Attracting loyal customers – not bargain hunters – through NFC technology

In this audio interview, C-ITV’s Steve Atkins spoke via phone to Kadona’s CEO – Markus Lobmaier. 

Headquartered in Vienna, Austria, and with an office in Palo Alto, CA, Kadona is rapidly making a name for itself around Europe and US. Thanks to its NFC platform solution, Kadona facilitates cost-effective loyalty marketing for merchants; demonstrating a very real return on investment.  At the same time, Kadona’s NFC platform solution ensures that end-users participate in a very simple, but effective shopping experience.

To hear Markus talk more about Kadona, its platform and why merchants prefer loyal customers to bargain hunters, please click below.

The following is an editorial transcript from the phone interview above, conducted by C-ITV’s Steve Atkins with Markus Lobmaier, CEO of Kadona.

Steve Atkins: Tell us a little bit about Kadona and what is an NFC Service Platform?

Markus Lobmaier: An NFC Service Platform is quite a generic term.  Basically, an NFC Service Platform is a platform that already manages over-the -air NFC-based data. And it manages this on a very highly secure level.

This platform, primarily manages the life cycle of NFC applications on a highly secure level. For the retailer, it is very important that the service is really good and works no matter which phone the customer uses. The same goes for the operating system; it shouldn’t matter which mobile network operator the customer has a contract with. What our platform is delivering is that we are bringing the service to any customer, with any phone and any mobile network operator.

SA: What makes you think there’s a market for loyalty cards or coupons or payment cards or bonus cards within this NFC environment?

ML: The market potential is very, very, high and we believe it can be even greater than the market potential many people now see for NFC payment services. If you consider the following: that on average, people have six customer cards in their wallet in Europe – many more than payment cards. Eric Schmidt, the former CEO of Google, has recognized this huge market potential and said that we are going to see a trillion dollar market in this field! And I really believe this is no exaggeration because we think the market will be very huge.

SA: Can you explain the Kadona solution, and in particular, if you could give me more information about your loyalty engine?

ML: These so-called “loyalty engines” are process-based modules. These modules are used for couponing and they are also used for bonus points programs, but we also work on modules for NFC-based in-store promotion, which means interactivity – in-store. This can be product information; this can be sweepstakes, etc. So our solutions enable the retailer to exactly transfer its loyalty programme, one-to-one, to the mobile phone. And this is an important issue, because we believe the requirement of large retail chains is to not change their loyalty programs, but to change the way the program is delivered to the customers. It’s very complicated for many people these days to handle so many plastic cards, or, for instance, paper-based coupons. So what we provide is the ability to enable this, through NFC technology, on mobile phones.

SA: How have retailers that you have spoken to reacted to your arguments and solutions? I mean, specifically, what do they get out of this? What are the benefits to them as opposed to, let’s say, the current paper or plastic-based campaigns that they have today?

ML: What most retailers want is, of course, more satisfied customers, because this means more returns. And they want to have more loyal customers, and less bargain hunters. This is one issue. For the customer and retailer alike, it’s about transactions. Transaction time at the checkout means money, and a shorter transaction time at the checkout also means savings for the retailer. What retailers also want for their customers is an easy solution – a solution on a mobile phone. A solution that is not only for some geeks, or some smart phone users, and not only for young people, but a solution that is really very easy and is for both the young and the old.

SA: What would their customers get out of this?

ML: Yes, that of course is the centre of everything: the customer. For their customers it will be a simplification in their daily life because it will no longer be necessary for them to carry around dozens of cards. I think this is a really relevant issue for many people today.

SA: Are you in any trials at the moment?

ML: Yes we are. Right now we have a field-testing with BIPA, a daughter of the REWE Group, as retail partner. On the MNO side, we have Deutsche Telekom as a partner in this field-testing. We are doing this for several months and we will go on for several months more.

SA: It’s interesting that you guys are based in Vienna. Normally most companies that are doing this kind of thing, I imagine, would to be based in somewhere like, I don’t know, San Francisco, New York, London, etc. Do you think that Austria is representative of the NFC loyalty market? And do you think there are similarities with the Austrian market in a much wider European market?

ML: Yes, it’s representative. You know you have to consider that we have about one billion customer cards only in Europe and more in the Western hemisphere. The difference is not so great in loyalty programmes, so it is representative. In Austria we have on average about six customer cards per person and this is about the same situation that we have in Europe.

And I think it’s important to say that our strategy is not just focused on the Austrian market – we have a wider approach. We will also provide our platform to third parties. The Kadona NFC Service Platform suits platforms as a service infrastructure that will supply many markets, not just the Austrian market and not only European markets.

SA: It’s interesting that you talk about how many loyalty cards people actually carry. I’ve heard that today on average, an individual is presented with some form of loyalty or redemption opportunity about four times a day. Would you agree with that?

ML: Yes, I think that’s a good number. I would agree.

SA: And if you had to leave merchants with one message about the future of loyalty or couponing, what would it be?

ML: What we believe, is that it is very important to retailers’ future success to have a loyalty solution that is an attractive solution. It should be very easy for the customer. It should be a secure solution. It is essential for retailers to have loyal customers and not bargain hunters who one time buys in one retailer’s chain and one time in another. Loyalty is an important issue today and it will be an even more important one in the future. We are certain that we can support retailers to succeed in this field.

SA: Markus, thank you very much for taking the time to talk to us.

ML: Thank you very much. It’s a pleasure.