Posts Tagged ‘digital loyalty cards’

Digital loyalty in the age of Passbook

I’ve been watching the digital loyalty space quite closely (see: THE CHOP SPACE (DIGITAL LOYALTY CARDS) IN MALAYSIA). I love being loyal to a business that rewards me. This forms the basis of how I choose what airline (alliance) to fly, or what hotel (chains) to stay at. I’m fortunate enough to be able to use multiple alliances and chains as I spend hundreds of days on the road every year, and live in a location where my business prospects are limited.

Why are digital loyalty cards great? I’ll let you in on a secret: I hate fat wallets. I’m sure you do too. My wallet is a Mighty Wallet, given to me as a gift at Christmas 2011 from Sara. It holds my essentials: credit cards, ATM cards, ID, drivers license, and cash. It expands to hold receipts and contracts when I decide to process them. Its unlike any leather wallet I’ve ever used as it doesn’t crack, expand out-of-shape or require care. My only complaint is that it is a little faded; I guess it just brings out its character.

Where did all my physical loyalty cards go? My old business card carrying case. In there is my Founder’s Card. My hotel loyalty cards from Hyatt, Starwood, and InterContinental. My Regus card. Two travel insurance cards. My Haagen-Dazs ice cream discount card. My Coffee Bean & Starbucks stored value cards. And many, many more. You get the drift I’m sure. Where does my business card carrying case go? Into my backpack.

In Malaysia, when I last counted, there were four playing in the digital loyalty space. There are many more that have launched since that post, and it has only been about two months since then.

What has this caused? Fragmentation. There is no one digital wallet for my needs. Instead of filling up my business card wallet, I’m filling up my phone with loyalty card applications (which you can now group thanks to folders). They all essentially do the same thing: scan some QR code. These wonderful applications have taken the physical cruft problem into the digital world. To some extent, it is worse because everytime they push an update, I have to download megabytes worth of application to my phone. Some turn on default sharing to Facebook which annoy me to no end (but apparently, merchants love it).

Google may have a solution to this. They call it Wallet. But its far from ready to take over my physical wallet & NFC has been around since 2006 in many a trial. A more elegant solution to me that I’ve seen work and have many people embracing it (including Starwood, Hyatt, Valet, etc.) is Passbook. You can use the Pass Kit APIs in your application. Passbook is more than just loyalty cards: boarding passes, tickets, etc. can be stored there. And it is location aware.

The best part about Passbook? You can use the PKPass files, and it works on Android phones with an application like PassWallet. How far Apple allows this is a good question, but we’ll leave that thought to another day.

Last week, Nazrul pointed me to an article: How to get your business on Apple’s Passbook.

I then heard Joe Beninato of Tello on This Week in Startups #298 and it hit me. Not only do you keep loyalty cards (via Tello’s PassTools – events, boarding passes, coupons, store cards, etc.), you can also provide feedback. User generated content (UGC) with a reward so to speak. So thats Yelp + digital loyalty. Malaysia isn’t a market where customer service is winning – many people expect more, and it is generally crap. Guess the private feedback option makes sense ;) The analytics feature is pretty standard for digital loyalty platforms – if you don’t have one now, you’re as good as dead.

Can Tello work in Malaysia? Possibly the Klang Valley/Penang (just like all these digital loyalty card services). You really need higher end phones for this sort of thing to work. Singapore is decidedly the land of iOS, so it might do a lot better there. It isn’t clear if there will be Android support or not. Android is growing in leaps & bounds, so I’m inclined to think this platform is rather important.

Why is UGC important? This digital loyalty business hits on two fronts: you have to grow the business by getting merchants as well as users. It really is a chicken & egg situation, because users do not come if there are no merchants, and merchants do not embrace if there are no users. UGC not only encourages others to visit the place (see how Yelp, Qype, Tripadvisor work), the feedback mechanism allows owners to write back. Overall, value provided for both the business owner & the user.

That said, not a single Malaysian company that I know of has started using Passbook, with the exception of Malaysian Airlines (their services might not be up to par, but their technology is usually ahead). I’m in Singapore as I write this and I’ve not seen a Singaporean establishment use Passbook either. There has been mention that Jurong Point, a mall, has started using it, and the claim is that they’re the first in Singapore to do so. I’ve never been to Jurong Point, and I don’t expect many people that don’t live there visit it either, but it could be a great case study. I expect great movements in this space come 2013 (after all, iOS6 is just a few months old now, it will get more mainstream next year; also the iPhone 5 is not even sold officially in Malaysia yet).

The chop space (digital loyalty cards) in Malaysia

I love competition and free markets. I read about Pirq coming to Malaysia via the webcampkl group. An interesting thread is brewing.

In Malaysia, I see three players (not including Foursquare for merchants which some establishments use to give mayor discounts, every 5th check-in, etc.): 

  1. ChopChop is the pioneer in this space (bootstrapped around December 2011 by 3 passionate young entrepreneurs whom I’ve had the pleasure of meeting more than once). 
  2. Shortly thereafter Voucheres came along and they picked up a nifty RM700,000 from MyEG & MDEC (newsclip, crunchbase). They’re a startup with 4 founders (January 2012), claiming 10 employees, and they seem to be relaunching 10 months into it. 
  3. And the latest to the block? ChopInk (July 2012). Four young founders who were AllStars graduates (RM18,000 + mentorship for some 6-7% equity), which I’m told reliably is a pivot from a different unworkable idea. ChopInk has goals of a 1,000 merchants by year end and is supported by Cradle and possibly had some investment from Telekom Malaysia.

And today, you’ve got the fourth player: Pirq. Pirq’s take is different: you receive an immediate discount of 20-50% instantly. You don’t collect chops for later redemption. Pirq is a US-based company flush with cash – currently USD$3.2 million has been raised (yes, thats USD not Ringgit). Their first expansion country: Malaysia, then Singapore. Pirq is like collecting chops meets Groupon (20-50% discounts on a bill last I checked at most restaurants is unsustainable). 

The grapevine tells me that Pirq has four sales people on-board. From an execution perspective, I love how they focus on areas. My biggest problem with these digital loyalty card applications is that I generally never visit any of their merchants! From a tech perspective, Pirq needs work.

I see Pirq as competition with group buying sites, which is definitely seeing fatigue (in Singapore they’re dwindling; in Malaysia?). The verdict is still out there how digital loyalty is going to be managed between ChopChop, ChopInk, Voucheres. Maybe well-funded Singaporean Perx might arrive eventually.

As a consumer, while I may not have to collect loyalty cards in my wallet any longer, I’m going to be collecting smartphone apps. Good thing you have folders on iOS :)

Who’s going to win? The people that make the better product & with better execution. Not just for the consumer (location based alerts, geo-fencing, etc) but for the merchants as well (smart ad posting, etc.). 

In another post, we’ll talk about money. Foreign money is rolling into companies coming into Malaysia (Rocket Internet, now Pirq), mainly because the USD or Euro goes further in Ringgit Malaysia land. Most of the discussion at webcampkl is focused on this.

Me? I’m naturally rooting for the bootstrapped entrepreneurs – that’s ChopChop.


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