Over the past few years, multiple innovations have helped reshape the payment space. But, says David John, CEO of Loyalize, one crucial area has been left behind.
While consumer payment processes have consistently been made more frictionless, customer loyalty has not received the same level of attention. For example, a customer can walk into a supermarket and pay with their phone, but they’re still required to rummage around for their plastic loyalty card. John says: “This clumsy and inconvenient process detracts from all the innovation that’s going into payments and creates disparity in digital advancement.”
Recognising this, John decided to set up a company that would bridge the gap between payments and loyalty, offering a seamless experience. “Existing programmes weren’t providing enough value for customers,” he explains. “There just wasn’t enough variety, and engagement was low.”
But the journey wasn’t quite that simple. In 2016, John created a customer facing app that enabled users to connect their payment cards to earn points across a whole network of retailers. However, a couple of years later, John made the strategic decision to pivot the business to a B2B model.
This was on the advice of a former Visa exec who felt the technology was right, but that it was being delivered down the wrong channel. John recalls: “It was the first time someone sat me down and told me that my strategy had limited chances of success, but that if we could deliver our technology to market in a different way, we might have something.”
Such a pivot will be a risk for any start-up due to the time and costs involved, but as John explains: “It was absolutely the right thing to do. We rebranded for a completely fresh start.” Today, John maintains the experience has put Loyalize in a stronger position. “We had to go through that learning to understand the pain points for retailers and what customers really want,” he says.
In January 2019, Loyalize emerged as a white label platform that combines payments and loyalty into a single transaction – and the idea proved a hit. “Retailers want to maintain control of how they communicate with customers rather than sending them to a third-party app or website,” explains John. Loyalize’s platform gives retailers a way to retain that level of control while enabling them to easily add features to improve the customer experience.
“Loyalty is much more than just rewarding consumers,” says John. “It’s a way for retailers to communicate with customers in a non-invasive manner while gathering valuable data to improve their offering.”
The loyalty space is shifting from stamps and points to emotion and experience, particularly due to the impact of COVID-19. Now, consumers are not just shopping online because it’s faster or easier, but because they have real concerns about entering shops and using physical cards. “In times like these, retailers need to engage with customers in a totally different way,” says John.
Making such a shift is no mean feat for retailers, but Loyalize aims to make it happen “overnight” through a single line of code, with minimal effort and cost.
“In the past 12-18 months, interest in loyalty has grown significantly,” says John. “Retailers can only drop their prices so much to get people in the door before it becomes unsustainable. The way to retain and increase business is by adding value rather than just offering a good price.” For this reason, many retailers have approached Loyalize because loyalty is the only part of their business untouched by innovation.
Partnering with a retailer on such a huge undertaking, it’s important for John and his team to be empathetic of their problems and goals. “We need to understand their pain points and how can we help,” he says. “It’s not just an improved customer experience – that’s the end goal – but we need to spend time understanding what they want out of their loyalty programme and consider how our platform can help them – whether it’s cost savings, reducing transaction time or getting access to more valuable data insights.”
As the loyalty sector kicks into high gear, Loyalize finds itself in a strong position, having all the technology in place – and, of course – having learned a lot about the needs of clients and their customers in the process. John says: “We can get up and running in a short space of time. Technologically the platform is ready to go.”
Currently, Loyalize is in the middle of a pre-seed round which will help it launch the platform with one or two key partners. Thereafter, it will expand its team and look to raise further investment as it scales.
Of international expansion, John says: “Our focus is on the UK at the moment but there are lots of opportunities in Europe and especially the US.” He adds that in the first week shops opened after lockdown, multiple retailers approached Loyalize asking for help because they recognised they needed to change.
From pivoting the business to embracing the surge in interest and challenges that have come from COVID-19, both John and Loyalize have been put through their paces. As retailers shift to omnichannel experiences to make customers feel more valued, Loyalize will only become busier – and as John points out, the biggest lesson he’s learned as a founder is that there are never enough hours in the day.