Contactless Payment, Engagement and Loyalty: How to Have It All


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It’s Happening: Touch-Free Buying is Breaking Off Contact

Think ahead about what you give your customers, business owners, because it almost always changes how they interact with you. Today, all merchants should be thinking ahead about the implications of offering contactless payments.

Most companies won’t have a choice but to offer it. The use of this service, which allows consumers to breeze in and out of a business without having to make eye contact with a single employee, rose more than 100% among high-frequency retail segments from 2019 to 2020. By May 2021, more than 80% of consumers said they have used contactless payment in the trailing 12 months.

That’s a staggeringly fast change in purchasing patterns, and it presents an opportunity that is just as fleeting. Because as more people adapt to this technology and use it more often, operators of reward programs could be missing live-time opportunities to better engage and upstage their rivals.

The key reason: Contactless payment speeds up the experience – which is good – but it also limits human engagement, which is still essential to brand loyalty. And, importantly, that lack of contact can lead to other behavioral changes.

So, think ahead: How do we balance these two factors?

Making Good Contact from Change: 3 Solutions

There are three ways in which reward initiatives can be leveraged to reconnect members with merchants, even when they don’t interact with employees during checkout. The trick is first recognizing the potential threats contactless payments present to the consumer-brand dynamic. Then, find ways in which loyalty can turn that threat to a company’s advantage. 

Threat 1: Customer loyalty may shift from brand to payment method. Fewer employee interactions means less human touch and the face-to-face experiences that make a brand stand apart. And guess what? The more distanced consumers become from human experiences, the more they will embrace transactional ones. Look: Contactless payment providers are already generating loyalty of their own – 87% of Apply Pay users are specifically loyal to Apple Pay.

Solution: This is an opportunity for merchants to draw comparisons between the human touch and the tech touch, emphasizing the benefits of each. Reward program messaging can detail ethical product sourcing and sustainability, for example, and include employee spotlights (“Meet Bethany. She can answer any Pilates question. Just ask!”). On the tech side, a rewards app can highlight virtual benefits exclusive to that merchant, such as buy-now promotions and free product upgrades.  Physical changes can help, as well. Consider a restaurant that allows customers to order online, pay  by app and pick up in-store (Chipotle offers this). Often, those pickup shelves are right at the entrance – an ultra for convenience, but it encourages zero human interaction. If pickup is deeper in the store, the customer will get more of a brand experience.

Threat 2: Contactless payments may shift the customer’s focus from the rewards being earned to the convenience of getting in and out of the store fast. (My company is already seeing this trend manifest among our convenience store clients.) This is a threat because loyalty members tend to spend more than non-loyalty members – as long as they are active. One recent survey reveals that nearly one-third of consumers switched credit cards during the pandemic, trading the one they use most often for a card that offers contactless payment (for convenience as well as safety).

Solution: Make contactless payment available through a loyalty app. Period. Merchants can then issue extra points to members who use the technology and reinforce the relationship between payment and rewards with animated graphics that show points being added – think falling coins or numbers running higher. To the consumer, it’s easy-peasy, and it has to be. There’s a reason why 40% of Starbucks’ total sales are generated through its rewards program – contactless payment is a mindless part of it.

Threat 3: Contactless payments provide the ability to capture and analyze a lot real-time data through new sources (meaning payment apps). This can be good, assuming the reward program operator has the resources to track and understand this data and use it beneficially for all parties. If not, this amount of data can be crushing and confusing.

Solution: Organizations will likely need to update their insights analysis or hire a firm that can do it for them. The payment platform LedgerPay can, for example, aggregate all of a customer’s payment devices in order to match them to their reward membership. This streamlines data and also presents opportunities for deeper engagement. Say a loyalty customer stopped at a grocery store but didn’t enter her loyalty identification to earn points (Threat 2). The program could match the member to that transaction, via credit card, and send a follow-up text or email that engages her to earn the points. It can, for example, ask the member to answer a simple question, such as: “While at the store, you purchased (A) a banana, (B) a Coke, (C) a lottery ticket or (D) Bengay ointment.” Better connections, better data.

Remember, Contact Does not End at the Exit

Lastly, all organizations should take advantage of that tight, post-purchase period – the first few minutes after a customer leaves, and the brand is top of mind. This is when “making contact” may be most important. A rewards platform should send a virtual receipt, points balance and suggestions of the rewards the customer can buy with those points, as well as alerts to future events, such as sales and happy hours. 

Again, it just requires thinking ahead. Customers may breeze in and out of a business without talking to an employee, but that doesn’t make human contact less valuable to those customers. Payments may be touch-free, but effective loyalty is always on touch.

Jenn McMillen
Incendio Founder Jenn McMillen has been building and sharing expertise in the retail industry for 20+ years. Her expertise includes customer relationship management, shopper experience, retail marketing, loyalty programs and data analytics. She's a retail contributor for Forbes.


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