Loyalty cards are inefficient and generate a lot of waste. Even digital ones. A while ago, I was at a music shop and decided to preorder a music album for a friend.
To my delight, I received two chops on Perx, a loyalty card app I recently featured. But to my dismay, I was eight chops away from getting my reward. And it’s extremely unlikely I’ll step into the store ever again — I’m just not an avid music listener.
Here’s the problem with loyalty cards: They don’t always capture loyal customers. And when they don’t, they’re a burden to merchants.
This is a problem Singapore-based startup Squiryl hopes to solve. Unlike other loyalty card apps, it allows users to swap stamps — or acorns, in their lingo — with one another.
Suppose I have two acorns at a restaurant I’ll never visit again. I can use the Trades feature to exchange acorns with others by putting up an offer. For example, I can offer two acorns from Fisherios Fish n Chips in exchange for three acorns at a Puma store.
While critics might argue that such trades defeat the purpose of loyalty cards since it diverts customers away, Squiryl co-founder Mulyadi Syariffudin disagrees.
“We gave up the [advertising] agency because we believe in burning our boats so that we can’t turn back.”
Customers who don’t like a product are unlikely to come back to the store anyway. So, why not exchange them for another customer who willingly traded for your acorns? With some acorns in hand, customers are more likely to visit a store since rewards are more easily attainable.
“If you lose one, you get another one. That’s the worst scenario. In the best situation, customers that get acorns spread the word, resulting in more sales for merchants,” he says.
While past apps have tried universal currency, merchants revolted because consumers can effectively get points at one brand and use it to redeem rewards at another. Acorns, on the other hand, are always tied to a merchant. They can only be used on one particular brand at a time.
The net effect is greater market efficiency. Instead of taking a slice of a small pie, Squiryl hopes to enlarge it by making the concept of loyalty points more relevant for customers.
They’re essentially hoping to do what Google did with Adsense: Making an entire industry more efficient, resulting in better returns for both merchants and consumers. Except that while Google is achieving this with algorithms, Squiryl is doing it with social exchange.
This social element is at the heart of Squiryl’s vision. Ultimately, they aim to be the universal social network for loyalty points — a fundamentally different approach from their competitor Perx, which is more of a marketing tool than anything else. Squiryl is working on more social features right now.
How Squiryl works:
Mulyadi was candid in his interview about competing with the more well-funded Perx, and how Squiryl lost out initially in the battle for merchants. Perx gained the advantage in Singapore with a clustering strategy — by targeting merchants in a particular area, those who didn’t use the app felt left out and wanted in too.
Even though Squiryl is forever free, merchants on Perx were hesitant to switch to another loyalty card program. Another painful lesson Mulyadi learnt was the importance of putting their product out there fast, even though it may be flawed.
Mulyadi also admits that Squiryl doesn’t have as much marketing muscle as their Saverin-funded competitor, and as such are less visible to consumers. This is painfully obvious to me — as I stroll around Singapore, the Perx logo is visible on storefronts everywhere, while Squiryl seems obscure.
But he and co-founder Alan Lee are a scrappy bunch: They’ve managed to amass 15,000 downloads and 6,000 monthly active users despite their constraints. About 100 store locations are on their program, issuing out a total of 9,400 acorns in March and April. They officially launched at DEMO Asia 2012 in March, six months after Perx.
Squiryl is determined to catch up. They have already set up an office in Indonesia and hired a sales team there. Their BlackBerry app will launch in a few days time, while their Android app will unveil in mid-June. They are working feverishly hard to get Indonesian merchants on board, aiming for 500 outlets and 150,000 users in Indonesia by November.
Mulyadi isn’t aware of any prominent mobile loyalty card app in Indonesia. Over there, the loyalty card scene is dominated by credit card programs, but he argues that these loyalty schemes build brand affinity for the credit cards rather than merchants.
It’s still too early to tell how the loyalty card battle will pan out. There’s still a lot of untapped retail real estate in Asia, and I’m curious to see who will be the first to develop loyalty programs for the white-hot mobile commerce industry. I’m also interested to see how Mobipoint and Spoqa will perform in South Korea.
For both Alan and Mulyadi, it’s a race not just against competitors, but against the clock. Both of them are married, and Mulyadi has four young daughters. Having bootstrapped all the way, the co-founders find themselves with a runway of six to twelve months.
Mulyadi himself was running an advertising agency before giving it up to pursue his dream. Alan is a serial entrepreneur who is proficient in web development.
“Me and Alan, we’re very particular, we gave up the agency because we believe in burning our boats so that we can’t turn back,” he says.
Their immediate concern for now isn’t revenue — but getting user traction. They’re also seeking the right investors, having previously rejected one who wanted Squiryl to scrape its trading program.
Having family commitments have imbued them with a sense of desperation — and this could work in their favor.
“We’re different from other startups because we’re in our early twenties, so there’s more urgency for us. This thing has to work.”
Link to full article