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Why Mobile Loyalty Apps Are Rapidly Replacing Plastic Loyalty Cards

Plastic card-based systems started loyalty marketing as we know it today. However, mobile has shaken up the traditional loyalty model. More and more restaurants that have their loyalty programs in place are becoming aware of the need to satisfy the specific demands of their tech-savvy customers. They want to amplify their existing loyalty programs with a mobile app

There’s an important debate within marketing about the future of loyalty programs. Some businesses continue to use plastic card-based loyalty programs, and only consider a mobile app as an additional asset to plastic loyalty cards. And this approach isn’t very surprising, as card-based programs are easy to implement and are low-cost to run. Yet an increasing number of restaurants are bringing their loyalty schemes into the digital age with mobile devices, opting for an app-only approach. They know that supporting outdated tools leads to inefficient use of time and money. 

The Current State of Loyalty Marketing
Despite the high number of loyalty memberships, active participation in such programs is falling. A COLLOQUY census industry audit reveals that, as of 2017, there are 3.8 billion individual loyalty memberships in the U.S. However, only 46% of them are currently active. The study explains that even though many brands realize the need to create an emotional connection with their customers and believe they are doing so, most of the time, they’re only creating transactional relationships rather than strategic ones.

The problem is that just having a loyalty program is not enough for restaurants and other retailers to compete. According to Forrester Research, one of the biggest challenges that marketers face is ensuring that their customers are aware of and understand their loyalty programs and its many benefits. Programs need to be simple and easy to engage with. More progressive and innovative businesses are trying to take their loyalty to the next level by making loyalty programs smartphone-accessible to change the way their consumers view loyalty programs and their brand. 

The Starbucks app is the perfect example of this. With its new reward loyalty program, replacing a plastic card used just 5 years ago, the #1 coffee brand made it much easier for their guests to earn and track rewards. The loyalty app encourages higher spending and collects a vast amount of user data.  

A report from Vibes shows that 73% of smartphone users are interested in saving loyalty cards on their mobile phones. As a result, mobile loyalty apps are now replacing traditional loyalty cards and transforming the way restaurants and other businesses deliver their loyalty and marketing programs.

The Growing Benefits of Mobilized Loyalty
When choosing between different types of loyalty programs and taking the app-only approach, one must analyze how both programs can work. We evaluate  two programs based on the following six criteria:

1. Ease of use
Card-based loyalty programs. Carrying multiple plastic cards in your wallet and pockets can be messy. Consumers have to continually find and then pull out their cards, get them punched or stamped. According to Vibes, a good portion of consumers (44%) have to carry anywhere from 2-4 loyalty cards with them. 
Additionally, CodeBroker shows that carrying the cards is what frustrates most consumers, as 43% say that having a collection of plastic cards is the biggest pain point with loyalty programs.

Mobile app loyalty programs. By providing your customers with a mobile loyalty program based on an app, restaurants can simplify loyalty program experiences. Wallets and pockets suddenly get their space back.

2. Customer engagement
Card-based loyalty programs. Card-based programs require guests to remember to redeem their cards. A plastic card doesn’t engage customers, nor remind them 
of your brand, and most importantly, does not provide incentives for them to return to your business location. Plastic cards are often forgotten if not lost altogether. It means that a card -- and loyalty program, will go unused, making the program largely useless. 

Mobile app loyalty programs. With mobile apps, consumers no longer have to worry about leaving their plastic cards at home or losing them. Smartphone owners most always carry their mobile devices with them and spend 2 hours 51 minutes on their phones daily. With a mobile app installed on your guest’s smartphone, you can have the “brand in their hand.” An app icon will serve as a constant reminder of your brand.


3. Personalized communication 
Card-based loyalty programs. Plastic loyalty cards stored on key chains or in wallets make it extremely hard to foster effective communication between your guests and your brand and build strong, long-term relationships with them.


Mobile app loyalty programs. Mobile apps allow restaurants to develop unique, personalized content that addresses targeted consumers. Only a mobile app provides an opportunity to connect with customers at the right time, in the right place, and via an individual message. With push messages, guests are easily informed about specials within the restaurant, they are sent custom birthday greetings, and other offers and incentives, encouraging them to return again and again. Geo-targeting options enable restaurants to communicate with clients more precisely based on their location. Restaurants can more easily collect customer feedback following each visit to the store. With greater context and control, restaurant owners can effectively influence customer behavior by better meeting their expectations and delivering greater value.



4. True loyalty
Card-based loyalty programs.
Card-based loyalty programs are often associated with outdated tools that don’t fit the brand image and expectations of today’s consumers, Millennials in particular. Plastic card owners cannot use special offers that mobile apps provide. Combining plastic loyalty cards with mobile app loyalty programs leads to higher difficulties both for your restaurant and your 
guests because the reward system is too complex.

Mobile app loyalty programs. Mobile apps provide the most convenient customer experiences. Simple mechanics make the interaction with your loyalty program smooth, simple, and pleasant. A mobile app is highly trackable and offers more opportunities for interactions (e.g., gift cards, lotteries, special offers, etc.). This allows restaurants to increase their loyalty program’s relevance and usability.

5. Visual and emotional appeal
Card-based loyalty programs. Card-based loyalty programs lack visual and emotional 
appeal because customers don’t see rewards they can get their earned points.

Mobile app loyalty programs. By showing customers mouthwatering visuals of food in a mobile app, the program more effectively appeals to their emotions and appetite. This motivates guests to visit the restaurant more often and helps nurture the stronger emotional connection between them and your brand.



6. Data collection
Card-based loyalty programs. With card-based programs, it’s much more difficult to collect and analyze data on your customers. It means you cannot send personalized offers to your clients and create highly targeted marketing campaigns.


Mobile app loyalty programs. With a mobile app, you can easily collect valuable customer data to get insights into demographics, behavior, habits, and preferences of your guests. As a result, you can make smarter decisions and send out specials to your clients’ smartphones that are likely to be read. 

The card free future of customer loyalty
Consumers are more demanding than ever, they want fast, simple, and efficient experiences, instant gratification, more personalized offers and communication. People always have their phones with them. It means that with a mobile app, they will never miss out on collecting their reward points.

Today more customers begin to interact with loyalty programs via mobile apps. The report from Vibes shows that 66% of consumers would have a more positive opinion of a loyalty program if it were smartphone-accessible. Their wallets and pockets are bursting with multiple cards, and they don’t need another one. Eventually, most of the consumers are likely to prefer a mobile app to a plastic card. As a result, supporting the outdated tools like plastic cards prove to be useless, but vast resources are already wasted.  

When the market is moving towards full digital access, it makes more sense for restaurant owners to go with a mobile app loyalty program. By mobilizing loyalty they create additional opportunities to engage, recognize, and reward their best customers. Instead of wasting their resources on supporting outdated tools, restaurants can build more authentic relationships with their guests by capitalizing on the massive potential a successful mobile loyalty app offers.