FAST-TRACK SUCCESS IN

mPAYMENTS, LOYALTY &

OMNI-CHANNEL ENGAGEMENT
Using the Tools You Already Have

TABLE OF CONTENTS
Introduction ......................................................................................................................................... 3
Focus on the Data ................................................................................................................................ 4
Reality Check ....................................................................................................................................... 5
The Strategic Business Case ................................................................................................................. 6
Case Study: Starbucks .......................................................................................................................... 8
Action Plan .......................................................................................................................................... 9
Branded Currency: What Will Happen Next? ...................................................................................... 11
Summary and Next Steps ................................................................................................................... 12

FAST-TRACK SUCCESS IN mPAYMENTS, LOYALTY & OMNI-CHANNEL ENGAGEMENT

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INTRODUCTION: WHY mPAYMENTS?

Today, the discussion about mobile strategy isnt complete without a focus on payments. Not only has
consumer smartphone adoption finally tipped, using digital wallets for mobile payments in-store is a
natural extension of existing consumer behavior. Smartphone users already use their phones in-store to
redeem coupons, look up product information, and compare prices.
So Apple, Google and Samsung have installed mobile wallets into their smartphones, helping consumers
become more comfortable with mobile payments. Likewise, financial institutions, mobile carriers, app
developers, and others are unveiling new mobile payments offerings for consumers on a seemingly daily
basis.
The question for retailers is whether to just sit on the sidelines as the battles among these third
parties run their course and the winners emerge?
The answer depends on whether the retailer wants to maintain control of the customer experience,
customer relationship and importantly the customer data on which next-generation loyalty and
personalized omni-channel engagement programs will be based, or if they are comfortable relinquishing
these to third parties.
Mobile payments and loyalty may sound like a big hairy challenge, but in fact most retailers have the
building blocks already in place to get a solid solution deployed with minimal investment or risk.
So the good news for retailers focused on increasing consumer spend and engagement in the near term,
and building more enduring relationships in the long term, is that with relatively little effort and
investment, they can get in the mobile payments game and carve a place in their customer engagement
strategies now rather than having to wait for, or cede, that ground to third parties, or to wait until
competitors moves force them to take action and try to catch up from behind.
This whitepaper will explore:
How mobile payments are specifically revolutionizing retailers marketing toolkits by linking the
once divergent areas of coupons, gift cards and loyalty points into Branded Currency
The opportunities that exist for forward-thinking and early adopters of mobile payments
strategies
Key next steps to getting on the path to success

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FOCUS ON THE DATA: WHAT THE MARKETS TELLING US

Sixty percent of consumers who already make

mobile payments said they would probably do
so more often if they received instant coupons
from retailers, while some 36% said they would
hand over personal information in exchange for
such rewards. Source: American Banker

US mobile payments will reach $90B in 2017,

driven by proximity (in-store) mobile
payments. (Source: Forrester Research Mobile
Payments Forecast 2012-2017, US)

90B

BY 2017

IN MOBILE PAYMENTS

60%

38% of retailers say they believe mobile will

help drive sales in stores, and 82% say they
are making technology investments in mobile.
Source: The eTailing Group

In a survey of 4,000 smartphone users, 51%
said reward points stored on their phones
would spur mobile payment usage. 32% said
the ability to track receipts. 21% said
preferential treatment at retailers. 20% said
coupons. Source: Accenture

TS: 4,000
N
I
O
P
D
R
REWA

51%

SAY POINTS ON PHONE WILL

SPUR MOBILE USAGE

Usage of brand/retailer mobile apps is high
among eGift Card purchasers and recipients,
with over 50% of downloaders using apps
from brands or stores at least weekly. The
most common uses among brand/store app
users are coupons, discounts and sales.
Source: CashStar






Consumers were revealed to be 50 percent
more likely to say they would use a mobile
wallet provided they were given perks.
Source: ICM

Nearly half (46 percent and rising) of gift
card recipients are interested in storing gift
cards on a mobile device. Source: First Data

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REALITY CHECK: ITS TIME TO TRANSFORM

