Wallet-based CRM: New Era of Customer Data

The customer attention that companies strive to attract has become the most valuable currency because it can directly drive profits. Because of that, it represents an important challenge businesses need to navigate, which they are doing by gathering insights into audience preferences and then aiming to satisfy them through targeted activities and offers. Traditional CRM systems were the standard, but today they rely on passive and already outdated communication channels, making the process far less efficient. However, with the rise of new technologies and their increasingly powerful features, a new era of customer data management emerged - a wallet-based CRM. Here is a simple explanation of what this era represents and how exactly it has transformed the data collection processes. 

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What is CRM?

CRM stands for Customer Relationship Management. It’s a system that companies of all sizes use to collect data about their current or potential customers, helping them better understand their audience’s needs and tailor their products or services accordingly. By understanding customers more, this system drives sales and marketing strategies, which provide even greater profit potential. 

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CRM data is usually collected automatically from purchase history, customer service interactions, phone numbers, website and app data, as well as customer sentiment, preferences, and behaviors. It also comes from cookies, email marketing, and brand apps they have on their phones.  

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How Does CRM Work?

With the CRM database, companies manage to build loyalty with their customers. One simple example is a hair salon that tracks how many weeks it usually takes for a specific customer to visit, which services they choose, and even what kind of coffee they like. The system automatically records these details by analyzing the communication channels customers most frequently use to book appointments. When that customer calls again, the hairstylist can use this information to show how well they know their clients, making the customer feel special.

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Furthermore, if the usual period between two visits passes, the CRM system detects it and automatically sends the customer a text message with a suggested new appointment. This way, the salon subtly reminds the client of their routine and shows that it always has a spot for them. This approach can help improve customer retention and potentially increase profitability.

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Customer Data Evolution

Traditional CRM systems served businesses effectively for many years. However, due to the growing volume of digital marketing content and declining engagement rates, this model is increasingly becoming inadequate. In fact, email marketing, cookies, and SMS are the main reasons why this type of CRM is slowly becoming outdated. People often view emails and text messages as spam, so they rarely interact with them, while also clearing their browser cookies, to improve privacy and browsing control. 

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Additionally, a significant amount of data is being collected through brand apps installed on users' phones. Still, as people increasingly avoid keeping apps due to phone storage constraints, businesses recognized the need for a better system that doesn't rely on them. That’s why the evolution of data led to the next logical step, wallet-based CRM.

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What Is a Wallet-Based CRM?

This CRM database model is a new approach to customer relationship management. It uses digital wallets to recognize customer identities and analyze behavioral patterns and preferences based on purchase history and interactions. It works on a similar principle and has the same goal as traditional CRM databases, but instead of using email marketing, cookies, and apps to gather data "behind the scenes", it uses digital cards and passes inside smartphones. Whenever customers use these digital cards, they generate real-time interaction data that can be used to improve personalization and customer engagement.

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What does this actually mean?

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Many users already have Apple or Google Wallet installed on their smartphones, and as a member of a brand's loyalty club, they can download a digital card into their existing digital wallet with just one click. Each time a customer scans the digital card in a store, loyalty points are automatically updated in the wallet, while the CRM database in the background records what they bought and what to recommend to them in the future. The next time the brand wants to offer a discount, it doesn't send an email, it notifies the user about the extra benefit via a push notification on their phone. So, the entire interaction happens directly between the user's phone and the company's database.

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Wallet-Based CRM Company Benefits

A Direct and Cost-Effective Communication Channel - Companies can completely bypass expensive SMS providers and emails that usually end up in the spam folder. Instead, they can send direct push notifications that arrive straight to the user’s lock screen.

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First-Party Data - Through digital cards, companies receive legal, clean, and accurate data directly from the customers.

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Geofencing - Using GPS and Bluetooth, the CRM system tracks when and how often a customer walks in or past a store. When the customers are nearby again, the system can send a push notification reminding them of an active discount they can use right away.

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Savings on Development Costs - By relying on the already existing Apple and Google Wallet apps, companies don’t need to spend money creating and maintaining their own branded app.

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Why Would Customers Use It?

No App Clutter - Users don’t have to install dozens of different apps for every store they buy from.

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No More Plastic Cards - With a digital wallet, the card is always on the user's phone, which, in today's tech-driven world, is practically always in their hands.

Real-Time Updates - With all info directly on the digital card, users instantly see their points and balances without logging online or asking a cashier.

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Location-Based Convenience - Thanks to geofencing, users can receive timely offers and discounts when they are near a participating store, making promotions more relevant and convenient.

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Enhanced Privacy - Users can benefit from reduced reliance on cookies and receive fewer promotional emails while still accessing loyalty rewards and personalized offers.

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Wallet-Based CRM Challenges

Like any new tech innovation that sounds thrilling, wallet-based CRM also has challenges that could potentially be a problem. Besides depending on Apple and Google Wallet platforms, the digital gap that can stop older generations from using it, and complicated integration with old systems, wallet-based CRM also faces the challenge of onboarding friction and too easy opt-out.

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For a user to want to set up the cards on their phone, the setup must be super easy so users don't give up at the start. On the other hand, deleting the card is extremely easy because it can be done by simply deleting the app, so companies should avoid overwhelming users with excessive notifications.

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The Win-Win Model

Wallet-based CRM turns data collection into a fair exchange. Companies gain access to relevant customer insights, while customers maintain greater control over their data and receive more personalized offers. When both sides win, this innovation becomes less about technology and more about the new standard that customers expect.