We are now fast moving into an era where physical objects can be used to drive marketing, payments and loyalty using digital technologies. Apple’s recent announcement regarding the launch of Apple Pay in the UK this July is an exciting and long awaited step in the evolution of mobile contactless payments becoming mainstream. But this news is also an exciting move forward that affects the loyalty market and the future ability for brands to use digital technologies to understand valuable consumer insight.
The main driver to all of these opportunities is ‘proximity’ technologies that ease the interaction between a mobile device and the physical things around us… all of this physical world interactivity can be monetised through new data sets and ability to create highly contextual calls-to-action that can drive consumer behaviour and ultimately sales.
There are two key technologies that are enabling this merger between the digital and physical worlds. NFC engages customers and facilitates transactions by the process of ‘tapping’ things; and ‘beacons’ which use low energy Bluetooth to ‘push’ information and content into apps when a consumer is nearby.
Until recently, Apple has historically been a major blocker of these technologies as it was the last major phone manufacturer to include NFC in its devices. Because of Apple’s historical prowess in affecting market adoption, the recent news about Apple Pay (which uses NFC technology) means that consumer adoption of mobile payments is suddenly going to start moving very rapidly once the payment service launches in July.
The UK is the perfect market for Apple to launch Apple Pay. It is based on the same Mastercard and Visa technology used for contactless cards and will allow participating banks to issue a payment card directly in to the Apple Pay mobile wallet. The wallet is fully compatible with all of the existing contactless payment terminals, including TfL’s ‘oyster reader’, and therefore because many UK consumers are already very comfortable with making contactless transactions, the smartphone is now the logical next step.
For brands, the application of NFC technology will go well beyond just the adoption of mobile payments and presents opportunities to close the loop between offers and redemption to enhance consumer loyalty initiatives. This has already been shown with a lot of the recent work from Proxama, GSMA, Softcard and Google Wallet.
There is a natural synergy between mobile proximity commerce and the opportunity to authentically engage customers in the physical world, through marketing offers and loyalty programs is likely to open-up new windows into consumer behaviour that can be used as knowledge to build better products and services for customers. Whether it’s via NFC/ QR enabled posters at a bus stop, or redeeming a loyalty card at point of sales, these proximity interaction points are highly valuable data events that can be used to help monitor footfall, target offers and create instant purchase opportunities.
However, the reality is that for those looking to gain such invaluable insight, there are still a few more steps to go before that loop is properly closed. Whilst it is feasible for Apple’s NFC technology to layer value-added services around the transaction confirmation display on the phone, they are currently not supporting this function.
There will also be complexities inherent in tracking card numbers through ‘Tokenisation’ technology used at Point-of-Sale which will ensure that transaction data will be harder to analyse. This is obstacle is great for fraud prevention, but will unfortunately will limit the ability to uncover insight in to consumer purchasing habits and behaviours.
Nevertheless, Apple’s plan to rename ‘Passbook’ to ‘Wallet’, shows that by iOS9 the capability of supporting loyalty and coupons on their handset will eventually be a reality that links value added services and redemption. The launch of iOS9 will not only sit at the heart of providing in-depth invaluable insight from consumer behaviours, but will also deliver a further massive boost in consumer adoption and will embed the process of mobile ‘tapping’ into consumer shopping behaviour.
Whilst the market and consumers are getting to grips with having more mobile payment opportunities, beacons and NFC marketing initiatives already present a fully joined up proposition for brands that are aiming to start the process of closing these links between the physical and digital world customer experiences.
The technology presents a fantastic opportunity to deliver fully contextualised marketing for retailers or brands, showing relevant realtime insight that can be used to engage customers. But brands need to get it right as your customer needs to be treated carefully if you want them to make ‘tapping’ a habit that they are comfortable with. Yes, this insight can determine your store layout, influence purchasing decisions and deliver offers (as close as five metres up to 50 metres) that can influence footfall from outside your store. But whether you are Apple or a smaller independent business the rule is the same, interactions with customers need to be carefully considered and tailored to the user.
The great thing about using these technologies is that customers can set their own preferences through their app settings to control the level of your contact with them. Our advice is to start engaging them with the technology through simple marketing and advertising initiatives. When you prove you can be trusted to provide authentic and useful content, you will naturally lead them to open up their personal smartphone channel further and – crucially for Apple Pay adoption – trust you to lead them through their mobile payment.