Loyalty programs and data reporting have long been a part of reselling POS systems. And selling them has never caused solution providers to stray that far from their central skill set in integrating systems and helping customers learn to use them.
But that was then. The loyalty programs now within reach of SMBs are far more sophisticated than they were in the past, and they’re underpinned by deeper, real-time customer relationship management analytics. Offering these more evolved capabilities could require solution providers to move far outside their POS integration comfort zones into the worlds of marketing and data analytics. But not all are prepared to make the leap.
For some solution providers with engineering backgrounds, marketing their own businesses has been challenging enough. Many VARs feel uncomfortable straying past installation of basic loyalty and marketing programs to actually teach and advise customers on how to make the most of today’s more sophisticated tools.
But many experts advocate doing exactly that, and here’s why: Competition. Mobile POS is drawing many new upstarts into POS, including ISOs. Third-party business intelligence and loyalty companies—including mobile loyalty and wallet providers—are also targeting SMBs, putting them one step away from the POS system itself. POS solution providers will need to add more value to their SMB relationships or risk losing them.
SMBs also understand and want to buy services that will help them find and keep new customers—one of their biggest challenges. Often they want more capability than they can get from the loyalty modules that came with their legacy POS systems.
“Loyalty is good for everyone,” says Russell Harty, SVP, partner and key accounts for Merchant Warehouse (merchantwarehouse.com). “Merchants attract new and keep existing customers, consumers get products for a lower price and the vendor sells a system.”
And while they’ve grown more sophisticated, high quality loyalty programs have also found ways to shield users from the complexity with simple charts and dashboards. Basic users can rely on those, while others can dive under the covers to analyze customer data at a deeper level. These tools are often tied right into marketing automation functionality. Once they identify customers they want to target, they can select terms of an offer via templates and put it into action with a single click.
The most important factor favoring the role of POS solution providers in loyalty, customer analytics and marketing is that those activities are all fueled by POS data, and that’s something very familiar.
Loyalty programs—even better thought of as rewards programs—“are extremely important as we need the VAR channel to incorporate more recurring revenue streams into their product mix,” says Joe Finizio, executive director of industry strategy and relations for RSPA (gorspa.org). Not only does POS hold the “secret sauce” to marketing, but turning one into the other carries mystery, and therefore opportunity, he says.
Like many other application areas, loyalty is being transformed by mobile and cloud.
Mobile is making it far easier to connect to customers. Pew Research says more than half of Americans own a smartphone. Often people carry them everywhere they go, making them an ideal platform for brands to find and communicate with customers. Many major brands use apps, social media, SMS messaging and e-mail to nurture their customer relationships on mobile devices. SMBs want to do the same.
Cloud is an enabler by creating an easy platform for the customer, the SMB and the solution provider to interact with the loyalty application. Cloud also makes it easy to use as-a-service business models. Portals, dashboards and tool sets allow SMBs to manage their programs from anywhere.
When a customer file resides in the cloud, it’s easier to ensure that all transactions, on the web, at the POS, on mobile platforms, and so on, all flow into a single place. “You get a 360-degree view of the customer to analyze and leverage that data,” says Craig West, VP channel sales for NetSuite (netsuite.com), which offers entire SMB business platforms in the cloud. “Analytics are inherently available and ready in real time.”
Improvements in the front end of analytics tolls are making it more intuitive for SMBs to use them without extensive training. “There are more tools for development, for example, making them more dynamic, with prettier graphs,” says David Gosman, CEO of pcAmerica (pcAmerica.com). But as a developer, “you still have to figure out what data to pull, and you’ve got to make it fast. Users don’t realize that with more data, it takes longer.”
Following the Loyalty Path
Some third-party loyalty programs are using the channel to reach SMBs. Maturity of their channel programs is all over the map. So the strength of the channel program is an important criteria for selecting programs to offer. Many now offer a recurring revenue stream.
The best way to frame a search is to start with current clients.
“Most retailers are looking for turnkey, cloud-based, hosted and subscription-based,” says Bob Leonard, CEO and managing partner of iMobile3 (imobile3.com). iMobile3 serves as the enabling platform for many wallet solutions.
Other considerations include:
Client goals: Do they want to attract new customers? Boost average tickets? Increase visit frequency?
Fit for client’s businesses: Hair salons will track and market differently than pizza restaurants. Some programs also have a strong geographic presence where they launched, such as LevelUp (thelevelup.com) in the Boston area.
Marketing and analytics skills: Does it require marketing talent, and do clients or the solution provider have those in house?
Interface: Is it easy to use and understand? Does the end customer portal encourage customers to share additional information for a reward?
