Market research firm Technavio forecasts steady growth of the global mobile wallet market within the next 4 years, reaching a compound annual growth rate (CAGR) of over 35% by 2021. It identifies the increased use of m-commerce as a key factor behind the market growth. More specifically, m-commerce firms will actively be using mobile wallets, which will boost the market.
Technavio estimates that the Asia-Pacific region will generate the most revenue from mobile wallets by 2021. The region will take the lead because of the interplay of 2 factors: (1) the increasing penetration of smartphones and mobile internet in developed countries (regions) such as Australia, Hong Kong and Singapore; and (2) the fast-paced adoption of mobile wallet technology in developing countries such as India and China.
According to a survey conducted by Urban Airship, a mobile engagement platform provider, 74% of consumers positively perceive brands which offer loyalty benefits. This perception prevails among 83% of millennials and 80% of consumers whose annual household income is above $60,000. 69% of consumers are more likely to use loyalty cards if they have them in their mobile wallets. Loyalty programme participation increases even further across a few consumer groups: 82% of millennials, 73% of Generation X and 78% of households with an annual income of $60,000+ are more likely to use loyalty cards on their smartphones. These figures send a clear message that marketers should focus more on fostering brand loyalty through mobile wallets.
Tami Cohorst, COO of Abtek, a provider of financial services, presents some benefits of mobile loyalty programmes for businesses. Firstly, they can increase sales. Research has shown that customers who participate in a mobile loyalty programme tend to buy more. For example, Kohl’s loyalty customers tend to take on average 2 extra trips to the store and spend $80 more than non-loyalty customers within a year. Secondly, firms can use mobile loyalty programmes to differentiate themselves in the market by carefully analyzing their competitors’ loyalty programmes and addressing their drawbacks. Thirdly, mobile loyalty programmes reduce operational costs as they do not require as much management as paper-based loyalty programmes. Finally, mobile loyalty programmes help improve customer service. They facilitate communication with customers during checkout as well as reward loyal customers, which makes them feel appreciated.
Market research firm Forrester Research projects that the mobile wallet will become a marketing platform within the next few years. In its opinion, now is the time to start testing mobile marketing campaigns to realize their full potential. “I’d recommend brands start mobilizing their offerings and think of how they can leverage mobile in the customer journey,” says Forrester’s VP and Senior Analyst Thomas Husson.
Marketers should think of the mobile wallet not only as a payment option but also as a customer engagement tool. It can help overcome the challenge of reaching customers through their mobile devices: most of them are unwilling to download brands’ apps, observes Forrester’s Senior Analyst Xiaofeng Wang. She believes that marketers need to establish a ‘borrowed brand presence’ on mobile devices: they should reach their customers through mobile wallets and other apps that they use every day.
Barry Levine, a martech reporter at Marketing Land, claims that the mobile wallet can be turned into a marketing platform by taking advantage of the fact that mobile wallet cards provide “an open-ended publishing stream into a user’s phone”. They are lightweight in file size so users do not need to clean out their wallets to free some space on their phones. Urban Airship estimates that only 10 to 20% of wallet passes are deleted from the memory card, even if the promotions have already expired. Levine considers that as an advantage over mobile apps: “The mobile wallet offers a stream of refreshable brand-specific content that doesn’t require you to go to an app store, download an app and keep the app until you need the space.”
Marketers can also make use of the mobile wallet’s ability to determine its location using GPS coordinates or beacons. According to Urban Airship, 63% of consumers are more inclined to visit a nearby store if they receive a location-aware notification in their mobile wallets. This feature turns them into “a direct marketing channel optimized for brick and mortar experiences” as it brings together the payment option, rewards and discounts, says Sonal Patel, Senior Product Manager at Vibes, a mobile engagement platform provider.
Marketers can also extract more value from transaction data. If data of each transaction are moved to mobile customer profiles and made available to other retailers, it will be easier to reach customers with follow-up marketing content. That in turn will boost the entire marketing ecosystem within the next few years, Patel predicts. For example, if you regularly buy coffee from a coffee shop located inside a bookstore, your mobile discount card for coffee might automatically add discounts for books available in that bookstore.
References: technavio.com | Urban Airship, The State of Mobile Wallet Marketing | Tami Cohorst, Entrepreneur | Alex Samuely, Retail Dive | Xiaofeng Wang, Forbes | Thomas Husson, Ad Age | Barry Levine, MarTech