Adding Value to Reward Programmes

February 25, 2006 - StarBiz Week
BY JOSE BARROCK


VARIOUS contraptions and gadgets occupy Nyang Koon Seng’s desk; a miniature football with grass seeds in it, several necklaces with miniature World Cup trophies dangling like a pendant and a rubber football, amongst others.


But then again that is to be expected as he is the chief executive officer of Advance Information Marketing Bhd, a company specialising in reward and customer loyalty programmes. The items are samples for his clients.


“We basically extract value from the data for reward programmes. In Malaysia this business is in its infancy stage. There is still a lot of room to expand because loyalty programmes are not just about giving gifts, but more importantly about using data, extracting the value from the data, and employing it as a tool for selling and cross selling products,” Nyang tells BizWeek in an interview.


He enthuses about a recent tie up with AmBank Bhd. The bank approached Nyang and crew to handle the launch of a credit card in conjunction with the upcoming FIFA World Cup. “We have had to outsource our products in Europe which are licensed by the governing body (FIFA)...Hence all this,” he says pointing to his table littered with various balls and related merchandise.


“When there is a launch such as this, we have to determine the target customers, age group, and customer profile. We have to conduct a lot of research to understand the clients’ budget constraints and come up with a solution in terms of design and communication...So it is pretty interesting,” he says.


A Good Enough Start

The business model is simple enough and it’s a money-spinner, if done well. In 2004, Nyang says the company and its unit Customer Loyalty Solutions Sdn Bhd, made a profit after tax of about RM5mil on the back of RM18mil in revenue. The business has been growing and by September 2005, the company’s sales surpassed that of the entire 2004.


“It’s not bad for a company that is two years old,” says Nyang.


The company’s first big break came from the banking sector. “When we took on our first project with a bank, we realised that financial institutions needed to outsource a lot of services. So we focused on the sector. Once we secured a bank, we built up confidence in our services and managed to sign on many more.”


Nyang talks about the biggest appeal of his business: “When an industry faces very thin product differentiation, there is a need for a marketing tool to retain customers and acquire new ones. That is our forte.”


Advance Information Marketing boasts of a prominent clientele such as Japan International Tobacco, Debenhams Department Store, AmBank and F&N Coca Cola.
“There is a growing opportunity in accessing existing customers and deepening our business with them; from a business-to-business initiative, to business to consumer type of offering.


“For example credit card rewards in the finance sector. You get points for swiping your card. But the business is much larger. The banking industry involves saving accounts, loans, insurance and unit trusts, all of which can be integrated to provide a common reward platform. Therefore, we are looking at expanding horizontally to strengthen our relationship.”

"When an industry faces very thin product differentiation, there is a need for a marketing tool to retain customers and acquire new ones. That is our forte," says Nyang

The current consolidation in the banking industry, Nyang says will not dampen the company’s prospects. Advance Information Marketing is the market leader in its field so it stands to benefit from any consolidation.


“It is actually better for us (the consolidation) as it is an opportunity for us to grow as there will be bigger economies of scale post consolidation.


We also have no problem serving several banks, as we maintain confidentiality and we have different teams handling the various banks. Anyway, the requirements of each bank vary from the other. The bottom line is in Malaysia we have quite a strong market share so any consolidation will help increase our slice of the pie,” Nyang says.


The Proposed Listing

The company just received the nod from the authorities to list on the Mesdaq market of the Bursa Malaysia.


The company’s prospectus is likely to be released end of this month, or early March and Nyang is hoping to conclude the flotation exercise by April this year.


“We planned to list about a year ago. We need to tap the funds from the capital market to expand and for our infrastructure development. We also plan to set up a regional presence,” Nyang adds.


He says that the company is also considering tying up with other parties to penetrate certain target overseas markets. “There are many issues to consider such as language barriers. At present, we are exploring several options.”