On July 24th, 2014 Verizon will launch Verizon Smart Rewards, a loyalty program aimed at its postpaid customer base. Offering a loyalty program in a fiercely competitive US mobile market makes a lot of sense, and Verizon will be able to use it to differentiate from competitors, beyond the usual device portfolio and tariffing.
Loyalty and reward programs are widely deployed in retail. Supermarkets and department stores use loyalty systems to track user purchasing behaviour to better understand customers. Customer insights enable retailers to target product offers to specific individuals in order to incentivise a visit to the store (either physical or virtual), but also to identify customers that may be churning to competitors. To hook users Verizon’s Smart Reward customers will get access to “….discounts and savings of up to 40 percent on brand-name merchandise from more than 200 well-known brands, offers on local shopping and dining redeemable directly from a customer’s wireless device, and travel including discounts at more than 26,000 hotels.” The more attractive the offers the more likely Verizon customers will sign up, surely?
Attention around Smart Rewards has centred on the requirement for those signing up to also opt-in to sharing their location information and mobile usage with Verizon. However, with just two days before launch, Verizon’s blog is unclear about whether or not Smart Reward members will need to share their location and usage information - “Customers may be required to enroll in Verizon Selects, part of Precision Market Insights from Verizon, as part of the Smart Rewards registration process and will receive 2,500 bonus points for being part of Verizon Selects and 500 Rewards points per participating line each month.” Through Verizon Select customers agree to sharing location and usage information with Verizon, in exchange for receiving targeted offers and discounts from third-parties. Verizon uses this data to create “verified” profiles of its customers and allows third-party advertisers to send offers and marketing communications to target audiences. These adverts and communications are delivered via email, text, postal mail or via online or mobile advertising.
Automatically signing-up users to Verizon Selects will provide a welcome boost for Verizon’s Precision Market Insights audience numbers. While Verizon highlights successful campaigns with 1.800 Flowers, Kraft and the Phoenix Suns, I speculate only a small (single digit) share of its customers will have signed up to Verizon Selects. Thus, driving greater opt-in levels is imperative to increasing the appeal of Precision Market Insights to advertisers and for Verizon to more effectively monetize customer data. However, as a warning, Verizon must make clear what data it is collecting and how it will use this information, in order not to mislead loyal customers. Being vague will create distrust and will risk Verizon’s reputation.
Elsewhere, operators have been experimenting with opt-in based mobile marketing for some time, with varying degrees success but no concrete evidence of a significant positive impact on the top line. In the UK ‘O2 Priority’, launched in July 2011 and that continues to run, as does ‘EE Recommends’, which has evolved from Orange ‘Bright Stuff’ and Orange ‘Shots’. Rather than providing a new revenue source from advertisers to mitigate revenue decline from core voice and text services, both initiatives continue to operate because they help to lower churn and help boost loyalty. In Germany E-Plus initially launched Gettings as an opt-in SMS mobile marketing channel, but evolved this to deliver pull-based deals from local businesses. However, there have also been notable casualties in this space too – daily deal site’s Groupon’s decline is indicative of the ‘inbox/ deal fatigue’ that occurs when consumers are bombarded with offers and deals. Whether a more selected and targeted approach from operators will mitigate this challenge remains to be seen, but either way Verizon (and other operators) must make clear to customers exactly what they are signing up for.