Revenue Streams

44 of 87 different players within the industry, and the chance of getting an identically solution from two competitors are very low, due to the complexity of building integrated IT systems. As explained previously there is a domino effect regarding building up trust through a

reference list of developed loyalty solutions, which can make it difficult for new companies to compete within the industry. This fact further establishes the dominating players such as Netcompany, Nodes, and IBM as the forces to be reconned with in the industry. Their degree of knowledge in the industry is a very high competitive advantage compared to the different loyalty solutions in the market, where it can be difficult to break through the noise.

45 of 87 For MyLoyal, the switch from MyLoyal 1.0 to 2.0 with the introduction of building app

platforms for chains and bigger companies there was a need to make a rethinking of the MyLoyal market segmentation. As previously explained, the current customers are divided into three overall groups, restaurant chains, retail chains and communication platforms, with the latter not being focused anymore as it is has been categorized as an outlier of the loyalty that is at the core of the MyLoyal product. The reworked focus to bigger companies, retail chains and restaurant chains happened not through any extensive market research, but as explained by far due to chance and the network of the management team of the company. MyLoyal found that companies with annual revenues of more than $250 million and between 10 and 100 stores, are very suitable for the products that MyLoyal offers.

This is because the products require an upfront investment of 125.000DKK plus a monthly SaaS. MyLoyal found a niche in the market where it was possible to compete on prices while giving the possibility to customize the IT solution at a moderate amount. Lowering especially the upfront price of starting the collaboration enables a new customer segment to participate in the digitalization of their loyalty, which has previously been dominated by big corporations like Capital Fund owned Lagkagehuset. Solutions like Lagkagehuset, though not public, is estimated to have cost above 1million to build, based on much of the same technology which MyLoyal uses, and hence we know rough estimated costs of development. By MyLoyal having the upfront cost of the loyalty solution at just 12,5% of the estimated normal upfront cost of building similar solutions, MyLoyal fit this middle sized market with their financial needs. This is where MyLoyal currently can create the most value, for the medium sized companies.

The restaurant chains are currently the most important customer segments for MyLoyal.

This is mostly due to the fact, that there is currently a great market fit with the product that the company has developed, and because as Peter Bodskov explains in the interview

‘’restaurant chains are easier to get in contact with, and the organizations are also

generally smaller than retail chains with less hierarchy, meaning we can reach the decision makers.’’ (Bodskov, 2021, 4:57). The potential for the digitalization within the restaurant industry is very much existing, but it has been historically slow, with the most digitalized aspects of the industry being the table booking systems and their POS. The pandemic has forced many restaurants to rethink their strategies and will need to adapt through

46 of 87 technology to remain a float and competitive, which creates a significant boost in the

maturation of the industry for digital loyalty solutions and other digitalization platforms. As Peter elaborates in the interview, the possibility is especially there in the restaurant

industry because ‘’there is really nobody focusing on loyalty solutions for restaurant chains, which makes it easier for us’’ (Bodskov, 2021, 5:30.

The retail chains customer segment is more technologically developed compared to the restaurants. The retailers that MyLoyal works with, has all adapted towards e-commerce through webshops, and are now looking towards implementing loyalty programs and loyalty apps. The potential with the retailers are tremendously big, with the boom of e-commerce and the need to adapt new ways to create loyalty with shifting consumer

behaviours. But the higher potential is also reflected in a more competitive space. There is a higher amount of retail chains, who already has developed a loyalty app, compared to restaurant chains. Another key trait defining the retailers compared to the restaurant chains are the high level of hierarchy and bureaucracy, which makes the retailers ‘’very difficult to get in contact with’’ (Bodskov, 2021, 05:10).

6.3.1.2 Interactions

When looking at the interactions, it is important to understand our customers’ needs, expectations, and mindset with the purpose of comparing them to the company and finding an understanding of where the actual value is created, and where it potentially could be created. The key questions to ask are:

• What mindset does our customers have?

• What relationships does the segments expect to have with us?

• What are the current existing relationships?

• How is the customer relationships integrated to the business model?

• How does the company work with data and customer insight?

• What is the Life Time Value (LTV) of our customers?

Restaurant chains that include customers such as Max Hamburger, The Old Irish Pub, Paradis, and Gorm's are usually informal and have Blue Mindset, Promote & Sell. The restaurant chains are as explained not highly technologically developed, which is why they

47 of 87 seek to have a partnership relationship together with MyLoyal. MyLoyal has a close

relationship especially to the restaurant chains, across the different organizations, and this is a key aspect of doing business within the industry, and is a clear expectation from the customers. The pandemic has further evolved the need for close business relationships, as in the world of more uncertainty than ever before, it has become even more crucial to find partners that you can trust. This close relationship is also a factor, that takes up a significant amount of time, as the customers’ expectations and needs for often

communication, also just simple chatting to strengthen the relationship, is a clear

requirement for business success. MyLoyal is fully aware, that nurturing especially these relationships can be highly rewarding, and the company is there for very mindful of allocating extra human resources through extra support services, which meets these needs.

The retail chains such as Petlux, Bonnie Dyrecenter, and ONLY all also operate with the Blue Mindset, Promote & Sell. The difference lies though greatly in the amount of

bureaucracy that are generally at place in the Danish retail chains, as previously

mentioned. Due to the organizational structure of the retailers, their preferences towards business relationships are also dramatically different compared to the restaurants. Close relationships are still highly valued, but even more so is the business value that is

generated based on the collaboration. When talking to Petlux CEO, Frederik, he explained that the most important factors of collaborations with MyLoyal and any other IT partners was ‘’Communication. This means to follow up on performance and service. For example if things needs to be changed or services needs to be upgraded or anything like that. It is super important that the service provider continuously informs about what is going on and really takes the customer by the hand’’ (Hvorslev, 2021, 10:10). Clear communication and transparency is a key factor in collaboration with the retail chains.

