Canadian shoppers love reward programs and are ready to receive such perks through their smartphones, according to a survey recently conducted by a Canadian consumer behavior research firm specializing in customer incentive and rewards programs.

“Smartphones and the trend towards mobile wallets are definite opportunities for businesses offering loyalty rewards to their favoured customers,” said Rob Daniel, managing director for research and loyalty at Maritz Canada Inc.

The firm’s recently released survey results, Maritz insights: The loyalty report, takes an in-depth look at the Canadian attachment to loyalty programs. The survey found that no less than 94 per cent of Canadians are members of one or more loyalty program.

Loyalty programs typically include a credit or store card through which shoppers can collect and digitally log-in points each time they purchase goods and services from the affiliated store. The rewards can then be exchanged for a specific products or discounts.

“Six in 10 Canadians agree that loyalty programs increase the chance that they will continue doing business with certain retailers,” according to Daniel.

But as popular as the programs are with Canadians, Daniel sees greater adoption in the near future as consumers begin to turn to their smartphones for shopping. “The trend towards mobile wallets will push the adoption of smartphones that allow users to collect and redeem reward points,” he said.

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Mobile wallets

The use of cell phones as mobile wallets has been around for years in Asia and Europe but the notion of mobile payment only gained popularity in North America in 2005.

The Maritz survey indicated that Canadians are prepared use their smartphones for collecting loyalty rewards:

  • 31 per cent of respondents would like to have reward points sent to their phones or would like to have smartphones that allow them to redeem reward points
  • 54 per cent of smartphone users surveyed said they are likely to demand reward points from stores they shop in
  • 64 per cent of respondents said they will collect rewards on smartphones if the feature were available

Daniel said, smartphones are very ideal vehicles for marketing campaigns such as loyalty reward programs because the devices can easily be used in conjunction with applications that track and measure consumer behavior.

Mobile payment is slowly gaining ground in North America because as more secure technologies are developed they offer ease and economy for both consumers and stores, according to one Canadian independent technology analyst. “Today’s mobile device is tomorrow’s wallet,” said Carmi Levy, an independent technology analyst.

“Mobile payment could significantly reduce costs associated with managing huge amounts of paper bills and coins,” he said. Security concerns about mobile payment will not likely be a tall barrier, according to Levy. He noted that after initial security fears were allayed debit and credit cards moved on to be used as the preferred payment mode of Canadians in as much as 45 per cent of their purchases – despite frequent instances of debit and credit card fraud.

Turning the smartphone into a virtual wallet is concept many businesses have been experimenting with in the last five years, according to Robert Burbach, senior analyst for financial insights, at IDC Canada.

“Various companies are dipping their toes into the mobile payment pond and there have been some successes, but we can’t be sure when it will gain widespread adoption,” Burbach said.For mobile payments to develop traction, he said it would be essential for industry players to have technology and systems’ standards similar to those developed for the credit card and debit card industry.”The more businesses subscribe to these standards, the more likely that mobile payment will catch on.”

How businesses can use loyalty programs

Despite their attraction to Canadian consumers, loyalty reward programs can be a pretty tricky campaign to launch, according to Daniel of Maritz Canada. “Just because you offer it (loyalty reward programs) doesn’t mean consumers will come.”

“Loyalty reward program members are not looking for bargains. They are aspirational shoppers,” said Daniel. In other words, he said, program members are looking fowards that would not typically purchase themselves.

“Maybe they aspire for a vacation or trip. Although they might not purchase a plane ticket at the drop of a hat, many people would like to collect points that could be used towards the purchase of a plane ticket,” he explained.

In another example, Daniel said, some consumers might be attracted to rewards that offer perks they do not normally indulge in such as a spa appointment.

    There are however, consumers that also look for more practical rewards such as points that could be used to purchase groceries.

    The Maritz survey indicated that these are the types of rewards Canadians want:

    • Products and services that allow users to relax or make life easier – 45 per cent
    • Rewards that they otherwise could not purchase – 40 per cent
    • Rewards for adventurous or exciting activities – 31 per cent
    • Points that allow one to splurge – 24 per cent

    The three main reward program turn offs for Canadian consumers are:

    • Very complicated rules and processes for collecting and redeeming points
    • Rewards that offer no value
    • Very long period needed to collect redeemable points

    He said businesses considering to launch a reward program need to realize that loyalty reward fans are not in it for the bargain. Getting it wrong could mean disaster for a company he said. Daniel said the rewards need to present a value to the consumer

    Consider also that survey results showed that only 31 per cent of reward program members agree that reward programs do a good job of communicating with customers.

    “The loyalty reward program should not be a standalone campaign. It must be bundled together with an overall strategy aimed at generating a better relationship with your customer,” said Daniel.

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