Can you create a low cost business incentive program before you finish your morning coffee? How about one that provides reward points that can be used at major companies including United and Delta Airlines?
Roy Weissman of MediaJobs.com spoke with James Duchenne from Mplifyr who has built a do it yourself platform for businesses to create their own loyalty program.
James explains the need for his service: “Most companies that do not have the funds at the moment, what they’re trying to do is they’re trying to find the cheapest, sort of solution out there, because their competitors have some sort of program active. It’s sort of working, but they’re trying to compete with that and offer the same benefits to the same customer pool without really thinking about the consequences of loyalty.”
According to Duchenne loyalty programs are quickly becoming an important element of most businesses and are valuable in attracting and retaining customers.
Listen in or read along as Roy Weissman talks with James about why he believes that Mplifyr will command the lead in its market niche.
You can listen to the interview as well as read it below:
Roy: My name is Roy Weissman from MediaJobs.com and today we’re speaking James Duchenne from Mplifyr. Mplifyr helps businesses customize their own affordable and powerful incentive program to rival large programs, but at a fraction of the cost. So, James, how are you today?
James: I’m very good. Thank you, Roy.
Roy: Thank you for spending some time with us. Maybe you can give us a sense of when you started Mplifyr and why you started it? What was the impetus here?
James: So, Mplifyr, it started about four years ago when I wanted to solve a problem. I think most businesses starting out try to solve a problem out there in the marketplace. And the problem was I wanted to create something that had a unified global loyalty platform that offered customization to businesses and increased exponential benefits that were affordable and that would be a no-brainer for businesses.
Obviously, this was much more complex and time-consuming than I thought. So, I started researching the field of gamification and what we called influenced mechanics in 2009. Following years, the concept was deadlocked and we got a patent for our work on the universal point system, the loyalty platforms and subsequently raised capital to start our venture.
We started Mplifyr in 2011. So, about two years ago. And that was after talking which took me the better part of about six months. And once that was on, we raised capital the beginning of last year. And we raised the second round of capital in February of this year. So, the actual work started on Mplifyr around September 2011 and we launched in Beta about a year later. In fact, actually, a year later in September 2012 in Beta. We went live with a commercial product in April of this year. End of March 2013.
Roy: Now, what is your background? What got you into this business?
James: Sure. My background, I’m an engineer. I’m also a lawyer and a financier. I’ve owned several businesses in the mining field, reverse-mining field as well as logistics. And we wanted to create a serial entrepreneur. We wanted to create something that actually incentivized people to come to a business as opposed to another business, which is all the whole concept of loyalty. And that was in 2009 that we started it.
We’ve made several inroads and had several partners sitting on our boards even currently that have required elements to actually get a loyalty program out there and pretty much, one of the best in the world at the moment. So, my background has lots of education and engineering and software programming, as well as a lawyer. And most spectacularly, at the moment, it would be as an entrepreneur. I’ve been an entrepreneur for the past five to six years. Managed several successful businesses, both online and offline.
And Mplifyr is really our crown jewel. Something that has taken a long time to come together as well as be able to get the people interested in it, as well as to get the clientele on the other side.
Roy: So, now, you picked the loyalty marketplace. What made you pick that and what would you say the size of the market is from a revenue overall basis?
James: Well, it depends where we stand. The loyalty market today is very crowded. We’ve got pretty much every business trying to engage their customers in one way or another. And at the moment, you can see that the loyalty, depending on which strand of loyalty market that you look at, it can anywhere between $2.5 billion in the United States. Or loyalty gamification markets to upwards of tens of billions of dollars for the large corporations, airlines and the like.
These loyalty, it’s really important to understand loyalty as a means of actually attracting business. Loyalty in itself is started by business. It sort of works as together with a product. So, the actual product is one thing and loyalty, which is part of sales and marketing, is another. So, to actually obtain a regular clientele, there has to be elements of loyalty, here.
