My Rewards launches IPO to grab larger slice of $10.3b customer loyalty market

My Rewards International IPO ASX MRI customer loyalty market employees members
My Rewards will use its IPO funds to expand its e-commerce platform by incorporating a digital wallet and introducing a B2C program.

Loyalty and rewards program management company My Rewards International is hoping a $5 million initial public offering (IPO) will help boost member numbers and increase its revenues in a global market estimated to be worth more than $10.3 billion.

The Australian company has steadily grown to connect over 4.6 million members (or more than 23% of the nation’s total adult population) with more than 4,500 retail, financial services and telecommunications providers.

Its blue chip client base includes some of the biggest household brands in retail, financial services and telecommunications including Telstra Corporation (ASX: TLS)Coles Group (ASX: COL), MLC, Ria Money Transfer, Ramsay Health Care (ASX: RHC) and AIG.

It also provides more than 100 companies with employee engagement and customer loyalty programs delivered through a robust and scalable, cloud-based, e-commerce-enabled platform, where members can access exclusive discounts and offers, and businesses can hand out virtual rewards for customer loyalty and staff performance.

Attracting investors

Two decades after its incorporation as The Rewards Factory, the since-renamed My Rewards is now looking to attract enough investors to support a $5 million IPO through the issue of 25 million shares at $0.20 each.

It expects to accept oversubscriptions of up to 10 million shares at the same price to raise an additional $2 million.

If all goes to plan, the company will have a maximum 205.7 million undiluted shares on issue when it hits the ASX boards next month, at a maximum indicative and undiluted market capitalisation of $41.1 million.

It will be the second time My Rewards will list its shares since being delisted in 2009 after a brief 14 months of public trading.

Barclay Pearce Capital has been engaged as lead manager to the offer.

One listed, My Rewards will trade under the ASX ticker code ‘MRI’.

Revenue generation

My Rewards currently generates revenue from program sponsors and the sale of gift cards, goods and services to members.

Corporate clients pay the company a monthly or annual fee to enable access to a white-labelled employee engagement or customer loyalty program online and via a customised mobile app.

Fees are structured according to the size of the client’s membership base and extra costs are charged for program set-up and customisation on the platform.

Employee and customer loyalty programs offer gift cards, tickets to theatre, cinema and sporting events, and general merchandise such as electronics and fashion items.

My Rewards earns a small margin on each transaction made through the e-commerce platform.

Expanding capabilities

In launching the My Rewards prospectus earlier this month, executive chairman David Vinson said the IPO funds will be used to expand the company’s e-commerce platform capabilities by incorporating a My Rewards’ digital wallet and introducing a business-to-consumer (B2C) program.

The wallet establishes a pathway for the company to generate revenue from a member’s in-store transactions with suppliers, while the B2C program is designed to attract new members outside of the company’s existing business-to-business (B2B) network.

“The technology of [our] platform enables each employee engagement and customer loyalty program to be fully customised, delivering personalised products and services to each member,” Mr Vinson said.

“Our board and management [teams] have significant experience in the loyalty services industry and will aim to ensure that funds raised through the offer will be utilised in a cost-effective manner to grow [our] business.”

Cutting-edge technology

It is expected that cutting-edge technology will remain at the heart of new rewards offerings.

“Our technology is vital to the operations of our business and we have invested heavily in the research, development and innovation of our platform in order to widen its competitive advantage,” Mr Vinson said.

“Our investment in technology has enabled [us] to meet and exceed our members’ expectations through the launch of new products in response to market demand, specifically cashback offers and a buy now pay later facility [known as Pay My Way].”

International expansion

Mr Vinson said international expansion will be on the cards over the next 12 months through commercial relationships with a string of clients including US-based Ria Money Transfer (a subsidiary of Euronet Worldwide Inc).

My Rewards recently won a contract with the global money exchange company to design, build and manage a customer rewards program across an initial six countries, gradually expanding into all of Ria’s markets covering more than 30 million customers worldwide.

A separate agreement will see the loyalty program offered to Ria customers of its terminals located in a leading (and undisclosed) US retail store.

The My Rewards platform can securely scale in different markets and is adaptable to multiple currencies and languages.

The company believes the Ria contract will be a launching pad for further development in targeted overseas markets.

Rewarding loyalty

Loyalty and rewards programs are schemes designed to attract customers, encourage repeat purchases and increase purchase amounts through the provision of benefits and rewards to members.

They can be based on a points or cashback-on-purchase system or offer benefits by way of discounted prices and other financial incentives.

The rewards program market is being transformed through the increased use of digital technology to deliver a more personalised and responsive experience which encourages employee and member usage.

Australia is currently a significant player, with a recent survey indicating that 61% of domestic consumers (or approximately 12.2 million consumers) make purchases that earn rewards or benefits at least several times per week.

The country was ranked as the highest user of loyalty and rewards programs out of over 20 countries surveyed, with the average number of individual program memberships held by Australians reported as being between 4.4 and 6.1.

Program trends

Current trends driving the operation of rewards and loyalty programs include a rapid shift from schemes based on just earning points for future redemption to more holistic programs which engage more deeply with members through exclusive benefits, member events and member content.

Artificial intelligence is being increasingly used by larger platform operators to analyse their member data and provide more personalised offers and communications to consumers while the rise of automated online payment options is improving security and ease of purchasing.

The incorporation of digital wallets which combine loyalty with payment functionality allows members to pay in money or points and allows further personalisation at the point-of-sale, such as printing the member’s name on the receipt.

Market research has shown that since 2017, the percentage of consumers who prefer to use a mobile app which combines rewards with payment as opposed to a separate loyalty card has increased from 5% to 20%.

Since the mid-1980s, a number of large points-based programs have been launched worldwide including the Qantas Frequent Flyer scheme in 1987, Flybuys (1994), Virgin Velocity (2005) and Woolworths Everyday Rewards (2007).

    Join Small Caps News

    Get notified of the latest news, interviews and stock alerts.