Imagine That: Sales Increase Directly Tied to Loyalty Program

Good Day- 

Well, you know our old saw by now; we promise to increase frequency of posting.  But the fact is [A] we're honestly being hammered by a trio of major client deliverables all converging from three different parts of the country (S.F., D.C., and So.Cal.) at the same time which has us totally appreciating what an Iron Chef goes through; and [B] we just can't bring ourselves to blather; the majority of what we're tracking is worthy of micro-blogging and thus ends up being pushed through our Twitter account (and its very easy to fire off 140 chars).  But occasionally, we come across something worth a longer comment.

And so it is this morning (at least for myself.)  Its notable because one of the three client projects I am cramming on to finish has a CFO who is convinced that Loyalty programs are essentially a financial drain in that they reward people who are already committed to repurchasing.  OK.  It seems to us that for the right brand, and product or service type that's the point; switching costs are near zero, and retention marketing is everything.  So catch a whiff of this...

starbucks-card-iphone-app.jpg

Starbucks Corp.'s fiscal fourth quarter earnings increased by a better-than-forecast 34% on sales that increased by a double-digit percentage (per the Wall Street Journal).  Starbucks has recorded stronger sales trends in the U.S. than most of its competitors.  Same-store sales rose 8% in the U.S., driven by a 5% increase in transactions. 

Here's the thing: Starbucks CFO and Group VP of Global Business Services, Troy Alstead noted in an interview that in addition to accelerated drive-through times and new food offerings, their loyalty program was responsible for increasing repeat customers and rising sales. That's right: Starbucks is tying their increase in sales to their loyalty program.  From what we know of the internal workings at Starbucks CRM efforts they have plenty of analytics and data to back this up.  And presumably that's how they reached this conclusion (acknowledging there were two other factors: food offerings and drive-through improvements).  But the point here (at least for us) is clear: a loyalty program that appears to do exactly what was hoped: positively effect customer wallet-share. 

The numbers speak for themselves.  Overall, Starbucks reported a profit of $481.1M up from $359M a year earlier.  And net revenue rose 13% to $3.8B.   Hmm, a CFO reports a direct causal link between a loyalty program and business growth.  Imagine that.

Now, to be intellectually honest there is one more observation to make (and then I need to jump back to that client's deliverable) ...the key to Starbucks loyalty program invokes the two principal watchwords of the digital age: ease and convenience.  We think what makes Starbucks program so effective is not just accumulating points to earn free drinks or food, rather its the fact that their loyalty mechanism (once a card, now a phone app) makes it easy and convenient to buy and reload their digital wallet.   We'll have to muse about loyalty program vehicles another time.

 

Don't Shoot Me I'm Only the Message!

...or maybe we should say "Don't shoot me I'm only the piano player" ;-) 

Apparently, a recent comment or two by uber geek Mark Zuckerburg in his leadership of Facebook has sent several scurrying to scuttle plans for their mobile apps because the word is HTML5 was a bummer for FB mobile development.  Well, let's not shoot the message -- maybe the messenger in this case, but not the message.  In other words, we're suggesting there is no need to abandon HTML5 just because its fallen from favor at Facebook.  But on the other hand, HTML5 may not be the best choice depending on what you're trying to achieve with your mobile app. 

Um, let's back up a bit.

This all got started when a client recently complained to us,

We're so confused about mobile development for our planned CRM apps.  Should we use HTML5 or go native?  Facebook says HTML5 sucks.

We think we helped calm our client's tattered nerves by explaining this is not a conundrum of some sort, but simply a deployment question concerning user experience and the intents and purposes of an App in a mobile world.

So, in the spirit of our comments a couple of days ago, we thought we'd bring this question to the attention of our readers.

First, the fuss for this Client all began because someone in their IT department had either read or heard about the uber social networker himself Mark Zuckerburg bashing HTML5 during an on-stage chat during a technology geek-in last month in the Silicon Valley (actually San Francisco).  But we don't think they actually attended the event, or they probably wouldn't have tossed the proverbial monkey wrench in the manner they did during a marketing technology planning meeting.  The disruption was not helpful.  Here is why.  The trouble is (was) that Facebook had placed a big bet on HTML5 to achieve their mobile web experience and it gave them fits given the wide variety of user experience elements in FB.  And they finally did what they had to: they embraced native experiences and developed their latest Facebook mobile in both iOS and Android.

But just because HTML5 didn't work for Facebook doesn't mean it won't work for anyone thinking mobile.  In fact, the C[IQ] Tech Team  points out that there are a handful of factors we consider when making a strategic recommendation about deploying any CRM app in a mobile setting.  Here are five of them:

  1. User Experience.  First and foremost, consider the interaction model.  HTML5 works fine for apps that have a simple user experience, such as filling in forms or making clickable choices. However, if the user experience is more complicated say for something like a Loyalty Program (think Starbucks Awards on your phone), then going native may be preferable.
  2. Data Privacy and Security.  If sensitive data capture is involved, HTML5 may be preferred in a solution that leaves all of the data on secure servers (e.g. think anything financial services or healthcare).
  3. Connectivity.  Of course, there is always the question of dropped connections or poor reception.  In such situations, HTML5 is not a good choice over a native experience local to the device.
  4. Device Neutrality.  Until very recently the strongest argument for HTML5 was platform independent deployment -- write once deploy everywhere.  Well, "everywhere" has arguably narrowed to Android and iOS (notwithstanding whatever market penetration Microsoft may make with their new mobile device platform).  Yet, you need to consider your customers and how the majority of them are likely to interact with your business in a mobile setting.
  5. Leveraging Device Capabilities.  Finally, native apps can offer the most robust and rich user experience and capabilities if on-board services can be utilized.  For example, a native app can use the device's camera for capturing images like QR codes, product labels, etc. whereas relying on a mobile web app means confining functionality to the "sandbox" of the browser.

At the end of the day we caution clients to not stress over the mobile deployment question.  And we also think it ill advised to react based on the words of uber geeks ;-)  In our humble opinion, despite its enormous reach, technology strategy should not revolve around Facebook or whatever Facebook leaders believe is the answer or the trend.  Simply determine your customer requirements (user experience, capabilities, etc.) and the objectives of your planned app, and then make a call on whether to go native or stay nuetral. 

The message is valuable: HTML5 is not for every application instance.  The manner in which the message was delivered and the ensuing knee-jerk market reaction it engendered... calling to mind funnier moments of the Life of Brian ...was not

As to making those deployment technology decisions: Been there. Done that. And we can help.