Sydney fintech OpenSparkz wants to fix loyalty programs and coupons

According to a report released by Mastercard earlier this year, nine in 10 Australians belong to a loyalty program. In fact, we love loyalty programs so much that the average Australian consumer participates in six loyalty programs – and they have an effect on how and where we spend our money. 

The report found 62 percent of Australian consumers believe their ‘‘Most Important Program’ – defined as the program they’re most highly engaged in, and where they look to maximise the value obtained – is having lots of influence on their shopping behaviour.

Despite our love of these programs, Sydney startup OpenSparkz believes they could be working better.

Founded by Terry McMullen, CEO; Ian McKenzie, CTO; Debra Taylor, COO; and Nigel Lovell, now an advisor to the business, OpenSparkz is working to reimagine loyalty programs and offers.

As it currently stands, McMullen believes, there is too much friction in such schemes for both merchants and customers.

“Consumers love to get a reward or a good deal, but they hate messing around with loyalty cards or offer codes and coupons. It’s also a big problem for merchants to capture the card or code details, match it to transaction data and integrate with the loyalty or offers program,” he said.

Working with any organisation that operates a loyalty or offers program that involves third party merchants, the OpenSparkz system allows for consumers to link their credit or debit card through an app, browse offers, and then make a purchase, whether online or offline.

A customer completing a purchase will then receive a real time notification, and fulfilment of the offer via the app, McMullen explained.

Merchants, meanwhile, just create and publish offers and track the results in real time, with no other extra work to do – customer identities and profiles are matched to consumer purchases at store and product level, in real time.

“The OpenSparkz platform also solves the online-to-offline sales attribution problem. Offers at bricks and mortar merchants can be published online and the resultant offline sales accurately tracked in real time,” McMullen said.

McMullen has a long history in the loyalty and offers industry – and, in turn, its frustrations.

He worked with American Express in the 1980s, helping to launch Amex Membership Rewards in Australia, before spending 23 years at Pinpoint, acquired by Mastercard in 2014, with over a decade in the role of co-CEO.

“I got to look under the hood of hundreds of loyalty programs across Asia Pacific. I saw first hand on a daily basis how the use of loyalty cards and offer codes was a response and engagement killer for consumers and a source of cost and friction for merchants,” McMullen said.

With the startup’s clients corporates operating loyalty programs, the sales cycles are long, which McMullen admitted can be an issue; however, he said, OpenSparkz is “able to stand on the shoulders of giants, so to speak”.

The company is taking part in Mastercard’s Start Path program, one of just three Australian startups and 40 startups globally to be accepted since the program launched in 2015.

“The program is very focussed on getting participating startups to market, and Mastercard leverages its vast global customer network to achieve this. Start Path has opened doors for OpenSparkz that we could not have opened on our own,” McMullen said.

The startup also raised seed funding from Hong Kong payments company EFT Solutions last year, a link McMullen said gives the company an “excellent springboard” into north Asia.

Beyond the Start Path program, the startup has been running a proof of concept for a “major Australian loyalty program”, which McMullen said has been beneficial in helping OpenSparkz develop new features for both consumers and merchants.

As it moves forward, McMullen believes OpenSparkz’s biggest competitor is simply the old way of doing things: there are thousands of loyalty and offer programs out in the market that rely on loyalty cards, offer codes, and coupons.

“Fortunately, our platform can easily operate alongside existing platforms, so implementing an OpenSparkz-powered card-linked solution is pretty easy.”

Image: Nigel Lovell, Terry McMullen, Debra Taylor. Source: Supplied.