Smartphone users already use their phones in-store to redeem coupons, look up product information,
and compare prices. But its even more important to note that consumers are already using value-added
services on their phone.
Forrester Researchs 2013 North American Technographics Retail Survey revealed a 10% year-over-year
increase in consumers storing Gift Cards on their phone, an 11% increase in finding/redeeming coupons
or coupon codes and 7% increase in accessing loyalty and rewards. Expect these numbers to continue to
rise year-over-year as mPayments adoption accelerates.
To ensure success, retailers need to stay a step ahead of consumer behavior and continue to improve
the customer experience across all channels. An essential step in doing so will be to continue to add
value to existing programs via transforming legacy assets into strategic advantages.
Three key areas to begin with are:
Transforming your mobile app into a mobile wallet

Transforming your gift cards into mobile payment and loyalty cards

Abandoning a siloed approach to payments, offers, and loyalty in favor of a unified branded
currency and omni-channel engagement strategies

FAST-TRACK SUCCESS IN mPAYMENTS, LOYALTY & OMNI-CHANNEL ENGAGEMENT

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THE STRATEGIC BUSINESS CASE:

PUTTING TRANSFORMATION IN PERSPECTIVE
An Excerpt from The Harvard Business Review Blog Network

MOBILE IS DRIVING A BRANDED-CURRENCY

REVOLUTION
By Gene Cornfield, Vice President of Marketing, CashStar
and Mark Bonchek, Chief Catalyst, ORBIT
Coupons. Gift cards. Loyalty points. These tried-and-
true tools of the retail trade might not be as sexy as
other forms of marketing. But together they account
for more than $165 billion in purchasing power ($110
billion in gift cards purchased, $48 billion in loyalty
points earned, and more than $5 billion in product
coupons redeemed). That's almost as much as total
e-commerce sales.

MORE THAN

$165 BILLION
in purchasing power

These instruments share a common objective: to influence purchase decisions by equipping consumers
with incremental spending power for specific brands and retailers. But consumers use them
independently and individually (combining their value, when possible, takes a lot of manual effort), and
store them in different places often in drawers or folders where they lay forgotten and unused.

MOBILE
enables this purchasing
power to converge
What does this mean for retailers and brands?
The mistake would be to think that they can keep
doing what they have always done, but just add a
little digital to it. Instead, retailers need to think
about coupons, gift cards, and loyalty points not
only as three separate tools, but as different
forms of Branded Currency.

This is changing as coupons, gift cards, and loyalty

points all become digital and, more important,
mobile. Mobile enables all of this purchasing power
to converge in one place, and potentially be used
interchangeably and collectively, always within easy
reach for consumers.

Retailers need to think about

coupons, gift cards, and loyalty
points as different forms of
Branded Currency.

Economists define currency as a store of value and a medium of exchange. All of these instruments are
stores of value, and by going digital and mobile, they become far more effective mediums of exchange.

FAST-TRACK SUCCESS IN mPAYMENTS, LOYALTY & OMNI-CHANNEL ENGAGEMENT

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THE FIRST WAVE

The first wave of this convergence has made it easier for consumers to use their coupons or points for
payment. Card-linked offers enable consumers to load coupons to their credit cards or loyalty accounts
in advance of purchase. Valid offers are automatically applied as a credit when consumers' cards are
scanned at the point of sale. Consumers like it because they don't need to remember or present
individual coupons. Another approach is Shop-with-Points. As an example, Amazon enables consumers
to use their credit card loyalty points as a way to pay for purchases on the site. Shoppers can see their
balance and apply their points as easily as using a gift card or credit card.

THE SECOND WAVE

Where the first wave made possible convertibility, the second wave introduces much greater
convenience. Mobile wallets, like Apple's Passbook, bring coupons, gift cards, and loyalty cards together
in one place without the constraints of a physical wallet. This innovation is good, but it's a bit of a
horseless carriage, still tied to the mental model of a wallet. Consumers still need to manually figure out
which instruments can be combined and which cannot, prioritize them based on expirations, calculate
the math on their own, and then present them at point-of-sale one at a time.

THE THIRD WAVE

The third wave will be the mobile portfolio manager, the automobile to the mobile wallet's horseless
carriage, which marries the convertibility of the first wave with the convenience of the second. When
you treat coupons, cards, and points as convertible instruments, fully leverage the power of digital and
mobile technology, and add intelligence into the system, you get an entirely new possibility: calculating
and comparing purchasing power, converting currencies, prioritizing usage, and dynamically creating
scannable barcodes or other methods for combined payment. Soon consumers will be managing their
Branded Currency the way they use Mint to manage their bank, credit, investment, and other financial
accounts.
There is a lot of talk these days about brands as publishers. But the successive waves of Branded
Currency suggest that retailers will also need to think like bankers who mint their own currencies.
Market leaders will be those who best help consumers manage and spend Branded Currency from their
portfolios, offer the best exchange rates, create the most liquidity, and make the most efficient markets.

