Homepage / Currency / Mobile technology is revamping loyalty schemes
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election


Mobile technology is revamping loyalty schemes

THOSE of a cynical bent might think Tom Stuker a glutton for punishment. Over the years, Mr Stuker has flown more than 18m miles (29m kilometres) on United Airlines, a carrier not always renowned for treating its passengers tenderly. Mr Stuker may possess the world’s most impressive frequent-flyer account. Over the past half-decade he has averaged over 1m miles a year with United.

Mr Stuker is extreme in his devotion. But engendering customer loyalty is something that nearly all firms strive for. Most fail. The average American household belongs to 28 loyalty schemes. The country is home to 3.8bn scheme memberships in total, according to Colloquy, a research firm, up from 2.6bn in 2012. More than half of these accounts go unused.

  • Why Stephen King’s novels still resonate

  • Are Americans sacrificing food and clothing to pay their taxes?

  • Retail sales, producer prices, wages and exchange rates

  • Foreign reserves

  • Why “affordable housing” in Africa is rarely affordable

  • What effect is Donald Trump really having on American tourism?

Frequent-flyer programmes, introduced in the 1970s, were the first examples of modern loyalty schemes. They proved to be a clever bit of marketing. Flyers value plane seats highly, so a free one feels like a substantial reward. But airlines can give away unsold berths at little incremental cost, because the jet would fly whether they are filled or not. Air miles are also sold to third parties, such as credit-card firms, which then use them to reward their own customers. For airlines, profit margins on frequent-flyer programmes can be 30-40%, says Pranay Jhunjhunwala of the Boston Consulting Group (BCG), a consultancy, compared with 10% on flights in general.

Schemes like these are an example of “earn and burn” rewards, in which customers are rewarded for their purchases at a flat rate, whether a free flight for every 20,000 miles flown or a complimentary mochaccino for every nine swigged. According to Capgemini, another consultancy, nearly all firms with a loyalty scheme use this model.

Because they are so easy to implement, they are often used defensively. Many firms start a programme only because their competitors have one, says Steve Grout of Collinson Group, a loyalty consultancy. But they are so common that they end up generating little fidelity. Often “the market returns to stasis,” argued Lena-Marie Rehnen of the Ludwig-Maximilians University in a paper published in 2016. Some 77% of earn-and-burn schemes fail in one way or another within the first two years, according to Capgemini.

The best programmes, in contrast, get highly personal. Customers of Starbucks, for example, are encouraged to pay for their daily dose of caffeine using a smartphone app, which they pre-load with cash. (An estimated $1.2bn is deposited in Starbucks’s loyalty account.) This allows the firm to harvest reams of data on its patrons, including what they drink, at which stores and at what time of day—perhaps even whether it is sunny or raining when they choose a particular beverage. This information is then used to target members of the scheme with individual offers.

If that sounds a touch intrusive, Starbucks’s customers do not seem to mind. In its latest results in July, the firm boasted 13.3m active members. Over a third of its sales in America come through its reward programme. Customers tend to be happier handing over personal information when they get personalised offers in return, says Javier Anta, another BCG consultant. Some 97% of purchases at Kroger, an American grocery firm, are reported to be made by loyalty-card holders, who receive individual offers based on their shopping habits. Such data can be among the most valuable things a firm owns. When Caesars Entertainment, a casino group, went bankrupt in 2015, auditors valued its loyalty database at $1bn, more even than its property on the Las Vegas strip.

If data are the grist for the loyalty mill, then you might assume that the online giants would be running the best schemes. Yet this is not necessarily the case. Take Amazon. “Their philosophy is not good,” says one loyalty consultant (who asked not to be identified). “The amount they spend on promotions is insane.” Rather than offering across-the-board discounts, he says, Amazon would be much better served by designing and targeting customised promotions for particular shoppers as part of a loyalty scheme.

As Starbucks has shown, many advances in the loyalty industry are driven by mobile technology. For a start, it allows firms to use location information to send well-targeted, real-time offers. And storing scores of cards in an e-wallet, rather than having to wedge them into a purse, encourages shoppers to use them. A quarter of people who abandoned schemes did so because they did not offer a smartphone app, according to Colloquy. Smartphones are also increasing the number of ways in which customers can garner rewards. Some restaurants, for example, offer points for those posting photos of their meals on Instagram, or for “checking in” on Facebook. The only limit, it seems, will be customers’ desire to protect privacy.

Airlines, for their part, have been slow to keep up. Still, they have the odd card up their sleeves. In 2011, after Mr Stuker passed the 10m-mile mark, United Airlines named one of its jumbo jets after him. Even Starbucks would struggle to match that level of personalisation.

Source: economist
Mobile technology is revamping loyalty schemes

Comments are closed.