Elements of loyalty in my view, is obtained through trial and error. Seeing what works and what doesn’t. Because at the end of the day, loyalty, what it does, is that it ends up consuming the underlying product and services that a business is offering. So, you cannot disassociate loyalty with the underlying product or service.
To me, it is almost like this. You’ve got a product that you need to get out there, to the real world, to your customers. This product is one thing and it can stand on its own two feet. The minute that you introduce loyalty, a program of sorts, within the business, the loyalty goes hand in hand with that product. And any changes or removal of that program actually affects the underlying business that you’re trying to carry on.
So, loyalty to me is an integral part of every single business out there. It is the driver for consumers to come back to you. It is the driver for consumers to talk about your product. It is the driver for growth and repeat business as well as your customers talking to their friends to come to you. And while certain products can achieve that, obviously on their own two feet, most of the products, because of the competition out there, they cannot do so.
So, what that means, really, is, loyalty, whether I’m conducting in my past businesses such as a logistics company, loyalty is an integral part of that. So, choosing loyalty as a field was a no-brainer for me, because, ultimately, it affects every single business. It is like marketing, it is like sales, it is like the product itself. Once it is integrated within the business, it cannot be separated. Or if it is separated at any point in time, it can really hurt the underlying business itself.
Roy: Well that sounds good and bad. I think that’s basically saying once you get into a company, you can be involved with them for a long period of time. But it would seem like before an organization would make a decision to commit to a loyalty program, they would really be concerned that they had no other way to do it. Because once they commit to that loyalty program as you’re commenting, they can’t get out of it.
James: Absolutely. I mean, you can get out of it, but it costs quite a lot. And you can’t be detrimental to the core business. Which is why loyalty is such a specialized field that, ultimately, you really want to make the right choices. And the right choices in any business are based upon a bit of trial and error. Trying out what works best for you. What works for best for your customers, what sort of benefits that they get at the end of the day.
But ultimately, it could be a quite vast, devastating scene for you to actually grab and run your loyalty program with one company. And you try to disassociate yourself with that company, then it could affect your business, absolutely. Which is why loyalty programs, incentive programs and the like, must be carefully thought of before going into it. Which also leads me into something else.
Most companies that do not have the funds at the moment, what they’re trying to do is they’re trying to find the cheapest, sort of solution out there, because their competitors have some sort of program active. It’s sort of working, but they’re trying to compete with that and offer the same benefits to the same customer pool without really thinking about the consequences of loyalty.
I can give you an example. There was an airline, I think it was JetBlue, that started out by saying “Hey, you know what? We’ve got the best seats in the market. Our service is excellent. Everything is beautiful. We do not need a loyalty program.” That lasted a year because most of the airlines have a loyalty program and people look up to this. And by going into it, if you try to amend it. For example, if JetBlue tries to amend their loyalty program. You might have tried to stop their loyalty program overnight. It would really damage their core business.
I can give you another example which is Qantas. Qantas is an Australian airline and one of the biggest airlines in the world, as well. And they introduced their frequent-flyer points some years ago. And it’s working so well that the loyalty division of the airline is making more money than the actual airline is.
Taking off that loyalty program will hurt the business. Which is why they need to make sure that it runs perfectly. Have attention enormous attention to it, because taking the top layer of the loyalty program can significantly up the underlying business.
Roy: Now, what percentage of the companies out there would you say have a loyalty program?
James: At the moment, well, we have to differentiate. We’ve got three, mainly three different types of programs. You’ve got the points, the earn and burn like the airlines and they’re like most of the airlines now have a loyalty program. I think that’s a no-brainer, to compete, they actually need to offer the benefits to their customers. We have smaller businesses that are now, with the advent of technology, using cloud-based software to run their “Buy 10 get 1 free” or small gamification aspects. “Do something for me and I’ll give you a free coffee, for example.” And that is growing quite quickly at the moment. Because most of their competitors have a similar sort of program out there. Whether it is card-based or not.
