Heading into Apple’s WWD earlier this year, rumors rumbled that the titan tech company would unveil a drastically enhanced mobile wallet with iOS 17. The event came and went, and then shortly after, Apple released a video unveiling a couple of arguably minor new payment- and ID-related enhancements.
Meanwhile Google, always a step ahead, or behind–depending on who you ask–has been quietly adding mobile wallet features for its OS. For example, Android users can now screenshot their favorite passes and they will automatically upload to Google’s version of the mobile wallet.
While these moves are savvy, they still fail to fully exploit the potential that digital wallets possess, especially when it comes to enabling businesses to attract and retain customers.
The Evolution and Limitations of Loyalty Programs
Businesses have long used loyalty programs to keep customers coming back, employing traditional methods like paper punch cards or plastic membership cards. As digital transformation has taken hold, many large businesses, especially in food & beverage and retail industries, shifted their loyalty programs to mobile apps.
The benefits of digital or app loyalty programs, once launched and enabled, are clear. They offer a more cost-effective and flexible way for businesses to reward customers and build loyalty, while providing customers with a more convenient and transparent loyalty experience.
However, they also can come with their own set of challenges. The primary ones include: the cost of developing, implementing and maintaining the program; creating something that is user friendly and intuitive to the user base and ensuring it is secure and that customer data is protected.
Given these complexities, many industries and especially SMBs, have been left behind in this digital transformation. And large enterprises are now facing their own shift in this space.
According to Insider Intelligence, people are using fewer apps on a regular basis–a trend that’s expected to continue despite increased smartphone usage. This shift is driven by users consolidating their activities on fewer platforms, as apps become more comprehensive and closed ecosystems offer a wider range of services.
The Untapped Potential of Digital Wallets and Passes
Those mobile wallets quietly sitting on consumers’ smartphones may hold the key. Occasionally used today for tap to pay or to hold the random mass transit ticket, they otherwise go largely unused. According to JD Power, by the start of this year, not even half of U.S. smartphone users have a mobile wallet app installed on their device. And less than 40% of that group reported using mobile wallets for loyalty and rewards programs.
However, this loyalty and rewards segment of the market holds tons of potential. A study by Juniper Research estimates that the number of digital wallet users participating in loyalty programs will reach 3.7 billion by 2025, a significant increase from the 2.5 billion users in 2020.
Digital wallet passes can solve many of the challenges digital loyalty programs face. Because they integrate into the existing wallet technology, there is no need for costly development or maintenance. They integrate cleanly into the wallet UI, which eliminates the need to do additional functionality and usability testing. And since digital wallets rely on QR codes and NFC scans, there is no need to transfer personal data, protecting privacy.
Further, they provide enhanced flexibility for loyalty program managers in businesses and organizations of all types and sizes that extend beyond simply earning points and redeeming rewards. They offer an intelligent tool for tracking user behavior, adjusting program offerings based on insights, and creating more personalized, real-time and geo-targeted engagement, expanding a brand’s reach and visibility.
Their utility also reaches beyond the traditional industry realms of loyalty and membership cards: food & beverage and retail. Some of the most promising use cases are within the sports and entertainment industries, and they also offer unique solutions for heavily regulated industries.
The Future of Customer Loyalty Programs
Digital wallets and passes have the potential to significantly impact customer loyalty programs. As technology continues to advance, we can expect to see even more innovations that make it easier for customers to access their favorite brand communities, engage with them and other followers, and earn rewards.
Overall, the future of customer loyalty programs is digital, and businesses that embrace this trend are likely to see significant gains in customer engagement and retention.
