Some 3 million white-collar cardholders in China can now earn SmartClub loyalty points for using taxis and parking garages in Guangzhou, following a deal between SmartClub Loyalty Management and YangChengTong Guangzhou Public Transportation Card Company. At the same time, online community Xici is to operate a SmartClub franchise on its web site for its 9 million users.
The 3 million YangChengTong cardholders can now earn SmartPoints whenever they take the taxi or park their car. For the initial three-month launch period, special rewards are being offered for every YangChengTong cardholder who takes a taxi 30 times (a 300 RMB value computer mouse), or parks their car 75 times (a 300 RMB value in-car refrigerator). At a slightly lower award level, taking a taxi 20 times earns a Snoopy-branded car accessory bag, while parking 50 times earns an MP3-player-to-car-radio adaptor.
SmartClub is designed for China's internet users, aged 17-35, to provide rewards and discounts both online and offline, in return for active participation and the provision of personal data. According to SmartClub, almost every internet user in Guangzhou already has a YangChengTong card, and the registration of these cards with SmartClub can be done easily via the internet or SMS.
YangChengTong is also used as a payment card at many retailers throughout Guangzhou, and many of those stores will also be joining SmartClub. This means that members will be able to earn points when they use their YangChengTong card to buy fuel, fast food, groceries and other everyday purchases.
SmartClub has also recently expanded its member base by entering into revenue-share agreements with China's leading web sites and online communities, most recently announcing a new partnership with Xici.net, one of China's leading community sites. Among the company's many popular retail partners are Shanghai Unicom, McDonald's, RongShuXia.com, and Linktone.
The latest online community tie-up with Xici is a revenue and membership sharing deal, through which Xici will actively promote SmartClub to its 9,000,000 registered members, and will use SmartPoints on its own website to keep those members active. SmartClub earns commissions when its members spend at partner retailers, both online and offline. SmartClub and Xici will share the revenue earned from members recruited by Xici. In terms of cross-promotion, SmartClub is also to encourage its other members to join Xici if they aren't already members.
Xici, through its partner agency Gan Zhi, will operate the SmartClub franchise in Jiangsu province, using the name Xici SmartClub. The franchise operation's members will benefit from offline points-earning and discount opportunities at retailers in Nanjing and other cities in Jiangsu.
Change of strategy
The original strategy behind SmartClub was to use the membership data to generate revenue (through research, marketing targeting, and so on). But according to Henry Winter, CEO for SmartClub Loyalty Management Limited, the company has decided to change its strategic direction and, instead of running a coalition loyalty scheme that requires partner retailers to adopt it as their own CRM/loyalty programme, the new idea is to recruit members directly through revenue sharing with web site operators. Through this approach, partner retailers pay a straightforward commission when programme members make purchases. The commission earned is then used in part to fund the SmartPoints loyalty currency.
This approach also places the programme in a strong position commercially, being in effect a central repository for valuable, up-to-date consumer data. The programme's member data can be used to isolate and segment consumer groups, with the aim of making relevant and timely offers and driving incremental spend for the programme's retail partners - while all the time driving extra commission revenue and SmartPoints usage.
An alternative partnership model has also been created for those web site operators whose membership levels are high but revenue is more limited: These partners can (relatively cheaply) issue a small number of SmartPoints to their members who sign up with SmartClub, which helps to drive programme membership and therefore promotional and marketing opportunities. SmartClub can then share any money it makes from those members with the referring web site's operator.
According to Winter, "For any retailer or brand, whether online or offline, we can deliver the 17-35 demographic. All they have to do is pay us a commission when our members purchase/register/or complete a survey. We use that commission to create SmartPoints for our members. By combining the SmartPoints from many partners, our members can earn one of our 500 prizes very quickly � often within the first week of joining."
SmartClub has already signed up online partners that collectively account for a potential 30 million members. The programme aims to acquire at least 100 million SmartClub members through partner-originated registrations, and is approaching the target quickly.