Not that long ago, loyalty programs involved gaining a reward by collecting stamps to fill a booklet or getting a card punched. Most digital rewards programs today still offer some sort of points-based system tied to consumer behavior, such as the classic buy nine, get the tenth free offer.

But loyalty is so much more than that, and the uses of a loyalty program are expanding. “The utilization of a loyalty app in the convenience store industry is in its infancy,” said Erik Ogren, president of Patron Points. “Apps allow retailers big and small so much opportunity to connect with their customers through the power of direct consumer communication.”

“Apps today have a more customer-first mindset than they did in the past,” said Nick Hand, loyalty and brand manager for Parker’s Kitchen, a 76-store chain based in Savannah, Georgia. “Rather than forcing behaviors upon the user, apps are now adapting to how users engage with the platforms.”

App Alterations

As with most technology, loyalty apps have evolved, and they continue to change to meet fluctuating customer needs. Technological advances also have pushed apps into new territory. “The most successful loyalty apps offer easily updated, relevant and personalized messaging as well as curated information and experiences designed to match guest preferences. Features like real-time fuel pump activation, pay-ahead functionality and incentivized engagement are some of the elements we’re seeing become more important for today’s customer,” said Hand.

Another way loyalty apps have transformed rewards programs has been how “apps give retailers the ability to communicate with consumers in a way we’ve never been able to do before,” Ogren said. “As recently as five years ago, our industry still had the idea that as long as you built your store on a corner with easy access, this was enough to have people shop our stores. … We can no longer wait for them to come to us—we must reach out to them directly on a personal level and invite them in a meaningful way to visit our stores.”

Apps today have a more customer-first mindset.”

Jack Kiser, chief customer officer with Stuzo, pointed to the ability customers have to enroll in a program via a mobile phone number, with the company then able to engage via SMS without needing an app at all, as a significant advancement in loyalty programs. “Another major change has been the varying degrees of personalization, from broadly personalized—based on general conditions, like location or weather—to hyper-personalized based on specific member data,” Kiser said. “Plus, now you can use digital payments to pay for gas at the pump and merchandise inside, as well as order ahead for pickup or delivery.”

At Parker’s Kitchen, Hand pays close attention to new integrations and next-generation technology by working with industry leaders in loyalty and tech development. “We want to make sure we’re providing the best and most valuable loyalty app experience possible to our customers,” Hand said. “As a company, we have always been extremely focused on using technology to enhance, support and optimize the overall customer experience. The Parker’s Rewards app serves as an important extension of our ongoing commitment to customers and reflects our overall desire to anticipate and exceed the changing needs of our customers over time.”

Breaking Down Data

While loyalty cards do provide retailers with information about customer habits, it’s generally not as robust as the data from apps. “Data analytics from apps allows us to specifically answer the age-old questions of who, what, where and when,” Ogren said.

For instance, app data can give retailers details on who used which coupons and what supplemental products were purchased at the same time, plus at what time and date and at which location the transaction happened. “Retailers can now offer specific deals, coupons and promotions to very specific consumer groups directly,” Ogren said. Using the example of a digital coupon of $2 off a personal-size pizza for a certain week, after the promotion, the retailer could learn the following information:

• Which customers used the coupon

• What day was the biggest redemption day of the promotion (for example: Thursday)

• What were the top ancillary items purchased with the pizza (for example: bag of chips, 20-ounce packaged diet soda)

• Which location logged the most redemptions (for example: store No. 3)

The ultimate goal is to create a frictionless experience.”

“This information gives the retailer the ability to build additional promotions because they know how the customer engaged in the pizza coupon promo,” he said. “Now this retailer can send more value-driven promos to the subset of their customers who participated in the promo.”

App data also allows retailers to take customization a step further. “The vast majority of loyalty programs nowadays broadly personalize based on segments of members with lookalike behavior,” Kiser pointed out. “The more sophisticated and successful programs are hyper-personalizing the member experience with offers, calls to action and digital experiences that are highly relevant on an individual level based on the products, store locations and personal preferences that matter to each member.”

For example, if Retailer A knows that a particular member buys 50% of their fuel from them and 50% from Retailer B, Retailer A can offer that member an increased incentive to purchase the additional fuel from them, rather than Retailer B. “This is highly effective at steering incremental fuel wallet share and is also hyper-relevant to the member, leading to a better member experience and more positive sentiment,” Kiser said.

Personalization is valued by loyalty members when it relates to rewards and discounts, but retailers should be careful because asking loyalty members for too much information could be considered intrusive, according to a loyalty report from NACS.

Parker’s Kitchen studies app data on a regular basis to improve the experience of its customers. “We strategically curate our loyalty app content based on customer preferences, opt-ins and behaviors, which helps reduce noisy marketing clutter while making sure that actionable items are relevant and customized for that user,” Hand said. “We can also analyze usage statistics to determine fall-off points in desired customer journeys, which allows us to optimize guest value experiences through our loyalty app.”

Unlike loyalty cards alone, apps give consumers the ability to pre-shop the store before walking inside, such as ordering foodservice items for pickup. Consumers also can load digital coupons in their digital wallet for easy retrieval during checkout. “This allows the consumer to remember what they want to buy at the store as well as speeding up checkout time,” Ogren said. “Apps have allowed consumers to truly experience the meaning of convenience in c-stores, which entices them to want to shop specific stores even more.”

What’s Next

For loyalty apps, data analytics will continue to grow in importance. “For a retailer to digest the tremendous amount of user data that is available in the app’s back end—and to be able to utilize that data in a very laser-focused manner to reach the consumer on an intimate level—is the next level for loyalty apps we’re just now starting to realize,” Ogren said. “This data will allow retailers to better understand how consumers are utilizing specific apps, and in turn to deliver value-driven promotions and product offerings that are unique to specific consumers.”

Parker’s Kitchen sees loyalty apps as an important piece of the overall customer experience. “The ultimate goal is to create a frictionless experience that allows the customer to take advantage of everything the brick-and-mortar store has to offer from the convenience of the phone in the palm of their hand,” said Heather Davis, senior director of marketing and food service for Parker’s Kitchen.

Kiser pointed out the scaling up of what’s already happening now—the movement of programs beyond the app to SMS or mobile web. “This approach enables retailers to expand their total addressable member opportunity and increase loyalty penetration at rates much higher relative to limiting a program to a native mobile app,” he said. “Add to that what we see as the next big evolution of hyper-personalization, where retailers will be able to deliver true one-to-one personalized offers on a member-by-member basis and at the member level on a product-by-product basis.”

“If convenience companies want to continue to stay top of mind for customers and encourage them to use their loyalty apps, they’ll need to integrate the functionality and ease that users already expect from apps from other industries, from airlines to rideshare companies,” said Davis. “Apps will continue to evolve in 2024 and beyond, offering contactless payments that are strategically integrated with all providers, pay-ahead features, streamlined online ordering and easy redemption of rewards for instant value.”