Why I Think Drop is the Future of Loyalty Programs

Serene Chen

“Do you have a Shoppers Optimum card?”, asked the cashier.

I look at the card holder I have attached to the back of my cell phone, that holds a maximum of four cards at a time.

“Nope,” I say, sheepishly, “Can you take my phone number?”

The cashier rolls her eyes, and takes my phone number down. That was an awfully awkward exchange for some loyalty points that I typically don’t redeem anyways.

Enter Drop, the loyalty program that promises to deliver on what millennials don’t know they’re missing.

The Loyalty Program Industry

Before looking at what makes Drop different, let’s examine the current loyalty program industry. The typical consumer has credit cards that allow them to earn points with each purchase. They also have a long list of points cards — their Shoppers card, their Scene card, their Sephora card, the list could go on. One of my friends has a pouch stuffed to the brim with her loyalty cards, that she flips through every time she makes a purchase.

There are also mobile apps that exist to help you track of all your loyalty cards but at the end of the day, these cards still exist separately. You have to go into the app, select the right card and then have the cashier scan the barcode.

Loyalty card apps vs. bulky, plastic cards

Your purchases at each store, typically only contribute to collecting points that can be redeemed at that brand. Sometimes, this means you are never able to accumulate enough points to redeem them for anything. Or, you simply forget about them.

But why would companies want the consumer to redeem their points? They’d rather gamify the point collecting experience, have you keep shopping with them, and not with their competitors.

What is Drop?

Drop, on the other hand, describes itself as the loyalty program created for the consumer. Through the Drop app, you’re able to collect points on debit card purchases, and earn double the points on your credit card purchases, without even taking your phone out. Best of all, all your points accumulate with Drop and you are able to redeem them for offers from a marketplace of brands that you actually shop with.

Redeeming offers on Drop (Left) and earning points on Drop (right)

By being good to the end user, Drop is also creating value for the brands it partners with. This takes the form of targeted advertisement to incentivize users to explore new brands by launching offers or by creating rewards that lower the barrier for customers to shop at individual partners.

The Future for Drop

Growing a fintech startup like Drop is undoubtedly not always going to be smooth sailing. Despite, my overall positive outlook of Drop’s future and my belief in their product, here are some of the obstacles that I think Drop will eventually encounter or is already experiencing:

  • App Usability— Currently, connecting your card to the Drop app is not always smooth. Th magic moment for a Drop user is when they redeem their first offer; however the biggest barrier of adoption is users actually connecting their card.
  • Customer Expectations and Perceived Fairness — Drop doesn’t host your transaction information; as a result, there are delays between rewarding points and even redeeming points that may cause user disengagement. Once a customer feels cheated, it’s hard to regain the user’s trust. This is a key contributor to why Drop has a 3.7 stars rating on the Play store.
  • User Disengagement — Aside from the delays discussed above, there also aren’t many interactive elements of the app that take advantage of network effects, aside from referral codes and updates from the “community” about others earning rewards, linking cards or inviting friends.
  • Brand Partnerships — Chicken and egg problem whereby users are attracted by brands and brands by users; also the potential implication of partnership quality as either attractions or deterrents for new partners or users. To out-compete other loyalty program offerings that also aim to satisfy the millennial demographic, Drop will also have to keep looking for ways to provide additional value to its partners.
  • Global Expansion — Drop launched officially in the US this past October and has experienced some pretty incredible growth, but also some unexpected consumer preference and behaviour differences from the Canadian market.

But the first thing Drop should prioritize here, is resolving the card connectivity issue and designing a better customer service experience around common problems described in their FAQs. Perhaps, an automated chat-bot with an escalation process that demonstrates to users that their requests are being heard (i.e. demonstrating that they’ve been assigned to a specific representative).

Additional Value to Brand Partners

I also have some ideas on how Drop can continue appealing to brand partners — one of the biggest incentives for new users to adopt Drop. Drop already boasts 20% penetration into the Canadian millennial market, having achieved #2 among Lifestyle apps in Canada and #3 in America. Currently, Drop provides its partners targeted marketing opportunity and customer analytics.

However they could easily take it a step beyond incentivizing consumer spending via rewards, emails or points offers. Partners could commission brand awareness studies the way YouTube does for advertisers.

Drop could even provide brands with store-specific analytics and allow the company to pinpoint which stores are over or underperforming and for what potential reasons. It’s very common to see stores ask you to fill out a survey at the bottom of your receipt, in return for a chance to win a prize or a gift card. Clearly, this information is valuable to retailers.

Despite the prizes being fairly enticing, from the consumer perspective, I always lose my receipts and/or never bother to go online and fill out the surveys.

If Drop is the platform hosting these surveys, using geolocation and a quick push notification, Drop is able to capitalize on all this lost consumer data that is very difficult for large organizations to collect.

Despite the relatively short period of time I’ve been a Drop user, I already see it as the most consumer friendly loyalty program alternative out there. I’m excited to see how the app will continue to evolve and how Drop will adapt to different markets, expand its’ value-add and solve some of the information flow issues of their current offering.

I’d love to hear your thoughts on the future of loyalty programs; let’s have a conversation below! What kind of loyalty programs do you use? Which ones have you tried but abandoned?

Serene Chen

Written by

Curious about people & organizations | Growth, design & tech enthusiast | Coffee (sometimes) snob | Opinions are my own

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