By Richard Witkowski, Chief Executive Officer of Pin4
For retail business owners, there is nothing more rewarding than a loyal customer. Customer loyalty programs are credited for everything from strengthening brand awareness and consumer loyalty to directly driving 55-70 percent of overall sales, according to Customer Insight Group.
Today, more than ever, customers love to be loyal – whether it’s accumulating stamps for a free coffee at the neighborhood coffee shop, amassing points or dollars on stored-value cards, or cashing in rebate checks from a favorite department store. Loyalty 360 recently reported that 83 percent of consumers participate in at least one loyalty program and 13 percent participate in more than five. These are just a few key indicators that loyalty programs are becoming an increasingly important component of the consumer/retailer dynamic. In fact, according to Bond’s 2014 Loyalty Report, 68 percent of Millennials wouldn’t show allegiance to a given brand without a strong loyalty program to incentivize them.
However, while traditional loyalty and promotional programs like gift cards or rebate checks can be effective for many big retailers, for small and mid-size retailers the costs and other burdens of managing card programs and carrying uncashed rebate checks on their balance sheet has kept these programs well out of reach. When considering gift card promotional programs alone, retailers pay between two and five dollars per card for production and shipping, but an estimated 10 to 40 percent go unredeemed for life.
Enter mobile, cardless, ATM cash rewards. Driven by the convergence of new cardless technologies, heightened consumer expectation for mobile promotions and proven success in cash incentives in the U.S. and abroad, new opportunities are emerging for companies of all sizes to tap into the benefits of loyalty and promotional programs in ways never before possible – with little-to-no cost of entry. While mobile cardless cash withdrawals are a new idea in the U.S., they have seen great success throughout Europe and other regions where they have been used to fulfill millions of transactions.
What is a mobile, cardless ATM cash reward?
Mobile, cardless ATM cash rewards are a new and innovative method for rewarding customers with immediate access to cash-in-hand without the need of an ATM card or bank account. Recently available in the U.S., sending cash rewards to loyal customers through this channel is simple, seamless and effective. With Pin4, a text is sent to the customer’s phone revealing a secure pin that they enter along with a code the retailer provides. Within seconds, the customer is able to redeem their cash reward at an enabled ATM. For example, if a local pharmacy were to fill a prescription which offers a rebate from the pharmaceutical company, rather than waiting to receive and cash a rebate check, the customer would receive a text to their phone letting them know the rebate was ready to be picked up at a participating ATM. The customer would cash out their rebate at their convenience, and the pharmaceutical company would receive notice that the promotion was fulfilled.
So, why are cardless cash withdrawals poised to become the new promotional currency?
Here are five key reasons…
1. Smartphones at the Register
With large technology providers like Apple, Google, Samsung and others throwing their hat into the mobile payments ring, not to mention high-visibility IPOs by payment providers like PayPal and Square, it’s evident that consumers and businesses of all sizes are becoming increasingly more comfortable with smartphones being used at the register. In fact, the most recent data by the U.S. Federal Reserve in 2014 reports that nearly three-quarters of the U.S. adult population owns an internet-enabled smartphone, and of those, 40 percent have made a point-of-sale payment using their mobile phone. This growing ubiquity is opening the playing field for mobile loyalty and promotions programs in ways that far exceed a simple mobile wallet payment.
2. The Lose-Lose of Old-School Loyalty Programs
While traditional points, stored-value cards and rebate programs can be cumbersome for many retailers, they can also be equally ineffective for customers. According to CMB Consumer Pulse, while people report that they love loyalty points, 54 percent admit having forgotten their rewards/loyalty cards or coupons in the last six months. Further, 64 percent of people surveyed by Collinson Latitude reported that rewards programs are overcomplicated, and 63 percent believe they are hard to use.
Businesses and consumers are primed and ready for a more simple, clean and effective loyalty and promotions program.
3. Consumers Want Mobile Promotions
As consumer expectations continue to build in support of transactions via mobile devices, Forrester recently reported that 44 percent of respondents from a consumer survey said they want to see coupons, discounts and special offers in mobile wallets, while 64 percent of retailers claimed customer loyalty programs that operate via mobile phones are the most effective.
4. Consumers Want Cash
Cash rewards are not a new concept. Not only have credit card companies been using cash-back rewards for decades, but as recently as this past December, banks including Chase, Capital One and Bank of America have been rewarding consumers for opening new accounts with cold, hard cash. So it’s not surprising that according to a recent survey by Bond, 71 percent of loyalty program members regard cash-back as an important benefit, and 51 percent of consumers stated they view monetary rewards as important in a loyalty program according to a recent Mintel survey.
Not only do consumers like to get cash, research has shown that cash incentives can alter behavior, as evidenced by recent cash incentive programs within the healthcare and wellness fields. Various wellness programs have been in place in the workplace the past few years, rewarding employees with cash for positive behavior such as quitting smoking. CVS Health recently launched a campaign dubbed "700 Good Reasons," where all employees who smoke can deposit $50.00. Once they test negative for tobacco a year later, they will receive $700.00 in addition to their original deposit.
When it becomes second nature for consumers to immediately cash-in incentives at an ATM, imagine how easy it will be for retailers and brands to strengthen their loyalty promotions by providing opportunities to earn immediate cash.
5. More Touch Points through Data
Through mobile, cardless ATM withdrawals, a customer taps into an ATM to redeem their reward, at which point the payment is authorized and the retailer is alerted. However, the data capture starts well before the cash payment. It begins when a customer first receives a text, and can offer additional direct touch points with consumers in ways that personalize and strengthen relationships. For example, retailers are able to track customer behavior to determine if and when a withdrawal took place through daily reports or logging into the provider’s platform. The follow-through enables a direct line of communication to consumers thanking them for completing their redemption, or reminding them that the redemption is still available for pickup. Further, it provides greater visibility into responsiveness of the promotions program, and an ability to tailor promotions in a way that is effective for each customer.
As next-generation technologies push the boundaries of the retail experience, a smart, mobile promotions program is no longer a nice-to-have, but a need-to-have. Mobile, cashless ATM loyalty programs bring businesses diminished overhead, greater customer engagement and real-time visibility into the effectiveness of promotions while simultaneously offering instant gratification of cash for consumers, it’s a veritable win-win.
Richard Witkowski is Chief Executive Officer of Pin4, the first independent cardless cash network in the U.S. providing real-time delivery of cash to consumers at enabled ATMs without the need for a debit/credit card or bank account.