Why One-Click Authentication Can Help Unlock Customer Loyalty Programs

I recently chose to spend $150 more to take a flight that had a connection, rather than a cheaper, non-stop flight. Because of a loyalty program. Sort of. And I’d probably do it again. Unless…

Let me explain. 

To escape the winter cold of our home in Cleveland, we decided to take a family trip to Arizona. When booking the flight, the best airfare and most direct flight available was via an airline I don’t use often. I started the purchase process — but when I was prompted to log in with my username and password, I couldn’t remember my account info. I know I’d flown this airline before and probably signed up for its frequent flier or loyalty program. But contemplating the process of doing a password reset, and trying to find my membership number — or, worse, creating a new account, and trying to link it to my TSA pre-check account — was too much. 

I abandoned. Friction defeated me.

Then I booked a more expensive flight — with a connection through Chicago — on an airline that I use frequently. Because I’d used this airline more recently, I knew my login and had my loyalty membership info saved in my online profile. It took just moments to confirm it all. 

Customer loyalty programs (mostly) work

Customer loyalty programs are big business. For many brands, they are a staple — helping them to cement a long-term relationship with their most valuable customers and providing a consistent source of revenue. 

DSW is an extreme example. Its parent company, Designer Brands, Inc., reported that in its fiscal year 2022, it had 32.1 million members of its customer VIP program, accounting for a whopping 89% of its revenue. 

Here are three more incredible statistics about customer loyalty programs: 

• Starbucks Rewards has more than 29 million active members and, in 2019, the coffee giant reported that the program accounted for 40% of sales in the U.S. 
• Loyalty programs, according to a McKinsey report, can boost revenue from customers who redeem points by 15 to 25 percent annually, by “increasing either their purchase frequency or basket size or both.”
• In a survey, 79% of consumers agreed that loyalty programs ”make me more likely to continue doing business with Brands.”

Of course, there are thousands more stats and countless case studies you can find online that show the positive impact of loyalty programs. Loyalty programs seem like an almost sure-fire way for any e-tailer or brand to boost revenue. A magic bullet. A no-brainer. Almost.

Loyalty is limited by memory

“All loyalty programs have members who don’t redeem points or don’t even know they exist, and as a result, their points eventually expire.” — McKinsey report

Back at work here at OwnID, I’ve been reflecting on that flight booking experience. 

My choice of purchasing the more expensive and less convenient flight had little to do with any brand preference. Though I chose one airline’s loyalty program over another, that decision came down to purchase convenience. 

I chose the airline with the account info I remembered. The one I used most recently. In retrospect, it was a revelation that I chose purchase convenience over travel convenience. (I may owe my family an apology for adding time and hassle to their travel experience.)

But the bigger revelation is that loyalty programs, today, may be driven by frequency — by people who, like me, have account info committed to memory. Or we at least know where we saved that info.  

As my colleague Ben Jackson recently wrote about the customer journey, “we know the vast majority of people forget the passwords they set up.” And, if loyalty programs require a rewards number or passcode — in addition to a username/password — that’s one more form field for us to save somewhere we’ll forget. 

Truth is, I’ve probably forgotten about more of the loyalty programs I’ve joined than the ones I remember — and I’m not alone. One study found that the average consumer is a member of more than 14 loyalty programs. 

But we shouldn’t blame consumers’ inability to remember or our lack of organization when it comes to the dozens of online accounts we have in this digital age. Brands shouldn’t require us to side-step through form fields to sign in — nor enter ten-digit codes to redeem an offer. You know, friction. 

It’s no wonder the vast majority of us simply don’t take advantage of those great membership rewards and offers we see in our inboxes. Nor is it a surprise that, for most companies, only a small percentage of customers are active members of their loyalty programs. The rest are dormant.  

How biometric authentication can unlock rewards programs

What if user IDs, passwords, and membership numbers were no longer required to join a loyalty program? And what if you could come back to a brand’s site and redeem an offer or reward without needing any account info? 

Some brands are now powering their customer rewards programs with biometric authentication. Customers can log into an app or on a website by using their fingerprint or face ID. Just as easily as unlocking their phone. With a single click. 

One of our clients, a Fortune 100 Food & Beverage consumer brand, recently deployed our password-less authentication technology. And they instantly realized a 30% increase in loyalty members — well into the millions — returning to their site and logging in. 

The revenue projections from this previously dormant group are staggering. And it’s a marketer’s paradise: The brand team suddenly has millions of re-engaged customers they can reach — to extend different offers and rewards. To see what member perks and rewards are most popular. And to ultimately drive more sales. 

Loyalty programs, without friction, have less recency bias

There are certain kinds of goods and services we simply don’t buy every day. And there are certain companies that we don’t engage with regularly. But that doesn’t mean we don’t like them. That doesn’t mean we couldn’t be “loyal” to them. 

By removing the passwords, membership numbers, and form fields that guard loyalty programs, companies of all shapes and sizes can fully realize their potential. Because companies wouldn’t have to rely on their most recent customers — who can remember their account info — and their most committed customers — who persevere through this friction. 

In other words, the 80/20 rule doesn’t have to rule loyalty programs. There can be more brands like DSW and Starbucks that use customer loyalty programs to drive repeat customer engagement and sales to a large percentage of their base. Even if it’s not every day. 

Take me. I’m the guy who chose to book a more expensive flight — and one that was more inconvenient for my family — because of recency bias. Because I remembered how to log into the website of the airline I use more frequently.

And I’d do it again. Unless…

Unless the other airline made it simple for me to sign into my account and book my flight. As simple as signing into my phone. With one click. That would certainly inspire more of my loyalty. And, undoubtedly, it would have made my family happier. 

___________________________________________________________________

Colin Eastman is a seasoned professional with over 15 years of experience in software sales, specializing in Customer Identity for the last decade.  He has held leadership roles at the likes of Experian, Gigya and SAP and has partnered with many enterprise eCommerce companies and Fortune 500s on deploying their Customer Identity and Digital Commerce technology and strategy.

‍