LoyaltyPlus disrupts in the era of centralised virtual currency

In today's retail market, there is no mistaking the value of the loyalty programme. It is driven by merchants to attract customers and retain their business, but specifically, the massive contribution of e-commerce characterised by loyalty or points cards (both physical and digital), according to independent customer relationship management (CRM) specialist, LoyaltyPlus.

LoyaltyPlus offers services ranging from loyalty business design (including actuarial financial design) to custom software development and specialised hosting needs.

Customer loyalty has proven value in today's market. Online research suggests it costs a business five to 25 times more to acquire a new customer, while existing customers spend 67% more cash than new customers.

However, a new debate has emerged in the market, a comparison of the value and benefits of a standalone loyalty approach versus a multi-player approach. In other words, the value of card-based loyalty programmes that are slowly but surely making way for digital-central online e-commerce, such as apps.

Cards identify the card holder as a participant in a loyalty programme and relate directly to the company's loyalty business model. They have emerged as a central interface to ascertain and respond proactively to consumer behaviour patterns.

LoyaltyPlus experts explain that cards typically have a bar code or magstripe that can easily be scanned, although some are chip cards or proximity cards.

The company adds that by presenting such a card, purchasers typically receive either a discount on the current purchase, or an allotment of points that they can use for future purchases. Thus, the card is the visible means of implementing a two-part tariff, as referred to by economists.

Application forms for cards usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) that entails non-aggregate data about customers. The store uses aggregate data internally (and at times externally) as part of its marketing research.

At the same time, the e-commerce ecosystem is being developed (characterised by a multi-player approach) with emerging platforms, Web sites, online systems and digital cards.

The LoyaltyPlus product models are designed to cater for small to large customer bases for airline, hospitality and retail industries worldwide, providing a quick and effective passage to owning a loyalty programme in the cloud.

Len Lubbe, CEO of LoyaltyPlus, says linking the loyalty programme to the cloud is fast gaining popularity in today's e-commerce and the online retail dominated environment. "Due to the cloud-based shared methodology, the enterprise benefits from the economies of scale with regards to licence fees, software and hardware infrastructure."

Loyalty programmes have been described as a form of centralised virtual currency, with one-way cash flow, since reward points can be exchanged into goods or services, but not into cash.

Whether fully digital, hybrid or traditionally card-based, there is no doubt that loyalty programmes will be inextricably linked to the future of e-commerce and retail.