Retailers who adopt and execute smart Branded Currency

strategies will gain relative share of wallet and have deeper,
more enduring relationships with consumers.
Read the complete HBR post.

FAST-TRACK SUCCESS IN mPAYMENTS, LOYALTY & OMNI-CHANNEL ENGAGEMENT

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REAL WORLD CASE STUDY: STARBUCKS

In 2011, Starbucks launched Android and iPhone apps that enabled customers to mobilize and easily
reload their plastic cards or purchase new digital gift cards. Most Starbucks customers use the gift card
not as a present for others, but as an easy way to pay for purchases, redeem offers, and earn rewards. In
effect, they transformed their gift card into a mobile payment/loyalty card and their mobile app into a
wallet for their Branded Currency. Over 7 million people now use Starbucks' mobile app to make 4.5
million payments a week, accounting for at least 10% of Starbucks total U.S. revenue. Over 10 million
Starbucks eGifts, the digital version of a gift card, have been sent just since 2012.

4.5M

10%

mobile payments
per m onth

of U.S. revenue

The strength of Starbucks strategy is not in any single program or promotion. It is the way that the
entire Branded Currency system works together to provide an integrated and seamless experience for
the customer. They knit together a variety of technologies and platforms from Apple, American Express,
CashStar, Facebook, Square, and daily deal providers to promote and execute their deals, offers, and
payments across digital, mobile, and social channels. But most importantly, by having its own Branded
Currency system, Starbucks maintains control over the customer experience, relationships, and data.
And while Starbucks is somewhat unique in terms of their high-frequency and low-spend-per-visit, the
same tactics Starbucks has employed can be implemented by any retailer, albeit modified to their
unique frequency/spend-per-visit profile, as well as the profile of their target customers.

FAST-TRACK SUCCESS IN mPAYMENTS, LOYALTY & OMNI-CHANNEL ENGAGEMENT

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ACTION PLAN: START WITH WHAT YOU ALREADY HAVE

These building blocks include a digital gift cards program, a mobile app and loyalty program. And even if
you dont have these foundational items in place, its easy to set them up. Heres a four-step process for
getting started thats easier than you think.
1

Transform
If you already have a plastic and/or digital gift card program, the next step is to transform gift
cards into mobile reloadable payment cards. That transformation is possible by enabling your
mobile app to store and manage your brands plastic or digital gift cards.
Unlike plastic gift cards that often go forgotten and unused, mobile phones are always with
consumers. Mobilizing your gift cards, and thereby transforming your app into a mobile wallet,
will help accelerate redemption of unused balances, and drive the sales lift that comes from
purchases made above the value of the gift card.
Consumers benefit from the added convenience and enhanced features like being able to merge
multiple cards with unknown balances into a single mobile card that displays one, always-
current balance.
Better still for retailers, adding plastic gift cards to mobile wallets turns anonymous cardholders
into known individuals that retailers can message and market to, in order to reclaim millions of
dollars in unredeemed revenue, and as the basis to forge increasingly personalized, ongoing
relationships, when the remaining steps are followed

Integrate: Loyalty, Offers, Non-Mobile Marketing, Web Site, In-Store

First, make your loyalty program a core part of your mobile app experience. Having your mobile
payment card double as your loyalty card increases convenience for your customers and gives
them a reason to download, and to continuously use, your app. Further, if payments made with
the mobile card carry added benefits such as double or triple point values, accelerated reward
achievement, or other exclusive benefits you ensure that customers are incentivized to re-load
their card (which costs you less than any other form of payment) and to present it with every
purchase (which ensures you capture associated data).

Next, integrate your coupons and offers into your mobile app. Amplify and accelerate the
redemption-reload virtuous cycle by making certain offers available only if they are redeemed
and/or paid for using your in-app mobile payment-loyalty card.

Then promote such card-linked offers through your non-mobile marketing channels, and youll
drive downloads of your app, uptake of your mobile payment-loyalty cards, and enrollment in
your loyalty program.

