Why Most Stand Alone Loyalty Products Will Fail

Loyalty AppsOver the last few years amid the significant uptick in the focus on local markets, loyalty has become regarded as a difficult, yet significant, aspect of the purchase funnel to crack.

We’ve all heard the adage that it’s more valuable to keep a customer than to find a new one. But let’s face it, customer loyalty is hard.

Despite the number of loyalty products that have come to market, most of them will fail to stand on their own and will either go out of business, or if they’re fortunate, get acquired and integrated into a larger platform.

But if there is so much promise in loyalty, why would virtually all stand alone loyalty apps fail?

It’s certainly not for a lack of need, creative thinking, or funding.

It’s because loyalty is itself a behavior that results from a consumers purchasing journey and the experience that the customer has with a business. As such loyalty, is not a stand alone aspect of the purchasing journey.

With lead generation, outside factors initiate behavior. Loyalty, however, is the behavior, and that’s not something you can easily engineer without being deeply tied into all aspects of the journey which preceded it.

While there are mechanics to loyalty and specific actions businesses can take to drive loyalty, those actions are rooted in a purchasing journey where the steps are tightly integrated, rather than standalone applications, which are loosely tied together if at all.

The companies that are looking to build stand-alone loyalty products will eventually fail. ~ Angus Davis, CEO Swipely

By way of example, a common loyalty application is an app that allows you to keep virtual punch cards all in one place. And while such an app is useful in reducing the clutter in your wallet, it does little to drive loyalty. Just because someone keeps using a punch card doesn’t mean they’re loyal.

What that standalone app doesn’t know is

  • where the customer come from and what path did they take to get here?
  • what factors were influential in driving their decision to purchase?
  • what did they buy and what is their purchase history?

All of which (and more) play into driving a long-term loyalty strategy.

Instead, merchants and publishers are more well served by using an integrated platform that allows them to understand and tie all five stages of the purchase funnel together. That way, loyalty becomes a natural result of doing business and not a mysterious “thing” leaving businesses chasing their tails.

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