Driving User Growth Through Reward and Loyalty Programs

Loyalty programs are traditionally part of the marketing mix of successful off-line businesses. Who would think of a well-run airline or a favorite hotel chain without immediately associating their brand name with a points or loyalty scheme?

For mobile operators, a well-designed rewards and loyalty program can also mean the difference between success and failure when driving user acquisition, engagement and retention. In this sense, there is much to learn from the best practices of brick-and-mortar players who have built successful digital rewards programs.

For example, since launching its program in 2016, Starbucks has turned the century-old loyalty scheme into a cornerstone of Growth in the digital age, and now runs what is probably the world’s most popular app-based loyalty program. In its last earning report, the company reported that app-based that app-based orders and payments now represent 12% of its US sales.

On the Starbucks app, customers are able to discover nearby stores, access exclusive deals, place an order and earn points and free rewards. This helps drive traffic to stores, optimise staff size, inventory and costs. Personalised offers optimised for time and location also provide sophisticated opportunities for upsells and inventory optimisation (‘get the offer of the day between 4 and 6 pm’). Needless to say, a rewards scheme is a powerful incentive for customers to download and use a retailer’s app. In the same earnings report, the company reported that ‘Starbucks Rewards’ accounted for 39% of its US sales.|

At LotusFlare, we believe that these best practices can (and should) be replicated by operators when designing their self-care app. A referral and loyalty program could even be the first step in turning a basic self-care app into a lifestyle app that generates engagement and becomes a tool for increasing revenues through upsells and cross-sells.

The first step towards building an efficient rewards program is to segment users into tiers. This lets operators better reward the more loyal and profitable users and spend fewer resources on users that are less engaged. A tiered program also encourages ‘gamification’ by showing users how much money they have saved and how close they are to the next tier ‘status’.

The second step is to make reward and loyalty social. This can be done by designing a member-to-member referral program that is based not on the traditional one-time ‘coupon’ model but that ‘lives’ with users. We help operators set up sophisticated programs to gift each user with three SIM cards to distribute among family and friends, and then reward this existing user for the loyalty of the new subscribers they have helped bring in. This, in turn, helps bring the telco app experience closer to that of a ‘social’ platform.

Often times, it is hard for mobile operators to match supply and demand of data usage. One-time offers are a way to solve this problem. Mobile operators can offer subscribers data at discounted price at times when demand is low. This helps increase revenues and the predictability of revenue.

Reward platforms have been beneficial to both offline and online companies, and can be a great feature for mobile operators to improve acquisition, retention, engagement, and monetization. To learn more about how a rewards platform can benefit your company, contact us.

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