Loyalty programs, while less discussed than other areas of Fintech, are one of the most interesting sectors that deliver daily consumer value. One of the main innovators is Engage People, which has enabled the redemption of more than 1.4 billion points thanks to partnerships with Amazon, Apple, Best Buy, Bank of America, and others.
Fittingly, Engage People operates in the background. CTO Len Covello said the company succeeds by focusing on democratizing the pay-with-points ecosphere, building value on both sides of the network so consumers have more choices.
Gone are the days when point value was limited to core rewards like airline flights and hotel stays. Covello said consumers expect options, choice and utility.
That leads to a chicken-and-egg scenario, as redemption partners want the same. If they are going to invest in new technologies, they need assurances it’s worth the time and money. In the $200 billion points world, how much can Engage People access?
In short, there is a lot. In addition to the firms listed above, Engage People’s partner roster includes the biggest Canadian banks. However, Amazon was the main catch, making it easier to attract retailers.
If a company wants to develop a loyalty system, Covello said personalization must be the first focus. What is your value proposition? It must be more than giving out points when money is spent. How do you create and reinforce the customer relationship?
“If you’re building a true loyalty program, it’s the value add,” Covello said. “It’s making the customer feel special.”
Rewards don’t have to be tangible, either. They can provide status upgrades or improved services like same-day delivery.
This value must be provided friction-free. Covello said online commerce brings more flexibility, but in-store point-of-sale interactions must be quick, no more than yes/no scenarios.
That is where artificial intelligence has a practical application. By understanding the stakeholder’s past behavior and knowing millions of people overall, Engage People’s system offers value propositions that are likely to resonate with the customer. For example, the customer might receive a free coffee or $35 off their $150 purchase.
Experience taught me that customers never want to burn through their points stash at once. Hence, intelligent options history shows have greater uptake. There’s a psychology to the design, as an “x” cents per gallon discount gets more takers than a straight cash discount on the overall purchase.
The larger the network, the more intelligent the fraud detection, too, thanks to data volumes and transaction velocity. Covello said that while fraudsters do target points, several system characteristics are natural deterrents.
Card-present transactions mean PINs and chips validate users. Online, multi-factor authentication helps. Credit card issuers have their checks, too.
However, the loyalty ecosystem also offers enticements. In the US, the average consumer is involved with 18 loyalty programs. While there’s value, they’re not checking them as often as their bank balance. With months in between check-ins, there are some easy pickings.
“It’s something that’s not going away,” Covello said.
The pandemic accelerated consumers’ expectations to be able to use their points everywhere. Combined with inflation, more are using points to supplement daily life.
Younger consumers are driving value, as they have little long-term loyalty.
Covello said digital wallets are the next frontier. They offer ultimate personalization and can be an intimate expression of consumer preferences. Digital wallets will display points balances and allow the tap to pay without impediments.
“That currency, that relationship as a customer, it’s probably as good as it’s going to get,” Covello concluded.