Loyalty programs are typically viewed as a consumer-facing marketing play, but the shift to mobile commerce is bringing these programs deeper into the supply chain.
Sionic Mobile is extending its technology to new audiences, such as the supplier who wants to change the way its merchant clients pay for its goods.
"In our model the entity receiving payment now has the financial freedom to reward the payee," said Ronald Herman, CEO and founder of Sionic Mobile, an Atlanta-based marketing company. "This creates space for the distributors to make offers to retailers, who can then make offers to consumers."
Sionic has partnered with a processor to enable the business supply portion of its rewards program. (Sionic did not identify the processor).
The program offers payment fees that are less than the typical interchange for procurement, which exceeds 2%, Herman said. The first wholesaler to use the new business rewards model is giving its distributors back 1% of their mobile payment amounts. The wholesaler also pays a 0.5% to Sionic.
Sionic's network includes about 100,000 locations and retailers such as Bass Pro Shops, GameStop, Papa Johns and Staples. Every Sionic merchant is required to reward at least 0.25% to app users, regardless of whether that merchant receives IONs from a distributor or pays for the IONs being rewarded out of the sale, Sionic said. If Sionic's strategy works, the rewards will forge a relationship that extends from manufacturers to consumers, increasing transaction volume at each step.
The competition among mobile payment marketing companies to win merchant business is fierce, and other companies, such as SCVGNR's LevelUp, have taken the approach of designing a loyalty program to steer customers to less expensive payment options.
The new business incentives will be offered through Sionic's small business center, a mobile portal which is scheduled to debut in August. The small business center is designed to enable micro-merchants to offer rewards, mobile payments, e-gift cards and the ability to create and deploy mobile advertising campaigns.
"We're extending the functionality of payments and rewards model across the entire chain," Herman said.
Sionic Mobile has also released a new version of its reward app and has upgraded its back end system. The update adds security and refines how rewards are tailored based on spending trends.
"There's more IONs to earn depending on where a consumer shops and what a consumer buys," Herman said.
The challenge for Sionic Mobile is whether it can convince shoppers to favor its app over those of larger companies such as PayPal, Google or Apple, said Nikhil Joseph, an analyst with the emerging technologies service at the Mercator Advisory Group.
"The three tech 'Goliaths' all have deep pockets and intense desire to own the payment experience through their apps and operating systems," Joseph said.
The technology that can match an offer to a consumer in real time, which is a large part of Sionic's upgrade strategy, exists elsewhere. But what's missing is the optimal consumer experience that's non-intrusive and integrates with payments, Joseph said.
"Ideally, when you walk into a store and look at a particular product section, you should not only be able to receive a unique offer that's relevant, but also redeem it at the point of sale in one action that also takes care of the payment," Joseph said.