Mobile apps to digitize your customer loyalty program

Want to ditch paper, text messages or plastic cards as a way of tracking or running your company's rewards program? These companies would love to help.
Written by Heather Clancy, Contributor

In the half-year since I last updated this list of mobile apps and services for customer loyalty, the conversation surrounding the technologies has become noticeably louder. In fact, it's a feature that's on the mind of pretty much every major SMB e-commerce technology platform provider and is an equally big agenda item for developers of small-business customer relationship management (CRM) apps.

"If you know who they are, what they bought, what they spend, you can give them a more personalized experience," said BigCommerce co-founder Mitch Harper, summing up the issue when I interviewed him last week for an upcoming profile about his company.

That line of thinking is illustrated by a survey conducted this spring by Manta and BIA/Kelsey, outlining a demonstrable shift in small-business marketing investments away from customer acquisition and toward activities that nurture engagement with existing accounts or clients.

Only 14 percent of the respondents — almost 1,000 members of the Manta online directory — reported spending the majority of their marketing budgets on new customer acquisition. That's not all that surprising, given that 61 percent of this group generates more than half of annual sales from repeat customers. Still, only 34 percent of the group considered in this research actually has a customer loyalty program in place, suggesting that there's a big gap right now.

"Our joint research shows that customer loyalty programs are starting to gain traction in the small business community," said Jed Williams, BIA/Kelsey vice president of strategic consulting, in a statement. "This finding aligns with BIA/Kelsey's analysis that over half of small businesses will launch customer loyalty programs by the end of 2014 to help their businesses become more competitive."

There are dozens of services that small businesses could consider, so I've chosen to "edit" this list to include platforms and services that prioritize the use of mobile apps (rather than primarily texts) as part of the relationship building process. It doesn't include some of the point-of-sale (POS) and payment service developers that are creeping into this space such as LevelUp or Swipely. No smartphone app yet for consumers? Then the service isn't included, sorry.

I've removed two services from previous versions of this list that seemed to be showing little progress. After the January update was published, I received a deluge of email from companies wanting to be listed. I've eliminated a couple of those because they didn't have a major US presence. Finally, I picked technologies and offerings that explicitly make small companies and retailers the central focus of development, rather than an afterthought. All that said, here's what I'm watching, circa July 14, 2014.

Belly — Since early this year, the company has added half again as many merchants as the last time I updated this list: it now is used by 7,000 merchants not just in the United States but now in Canada (where it expanded in June). There are roughly 3 million members. Belly offers a physical card for its program, as well as mobile apps for either Apple iOS or Android that replace paper punchcards. Notable features include Passbook location alerts, email campaigns, integration with Facebook and Twitter integration, and analytics (with the premium accounts).

Foursquare — Technically, the Foursquare service isn't a loyalty app. But it can absolutely help with engaging customers or would-be customers who have checked-in at your location. Its reach is almost overwhelming, with more than 50 million "community" members and more than 1.7 million businesses using the merchant platform. It uses an advertising model: your business pays only if someone acts on it (by tapping on it to see more details).

Front Flip — One cool feature of this rewards system with more than 1 million members is integration with social networks, which lets customers "boast" about the promotions they received from your business or even share them with friends (as appropriate). In early July, the company released a tool that lets merchants send mobile surveys to customers' phones. The service has several big franchise relationships, including McDonald's and KFC, but works closely with local businesses.

KeyRing — With apps for Android, Apple iOS and BlackBerry, KeyRing is actually a mobile wallet that stores loyalty card information. Four years after its launch, the app has been downloaded more than 10 million times. Businesses can use the platform to build databases, run promotions and send offers to specific customers. The developer behind this service is owned by media and marketing giant Gannett. (There are other companies that offer similar loyalty organizer apps, including Mobile-Pocket and CardMobili, but their primary focus is outside the United States.)

LoyalBlocks — Backed with more than $12 million in funding (including a $9 million 2013 round led by General Catalyst Partners), this loyalty marketing service for both Apple iOS and Android smartphones is amassing a fast-growing following in the United States and the United Kingdom. During the first quarter of this year, it signed up more than 30,000 small and midsize merchants. The twist is that its apps also use location-based notifications that be used to target customers within a one-mile radius.

Perka — The Perka service rewards transactions, not just check-ins or visits. There are Android and Apple iOS mobile apps for customers to manage their accounts, and that can be used to send promotional messages. The service also supports SMS text messages so people with older phones can be included in offers. There are two programs: a "punchcard" service that can be used to give perks after a certain number of purchases or a "flexpoints" option that is based on the amount customers spend.

Slyde — Launched in beta test in early July, the apps for this service run on Android and Apple iOS. The company is affiliated with a big South Korean wireless carrier, SK Telecom, and this platform straddles the gray line between payments and customer loyalty. Right now, you can only use it in a few places in Berkeley, Calif., but given the credentials and deep pockets of its parent company, it's worth further scrutiny.

SpotOn — Now used by 6,000 businesses and 2.5 million consumers nationally, SpotOn relies on both plastic loyalty cards and mobile apps for Android or Apple iOS. Customers using the mobile apps record visits by scanning a QR code on their smartphone at the merchant's Samsung Galaxy check-in tablet. (The service also integrates with Passbook to register "Spot" visits.) According to a February 2014 survey, SpotOn businesses that send two to three communications to members are tripling customer visits to their locations (compared with those that don't send any campaigns).

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