Len Covello: CTO at Engage People Comments on Loyalty Rewards Landscape and Opportunity for Financial Institutions
Published April 9, 2022, 11:28 a.m. by Omar Faridi
We recently caught up with Len Covello, CTO at Engage People, the loyalty network that enables program members to pay with points (PwP) directly at checkout.
Covello talked about the ongoing growth of the loyalty rewards landscape and the opportunity for retailers and financial institutions.
In January 2022, Engage People had reported a 33% increase in YoY revenue in 2021. Access+, Engage People’s platform that powers the loyalty network and PwP capabilities, grew revenue “by 94% – a signal of continued demand from retailers and financial institutions for the convenience of paying with points,” according to an update shared with Crowdfund Insider.
In addition, its Podium Loyalty platform saw revenue increase by over 32%, and merchandise and gift card sales via the platform surged by over 23% in 2021. The growth achieved across Engage People’s suite of loyalty solutions has been attributed to the Fintech firm’s dedication “to expanding its loyalty network while enabling a better customer experience for its partners.”
Jonathan Silver, CEO of Engage People, stated (in January 2022):
“2021 was a year of growth for our business as a whole, from attracting new partners to strengthening our investment in expanding talent. We’ve created a strong foundation for the year ahead, and we’re energized by the prospect of adding more retailers and FIs to our loyalty network – ultimately, helping them to deliver pay-with-points capabilities to their customers.”
Our conversation with Len Covello is shared below.
Crowdfund Insider: I recently saw that Engage People’s loyalty network grew by 94% last year.
Can you share the key factors that are driving demand for this network and its offering?
Len Covello: The value, convenience and flexibility of paying with points is what is fueling demand.
Over the past couple of years, the industry has witnessed substantial growth and wider acceptance of loyalty points as fiat currency from consumers, retailers and loyalty program sponsors alike. This trend has mirrored the acceptance of other alternative currencies and payment options, like crypto and buy now, pay later, for example.
From a brands perspective, retailers are beginning to realize the benefits of joining a loyalty network – which provides better access and more engagement with customers. This realization helps to bring more of them into the fold and translates into increased purchasing options for loyalty program members.
Crowdfund Insider: The pandemic has shifted how consumers complete their everyday purchases – in part by leaning more towards flexible payment options.
How does consumer demand to (PwP) impact retailers and financial institutions (FIs) subsequently?
Len Covello: The pandemic initially accelerated the adoption of contactless payments as people moved away from cash given health and safety concerns. This led to the increased demand for the use of alternative payments through mobile devices – including the use of loyalty currencies.
Fast forward two years, and retailers and financial institutions still have the opportunity to take advantage of new ways to interact with customers and increase engagement using their loyalty programs and points. For example, the adoption of pay with points (PwP) has helped FIs and retailers increase interactions for all loyalty program members, even those with lower point balances. Expanding redemption options increases engagement and expands the customer base.
Lastly, by allowing customers the ability to pay with points for every-day items and aspirational purchases – the latter of which we identified as a trend during the height of the pandemic – they are able to extend purchasing power and limit the impact on credit or cash.
Crowdfund Insider: With the emergence of innovative loyalty perks like the ability to pay with points, are traditional perks like gift cards, merchandise and travel credits still relevant?
Len Covello: Traditional perks are still an important part of the marketing mix for loyalty programs. The ubiquity and extensible nature of points means greater flexibility and convenience of things like e-gift cards, the purchase of travel-related products, and merchandise.
And while merchandise catalogs have shown some limitations over the last few years given shifts in consumer demand, these catalogs still have some merit. However, now the focus is on a curated network of ecommerce partners offering a breadth of products rather than a limited catalog.
Crowdfund Insider: What are some of the other ways that FIs and retailers can retain customers through reward programs?
Len Covello: One of the best ways to retain customers is by increasing communication of offers that are truly personalized and meaningful. This provides a better customer experience, which helps to create an emotional connection between the brand and customer. Pair customization with delivering flexibility, convenience, value, and more options to redeem, and that connection is even more solidified.
Other avenues for increased retention include tools like bonus points on purchases, unique offers only available to members, and discounts for members on products available through retailers in a loyalty network. All of these avenues help to create a unique and special experience that is only available through loyalty program membership.
Crowdfund Insider: How do you see the loyalty space evolving as a whole over the next one to three years?
Len Covello: Over the next one to three years, we’ll begin to see the expansion of redemption options including using your points at a network of strong partner brands, not just online, but also in-store. This will give consumers the option to use their loyalty points as currency when going to get groceries or buying their daily coffee.
We’ll also see a continued acceptance of points as a form of payment along with BNPL and crypto being incorporated into loyalty programs.
Looking beyond payments technology, an increased usage of artificial intelligence will help deliver the right product at the right time through the right channel to customers. This will help lead to greater customer connections through all channels and in all customer communications.