Executive interview with Alejandro Gonzalez-Saul, FEMSA
Editor's Note:
FEMSA is a Mexican multinational company that has developed successful businesses in the retail and beverage industry, including Coca-Cola FEMSA, the largest bottler in terms of sales volume in the entire Coca-Cola System, and OXXO, the largest small-format proximity store operator in the Americas with over 23,000 stores.
Less than two years ago, the company migrated an existing loyalty program in its OXXO brand (Oxxo Premia) into a new initiative named Spin Premia. We have heard about the enormity of this project and the success achieved to date, and contacted Alejandro Gonzalez-Saul to discover the details of how this massive program came to life.
Alejandro is a finance expert with a Master’s from ITAM and has reshaped loyalty strategies for many brands over a 20 year career. At American Express Mexico in 2004, he diversified redemption options, tripling engagement in two years. Leading Club Premier de Aeromexico, he propelled it into Mexico’s premier coalition loyalty program. As founder CEO of Points Colombia in 2018, he pioneered Colombia’s loyalty market.
Joining FEMSA in 2021, he led the transformation of OXXO’s loyalty program into SPIN Premia, amassing millions of users. Alejandro is a sought-after marketing executive, and he often shares insights through Merca 2.0 and lectures, while mentoring within FEMSA.
The Wise Marketer is fortunate to have the opportunity to sit down with Alejandro and to learn about the Customer Loyalty journey at FEMSA. Here are the highlights of our interview with Alejandro Gonzalez-Saul.
FEMSA – a Mexican based Multinational
For more than 130 years FEMSA has continued its growth and today, FEMSA is one of the largest employers in Latin America, with more than 350,000 employees and operating in 18 countries (Germany, Argentina, Austria, Brazil, Chile, Colombia, Costa Rica, Ecuador, United States of America, Guatemala, Luxembourg, Mexico, Nicaragua, Netherlands, Panama, Peru, Switzerland, and Uruguay). You can learn more about FEMSA here.
The value-creation and growth of the company is focused on retail, drinks, and digital. Thanks to the latter, FEMSA is developing an omnichannel ecosystem of financial services and customer loyalty initiatives leveraged on our strong brand reputation and footprint.
Customer Loyalty in key FEMSA retail brands
FEMSA’s retail division operates two distinct brands, each with its own value proposition, OXXO and OXXO GAS. There are more than 23,000 OXXO stores in Mexico and the Americas. OXXO GAS only operates in Mexico, and it has more than 500 gas stations.
These two value propositions are complementary, and today the company has more than 300 OXXO GAS stations with an OXXO store. Depending on the country and the size of the network, there is a mix of company owned, commercial commissioned, and franchised stores. All OXXO GAS stations are company owned.
OXXO previously had a loyalty program named Oxxo Premia, which migrated into Spin Premia. When asked about the principal goals of the new program, Alejandro responded “The main goal of the program is to deliver value and savings to the members through their points, which are like money. Similarly, the program aims to provide value to the allies within the ecosystem by gaining a better understanding of their customers, being part of a network of other relevant brands, and being part of a marketing and communication platform. The model is a B2C and B2B proposal.
We learned further that the reason for evolving the value proposition of the loyalty program was to increase the use cases for which a member could use the program beyond convenience stores. The rationale was to create an everyday value proposition and be present in "the main moments of a member consumption. Although OXXO is every day, it does not cover 100% of a person's share of spending.
Alejandro shared some of the biggest challenges in this project:
- Create a technological and data platform capable of supporting the millions of daily transactions that pass through OXXO's POS systems (13 million people visit an OXXO store in Mexico everyday).
- Find a solution to register the information of millions of users and ensure this data was properly structured for analysis and understanding.
- Migrate the old program to the new one without affecting the real-time operations of the POS, as OXXO operates 24 hours a day, 365 days a year, and the program could not be halted due to this rebranding change.
- Migrating millions of users without altering their historical transactional data was another important challenge.
