“Each turn of the flywheel builds upon work done earlier, compounding your investment of effort. A thousand times faster, then ten thousand, then a hundred thousand”
Jim Collins
Today, talking about ecosystems is fashionable among the most renowned consulting firms. In fact, by connecting the different own assets or third parties of an organization, ecosystems can be orchestrated that offer a series of services and products to consumers, with the right to gain their preference and permanence over time. There are some that are already very established, such as WeChat in China, which offer everything from a communication channel (that’s how it started), products, payments, P2P transfers, financial services, and other things. In Latin America there is Rappi or Mercado Libre who offer various products and/or services from their platforms.
From the user’s point of view, it is very satisfying and convenient to be on a platform that offers various everyday solutions and alternatives without having to jump from one solution to another, especially if they offer competitive products/services with a simple and intuitive experience. According to a Sturgeon Capital publication, a super app is possible when a service becomes a daily habit present in people’s daily lives. WeChat started out as a communication channel. That was its use case that massified the use of the solution. Then other alternatives were hanging on him.
An equally important element in the creation of these digital ecosystems is the loyalty factor. This element becomes the ideal glue that connects the various products and services offered by the organization. It is easily accessible, generally free, can start with very little information required by the user and the purpose is to provide a benefit to customers. It is a massive element.
It can be the gateway to ecosystems. Once the customer is part of the loyalty scheme, he begins to live in a different way with the ecosystem. Through the data and knowledge that is acquired from that client, they can be offered the different solutions that coexist. Of course this is not the only solution or strategy. There may be other paths to follow. According to a paper written by McKinsey (“Preparing for loyalty next frontier: Ecosystems”), in a well-orchestrated, loyalty-focused ecosystem, all parties should win. Consumers receive valued benefits and experiences, plus faster speed to earn, more flexible redemptions with a simple everyday presence and great user experience.
From my point of view, there are several criteria that must be taken into account to create an ecosystem focused on loyalty. Some of them are the following:
- Simple and transparent: For the loyalty proposition to be the ideal ecosystem connector, it must have a simple, uncomplicated value proposition that is easy to explain and easy for users to understand. Make it immediate and flexible. That does not contain small letters or friction so that the user can use it.
- Easy access: that, with few but relevant data about the person, it is possible to create a simple and non-intrusive registration.
- Masifier: that allows that due to its simplicity and without frictions to enter, a large number of users can be acquired with low acquisition costs. This part has inherent challenges that must be taken into account, especially those that have to do with the quality of the data. The large number of users is the raw material for ecosystems to scale in size and relevance.
- Frequent: the loyalty solution must allow the user to have a high frequency of use within the ecosystem. If this is achieved, adding the mass effect, we are talking about creating a “flywheel effect” (Jim Collins, Good to Great). An initial action that can trigger other actions to move to create something bigger with greater speed that generates growth.
- Connector: that the loyalty solution is the connector or glue that allows, through the data and knowledge of the user, the relationship of the person with other products and services of the same ecosystem to grow.
There may be other criteria to be taken into account. The above are essential to evaluate if you want to create an ecosystem focused on loyalty. As the McKinsey paper says, if this loyalty-based ecosystem can be created, brands will see an increase in frequency and usage. They will gain more and better consumer data, shared infrastructure, and cross-marketing opportunities.
Ecosystems are here to stay. It is time for consumer brands to start thinking about how to be part of one. The loyalty-centric ecosystem can be a good start.