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The ability for loyalty program members to directly buy points from their program for themselves or as a gift to others, or to transfer them from one account to another, has become a staple amongst reward schemes. And with good reason: Given that most rewards, such as a free flight, are available at a fixed threshold of points, these features allow members to top up their points balance and unlock the reward they desire.
For programs, “Buy Gift Transfer” (BGT) services are big business: In aggregate, they are often the 3rd most important source of accumulation, after the program’s “parent” company (say, an airline) and banking partners. So it’s not surprising to see many programs offer BGT in one form or another.
Often programs develop this functionality in-house. After all, they are selling their own rewards currency to their own members. A good number, however, have decided that either due to technical development efforts or time-to-market concerns, they would rather work with an outside provider offering a ready-made solution.
Until now, one company dominated the outsourced BGT space, profiting handsomely from its position. On its loyalty points retailing business, it realized an 11% gross margin and 5% EBITDA on over USD25M in revenues. It achieved these plush profits by bundling simple transactional capabilities with high-margin marketing services promoting the feature on the loyalty program’s behalf. Programs interested in outsourcing their BGT functionality had to accept this package, sharing profit margins with a 3rd party.
At Loylogic, we believe in the power of Choice. Not just for members, but also for loyalty program operators. This is why Loylogic has launched a straightforward, turn-key BGT solution at a much lower cost, letting programs maximize their profit margin.
Loylogic takes the role of a simple agent, facilitating the technical and transactional components of buying points. The loyalty program, typically already a data-rich marketing powerhouse, is free to use its own communication channels and tools to promote the BGT feature to its members.
This leaves more of the profit from the sale of points at the program’s disposal, either to capture it itself or to re-invest it into a superior value proposition for members. Since launch this summer more than 5 clients are already reaping the benefits, with more on the way.
Buy, Gift and Transfer features are a must-have for any sophisticated loyalty program. Outsourcing the technology component often makes sense, but programs should think twice before paying the price they are currently asked for.
Thanks to Loylogic, program operators now have a choice.