And the third type, really, is the online market, utilizing what we call the “gamification aspect.” Which it is using game mechanics to engage audiences online. And what that actually does is that entrusts to a person to a certain site and gets them to come back to that site. To create repeat purchases and the like.
To answer your question, what is the percentage of businesses that have a loyalty program? I would say most of the businesses have a loyalty program already as part of their business model. It might not be an automated one. It might not be a program that’s run online. But, ultimately, they all do have the same. They all offer a certain, sort of, discount. They all have a percentage of referrals.
Roy: I was going to say, but you said before, that once people start a loyalty program, it’s very hard to drop it or to change companies. So, given that and given that what you just said, that a lot of companies have some kind of program, how do you anticipate being able to get this business?
James: In terms with Mplifyr, you mean?
Roy: In other words, when we started the call, you brought up a very good point. You said that companies that start loyalty programs are loathe to end them because the customers get upset. So, it’s very difficult to end a loyalty program. And then I just asked you, but you said that many companies have loyalty programs. And therefore, it’s very hard to end it and you said it’s also very hard to change vendors because you’re changing the functions or the benefits or whatever elements are in the program.
So, obviously, you guys are answering what you, to note, as a crowded field. A lot of people already have programs and it’s hard to get them to switch. So, what is the secret sauce that you guys are doing that’s going to give you the ability to get in there and make something happen for you guys?
James: Sure, I understand. I’ll answer this question in two parts. The first part, a great thing, you know, that the fact that everyone has a loyalty program and how we build on that. And the second part is to what we do offer as Mplifyr.
So, the first part is most businesses have said “Have some sort of loyalty.” And, ultimately, when their competitors gravitate towards a benefit system for their customers, the loyalty program of the one business that does not have it tries to gravitate to match that loyalty program of their competitor.
So, as an example, two companies. One has a “Buy 10, Get 1 Free” loyalty or for some people, a rewards program, for their customers. And the other one has the same. They then try to gravitate to something called the points-based system. Where they can offer way more benefits to their customers, leaving their competitors for dead, pretty much. The other competitor of what they’re trying to do, now, is trying to match that. Because, obviously, the benefits of the customer, between those two companies, are unequal. So, that’s where we come in. And that’s where some of our competitors come in.
The main thing at Mplifyr is that we can offer a program to businesses that they can set up themselves very quickly and try it out without a contract setup of subscription fee. Which allows individuals to earn and redeem from any business that has built their program on Mplifyr. This is completely different to all the loyalty programs like CVS, Walgreens and pretty much every other loyalty program, except maybe the airline model.
The second thing is, the way that we earn revenue to be front to any program on the market. We do not charge monthly fees like our competitors. Businesses on Mplifyr only purchase points per month. That build reward, their customers after they complete earning activities in their program. When they run out, they simply top up, like adding mobile phone minutes to a plan.
So, those that got that solution out there that businesses can quickly tap into to generate even more value to their customers. We offer something that is way more than the “Buy 10 get 1 free” for example. Or, most of what our competitors are actually in the identification field. For example, “Come into my store, high-five me and I’ll get five points and I’ll use those five points with that same business.” With us, it works like this. “Come into our store, high-five us and you’ll get five points.” Use those five points for the business down the road.
The flexibility of Mplifyr as a platform is enormous. Because you can have several businesses or individuals to earn and redeem from. There is one pool of points, so that when they log-in to their profile or their account, they only deal with one point. They do not deal with five CVS points, five Walgreens points, five some other points. It’s all universal points, which is why, at the end of the day, we call it the “universal points.” And we do this on a global basis.
Roy: So, let me see if I understand this? So, in essence, if Walgreens, well, it might not be three competitors. I think some examples, if a supermarket down the street, Whole Foods and Walgreens and Best Buy, are all in your program. And they’re all awarding Mplifyr points. So, I can spend money at Best Buy and earn 1,000 Mplifyr points and then, go to Walgreens and use them?