Measurement: How can the SMB measure the results of campaigns and apply that learning? Does it suggest ROI potential for a campaign?
Desired sophistication: Travis Priest, VP of value added services at Mercury Payment Systems (mercurypay.com), breaks loyalty programs into five levels: 1) Punch cards; 2) Loyalty cards; 3) Loyalty marketing/CRM; 4) Marketing automation; 5) Predictive analytics. As programs grow more sophisticated, they collect more data and do more with it. At the higher levels, merchants gain more insights into individual customers and can market accordingly. Most SMBs are active in the first three, he says. It’s not just lack of sophistication; often they don’t have the volume of data to make effective use of the most powerful tools.
Reporting: Are the predefined reports and charts easy to understand and actionable? How easy is it to customize and run A/B testing? How easily can data be extracted? Deeper analytics sometimes require porting data to a tool such as C2It (c2itconsulting.net).
Loyalty marketing: How appealing and easy to use are predefined campaigns? This is important—the majority of iMobile3’s customers use predefined tools, says Leonard. Also make sure there are tools to manage the campaign after it’s launched, and mechanisms to automatically deliver rewards.
Payment types: Loyalty and payment are more tightly linked than ever. It’s important that a solution work with all payment types, including emerging needs such as EMV and NFC and the ability to use QR codes. Solution providers should also be looking at wallets. “I think wallets are here to stay, and solution providers should be evaluating them,” says Merchant Warehouse’s Harty. “Be proactive and explore loyalty options online and in the area where your customers are.” Understand how a proposed solution works with wallets.
Training: What training is available for the solution provider and end user?
Ownership: With so many loyalty services aimed at SMBs aggregating data and then selling it back to the SMB, “it’s important for the merchant to ensure that customer data stays with them,” advises Justin Hotard, general manager of NCR Silver (ncrsilver.com), the company’s subscription-based iPad app.
The open platforms used by many of today’s loyalty and payment programs mean solution providers can choose best-of-breed programs for their customers and integrate them with existing POS and backend systems. That step is key to associate purchases with customers for one-to-one marketing and rewards. “Integration is where you get the most value,” says NCR Silver’s Hotard.
The ease of integration varies by application and is worth investigating.
Eran Harel is VP business development at AppCard (appcard.com), a third-party loyalty solution that associates every shopper with a transaction without requiring integration with the POS. He says solution providers should make sure loyalty apps also integrate with SMB’s ecommerce sites, and they should make sure their current POS contracts and warranty terms allow them to work with third-party loyalty and customer analytics tools.
Adding Marketing to the Portfolio
Some solution providers are embracing the opportunity to extend their services into the marketing arena. They’re aligning with marketing agencies or developing or adding marketing and customer analytics talent to staff, so they can offer consultative services in marketing.
Solution providers that added loyalty consulting services include Retail Information Systems (retailinfosys.com) and ISC Granbury Restaurant Solutions (granburyrs.com). Alexandra Frith, director of marketing for Retail Pro International (retailpro.com) says their company is seeing business partners hiring, or even more often, cross-training, marketing talent to deliver this type of service. “There is definitely a trend for greater consultancy in the channel,” she says. SMBs with loyalty programs have less loss, and that’s good for the SMB and their solution provider, she notes.
Granbury’s director of strategic products, Duessa Holscher, admits that when you open the doors to begin supporting SMB’s marketing efforts, it’s easy for their needs to grow well past the scope of using the loyalty application. “It’s a balancing act. We developed best practices and templates to give the restaurant owner guidance; it’s customized, but not from scratch.” For those who want more help, Granbury offers additional marketing consulting packages the SMB can purchase.
Developing marketing and analytics consulting expertise within the business not only adds value to customers—properly scaled, it’s also a service that can be resold to other VARs, says pcAmerica’s Gosman. Analytics expertise can also be applied to other areas, such as inventory.
Adding marketing skills to a solution provider business not only provides margin and recurring revenue; it also facilitates other technologies that cross that divide, such as digital signage, notes RSPA’s Finizio.
For those reticent to take that step, some of the third-party loyalty companies, such as iMobile3, AppCard, Mercury Payment and NCR Silver, provide marketing consultative service and support to their channel partners’ merchants.
Adding Value through Loyalty
While loyalty, marketing, analytics and POS integration would seem to be of different worlds, they are rapidly converging. Many visionaries see the ability to deliver expert consulting on these as a key differentiator in the increasingly crowded POS category.
“I think loyalty is a ripe, untapped market, and it provides a residual revenue stream for VARs,” says Mercury Payment’s Priest.