Once your customers can see their Branded Currency holdings (card balance, loyalty earnings,
and coupons/offers) in one place as a single, aggregate value, now display that value to them

FAST-TRACK SUCCESS IN mPAYMENTS, LOYALTY & OMNI-CHANNEL ENGAGEMENT

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when theyre logged into your website, in your email or catalog communications to them, when
they walk into your store, or scan an items QR code in your store.
3

Engage, Learn, Exchange

Now that youve given your customers a great reason to download and use your app on an
ongoing basis, the next step is to keep them engaged so you can drive sales. Its time to take
advantage of mobile devices unique capabilities:

Use location-based or time-based mobile notifications to prompt customers to spend
their unused card balances in-store or online. Test adding limited-time purchase
incentives or other benefits to notifications to measure any increase to response rates
and sales. Also experiment with mobile flash sales that are exclusive to your mobile
app/card users as another way to both drive adoption of your app/card/loyalty
program, as well as increasing engagement and purchases among those customers.
Deliver other simple, engaging experiences unique to how consumers use/interact
with your brand. Integrating with social platforms, deliver on-brand tops, video,
gamification, and other valuable content/experiences that will compel customers to
share non-purchase-related data with you, so that you can get to know them better as
individuals.
Increase personalization based on data by delivering content, offers and rewards based
on everything you know about your customers purchases, preferences, likes, friends,
offers redeemed, location, etc.

Taking these first steps of deploying a mobile payments system and ultimately a unified and omni-
channel Branded Currency strategy will deliver an aggregate value that is much greater than the sum
of its parts.
Youll establish and enjoy deeper, stronger, mutually beneficial, and more enduring customer
relationships.

Increased
engagement
& spend

Personalized
marketing

Emotional
attachment

Impassioned
advocacy

FAST-TRACK SUCCESS IN mPAYMENTS, LOYALTY & OMNI-CHANNEL ENGAGEMENT

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BRANDED CURRENCY: WHAT WILL HAPPEN NEXT?

Many technology companies including Apple, Google, eBay and Square are hoping brands will rely on
their platforms to integrate and manage coupons, offers, gift cards, payments and rewards.

Apple has been quietly creating a platform for managing branded currency in the form of its Passbook
app and a newly filed patent. If brands aren't careful, they will be as beholden to Apple for digital and
mobile coupons, payments, and loyalty as record companies are for digital music, book publishers are to
Amazon for digital books, and social game publishers are to Facebook.

As the market for Branded Currency converges and grows, brands will fall into three categories.

1

Losers

Some brands will continue to operate their coupons, deals, offers, gift cards and loyalty programs the
way they always have, as separate standalone programs, and will adopt mobile technology
reluctantly. These brands will steadily lose their competitive edge and share of consumer spending.
2

Laggards

Some brands will play catch up, adopting best practices after they are widely accepted, and rely on the
platforms developed by technology and financial services companies. They will stay in the game, but
will be in the middle of the pack, unable to control the customer experience, lacking full access to
their data, and losing margin to the platform provider.
3

Leaders

A few brands will set the pace by creating an integrated approach to using Branded Currency as a
vehicle for customer engagement. They will aggregate deals, offers, payments, and loyalty; unify
online and offline; and put mobile at the center. They will work with other third-party platforms and
wallets, but not be beholden to them. As a result, they will use their data to create value for their
customers and bring a unique brand experience to every touchpoint. They will enjoy increased
frequency and spend, forge stickier relationships, and greater and more sustainable profitability.

Will you be a loser, laggard, or leader? History, current trends, and the billions of dollars at stake would
suggest it's time to start building your Branded Currency strategy and system now.

FAST-TRACK SUCCESS IN mPAYMENTS, LOYALTY & OMNI-CHANNEL ENGAGEMENT

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SUMMARY & NEXT STEPS

Mobile payments and their role in omni-channel engagement, sales, and loyalty strategies represent a
largely untapped but huge opportunity.
For retailers looking to fast-track success and deliver a unified omni-channel customer experience using
the resources youve already invested in, turning your gift card platform into a mobile, reloadable
customer engagement and loyalty tool is a smart and easy strategic move whose near- and long-term
benefits easily warrant the minimal investment.

KEY TAKEAWAYS

Transform your existing app into a mobile wallet for storing, organizing & paying with your
brands gift cards
Convert your gift cards into mobile payment cards that are reloadable & integrated with your
loyalty program
Integrate variety of mobile & social marketing into your existing apps for personalized customer
engagement in-store, online, and on-the-go

To learn more about CashStars offerings,

please contact us:
marketingteam@cashstar.com
www.cashstar.com

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