It’s Time: Banks Need to Give Loyalty Program Members Access Via Mobile Apps

Todd Weiss November 27th, 2017
Customer Engagement

When was the last time you went to the grocery store, visited a library, attended a sporting event or commuted to work and didn’t see someone on a mobile device? Can’t remember? Neither can I.

Mobile technology has become a critical component of American life, and banks have wisely leveraged consumers’ growing affinity for all things digital by offering banking services through online portals and mobile apps. Fewer, however, are maximizing the power of mobile to influence their loyalty programs. In fact, research by Forrester Consulting indicates many are missing out; as of 2016, just 28 percent of banks had integrated mobile apps into their loyalty programs, and a mere 41 percent said they were planning to do so.

Yet the 2017 Bond Loyalty Report makes it clear consumers are ready and willing to embrace the marriage of mobile apps and loyalty: 57 percent of loyalty program members say they would like to be able to interact with their program through their mobile devices. What’s more, numerous organizations outside the financial services industry are already using mobile apps to allow customers to interact with their rewards programs.

If a bank’s mobile app doesn’t allow customers to engage with the institution’s loyalty rewards program, the bank is missing a stellar opportunity to build loyalty, deepen engagement and enhance customer satisfaction.

Mobile banking nation

Americans have embraced mobile technology, including mobile banking. According to the 2016 Federal Reserve Consumers and Mobile Financial Services report:

  • 87 percent of American adults have mobile phones.
  • 77 percent of all mobile phones are internet-enabled smartphones.
  • Most consumers say having access to mobile financial services was a consideration in their decision to get a smartphone.
  • 53 percent of banked smartphone owners have used mobile banking in the past 12 months.
  • 94 percent of mobile banking users check their balances and transactions through a mobile device.
  • 58 percent transfer money.

What does it say that use of mobile devices to interact with loyalty programs doesn’t show up in the Fed’s report? Clearly, the report was meant to focus on how consumers use mobile technology to engage with their financial institutions. Yet mobile loyalty interactions appear to be overlooked.

The loyalty landscape

Now consider these insights into the loyalty landscape from the 2017 Bond Loyalty Report:

  • 81 percent of American consumers say a loyalty program is likely to make them continue doing business with a brand.
  • 66 percent adjust their spending actions in order to maximize rewards.
  • 73 percent are more likely to endorse to others a company with a good loyalty program.
  • The average loyalty program participant is enrolled in just over 14 programs, but actively participates in just under half of them.
  • 55 percent of new loyalty program members enroll through online portals, rather than in person at a brand’s location.
  • 52 percent don’t know if their loyalty program has a mobile app.

Marrying mobile and loyalty

Mobile loyalty apps offer numerous advantages for consumers and loyalty marketers, including:

  • Allows consumers the convenience of replacing physical loyalty cards in their wallets with an app in the mobile wallets.
  • Consumers can access and assess programs anywhere, anytime, and redeem rewards whenever and wherever it’s convenient for them to do so.
  • Ease of use and greater access can increase use, and enhance a program’s ability to drive desired reward behaviors.
  • Loyalty apps can allow companies to gather analytic data on customer behaviors, preferences, life stages and more, all of which can be used to enhance other marketing efforts.
  • A mobile loyalty app can increase customer satisfaction and positively position a brand in consumers’ perceptions.

Now, let’s revisit three compelling stats mentioned earlier:

  1. More than half (57 percent) of loyalty program members say they would love to be able to access and interact with loyalty programs via apps.
  2. Nearly three quarters of banks (72 percent) don’t allow loyalty program members to access their rewards programs through a mobile app.
  3. Fifty-nine percent of banks don’t plan to take their loyalty programs mobile in the foreseeable future.

If banks want to maximize the value of their loyalty programs, integrating rewards into their mobile apps seems like an obvious route.

Building a bank loyalty app

Most banks have apps that allow customers to perform basic banking functions, from checking balances to a growing assortment of payment functions. Some have even begun borrowing a page from FinTech disruptors and now allow customers to at least begin loan application processes through a mobile portal.

For financial institutions that have already embraced the value of mobile technology, incorporating it into their rewards programs should be an organic, logical evolution. The good news is, retail operations like Starbucks and Nike have been successfully using loyalty program apps for years, and financial institutions can learn a lot from what’s worked for other industries.

Here are some best practices to help financial institutions build loyalty program mobile apps:

  • Keep it simple. Starbucks’ loyalty program app wins high marks for ease of use. The easier it is for consumers to engage with your loyalty program through an app, the more likely they are to do so.
  • Incentivize members to download. A mobile app is meaningless if you can’t get customers to download it. In addition to rewarding the behaviors you want to drive, be sure to reward members for downloading and using the app.
  • Personalize the experience. Consumers in the digital age expect and demand a high level of personalization from all the brands they do business with. Financial institutions should use data analytics to create a more personalized customer experience across all communications channels, including loyalty program apps.
  • Make redemption easy. Mobile apps that allow users to redeem points and claim rewards can help financial institutions better drive desired consumer behaviors.

Looking ahead

Consumers have embraced mobile, and most banks have responded by offering transaction-driven mobile apps. In fact, mobile banking has virtually become business as usual for many banks and consumers; as the Fed’s report notes, use of mobile banking continues to increase.

Taking loyalty programs mobile through an app is the next logical — and imperative — step for financial institutions.

This content is accurate at the time of publication and may not be updated.