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    Loyalty as a Service

    As the value added services (VAS) market gets ever-more competitive, acquiring and retaining customers becomes increasingly vital. One way to do it is using loyalty schemes. Paul Skeldon finds a simple way to make that happen

    Value added services are booming. With more consumers than ever downloading digital content and services, there is a clamour among brands, retailers, network operators and more to roll out their own digital content services.

    While this is all excellent news for consumers, it makes for a very competitive market for content service providers and others in the value-added services value chain to stand out.

    One tried and trusted method in the world of retail has always been to offer loyalty schemes to help both acquire new customers and, perhaps more importantly, hang on to them. These schemes attract huge user numbers and offer consumers valued rewards for using a particular merchant or brand, while letting that same merchant or brand stay engaged with the consumer.

    So why not bring this to VAS markets? Well, the simple answer is that while there is a huge business imperative to do so, the complexity and cost of setting a loyalty scheme up from scratch deters many. Margins are tight and, while acquiring and retaining customers is vital to growth, it can be hard to justify the cost of rolling out a loyalty scheme.

    However, that is all set to change. One company, Xenosol, has up-ended conventional thinking and created what it dubs a Loyalty as a service programme, where it brings together a vast array of loyalty offerings from around the world and allows business to simply plug into its platform and offer the kind of loyalty offers it wants when it wants them.

    “Our aim is to really simplify the process,” explains George Galbiouni, partner, Xenosol,. “There are a lot of services, everyone has a service or multiple services. We wanted to offer loyalty as a service, with a simple hook-up through just one API, which once they are plugged into you are connected. So just one API call, get your points and then it goes but then everything is managed in the background, the user it’s seamless experience for the for your subscriber.”

    Loyalty is important because it tackles the two main issues VAS providers face: acquisition and retention, believes Galbiouni. “Offering new customers something for signing up, it definitely offers a greater push to make them do so,” he says.

    “And then it also cuts churn,” he continues. “Once they start accumulating some points, then their churn goes down because they don’t want to leave until they get some rewards. So basically, we’re tackling those two challenges.”

    There are also some sound financial reasons for offering loyalty too, he believes. “On the acquisition side, if you get customers subscribing to your service, it’s going to cost you between five and 25 times less to acquire each new customer.”

    “On the churn side, it would take your churn down anywhere between 30 and 40%, depending on the service and under location and how much you’re charging them,” Galbiouni adds.

    Additionally, loyal customers will tend to spend more with you and be more valuable to you as you’ve already spent your initial cost to acquire them – and they stay longer with you, so that’s additional money that you’re acquiring, he says.

    Galbiouni concludes: “It’s essentially a marketplace for loyalty – and it just works. We actually launched it back in February and, so far, it’s we’re doing really, really well and we’ve had a lot of great and positive feedback.”

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