Eliminating friction in loyalty

How the PAX ecosystem has enabled Payment Loyalty to disrupt conventional approaches to customer loyalty

· Case studies,News

“Conventional loyalty programs had fallen way out of sync with modern customer behaviour and preferences. We knew that positioning the payment terminal at the centre of customer engagement was the key to delivering an effective retail loyalty solution for the 2020s and the PAX ecosystem made that possible.” - Tom Holt, CMO Payment Loyalty

Can you introduce Payment Loyalty?

Payment Loyalty was founded by a team with over 3 decades of customer loyalty solution experience, who had seen the effectiveness of traditional loyalty schemes declining as technology and customer behaviours evolved. Payment Loyalty’s vision was to create a solution to bring loyalty into line with modern customer preferences, at a time where retailers need more than ever to engage their customers. With our patented ‘Nominate Loyalty’ solution, we have been able to deliver on this vision.

What key problem does the Payment Loyalty solution solve?

Friction… Ask most consumers what they think of when mentioning a store-based loyalty program and there are normally two elements: firstly, a sign-up process, where customers are required to fill out some kind of form with personal contact details (name, address, email, mobile, etc) and secondly, an additional card/app to produce each time they check out in-store. This approach may have worked a decade ago, but today’s consumers are much less inclined to hand over personal details. The rapid adoption of contactless payments makes ‘tap and go’ payment so quick and easy, that swiping/stamping another card at checkout has become much more of a burden.

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It’s this ‘friction’ that really limits the success of traditional customer loyalty initiatives these days. Having worked with many tier-1 retailers over the last 10 years, it became very clear that customers are no longer as willing to provide personal data, add another card to their purse or wallet, or download loyalty applications. To achieve any meaningful success when using loyalty/reward schemes to drive spend levels/visit frequency, the essential consideration is to remove unnecessary friction.

So how does the Payment Loyalty solution work?

Key to our ‘Nominate Loyalty’ solution is the removal of all friction and any additional process at the checkout, both for the customer and for retail staff. In order to achieve this, Payment Loyalty have developed technology that uses customer payment cards as a proxy for a loyalty card - no additional cards to remember/swipe/stamp - and uses cutting edge payment terminals to deliver the customer’s loyalty status each time they visit - eliminating need for staff to prompt customers at every visit.

We’ve based the Nominate Loyalty solution on a simple stamp-card style campaign, as it’s such a well-understood concept among global consumers. Merchants use our secure, web-based Campaign Portal to create their own, custom branded stamp card campaigns, where they specify not only branding and design, but exactly how customers gain stamps (visits and/or spend level) and the reward or discount they’ll get in return. Once the campaign has been created, it’s pushed to merchant’s PAX devices, using the PAXSTORE platform.

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Once the campaign is live, customers are shown the stamp card offer when they checkout and asked if they want to nominate the payment card to collect stamps. It’s a simple yes/no action on the part of the customer - no need for any personal data or long-winded sign-up process. Each time an opted-in customer visits, they’re awarded a stamp and given a quick update following the payment. Key to elimination of unnecessary friction and time at the till is the fact that Nominate works via contactless (as well as chip & pin / swipe), as customers simply see their stamp card progress when they tap & go - no hanging around.

The Nominate application not only awards customers stamps when they qualify but handles rewards/discounts without need for retail staff involvement. Customers who have rewards/discounts are reminded of reward value/expiry date and if the customer wishes to use their discount, Nominate adjusts the basket total and reduces the customer ’s invoice before payment.

How does the Payment Loyalty solution support Merchants’ businesses?

The simple aim of any loyalty program is to increase the lifetime value of a customer. Customer value is increased through either getting them to spend a little more each time they visit or compelling them to visit more frequently. Stamp card-style campaigns are very effective in driving increased spend and visit frequency, as merchants can set both the minimum spend level required for customers to gain each stamp, as well as specifying how long the campaign runs for.

Let’s take a coffee shop as an example. If the business owners see from our simple analytics data that the average customer spend level is $3.75 and the average visit frequency is 6 times per month, they can use this simple insight and launch a campaign offering a free coffee to customers who spend $5 ten times in a certain month. This is just an example of how Nominate Loyalty can be used to gradually drive customer spend and frequency habits upwards. The great thing about Nominate Loyalty is that unlike conventional loyalty/paper stamp-card schemes, where campaigns are normally expected to run for a long time, Nominate Loyalty allows merchants to run short campaigns to see what works for their business. Trying seasonal or holiday-specials for example is a great way to learn what kind of offers customers respond well to. Rewards can be monetary (both defined amount or percentage discount) or based on an item/service (e.g. “Free Coffee!”). They key is to keep it simple and learn what works.

How has PAX enabled Nominate Loyalty’s route to market?

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It’s really the combined elements of PAX hardware, PAX payment software and the PAXSTORE platform that have enabled our route to market. Terminals like the A920 lead the industry in terms of screen size and resolution, which is essential when engaging customers with ‘quick-glance’ campaigns. Merchants are always excited to see their own branded campaigns on these devices and they become another brand touch-point for the customer. It’s PAXSTORE however that is the real enabler in terms of scaling a solution like Nominate. Not only does PAXSTORE drive awareness of the solution across the global merchant/service provider markets, it enables superbly efficient deployment of the application to merchant terminals.

“Having worked in retail software for well over a decade, the Payment Loyalty team have struggled through many retail solution deployments, which are invariably large and costly projects. PAXSTORE eliminates most of the work-overhead traditionally associated with POS software deployment and makes the process simple and pain-free. Without the PAXSTORE platform, deployment of our solution at scale would be impossible” - Tom Holt, CMO Payment Loyalty

What has been your experience of the PAXSTORE platform so far?

The PAXSTORE platform really is a big part of the Payment Loyalty solution and the way we have been forging partnerships. Pitching a solution via a conventional presentation is one thing, but being able to put it directly in the hands of our prospects by pushing to their test terminals through PAXSTORE is a game-changer. We’ve all become used to the Apple/Google app stores on our mobile devices, so it’s easy to forget how ground-breaking PAXSTORE is in the payment space. Using the platform to publish our solution has been seamless and we’ll be rolling out our next application in Q1 2021, so these are really exciting times for Payment Loyalty.

There is no escaping the pressure 2020 has put on merchants, especially those operating out of physical stores. Despite some return to normality looking likely in 2021, it’s clear that merchants will have to work hard and evolve their offerings to keep share-of-wallet. The conversations we’ve been having with operators suggest that for many, a contactless method of rewarding customer loyalty might be just what’s required to engage returning shoppers. We’re very excited to play a part in business success in 2021.