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  • W W W . C O L L O Q U Y . C O M

    FEBRUARY 2017



  • 2< >C O L L O Q U Y : A S I A P A C I F I C R E P O R T W W W . C O L L O Q U Y . C O M

    C O N N E C T I N G C O N S U M E R S A C R O S S B O R D E R S , C U R R E N C I E S Gabi Kool, CEO, PINS

    I T S T I M E F O R A C - L E V E L R E T H I N K O F L OYA LT Y I N A S I A PA C I F I C Dominic Powers, investor, adviser and connector for marketing and consumer- focused startups

    G R O C E RY C A M PA I G N I N C H I N A F E E D S S H O P P E R S E X C I T E M E N T Richard Petignaud, general manager, North Asia, BrandLoyalty

    T H E J O U R N E Y F R O M P R I C E TO VA L U E , F R O M P R O S P E C T S TO C U S TO M E R S Caroline Papadatos, senior vice president, LoyaltyOne Global Solutions

    W H AT S T R E N D I N G N OW A N D W H AT T H E F U T U R E C O U L D H O L D F O R L OYA LT Y I N I N D I A Vikas Chandak, head of partnerships, alliances and strategic businesses, JetPrivilege Private Ltd.

    E D I TO R S L E T T E R A N e w L o o k a t G l o b a l L oy a l t y Caroline Papadatos, senior vice president, LoyaltyOne Global Solutions

    I N A U S T R A L I A , BA N K S O F T E N F O R G E T T H E C U S TO M E R S I N FAV O R O F T H E C A S H Damon Pal, sales director, Australia and New Zealand, Epsilon

    C L I C K T H E Q O N A N Y P A G E T O R E T U R N T O T H E TA B L E O F C O N T E N T S .










  • 3< >C O L L O Q U Y : A S I A P A C I F I C R E P O R T W W W . C O L L O Q U Y . C O M

    Im a long-haul flyer, spending most of my days meeting retailers and loyalty leaders across multiple time zones. LoyaltyOne operates in more than 50 countries worldwide, and my grueling travel schedule gives me a unique lens on global changes to customer attitudes, payments, fintech, data, shopping, experience and technology that could transform customer management. Ive been astonished by the groundbreaking loyalty innovations in Asia and Australia, and I believe some of those innovations are setting the stage for the next generation of global customer management.

    Think the sun only rises and sets in North America? Think again. While there is a general perception that retail sophistication and customer-centricity are more advanced in mature consumer markets where competition is high and margins are razor-thin, it might be time to take a second look. Innovation is fueled by changing competitive

    forces, regulatory pressures, consumer attitudes, digital platforms, technology adoption and unsettling social conditions. With the majority of the worlds youth population growing up in Asia with smartphones in hand, disruptive change is moving at lightning speed in the East, with few of the legacy constraints that slow growth in mature markets.

    In 2002 in Australia, the Reserve Bank mandated a drop in interchange rates charged on credit cards. It was the shot heard around the world by every loyalty leader and bank credit card issuer! Since the launch of the Diners Club card in the

    Think the sun only rises and sets in North America? Think again.

    E D I T O R S L E T T E R

    Caroline Papadatos

    In Asia and Australia, change is constant in competitive forces, consumer attitudes, technology, regulations and social conditions. This creates a loyalty landscape that is innovative and always interesting.



  • 4< >C O L L O Q U Y : A S I A P A C I F I C R E P O R T W W W . C O L L O Q U Y . C O M

    1980s, interchange had funded a significant portion of bank loyalty and frequent flyer program reve-nues. Roll forward to May 2016, when interchange fees in Australia were halved again! Now issuers all over the world are watching to see how Qantas, Virgin Australia and the big four Australian banks will rethink cardholder loyalty. (Read our article on page 6 by Damon Pal, from Epsilon Australia, on bank strategies in Australia.)

    Lets move to India, the worlds largest consumer market, where loyalty is a relatively nascent strategy. With retail competition just heating up to capture the attention of the 200 million-strong emerging mid-dle class by 2020, how will Indian loyalty leaders deliver value to consumers with smaller baskets and a reduced funding base? India is rapidly becoming a data, technology and digital hub. Vikas Chandak gives us a window into market shifts including the rise of program commoditization and increasing complexity as programs interact in new models and shares his predictions on the future of loyalty on page 9.

    In Hong Kong, we upgrade to business class with Dominic Powers, who brings his unique perspective to the chase for top-tier spending from frequent flyers. When Cathay Pacifics Marco Polo program reallocates reward value to the most profitable customer segments, how can it create differentiated customer experiences and financial benefits for the base of occasional travelers? Read Powers perspective on page 19.

    Japan and Turkey are different stories altogether, and PINS is breaking new ground in bringing tradi-tional loyalty practices to non-traditional arenas like media, healthcare, insurance and highways. Consumers are being rewarded for all manner of beneficial behaviors, and loyalty-program metrics are

    Editors Letter


  • being recalibrated to measure unexpected social and economic benefits. Increasingly, were also see-ing the focus of loyalty programs shifting to fungible currencies that can be easily collected, converted and redeemed for branded experiences and travel that are both attainable and relevant.

    Finally, in the worlds biggest loyalty market, we are witnessing the highs and lows of the digital push. While the number, scale and sophistication of cus-tomer programs is intensifying in China, the customer is still largely disengaged. In fact, member devotion to the WeChat message platform is perhaps the greatest demonstration of brand loyalty in the market, followed closely by one or two payment platforms that have captured consumer attention. The consumer is rapidly becoming attuned to disloyalty

    and behaves with the constant expectation of deals and discount offers. With the explosion of e-commerce growth, offline retailers are fighting hard to maintain market share and retain their base of loyal customers. BrandLoyalty gives us a stunning example of how local grocers are fighting back, using digital means to deliver tangible value to customers and lifting sales by more than 4%. See these stories on pages 14 and 22.

    As West meets East, I invite you to take a second look at global loyalty through the lens of local operators and practitioners. We know full well that innovation in customer management in mature retail markets will not come from further incrementalism, so as Tom Peters would say, Swipe from the best, then adapt.

    Caroline Papadatos is senior vice president of LoyaltyOne Global Solutions. She can be reached at

    Editors Letter

    5< >C O L L O Q U Y : A S I A P A C I F I C R E P O R T W W W . C O L L O Q U Y . C O M

  • 6< >C O L L O Q U Y : A S I A P A C I F I C R E P O R T W W W . C O L L O Q U Y . C O M

    To generate better loyalty, they must embrace a top-to-bottom commitment to better experiences.

    Damon Pal

    Banks Often Forget the Customers in Favor of the Cash

    Take the money and run: That seems to be the customer relationship principle for many banks in Australia. It has been my experience that the retail banks in the Australia/New Zealand region have spent very little effort getting to know their clients.

    But that is likely about to change thanks to several market forces users evolving demands, the maturation of digital services and, perhaps most importantly, the coming cap on interchange

    fees that will open up a world of customer-ex-perience opportunities. Beginning in July 2017, new government regulations will limit the fees charged to businesses to process credit card payments, in


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