LoyaltyOne buys into Indian loyalty agency
Alliance Data Systems' LoyaltyOne business unit has expanded its reach into India with a strategic investment in Direxions Global Solutions, a loyalty, CRM and data analytics provider.
Direxions comprises three businesses: Direxions Marketing Solutions, a full-service agency and India's market leader offering loyalty and relationship marketing solutions; Cartesian Consulting, a precision marketing consultancy which provides analytic solutions including customer, loyalty, retail, campaign and channel analytics; and Red Box Rewards, which provides full-service rewards, point-based loyalty programmes and incentive programmes for businesses throughout India.
LoyaltyOne already owns and operates the Air Miles coalition loyalty programme in Canada, and has recently announced the launch of a national rollout of a coalition loyalty programme in Brazil, in which the company also has a sizeable equity stake. The new partnership with Direxions is therefore in keeping with LoyaltyOne's stated expansion strategy of identifying markets where loyalty initiatives and coalition loyalty models can be deployed with potential for significant long-term growth.
Similar to its approach in Brazil (with its equity stake in CBSM, which operates the Dotz coalition programme), LoyaltyOne says it will work with Direxions to explore a coalition model similar to both the Canadian Air Miles Reward Programme and the Dotz programme in Brazil. The partnership will also continue to offer one-to-one multi-channel marketing services to India's consumer-focused companies (e.g. retail, financial services, travel, and consumer packaged goods) using the combined global and regional knowledge and experience of both companies.
"Our investment in, and partnership with, Direxions represents a significant opportunity for LoyaltyOne to enter the Indo-Asian market... one of the world's fastest growing consumer markets," said Bryan Pearson, president for LoyaltyOne.
With an estimated total population of 1.3 billion people, India is the second-most populated country in the world and the world's 12th largest economy. It has a rapidly growing middle class of more than 50 million people. Global estimates suggest that the middle class is expected to grow ten-fold by 2025.
While specific financial terms of the agreement were not disclosed, LoyaltyOne said it secured its equity stake for an investment of less than US$5 million, with an option to increase its ownership stake and financial investment gradually (similar to its strategy in Brazil).