InnBucks: My two cents
IS InnBucks the biggest thing to happen in Fintech since Ecocash? Or is it just a customer rewards and loyalty programme? Everyone remembers the noise that was on social media when the RBZ shut down the service for failure to comply with RBZ regulations.
Everyone went into a frenzy amid concerns over what would happen to people who had money on the platform. InnBucks had become Zimbabwe’s main US dollar transfer platform less than a year after its launch.
Eventually, InnBucks fixed their issues with RBZ and now they’re back in full force.
What exactly is InnBucks?
From my own analysis, there are two possibilities:
1. InnBucks is just a customer rewards and loyalty programme or
2. InnBucks is a stand-alone fintech
Let’s look at possibility 1. We can start from their website. According to their website, InnBucks describes itself as Zimbabwe’s Ultimate loyalty and rewards programme. Self-explanatory. Let’s dig deep.
What is a loyalty programme?
A customer loyalty programme is a system where a business offers rewards to its customers who make frequent purchases. From a business perspective, it’s a tactic used to encourage customers to repeatedly buy from your business.
What has the Loyalty programme
done for Simbisa?
This loyalty programme has brought many advantages to Simbisa. The calculation of accumulated points and the announcement of available rewards will help Simbisa to increase customer interaction and encourage them to repeat purchases.
This also helps Simbisa build longer-term relationships with members. The reason why Loyalty programmes came into existence in the first place is when companies realised that the competitive advantage that they once experienced due to product differentiation no longer holds good due to a proliferation of similar looking and “me too” products.
If we’re being honest, Simbisa has no real differentiation in the market today. Yes, they are a pioneer in the fast food business in Zimbabwe but nowadays. I can easily think of five competitors offering the same product at a price equal to or less than their main offerings. In such an environment having loyal customers becomes more important and more difficult.
What are loyal customers?
In simple terms customer loyalty is a measure of a customer’s likelihood to do repeat business with a company or brand. Repeat customers deliver better returns.
Research states that loyal customers buy 90 percent more frequently, spend 60 percent more per transaction, and deliver 23 percent more revenue and profitability than first-time purchasers.
Therefore, retention is a great way to grow and increase profits.
According to statistics, Online rewards programmes increase overall revenue by 5-10 percent, loyalty members spend 5-20 percent more than non-members on average, which not only covers loyalty costs but brings home surplus profits, loyalty programme members buy 5-20 percent more frequently than non-members. Increasing customer retention by just 5 percent boosts profits by 25 to 95 percent, according to the advisory firm Bain & Co.
It’s a known fact that people get strongly influenced by referrals from family and friends. Hence loyal customers are the best source of referrals and new business. Customers onboarded through a referral or loyalty membership tend to have a much shorter (and cheaper) sales cycle.
Loyalty programmes also let companies shed unnecessary weight. A well-designed loyalty programme allows companies to segment customers and discover profitable and unprofitable customers.
It helps them in dropping off the customers who only buy the discounted lines and avoid premium range almost on a regular basis. These customer profiles can cost more money than they generate.
Through a loyalty programme, companies can reward better customers only and thereby minimise the payout to not-so-profitable customers.
Without an iota of doubt, this is the most efficient way to retain the customers from whom the company generates the most profit.
Let’s look at possibility 2: InnBucks is a stand-alone fintech
This possibility makes sense. Let’s look at their social media accounts. On one of their ads on the InnBucks twitter account the caption reads: “faster, simpler payments is the InnBucks way!”
On their Facebook page they call themselves a “financial service”. A loyalty programme is just a marketing strategy not a full-on financial service.
This suggests that they are actually in the online payments business. Besides, why are the InnBucks ads so focused on encouraging customers to use the app as a stand alone rather than encouraging customers to buy Simbisa products so that they can get rewards from Inn bucks?
Does Simbisa really need a Loyalty programme to convince customers to keep buying from them? Mind boggling. On the Inn bucks website they say they are just a loyalty and rewards program but on their ads they say they’re an online payments platform. Looking at the Simbisa website Inn bucks is not listed as part of their brands (don’t know if it’s intentional or what).
Let’s try comparing InnBucks to Amazon. Amazon started with books, InnBucks has their fast food outlets. In fact, InnBucks is in a better position than Amazon was at the beginning because Simbisa has a wide network of branches all over Zimbabwe and Africa at large.
Imagine if they make the decision to give merchants a method to receive payments (which I’m sure they eventually will).
The bigger picture
In conclusion, both arguments about Inn bucks hold a lot of water.
Here’s what I think about Inn bucks: It’s an online payments fintech disguised as a loyalty and rewards programme. It’s not exactly a disguise now since it’s out in the open but here’s my two cents: Simbisa receives a lot of USD cash from thousands of Zimbabweans each day.
The plan from day one was to always launch a fintech product so the Loyalty and rewards programme guise was just a part of the execution. What do you think?