Loyalty programs are a great way to pay back your appreciation and retain the customer. There are literally thousands of Loyalty programs in the world. What started out with Coupons, transformed into Loyalty programs and the system has become so large and complex, that today it is an ecosystem of Billions of US Dollars.
My Co-host for the Around The Coin money podcast, Brian Roemmele, wrote an excellent post on the loyalty issue and how it all got started (great read). Whilst most Loyalty programs are centered around the West, my American Co-Hosts were interested to know how big of a deal Loyalty programs and apps are in the rest of the world.
In this post, I’ll delve into the Loyalty programs in Pakistan.
A loyalty program essentially has four components:
Merchant (the one offering a loyalty program)
Customer (the end beneficiary of the loyalty program)
Loyalty Management System (the system or app which will handle the loyalty points issuance and consumption, etc.)
Financial System (the back-end financial system that ties the payment mechanisms together and links the payment made by the customer to the merchant by crediting the loyalty management system).
In Pakistan, the loyalty programs are closed-loop, i.e. they are only offered by companies for their customers. In addition, almost each program run on a different variant and cross-talk amongst such loyalty programs is almost non-existent. For example PIA’s Loyalty program does not converse with that of AirBlue (assuming AirBlue were to offer one); Mothercare’s loyalty program has no linkage and/or association with Facebook or FourSquare, etc. The loyalty program offered by Espresso has no linkages with the Debit cards one may use to charge and earn points. In short, there is a total disconnect.
I occasionally happen to become Mayor of various establishments when I use FourSquare. The thing with FourSquare (FS) is that right now it is being used primarily as a novelty item. There is no advantage to a FS user in Pakistan. We do it just for the kicks of it.
Yet, within FS, there exists a mild version of a loyalty program. Every FourSquare business that is setup, has the ability to reward its Mayors or people who frequent their place of business with coupons, discount codes, etc. but most Pakistani businesses are oblivious to this. I’ll cite an example: when Johnny Rockets opened up in Karachi, people thronged to the place for its burgers and shakes. Someone eventually decided to check in on Johnny Rockets in Dolmen Mall for the very first time, and since the business did not exist on FS, the first user created this business. Today, hundreds of people check in using FourSquare and leave tips, etc.
The issue here is that Johnny Rockets has no inkling that a FS property exists under its name and that they can claim it.
This is true for a lot many businesses. I did a survey of 123 businesses in the region (both Pakistan and abroad) and 123 out of 123 businesses were not utilizing or even aware of their own FourSquare page. There seems to be a huge lack of awareness about using FS for business promotion. These businesses can actually claim their business page and then start running a mini version of a loyalty program based on the patronage visits. If a Mayor of an establishment walks in – the business owner has no idea about it. There is no connect and hence these loyalty programs tend to fail or not pick up steam.
Here are some famous businesses who have yet to claim their business page on FourSquare.
So, the first step is for businesses to start being cognizant of the social channels customers are using. I would feel elated if I walked into an establishment as a Mayor or as a regular FS user and was acknowledged by the business. I’m not necessarily looking for discounts, but acknowledgment would be nice. As American Express Managers, their title sums it up: Loyalty & Retention. Its all about appreciation, and this appreciation turns to loyalty points and rewards.
Pakistan has a loyalty program app out (on the Android phone – last time I checked). Its called Olaround (All Around) and is a great initiative. So, I decided to check how many businesses in Karachi have heard about it. Surprisingly, quite a few. This was indeed good news. Next, I asked how many people are using the Olaround app. Surprisingly, amongst my friends, none! Not even one. I only know of 3 people who had downloaded the app, but none of them were using it. As a further experiment, I asked people to send me the snapshots of their main screen on their smartphones. Turns out, we trust only well-knowns apps. Facebook, Twitter, FourSquare, Viber, WhatsApp, Google Mail, Etc. Local apps like Olaround are not on anyone’s main screen. Why? I think it is a matter of trust and being skeptical. We don’t trust local apps and are very skeptical of them. The only local app I found being used was Food Panda!
Here are a couple of screen shots of people whom I reached out to. All of them show and tell the same story. Foreign apps rule!
Signing up merchants for a loyalty program is an area that represents a huge opportunity. Finding a process and a mechanism to sign-up vendors seamlessly into loyalty programs is very much needed and one that somehow ties into an app like Facebook, Twitter or FourSquare. An even greater plateau of opportunity is if somehow the payment mechanism can be tied with the loyalty program. If one charges in Pakistan using their credit card at an establishment that is enrolled in a loyalty program, then this charge needs to be reflected into the points awarded.
FourSquare provides this facility (something called Connected Cards), but unfortunately, your card would not work or rather you would not be credited with the points if you tried using a debit card.
See screenshot below, of what I get when I tried adding my Debit Card to the Connected Cards.
Loyalty programs are a very important aspect of our business ecosystem and this area should be looked into. Early adopters and solution providers in this arena will benefit from the lucrative returns it has to offer. If app developers can make apps that can natively tie into the trusted apps that people already use, and tie this with financial cards system in Pakistan, there is no reason why loyalty programs cannot experience steep growth.
Once there is enough traction in this space, only then would we be looking at the next part of the evolution which is Loyalty exchanges, where you could perhaps trade your Espresso Points with Starbucks Points, or your PIA miles with Emirates miles. There needs to be a widespread adoption and usage of loyalty programs in Pakistan before we will see the interest of any such loyalty points exchanges in Pakistan.