Freedelity is a company established in Brussels and which got pretty much press coverage this summer.
Freedelity launched a service based on the electronic ID card used in Belgium; namely, Freedelity proposes to use the ID card as a loyalty card. Advantages are obvious:
- no need to loose time filling in a questionnaire, the data being automatically retrieved from the chip on the ID card
- no need to have a loyalty card for the shops participating in the action
Freedelity offers an interface where clients can get an overview of the points collected, the discount they can claim, depending on the type of loyalty scheme chosen by the merchant.In the future Freedelity plans also to offer an interface for merchants to manage their database with marketing tools.
I had a very interesting discussion prior to the interview with Marc, whom I met for the first time at the 20th Beta-Group in Brussels. His concept is elegant and certainly innovative compared to old and classic loyalty systems. The percentage of clients accepting to use their ID card is also, according to Marc, superior to the normal rate. Marc quoted a percentage of 90% vs. 60% for traditional loyalty cards. I can confirm the latter since I worked with several companies selling loyalty cards / systems and this is indeed the rate I could calculate based on real databases.
This being said I see also a number of drawbacks or limitations.
First of all, I’m unsure about the willingness of entrepreneurs to make use of online tools that may be put at their disposal. Too often in my consultancy work I see owners (of sometimes large SME’s) not even having a marketing strategy. Moreover lack of knowledge certainly will not allow the majority of owners to use the information at their disposal.
Second, I’m unsure about the impact of encouraging entrepreneurs to give discounts to their clients. Marc stressed that this is the rule in Belgium but as a marketer I’m opposed to giving discounts. This can not be a loyalty driver and will only increase the expectations of customers on the long-run. If such a system is adopted by all firms it will not be a source of differentiation anymore (think about airlines), rather a source of costs and diminishing benefits.
Last but not least, generalized discounts may have an impact on margins which are by nature already tight. Imagine you give the 11th product for free. In the end you’ll be, as an entrepreneur, about 9% worse off.
My take:
Freedelity offers an innovative approach to the loyalty card and enables entrepreneurs to enjoy greater application rates to loyalty schemes.
I think however that sme’s will use this tool superficially, namely will only see the Freedelity concept as a tool to foster loyalty. This is however not the case. Freedelity should be seen as a provider of loyalty information and here’s the big issue in my opinion. SME’s, which are the targeted clients of Freedelity, understand insufficiently (or not at all in most cases) the drivers of loyalty and will not make use of all instruments unless they are properly educated.
Interview Marc Alagem CEO de la société Freedelity from pierre-nicolas schwab on Vimeo.
Posted in Entrepreneurship, Marketing.