Roy: The whole concept is that your points are supportable within your points network. Now, I saw on the site, you listed some other point companies. I think American Airlines, some other things. Does that mean that I can transfer my points into American Airlines also?
James: That is correct. And what we actually allow and the reason why we can do this and the reason why we’re pretty much the only company that can do this at the moment, especially because we market to the small to the small and medium businesses, is allow those businesses to issue their own points, which we call “universal points.” Based on our patented solution, those points into go individuals’ account. Those individuals now have the power to use it the way that they want to use it. They can cash it out, they can wait for mystery redemptions. They can exchange it back at CVS or Walgreens, for example. Or they can exchange it for frequent-flyer miles, Best Buy points and the like.
But, certainly, we’ve broken down the barrier of the singularities. So, if I earn points from “X” business, I have to spend it at “X” business. And we do this on a verbal scale.
Roy: Now, what’s the difference between what you’re doing and my points?
James: My points are different. My points, they actually don’t build a program for the small and medium businesses. They allow you to, and points.com, as well, does that. They allow you to earn points from airlines and all that and exchange it to different areas such as airline points to Best Buy and the like.
What we’re actually doing is we’re going, without platform, allows those small businesses to say “This is my program. I will give you five universal points if you purchase from me. Or I will give you five universal points if you high-five me in the street.” Or whatever activity that suits that business. It’s customizable to that if it’s good business. Once that individual has that, they can obviously go back to that business, but the benefit is there for that business to engage with that customer.
Now, the benefit now is I can go and exchange my points through easy-market airlines, for example, and go on points.com and exchange it from United to Best Buy or something else. Our program, that aspect of the points exchange, we’ve got that as part of our platform. But it is not the main driver. The main driver is to allow small businesses to create their own loyalty-incentive program that rivals the big guys in the way that works for them.
Each loyalty program is not going to work the same for every business. In fact, I’ve heard several times before, that loyalty programs are not for a certain business we can’t agree with for the reasons I’ve said before. But the benefits to the individual is for that business to have customized a program that actually works for them.
I’m thinking of companies like Pickett Street who already have a system to build programs for businesses. What we’re doing is, instead of charging the small and medium businesses and arm and a leg to actually get part of that program, we’re offering it for pretty much, free. And they start paying when they start rewarding their individuals. So, it’s a pay-as-you-go system.
So, the difference between us is we build it, it’s been done as a do-it-yourself program, but we can build it for the business, tailored to what they need in much less time than any other company can do it out there. And also provide, if not the same, there are much more benefits to the underlying customer that comes to that business.
Roy: So, what would you say the top three industries or verticals that are the most potential for you guys? What are the most significant ones that you should be on right in two seconds?
James: When we started, we were looking at the retail industry, which, obviously, is really saturated. We were looking at the restaurant industry, food and beverages, the hotel industry. We’re not talking about the InterContinental Hotels and all that. But call the small and medium businesses to obviously engage their customers a bit more on social media and beyond that.
What we actually found out was, out of those industries, there was a large number of industry groups that were interested in some sort of loyalty or incentive program, not only for their employees, but also for their customers at large. For other businesses in the wholesale industry. So, what we found out is what we got accountants on our platform that basically said “Hey, you come to me. You file your taxes and you leave us your tax returns with us and we’ll give a flat 500 universal points.”
We found a lot of professional services that are trying to get up there to differentiate their services. Obviously, where the service is of equal, sort of, value to their competitors. Where there is unequal value, then loyalty doesn’t work. If I have an iPad, which is great and I had a 1980’s TV, these are, sort of, similar products in values. Therefore, loyalty doesn’t really work.
The three main industries that we’re looking at at the moment, is, believe it or not, the professional industry. The last business that we got on board was a professional recruiter, an employment recruiter that wanted to generate referrals by using a loyalty program. And she didn’t want to spend $10,000 for the setup and all that. She wanted to try out what worked for her. And we’re actually, in the middle of going through that with her now.