- Like any coalition, attracting major allies to the program and getting them to adopt the value proposition as their own is always a significant challenge, especially at the beginning stages of the new program's life.
Spin Premia Overview
The Spin Premia program was launched with the new value proposition in April 2023. The project took 1 year and 3 months from the conception of the strategy, definition of the value proposition, UX/UI design, technology and data architecture selection, financial model, cybersecurity, fraud model, CX (Customer Experience), selection of founding allies, etc.
A Spin Premia member finds everyday convenience in the loyalty program's value proposition. The value proposition is primarily based on OXXO stores, where for every $10 pesos spent, they earn 2 points, equivalent to $0.20, which can be used as a form of payment for all products sold in the store (except for cigarettes and baby formula, for regulatory reasons).
In other words, the user receives a 2% benefit. In addition to OXXO stores, the member can earn and use points at OXXO GAS, with the Spin by OXXO card (fintech), and other external allies of FEMSA, such as Volaris, the leading low-cost airline, ViX, the Televisa / Univision streaming service, focused on Spanish-speaking audiences, Cinemex with cinema ticket coupons and discounts, and Caliente, an online casino that also allows users to earn and use Spin Premia points.
Ultimately, Spin Premia points are money that can be used as a form of payment throughout the ecosystem. The value of the points is the same across all allies.
Alejandro shared insight into the special nature of the value proposition that has contributed to the program’s remarkable success. The main feature of the program is the simplicity and transparency of the value proposition. Points have the same value ($0.10 MXN) across all ecosystem allies. The value is communicated to the members to ensure awareness of how much money they have in points. Another key factor for success is the ease of earning and using points. To earn points, only a cellphone number is required, and to use them, a digital or physical loyalty card is necessary.
From a channel perspective, the program was born 100% in the physical world due to the footprint of OXXO, its nationwide presence, and its reach across all socioeconomic levels. Currently, a Mobile App is being developed to allow members to have a digital experience with the program.
The idea is to provide greater value and a complete experience through the app. For example, coupons and punch cards are only available through the digital channel. This means that if a customer wants to use discount coupons, they have to download the app to access them.
We asked about the “earning velocity” of the program – a critical element in customer acceptance and engagement. Alejandro shared that “the redemption velocity is extremely fast. This is mainly because the points are like money; therefore, they can be used as a full or partial payment method. The average purchase ticket in OXXO is very low, so the points are used very frequently. For example, points can be used to pay for a Coke. Users are also finding value in using their points to pay for Volaris ancillaries, such as extra baggage fees, seat assignments, etc.”
Many benefits from the program are available beyond points. Spin Premia offers discount coupons with major CPGs, cinema tickets, premium ViX memberships, and discount coupons with the airline. Additionally, CPGs are interested in activating punch cards that incentivize the frequency of purchases of certain products, where the member benefits by obtaining free products.
Spin Premia also aims to reward members beyond transactions. The value proposition offers members access to exclusive concerts and music festivals. The program is less than 1 year; thus, it is in constant evolution to reinforce the value proposition and user experience.
A preview of results
Membership growth has been strong. As of year-end 2023 the program had 40.2 total million members. The acquisition of new members continues with excellent momentum.
Alejandro explained the sources of this growth, saying “OXXO stores and OXXO GAS stations serve as an excellent acquisition engine, although it also represents a challenge because it's not just about acquisition but about engagement as well. In fact, this aspect is where we are focusing, not so much on acquisition but primarily on creating daily users by leveraging our program and other solutions.”
As seasoned Loyalty Marketers know, activity rates are key once the critical mass of membership has been achieved. Spin Premia is performing well against this metric also. At year-end 2023, Spin Premia had 19.2 million active users, up from 12.9 million just one year prior.
Member activity with the program is very frequent. Alejandro shared “considering that OXXO has more than 13 million daily transactions and that the loyalty program already accounts for a significant percentage of tender (31%), we can say that the value proposition is generating high engagement.”