With a swipe of the smartphone, loyalty punch cards becoming obsolete

By John Ewoldt

Associated Press

Published: Wednesday, April 23 2014 12:00 a.m. MDT

Stinchfield said that newer smartphone technology won’t help a stingy program. And not everyone thinks the smartphone will be embraced as the new loyalty device. It has the potential to know a lot more about its users than an online card, causing some consumers to fear being overmarketed.

Paula Berge of Woodbury, Minn., said her smartphone pinged when she was in a Walgreens recently because she’s a Walgreens Balance Rewards member. She wasn’t impressed by the text. “It was the same deal they had on a sign in the store. I was hoping for something I didn’t already know about,” she said.

Michalek said Caribou is taking steps to be careful about non-reward emails or texts so customers don’t feel bombarded. “We let guests pick their level of engagement.”

But sometimes technology itself is a deterrent. Wilson, 21, has had trouble using his smartphone to collect loyalty points at some businesses. “Either the app won’t open or the scanning doesn’t work. I prefer the card,” he said.

Experts say smartphone-based loyalty programs will work out the kinks and offer a lot more than an online card or punch card and offer customized rewards faster. With a mobile loyalty program a merchant can shift the incentive to a new product that needs traction and buzz, Reppe said. “A smartphone lets a business make the leap from ‘come on in and buy anything’ to ‘buy this specific thing because we sent you a reward.’ ”

Caribou is working now to switch to a smartphone app, Michalek said. “Our guests want to get away from a plastic card. They lose it and then they don’t like calling out their phone number to access their account.”

With smartphones and apps, there will be more offers and more rewards, which has the potential to be good for businesses and consumers. Businesses want to break the long-term accrual process too. They want loyalty programs that are stickier, where people use up the rewards more quickly, according to Reppe.

While many businesses feel pressure to offer a loyalty program, Reppe said every business shouldn’t feel obligated to have one. “Three out of five companies that have intense customer loyalty have no loyalty program,” he said. “A loyalty program can be extremely powerful, but you often get greater loyalty just delivering an awesome customer experience.”

©2014 Star Tribune (Minneapolis) Visit the Star Tribune (Minneapolis) at www.startribune.com Distributed by MCT Information Services

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