Jun 02, 2022

Merger of Loyalty, Payments Integral to Customer Acquisition and Retention

New NFC Forum Loyalty and Payments White Paper Previewed

Everything we do as humans involves relationships – marriage, friendship, business, etc., These relationships are based on trust, which over time, matures into loyalty. So, it comes as no surprise that in the retail and payment area relationships and loyalty are of paramount importance.

Loyalty is important in retail because, as we all have heard, it is cheaper to retain a customer than to find a new one. What isn’t as well known is that customers increasingly expect retailers to offer a loyalty program. A survey found that 85% of global consumers are more likely to shop with retailers that offer loyalty programs -- and over two-thirds of millennials have stated that they need a rewards program to stay loyal to a brand.

Loyalty and the consumer-retailer relationship was altered by COVID and the resulting digital lifestyle it intensified. Thanks to technologies such as Near Field Communication (NFC), a simple tap is all it takes to initiate a digital conversation between consumer and retailer, enabling the next level in loyalty.

Loyalty management in retail involves the strategy and activities that a company deploys to better serve existing customers.

The NFC Forum’s Retail and Payment Special Interest Group (R&P SIG) is working on a white paper addressing the synergies between loyalty and payments for retailers. We talked with Bruno Carpreau, Chair of the R&PSIG and Director of Product Management with Mastercard for a preview of the white paper.

“The concept of loyalty for companies has evolved over time, and the pandemic has seen a shift in companies’ loyalty management strategies,” said Carpreau. “Today, we are witnessing the rapid merger of loyalty and payments as integral parts of the customer journey. The focus is on both acquisition of a customer and retention of that customer.”

Loyalty’s Growing Importance

A loyalty program is a foundational aspect of the relationship between the consumer and the retailer. To some extent, these relationships were up ended by the pandemic. The pandemic increased customers’ willingness to try assorted brands and places to shop, which led to the rethinking of loyalty programs by retailers in order to remain competitive. This overhaul involves focusing on high-value behaviors and spending habits, instead of merely increased reward speed. In other words, a transition from one-size-fits-all promotional programs to an ongoing customer lifecycle approach is the new normal.

Listed below are some of the aspects that help shape new, successful loyalty programs:

  • Instant gratification
  • Personalization
  • Relevance
  • Social Media Integration
  • Surprise & Delight

“According to a recent survey, 69% of customers allow the presence of rewards or loyalty programs to influence their shopping decisions. Equally important, 72% of consumers are more likely to be loyal to a brand if they offer a personalized experience with additional rewards and benefits,” said Carpreau.

NFC Technology Pivotal to Payments and Loyalty

NFC technology plays a pivotal role in the two-way communication between consumer and merchant devices. When the consumer inevitably goes through the check-out process, NFC technology can exchange meaningful data points in a transparent and controlled way, allowing for a customized, relevant, user experience.

Another key component of the consumer check-out process where NFC can help is with safety. In the post-pandemic world, consumers are increasingly concerned about hygiene and safety, and many prefer to shop at businesses offering touchless options. NFC technology provides consumers with the ability to interact with merchant devices without ever physically touching them, providing a safer experience.

NFC technology also allows for data to be exchanged between devices with web-based services or APIs. This allows for seamless integration of local data with data in the cloud and in distributed databases, all while remaining fully transparent to the end-user.

Check out the NFC payment and retail content to learn more:  https://nfc-forum.org/retail-sig/

Sources: Nielsen, SheerID.