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Making customer loyalty management through mobile banking truly work!

In my last blog, I had posited that banks must leverage their mobile channel for effective customer loyalty management. In this blog, I will share recommendations on what banks must do with their mobile channel for effective customer loyalty management.

1. Don't be the copycat. Banks must not clone their online banking loyalty management strategy onto mobile banking channel. This will prove counter-productive. Instead, banks must leverage the distinct features of the mobile channel. Specifically:

  • Mobile messaging system (push notification, SMS, MMS) should be a key focus. These should be leveraged effectively to occupy and retain customer mindshare. The mobile messaging system enables low-cost delivery of relevant news, actionable offers and reminders. For example, banks can focus on helping customers gain maximum benefits from the loyalty program through proactive alerts when their award points are close to the expiry date.
  • Location-based services in conjunction with mobile messaging to influence consumer behavior in a proactive and timely manner. Banks must keep the content and the customer's frequency preferences in mind though - add the context within location-based services. Real-time personalized offers based upon customer location will enhance the customer's experience. For example, when a customer is near a concept branch, an SMS alert can be sent providing information on new technology-enabled services or relevant products based on her preferences. She can then try the product/service at the concept branch. Focusing on linking the mobile loyalty program (and, by extension, loyalty programs from all other channels) to a centralized customer database (that captures all of the customer's purchasing behavior and preferences) is desirable to enable timely and relevant offers.
  • Loyalty programs through the mobile website. Banks must not overlook their mobile website and focus overly on native applications for loyalty management. Considering many non-smartphones have browsing capabilities, enabling mobile websites would expand a bank's reach. The focus should be on optimizing the mobile website to make it easier for customers to enable loyalty reward redemption, check their reward points/status, etc. Banks can further focus not just on enabling superior experiences on the landing-page but also enable HTML5 and other smartphone features (e.g. cameras, etc.) to facilitate superior experiences.
  • Mobile-based points redemption. A high percentage of conventional loyalty points and rewards go unredeemed. By enabling meaningful mobile reward and coupon redemptions, banks can increase their usability. The focus should be on reducing the number of steps involved in redemption.
  • Native mobile application to enhance user experience. Enabling good loyalty-related mobile applications that can enable customers to sign in for the program, check their reward point/balances, and also access the mobile loyalty card and redeem reward points is desirable. The app can provide a customizable user interface and even leverage the camera to enable integration with the offline experience. As an example, FIS Mobile Wallet comprising Cardless Cash Access is a cloud-based platform that provides financial institutions control over the users experience and branding within the application. In addition to many other features, this solution enables target offers and mobile coupons redemption.
  • Invest in technology. Technologies supporting self-identification of location, NFC, geofences, Wi-Fi related technologies and others are crucial for enabling location-based services. Banks must focus on enabling and integrating smart cards, NFC technology, RFID, and other advanced payment applications (e.g. mobile wallet) into their mobile loyalty program. There must also be a focus on integrating banks' various channels onto a single platform for enabling a unified customer view in real-time. Running the rewards program over a single platform that encompasses mobile, social, online and location-based technology is desirable. Leveraging customer intelligence technology will help in enabling targeted offerings, understanding customers' likes/dislikes and financial behavior, ensuring experience personalization, identifying customer segments to avoid for loyalty management programs, and more. Further, banks can focus on predictive analytics to enable innovative loyalty offerings.


2. Focus on differentiation through targeting and advanced segmentation. The loyalty programs of many banks lack differentiation and, as a result, are unable to deliver distinctive customer experiences. Loyalty programs should not reward all customers with the same incentive - this would just add to costs without providing commensurate benefits. Unfortunately, cost-to-serve studies reveal that many banks spend way too much serving their lowest-value customers. Needless to say, this is self-defeating. It is imperative that the focus be on rewarding the most profitable customers and on product and service improvements for this customer segment.

3. Follow a holistic strategy. A bank's mobile channel loyalty management strategy must clearly tie-in with their larger multichannel loyalty program strategy. Further, a bank's mobile loyalty management strategy must be flexible and scalable to cater to evolving and future mobile devices and platforms accessing myriad data streams. The focus must also be on mobile loyalty management program measurement with the use of robust analytics. Identifying the right metrics is crucial. For example, it is necessary to measure effective impact in terms of incremental customer spend (and also customer satisfaction and loyalty improvement) vis-à-vis loyalty program investments. Looking beyond just the loyalty scores and enabling complete loyalty systems is desirable. Loyalty metrics that sort the customers into key categories (e.g. positive, neutral, negative) can be considered.


For a considerable period, many proactive banks have already been effectively leveraging the mobile channel for effective customer loyalty management. As an example, in Aug 2011, Citi and Best Buy had rolled out the "ThankYou Rewards" - a mobile loyalty program. The free application would award points to consumers for using their Citi credit card or for conducting other banking-related activities. Furthermore, users could browse and search Citi's Rewards catalog, which featured a selection of Best Buy products and other premium items. Users could redeem their points at their local Best Buy or even remotely.

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