At Virtual Next we talk a lot about Digital Wallets, and extol their superiority over Apps. It’s become obvious to us lately though, that not everyone understands exactly what a digital wallet is. Here’s our best explanation of what it is, and why you would prefer it to an App:
A digital wallet is basically like an app, but it’s provided by your phone’s operating system. Theoretically, digital wallets will replace actual physical wallets because they will live in our ever present smart phones. Instead of carrying countless cards, coupons and tickets, we can actually store them in our phone’s digital wallet. This means no more concerns about losing credit cards, loyalty cards or boarding passes – they will all be digital and in our phones. Get a new phone? No worries – your digital wallet migrates because it lives in the cloud.
What is the Digital Wallet Benefit to a QSR?
When apps first came on the scene they were revolutionary, and it didn’t take marketers long to try to use this new technology to drive sales, and more importantly, customer loyalty. Before long, however, some of the draw backs became obvious. Each restaurant chain or retail brand had to launch their own app because it was the only way to offer an in-store mobile experience to customers. The challenge of course is that there are 10’s of 1000’s of retailers and restaurant chains out there. The average customer eats in about 50 different restaurants per year; there was no way these customers would want to download 50 different apps onto their phone.
On this blog we’ve often repeated the statistics that 60% of all apps are deleted after the first try; yes, you may tire of hearing it, but if you’re considering building one you must take that into consideration. Imagine spending a lot of money and resources for an app. that just doesn’t stick.
Considering all of these challenges, Apple came up with a brilliant idea: bring all benefits of apps for retailers and restaurant chains into one place on their phones. In Apple case, the ‘app’ is called “PassBook;” it sits on the phone and can never be deleted. After Apple, Google followed the same path and launched Google Wallet. Recently, Windows made the announcement that they will use Apple’s PassBook on their windows phones.
The reason for the attention being paid to digital wallets by these 3 tech giants is far more than physical attributes. Most importantly, they are location aware, and the benefits of location based offerings are just starting to be recognized.
Digital Wallets can push a customer’s loyalty card when that customer walks into a store. The content on them can be changed easily, meaning that QSRs can offer a promotion and push it into the user’s phone and update the card immediately based on any number of criteria. It can serve as a coupon, loyalty card, or gift card, and it can be connected to a credit card for payment as well.
The innovation that Virtual Next brought to the table is by combining all of these benefits into one ‘card.’
The Future of Digital Wallets
Currently, digital wallets primarily use bar codes to complete transactions identify customers, but Apple recently announced the launch of a new technology called ibeacons. This technology will enable your phone to be recognized by other ibeacon enabled devices around you; Apple has yet to integrate ibeacons into digital wallets, but we expect that down the road.
Digital wallets are gaining in popularity. According to stats, 25% of boarding passes are currently saved on PassBook; because Apple’s iPhone owns only 40% of the market, this tells you how significant the growth of digital wallets are. People are starting to store more and more of their passes, cards, and tickets in PassBook. We believe that In 5 years, most people won’t carry physical cards and wallets; using their digital wallet to store these things will make their lives easier and give them protection from theft.
From a QSR or Retailer position, the rise of Digital Wallets gives them the ability to build brand loyalty without the expense and headache of developing an app, and allows for the additional benefit of longevity on their customer’s phone. This knowledge and our belief in the future of Digital Wallets is why we built Virtual Next as a leading mobile loyalty program that is not app.-dependent, meaning that you can stay in touch with your customer, collect and understand their data, and ensure that their user experience with your program is as headache free as possible.
Photo courtesy of photopin.