So, in my mind, the most untapped markets at the moment is the professional industry. The restaurant industry, people know about it, so, people are more likely to interact with it. And the third one, for us, is the hotel industry.
Roy: That’s fantastic.
James: Leaving the retail out of the way, I think retail is really overcrowded at the moment.
Roy: So, now, you’ve almost been launched almost a year. September of a year, a few more months. What do you think, within the timeframe, how have you been doing with the specs, the customer acquisitions, sales. Can you provide any numbers, metrics, anything, to share?
James: I can provide, briefly, an overview of what we’ve been doing. So, we’ve launched in Beta. We were building the product for a year prior to September 2012. When we launched in Beta, it was a closed launch. And we signed up 44 or 45 businesses, I can’t remember. Around the 40’s. 40 businesses that were using the platform. They brought on their customers to it. And since we’ve went live in April, we’ve added a further 57 businesses to this.
The main issue that we’ve been having and it’s the same with most of the businesses that we’ve been involved in, is that the question of success or the question of actually getting your product out there, is really a matter of timing. It’s a matter of timing, it’s a matter of content, it’s a matter of people trying it out and getting it out there to their customers, as well.
So, what we’ve been doing as most online-based companies are doing, is building the content, generating the sign-ups, attracting people onto the platform and the like. So, we have been, our analytics have shown that we’ve been, reasonably, it hasn’t been anything like an exponential growth. But we’re growing every single month. We’ve started generating revenues from September 2012 to February 2013. We hadn’t had any revenues because we were still in our Beta phase. So, those revenues started coming in, in April 2013, which was a month and a half ago. And it’s building and pretty much doubling in May and in June, I think we should be pretty much around the same level as May.
Roy: How many employees do you have guys now?
James: We’ve got 11 employees. Most of our employees are shareholders of the corporation. We’ve got 21 shareholders at the moment through both seed capital raisings. Most of the employees are in the programming field. We’ve got lawyers, accountants, marketing executives. I would say about half of the people are pretty much in the programming field.
Roy: Now, you’re based in Houston, right?
James: Our head office, Mplifyr is owned SEiiAN Rewards, which is a company I founded quite a long time ago. And SEiiAN Rewards owns Mplifyr, LLC in the United States. Because our business is a global business, we do pretty much a transaction in Australia, as well as in the States. So, our head office for both Mplifyr, LLC and SEiiAN Rewards is in Australia. We do conduct business through our company here in the United States, as well.
Roy: Well, it sounds like you’ve put a lot of work into a very sophisticated business that has enormous potential. Have you thought about where you think you’re going to be in a year or two from a revenue or customer-based standpoint?
James: We’ve got quite a lot of projections and the like, required for our shareholders and potential investors, as well. Where we are at the moment, we’ve got just over 100 businesses on the platform. What we are looking at is a sort of trend. You can’t extrapolate a startup from zero to a million businesses because it doesn’t work. We need actual data.
What we’re doing at the moment, in April and May, we’ve been building the data. And we’re starting to see a trend and once this trend is achieved, then we can be better-assured as to where we’re going to go. But, obviously, our aim is to achieve, at the current growth rate that we have, is within a year to achieve 1,000 businesses on the platform.
And each business, because they enroll their own customers to Mplifyr, rather than those customers signing up to Mplifyr, themselves, it can attract quite a lot more math from the customers’ standpoint. So, in terms of revenue, we’re hoping that we can service out debts really from revenue items, within the next six months or so. That’s what our projections are looking at.
And in terms of the actual math on the platform, we’re hoping that, as I said, about 1,000 businesses and in terms of the customers. Each business would have 2,000 people, roughly. So, we’re looking quite large within a year.
Roy: Now you focus those 1,000 businesses, would they be in the U.S. or would they be all over the world?
