Innovators Taking Points Programs to the Masses

Loyalty and rewards programs have been around since the dawn of modern consumerism. But in recent years, the landscape has been undergoing a major shift.

Today, points programs are no longer the exclusive domain of retailers and service providers. In recent years, savvy startups are discovering new ways to leverage the power of smartphone apps and cloud to achieve the download numbers we traditionally see with classic points programs.

And rather than competing with conventional points programs, these innovators are open to engaging in partnerships with retailers and other points providers to deliver the best of both worlds.

“The space is moving so quickly,” says Andreas Souvaliotis, founder and CEO of Carrot Rewards. “Our society is hooked on points. It is in fact the oldest form of gamification.”

Carrot Rewards offers consumers a choice of available rewards with popular consumer loyalty programs that include Aeroplan^® Miles, More Rewards^® Points, SCENE^®Points, Petro-Points™, and Drop points, among many others.

Within two years, the company evolved from a points system to encourage wellness, into a comprehensive engagement platform that supports financial literacy, energy conservation and environmental awareness. In 2017 it grew from 100,000 downloads to upwards of one million and counting, and they have given away more than one billion points in total.

Carrot Rewards was also recognized by Mobile Syrup as the Canadian App of the Year, and more recently ranked in the top 10 in Bond Brand Loyalty’s list in The Loyalty Report 2018.

While conventional points programs remain strong, the new generation of consumers and business owners has an even more voracious appetite for collecting and choices. At the same time they want their programs to matter in some way, whether it’s to improve their health or finances, or clean up the environment, Souvaliotis says.

“They want to get that tangential good feel. More importantly, they want choice. They don’t just want a free movie or flight. Diversification makes points programs much more relevant.”

Carrot Rewards’ success has also become an “accidental inspiration” to the startup community looking to create a loyalty space for their users without having to build their own layer. “One interesting evolution in our area is that people are actually starting to focus on how the loyalty industry could be an enabler of startup success,” Souvaliotis says. “We’re doing that already with some fintech startups like Mylo while wrapping a message around financial literacy.”

He notes that partnering is a seamless way for a company to tap into their potential customers’ appetite for points at relatively low cost. “Everyone understands how loyalty works. The choice is they can build their own or harness the power of what’s out there.”

Because the platform gathers data from multiple touchpoints, Souvaliotis says insights are also much more comprehensive. “You get multiple lenses for the same person. One day they may be using SCENE, the next day Aeroplan. The more touchpoints you have, the more you can learn about them.”

Derrick Fung, CEO of Drop, a downloadable app that links debit and/or credit card purchases to a growing list of merchant partners from Uber to Starbucks to Bloomingdales, says the company’s trajectory is placing it in the ranks of the big league players.

Introduced to the market in 2016, Drop now has 1.5 million registered users and adding thousands each month. “We’re quickly getting to the scale of massive players like Air Miles in a short period of time,” Fung says, adding that Drop ranks #8 in the App Store’s lifestyle category.

The market is ripe for a new consolidated approach for points programs. Fung says that in Canada, consumers on average use over 10 single brand proprietary points programs. “The average U.S. household has almost 30. Drop provides a platform for all that to come together.”

Much of this ability has been enabled by ubiquitous smartphone usage for transactions. Apps such as Carrot and Drop are designed to create a seamless experience, from purchase to redemption. With Drop for example, users simply press a button to get a barcode that can be scanned at the time of purchase at their merchant of choice. “That would not have been able to happen five years ago,” Fung says.

In a world where consumers are deleting more apps than downloading them, a solid value proposition is critical, Fung says. “You need one that really stands out. When you do that you can scale more than ever before.”

The key, he adds, is that it’s not about the technology so much as what it offers the end user. “We are not building an app. We are building a lifestyle brand. We’re in the lifestyle category of the App Store for good reason. Consumers want the choice and flexibility to get whatever they want. It’s not just an opportunity for us, but all entrepreneurs.”

The most compelling part is that the community at large is on board and willing to work in partnership, he says. “What’s unique is that we all have the opportunity to partner together to build up this base of younger millennial consumers. Retailers want them but have trouble reaching them. These apps save time, are seamless, and offer tons of choice, which is exactly what today’s consumers demand.”