How instant gratification drives loyalty

Australian companies looking to scale up through a capital raising in recent months have found the going tough, but the fintech PokitPal has bucked the trend.

Rapid growth and an impressive list of new customers has helped the business raise growth capital from a combination of new and existing investors to leverage current trends in the rewards program sector.

Rewards programs are a tried and true method of increasing sales, with customers enrolled in these programs generally spending more and showing a greater willingness to recommend their favoured brands to others.

In fact, research conducted by McKinsey shows 60 per cent of consumers surveyed indicated that being a member of a rewards program had influenced them to either increase their purchasing frequency, more often choose that brand over others, or be willing to recommend the brand to others.

Now, with the economy tightening, consumers are showing a preference for cash over reward points and options on how to use that cash, including donating to a cause or investment.

“Loyalty programs have been around for a long time, but a lot of consumers miss out on rewards because it’s too hard to carry around all the cards or vouchers,” says Pokitpal chief executive Gary Cobain. “We’ve built the technology so the user just needs to register their existing payment cards and then we gather the rewards that are due and funnel those back to the user.”

Cobain says current consumer behaviour shows a preference for cash-back offers in many markets, with card providers and investment platforms now looking for different ways to meet that demand.

“As we see a shift towards cash-based rewards programs, organisations are moving away from points-based systems,” he says. “Not all organisations have the necessary technology in place to switch to this new approach, which has resulted in an influx of them coming to us for help with using cash-based rewards to incentivise and build loyalty to retain their customers.

“Ultimately, we are a data-driven business and we can use the insights gained from card and open banking data to personalise user experiences,” Cobain adds.

Pokitpal now supports 18 rewards programs for a combination of banks, fintechs and not-for-profit organisations.

In each case the company uses real-time transaction data and provides a list of offers to consumers, which are presented through APIs to banking or investment apps, such as Virgin Money and Raiz. It takes the hard work out of redeeming rewards and provides consumers with the instant gratification that drives loyalty.

The company recently acquired Sipora, a Fintech company with a roundup service that leverages Open Banking data provided by Basiq to help consumers save and invest on a daily basis.

Ronald McDonald House has adopted the technology to enable its supporters to donate their roundups, and the funds donated are put to good use helping sick children.

Cobain says the acquisition accelerates plans to personalise its service for consumers and enhances its offering for banks and fintechs.

“Consumers who leverage PokitPal’s technology can invest the cashback rewards and roundups, donate a portion to good causes, direct the funds into their savings account, and invest it in share portfolios or super funds,’’ he says. ‘‘We support a wide variety of options, so if consumers want to save, pay off their bills or donate using their rewards, we make it easy for them.”

Pokitpal started off as a consumer business that was focused almost exclusively on physical retailers, but the lockdowns caused by COVID-19 meant the business had to shift its focus. In hindsight, it was a profitable move, Cobain says.

“We really had to pivot during the lockdowns to survive. We are now a SaaS business that works with card issuers and fintechs and our retail team focuses equally on instore and online retail,’’ he says. ‘‘We’re now working with more than 1000 Australian retailers to help them attract and reward customers.’’

With that customer growth, PokitPal has attracted interest from investors and recently accepted $2 million of investment from a combination of new and existing investors.

The injection of funds was immediately put to work and is being used to expand the team and the range of products offered to customers.

The latest funding round was led by iGoDirect Group founder Pat Dalton, who has been a leader in the rewards industry for more than 25 years. She says customers now prefer to get discounts and earn rewards points without having to remember codes or coupons.

“The Pokitpal solution provides end customers with the very best in a cashback loyalty platform,’’ Dalton says. ‘‘It lets them earn cash back on their regular spending, which creates a better shopping experience and leads to a higher likelihood that customers will return to make repeat purchases.’’