Q. Can you describe the evolution of Dotz, and how it has grown to its present state as the largest coalition program in Brazil?
Chade: Today. Dotz is largest coalition in Brazil with 23 million collectors, which makes us a truly national program in a market that is historically very regional. We have the largest coalition network in Brazil, with grocers, telco, petrol, and many other household categories covered. We now handle about 15,000 redemptions a day.
When we launched the program in 2001, Dotz was basically an online loyalty program. In 2009, we began to roll out Dotz to the offline world with a strategy to launch a national program with regional loyalty implementations for our sponsors. We implemented a pilot market in Belo Horizonte, a major capital in Brazil, with a very strong coalition network, including Banco de Brasil, one of the largest banks in Brazil. In less than a year, we already had 40 percent market penetration. and then grew from there.
On the retail grocery side, we defined a regional strategy, and we have since signed more than 20 different grocer sponsors. In each region of the country, there are one or two grocer partners in each. We implemented a local operation in each region, and today we have 14 markets with offline retail presence with 40-45 percent market penetration.
Q. And how is the program's growth today?
Chade: Every year for last five years we've been growing at about 15-20 percent annually. During the last two years, the Brazilian economy has struggled, but we maintained our growth. Now we're entering new markets and adding new segments. We're growing the engagement of collector base, and investing a lot into the data piece. We are capturing SKU data, in addition of all of the coalition data, making the Dotz program one with a very unique market position. We’ve also increased our promotion effectiveness with investments in innovation, technology and advanced analytics tools. We’ve grown the ROI to our sponsors more the 200 percent. We've also implemented in-store redemptions with Dotz currency at the point of sale for several of our retailers. We have much room to grow.
Q. Describe your program's approach to leveraging collector data to build loyalty.
Chade: The loyalty business isn't about points, but rather about influencing consumer behavior through data insight. We're doing very well in that area: for the last two years, we've been capturing close to 70-80 percent of SKU data for many of our grocer partners so we can help them understand exactly what each customsr is buying. Thanks to our data collection, we've been able to work with our sponsors to deliver personalized, relevant promotional offers to our collectors.
When you combine our data capabilities with our digital capabilities and the opt-in permission we receive from our collectors, we're able to connect with them and build relationships that drive lift, retention, and acquisition. We're really using big data to drive consumer behavior. For example, we launched a mobile communications channel through which collectors receive customized product promotions driven by their purchase behavior - we're doing this for several partners today.
Q. Can you describe how you're leveraging your digital and data capabilities on behalf of your sponsors?
Chade: On the banking side, we have a great very important partnership in With Banco de Brasil, but we also have relationships with other key banks such as Santander and Citibank. For Banco de Brasil, we're the retail coalition loyalty currency for their customers. They earn Dotz on their credit card purchases, as well as on the coalition network, and can access 55,000 ATM machines around the country that function as "Dotz terminals" that allow you to get a balance summary and redeem your Dotz.
For the credit card business, our goal is to lift spend. Because we collect retail data to understand shopper behavior, we're able to do cross-partner promotions between the credit card issuer and our grocer sponsors. Through those promotions, we've seen 5-6 percent growth in card spend year over year. That's a tribute to the value of our data to our partners, and the value we provide to our collectors through the program.
On the retail side, we've focused on having very intensive and solid deals with grocers all over Brazil. We now capture BR 20 billion in grocer transactions; If we were a grocer, we'd be the number 3 grocer in Brazil. Through our analytical models, we're able to deliver customized promotions for each of our grocer partners. For example, a grocer in Rio de Janeiro runs a bi-weekly online flyer customized to each individual customer with six to seven products linked to bonus Dotz offers. For example, we understand through your purchases that you've welcomed a baby to your house, so we can send you an offer funded by Unilever that offers 5x bonus Dotz for diaper purchases as soon as the customer arrives at the store.
Those kinds of customized offers can increase response rates three to four times. Everybody wins: the customer gets more Dotz, the grocer gets higher response, and the vendor enjoys greater response by targeting their offers to those customers most likely to purchase.
Q. How do you see the Dotz program evolving in Brazil?
Chade: For the core Dotz business, we're developing AI and machine learning capabilities that will really enhance everything we're doing. These capabilities will allow us to be more efficient and relevant in our partner promotions. Through our Dotz Labs department, we follow and develop technologies that will allow us to continually evolve our program. We want to be a leader in those new technologies.
We've opened new domestic markets, such as B2B incentive programs. We're also considering international expansion of the Dotz program in Latin America. On the consumer side, we're increasingly focused on monetizing our collector base through new fee-based program benefits that help them accelerate the velocity of their earning.
We're continuing to add value and benefits for both our collectors and our sponsors, and we have the ambition to be one of the top loyalty programs not only in Brazil, but in the global landscape for many years to come.