How does MyLoyal work with data and customer insight? With the introduction of the MyLoyal Data Platform (MDP) in January 2021, the company has gotten the opportunity to gain a deeper insight into their customers behaviour and the users behaviour. As Jurate (CMO & CDO) describes in the interview ‘’Data is the most important asset (of MyLoyal)’’

(Puodziukaite, 2021, 6:01). Currently it is still at a very early stage, with only Paradis being

48 of 87 live with the Data Platform having estimated 20.000 active users which MyLoyal is tracking customer behaviour on. Paradis is estimating to get 50.000 active users by the end of 2021, and with the soon to be launch of both Gorm’s and The Old Irish Pub, who both also will be running the Data Platform service, there is a great potential.

The MDP will enable MyLoyal to achieve value for the ecosystem of all MyLoyal’s customers, value for the individual users of the different apps and finally help MyLoyal build even closer relationships with its customers.

The overall ecosystem will gain value, as MyLoyal will be able to track the different behaviour across all of its retail and restaurant industry loyalty apps simultaneously. This will enable the company to track trends across the platform and across the different end-user behaviour, which will enable MyLoyal to be able to create optimized features for the customers. A big caveat of creating data solutions is divided between two extremes, either you have a very hard time collecting any data, or you have access to vast amounts of data. Both of these factors are difficult to manage. If you have very limited data, then it is difficult to make any kind of statistical conclusions based on it. On the other side, if you have data points entering your system within the millions or billions, then the challenge arrives as to how to manage big data and create value from it, which is a highly

challenging task that takes specialized skills to manage. The value that the MyLoyal ecosystem then brings to its customers, are therefor that it to some extend helps eliminating both of these extremes. Through making a partnership with MyLoyal, the customers can benefit from the ecosystem data, and MyLoyal can create user tested solutions and updated features based on user input, which would be comparably

impossible for a company who build a loyalty app by themselves for the first time. On the other side, once the customers start gathering traction on their loyalty app platforms, MyLoyal also helps them converting exactly this traction into value through the help of Jurate, who is the company Chief Data Officer, and helps with the know-how how managing data. As the data project is still in its early development phase, it is not yet possible to calculate the MyLoyal LTV.

MyLoyal is still brand new and hasn’t had the opportunity to truly sit down and create the massive amount of value in which data has the potential to create. But with the launch of

49 of 87 The Old Irish Pub and Gorm’s, these will be a big step towards a greater amount of

success, and the possibility to gain deeper insight into the customers and end-users.

6.3.1.3 Channels

The revenue channels seeks to understand and highlight where the customers do business, and if the company is participating in these channels as of today.

The sales strategy for MyLoyal is ‘’Quite simple. We have first of all the relationship based part of it (sales). We are a quite strong team that is good at networking and so on, and we have some strong investors. So that means that we are getting some clients from our network. Otherwise it’s simply cold canvas’’ (Bodskov, 2021, 03:02). Cold canvas means that sales are done through LinkedIn Sales Navigator, which is LinkedIn’s lead generator tool. Here MyLoyal finds new leads and contacts them through LinkedIn. As Peter follows up with in the interview, ‘’the sales process is quite long, so it can take one to two months before we get the first meeting, and from the first meeting to we actually sign a contract is somewhere between three and four months.’’ (Bodskov, 2021, 3:25). Currently Peter Bodskov is the only one in MyLoyal who does cold canvas sales.

The pandemic has impacted the way the retailers and restaurant chains do business significantly. With the heavy restrictions on both industries, they have been forced to adapt. One of the new ways they’ve adapted is through their more open mindedness towards finding new partnerships who specialize in specific niches, who can supplement their knowledge gaps. Here they seek specifically tech partners, who already have built solutions on specific challenges. This shift combined with many people working from home offices, has meant that more people within the retail and restaurant chains has become active on LinkedIn and other medias, which has made it easier for MyLoyal to reach new leads, but it still very challenging through simple cold canvas sales strategy. As described by Peter Bodskov in the interview ‘’The people behind restaurant chains are easier to reach out to and get in contact with (compared to retail chains), and the organizations are generally smaller with less hierarchy’’ (Bodskov, 2021, 4:53).

50 of 87 As early explained especially the restaurant industry is built upon relationships. So even though they have generally been easier to get in contact with, then the pandemic

restrictions has meant that MyLoyal has not been able to, during the lockdowns, to have physical meetings with these customers. This has also impacted the sales, where it has been harder to actually close the agreements while the lockdown has been present, as it has been difficult to nurture new relationships with especially these customers during this time.

The retail customers of MyLoyal has during the pandemic been reflecting upon the purpose of the physical stores. Petlux CEO, Frederik, explains that the purpose they’ve found is ‘’to provide guidance for the customers on various products, and assisting them more closely’’ (Hvorslev, 2021, 09:23). This focus on providing guidance, together with the increased investments into loyalty together with MyLoyal is an indicator towards a change.

Th

The customers of MyLoyal, the retail chains and the restaurant chains are both currently operating with the Promote & Sell mindset. There seems to be an indication, that the customers are through the increased focus on their customer behaviour and through the work of data together with MyLoyal, that they are slowly changing their mindset more towards Listen & Learn, Red Mindset. What it means when a customer changes mindset, and what the impact can be, will be reviewed in depth in Chapter 7 – Discussion.