Digital loyalty in the age of Passbook
I’ve been watching the digital loyalty space quite closely (see: THE CHOP SPACE (DIGITAL LOYALTY CARDS) IN MALAYSIA). I love being loyal to a business that rewards me. This forms the basis of how I choose what airline (alliance) to fly, or what hotel (chains) to stay at. I’m fortunate enough to be able to use multiple alliances and chains as I spend hundreds of days on the road every year, and live in a location where my business prospects are limited.
Why are digital loyalty cards great? I’ll let you in on a secret: I hate fat wallets. I’m sure you do too. My wallet is a Mighty Wallet, given to me as a gift at Christmas 2011 from Sara. It holds my essentials: credit cards, ATM cards, ID, drivers license, and cash. It expands to hold receipts and contracts when I decide to process them. Its unlike any leather wallet I’ve ever used as it doesn’t crack, expand out-of-shape or require care. My only complaint is that it is a little faded; I guess it just brings out its character.
Where did all my physical loyalty cards go? My old business card carrying case. In there is my Founder’s Card. My hotel loyalty cards from Hyatt, Starwood, and InterContinental. My Regus card. Two travel insurance cards. My Haagen-Dazs ice cream discount card. My Coffee Bean & Starbucks stored value cards. And many, many more. You get the drift I’m sure. Where does my business card carrying case go? Into my backpack.
In Malaysia, when I last counted, there were four playing in the digital loyalty space. There are many more that have launched since that post, and it has only been about two months since then.
What has this caused? Fragmentation. There is no one digital wallet for my needs. Instead of filling up my business card wallet, I’m filling up my phone with loyalty card applications (which you can now group thanks to folders). They all essentially do the same thing: scan some QR code. These wonderful applications have taken the physical cruft problem into the digital world. To some extent, it is worse because everytime they push an update, I have to download megabytes worth of application to my phone. Some turn on default sharing to Facebook which annoy me to no end (but apparently, merchants love it).
Google may have a solution to this. They call it Wallet. But its far from ready to take over my physical wallet & NFC has been around since 2006 in many a trial. A more elegant solution to me that I’ve seen work and have many people embracing it (including Starwood, Hyatt, Valet, etc.) is Passbook. You can use the Pass Kit APIs in your application. Passbook is more than just loyalty cards: boarding passes, tickets, etc. can be stored there. And it is location aware.
The best part about Passbook? You can use the PKPass files, and it works on Android phones with an application like PassWallet. How far Apple allows this is a good question, but we’ll leave that thought to another day.
Last week, Nazrul pointed me to an article: How to get your business on Apple’s Passbook.
I then heard Joe Beninato of Tello on This Week in Startups #298 and it hit me. Not only do you keep loyalty cards (via Tello’s PassTools – events, boarding passes, coupons, store cards, etc.), you can also provide feedback. User generated content (UGC) with a reward so to speak. So thats Yelp + digital loyalty. Malaysia isn’t a market where customer service is winning – many people expect more, and it is generally crap. Guess the private feedback option makes sense ;) The analytics feature is pretty standard for digital loyalty platforms – if you don’t have one now, you’re as good as dead.
Can Tello work in Malaysia? Possibly the Klang Valley/Penang (just like all these digital loyalty card services). You really need higher end phones for this sort of thing to work. Singapore is decidedly the land of iOS, so it might do a lot better there. It isn’t clear if there will be Android support or not. Android is growing in leaps & bounds, so I’m inclined to think this platform is rather important.
Why is UGC important? This digital loyalty business hits on two fronts: you have to grow the business by getting merchants as well as users. It really is a chicken & egg situation, because users do not come if there are no merchants, and merchants do not embrace if there are no users. UGC not only encourages others to visit the place (see how Yelp, Qype, Tripadvisor work), the feedback mechanism allows owners to write back. Overall, value provided for both the business owner & the user.
That said, not a single Malaysian company that I know of has started using Passbook, with the exception of Malaysian Airlines (their services might not be up to par, but their technology is usually ahead). I’m in Singapore as I write this and I’ve not seen a Singaporean establishment use Passbook either. There has been mention that Jurong Point, a mall, has started using it, and the claim is that they’re the first in Singapore to do so. I’ve never been to Jurong Point, and I don’t expect many people that don’t live there visit it either, but it could be a great case study. I expect great movements in this space come 2013 (after all, iOS6 is just a few months old now, it will get more mainstream next year; also the iPhone 5 is not even sold officially in Malaysia yet).