James: That businesses will be all over the world, but what we’ve noticed is businesses in the United States are more readily ready, I suppose, to try new things. Whenever there is a business such as ours coming out, there is an element of credibility and an element of reputation that has to be built. We’ve been building this for the past number of months, really. Even over the last year. And it only now starting to get into gear and start to pay off some dividends. Which means that the lead-time between the time that you start at zero and the time that you’re starting to receive calls, rather than actually going out and seeking businesses, is something that we’re currently experiencing at the moment.
Roy: Have you thought about what your exit strategy would be?
James: I think the exit strategy is going to be for the shareholders and directors to consider; we have spoken quite a bit about that. And it is information that at this stage I’m not privy to release, unfortunately.
Roy: Well, that’s okay. Is there anything that I didn’t mention that you wanted to cover that you thought was important to talk about?
James: Sure, I think the most important thing is what differentiates our business model and others, really. And I think that’s a critical element. Most solutions in the marketplace for small or medium businesses, they either incur a large program setup cost and maintenance fees or subscription fees with a contractual term. Mplifyr does away with this altogether. And the businesses only pay for the points that they will reward their customers after completing earning activities in their program. So, when they run out of points, they simply top up.
So, there exists some really substantial advantages with this sort of business model. And I can name, really, three advantages on three points. These universal points can be earned from any business on Mplifyr and pooled in one central location. Which means you only need one card, which we call a universal card, and you’ve got one account with universal points. Now, these points, as we’ve touched on before, can be redeemed with any businesses on Mplifyr for items and cash vouchers from them, so they can also be converted to gift cards, air miles, cash and the like.
The second point is, it does also mean that the business can set up their program and be up and running in a matter of minutes and work out what works best for them without any setup fees, contracts or subscription fees. If the current activity they’re offered does not give them the requirement of interaction or engagement, they can quickly change the type of activity until they find a one that works.
That quality is really important because you can get a stuck with a company that has been building your loyalty program. And they are inflexible as to what works best for your business. Then, that would be detrimental to your business as a whole, the underlying product that you’re offering. And obviously, we don’t try that because there’s no contract. If they want to leave at any point in time, they can do so without any penalties.
Now, the third part which is critical for our business model is that we do not need critical mass, since we rely on universal points being purchased. Where a subscription-based model would need, for example, 1,000 businesses at $10 a month to make $10,000. We can do well with only one business purchasing $10,000 worth of points. However, obviously, critical mass is important for providing more avenues for exchange for the customers. But, really, it is not essential at this point in our business model.
So, unlike our competitors that need critical mass because of their subscription base and the like, we’re pretty much after the businesses that are really trying to engage their customers, really trying to get it out there, create the benefits for them. And we do so by generating universal points that is used almost as a rewards currency with their customers.
Roy: So, it sounds like you built a low-cost, high-value solution for loyalty programs for small to medium-sized business?
James: That’s exactly what we built.
Roy: That’s fantastic. I mean, it definitely, again, here’s another example of a company that’s creating, taking the same business model that’s been around for years. Just changing it a little and designing it to appeal to a whole segment of the market that really is desperately in need of cost-effective loyalty programs for their customers. And something that has enormous value, because if they earn money at one store, they can use it at another store.
And it’s so easy to setup. People can go online and set it up. Definitely, this is the kind of business we can see really booming in a few years. James, how can people reach you if they want to reach you?
James: They can reach us. Well, we’ve got the website, Mplifyr.com. M‑P-L-I-F-Y‑R.com. They can reach us at our info email address which is email@example.com. And they can also call us in the United States. Which is 1–888-414‑6651 phone number. And they can pretty much can get through to us. I mean, we’ve got quite a lot of people just looking out there, customers. And in Australia they can also call 1 300 SEIIAN which is 734426.
Roy: Well, that sounds fantastic. So, it sounds like physicists should be signing up right away. They just have to go to your website and they can have a loyalty program within minutes.
James: Exactly right, that’s right. And in a loyalty program that can rival any big program, use it very well, take your time and you’ll get there.
Roy: Well, thank you very much, James.
James: Thank you.