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Mobile Apps Follow Starbucks And Virgin America By Offering Loyalty Systems

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Starbucks , American Express , Virgin America and most of today’s great companies have loyalty systems. Starbucks, for example, rewards “stars” when you purchase coffee using their rewards card. These stars are collected and are then redeemable for a scone, among other things. So why do these companies bother with loyalty systems? The reason is that every great product is built around a simple principle: to make customers and users happy. And what better way to make them happy than by empowering them to earn loyalty points that can be redeemed for awesome gifts? Gifts allow people to feel rewarded and appreciated and give them a great reason to come back to the brand. 

App developers are taking notice of this trend, and it seems likely that loyalty systems are going to be the next big thing in mobile. App makers traditionally thought loyalty was something you added when you started losing users, but they should realize loyalty is something you do from the beginning to make the experience as rewarding as possible for early adopters. A good loyalty program will increase retention and engagement, improve customer lifetime value, and reduce customer acquisition costs.

A-list venture capital firms like Google Ventures, First Round Capital and Kleiner Perkins agree, as all are heavily investing in an assortment of startups bringing loyalty systems to apps. If we will soon spend an average of 10 hours a day on our phones consuming content, communicating with friends, and shopping for goods, why not be rewarded for these moments?

The three startups that have the most traction with mobile developers are Kiip, SessionM and Pocket Change. According to their sites, each have rewarded tens of millions of consumers already. Their loyalty systems can be found in premier apps like Mega Jump, Highway Rider and Pose, respectively.

Kiip seems to get the most press as far as loyalty systems go, though their rewards solution is a bit unusual. When you perform a positive organic moment, such as getting to level five in a game or booking a hotel room, the idea is that a serendipitous "reward" appears. The reward is a specific item, such as Pop Chips or Sour Patch Kids candy. But unlike traditional loyalty systems we’re used to -- like credit card points -- Kiip makes it so the consumer doesn’t have a choice in what they get. Though this may be a great solution for some, I personally would much prefer a choice in my reward.

SessionM and Pocket Change, on the other hand, reward you with points that can be redeemed for gifts. Rewarding points allows for consumer choice and improves user experience. Consider real world analogs like American Express Points or StarbucksRewards -- both use points systems. I do wish SessionM didn't annoy you with a promotion to watch an ad, but it is an option for the user to earn additional points. Although you can't redeem points for real products directly, the assortment of gift cards does give the user a lot of options to find places that may have what they want.

Pocket Change nails the consumer experience. It rewards you with points, the points are yours without having to engage with ads, and you can redeem your points for virtual goods, gift cards, and real world products like an Xbox. Everything from its branding to user experience is great. To find out more, I reached out to Ari Mir, co-founder and CEO of Pocket Change, for insight into its consumer approach.

“We have three core values at Pocket Change, and one of them is ‘Consumer First,'" he says. "If you judge our competitors by their products, I would argue their core value is ‘Advertiser First.’ Our data shows this approach to be fundamentally flawed because if you put the consumer first, you will deliver the advertiser better quality traffic.”

Being in favor of choice, my personal favorite of the three is Pocket Change. But overall, all three startups are great solutions for app developers and should be considered when strong user engagement is a must. 

Have you considered a loyalty system for your mobile apps? Why or why not?