and McDonald’s Corporation, who offered tiers and points that could be reused at the same retailer for perks; (2) aggregated/coalition rewards, which included most credit-card systems and where points earned for shopping at a variety of different vendors were accumulated in one platform; and (3) loyalty management companies, such as LoyaltyOne Co. (which managed Air Miles). 1 Tim Winship, “Airline Frequent Flyer Miles, 30 Years Later,” ABC News, May 16, 2011, accessed November 13, 2019, https://abcnews.go.com/Travel/airline-frequent-flyer-miles-30-years/story?id=13616082. Authorized for use only by Zaid Khartabil in BUAD 301-26 at California State University – Fullerton from 1/24/2022 to 5/18/2022. Use outside these parameters is a copyright violation. DROP TECHNOLOGIES INC.: UNDERSTANDING THE INFLUENCER MARKETING CHANNEL 9B21A006 The global loyalty management industry was valued at around US$3.2 billion2 in 2019 and was expected to experience a compound annual growth rate of 23 per cent over the next five years. This heightened growth was influenced by technological advancements, especially within mobile applications. Before the modern era of smartphones and online advertising algorithms, reward programs meant carrying a creditcard-sized punch card. With the introduction of mobile technology, loyalty and rewards systems became more relevant and engaging, and could inspire real-time action. According to research carried out in 2016, 57 per cent of consumers preferred engaging with their loyalty programs via a mobile device.3 Former approaches to loyalty programs that required customers to act after making a purchase, or required them to even remember to carry a physical card, seemed unnecessarily cumbersome in this new environment. DROP TECHNOLOGIES INC. Founded in 2015 by Derrick Fung, Darren Fung, Cameron Dearsley, and Akhil Gupta, Drop was a Torontobased coalition customer rewards program that enabled users to earn points using their linked debit or credit card. To join, consumers linked their spending methods of choice (e.g., debit cards, credit cards, or other payment methods such as PayPal) to their Drop account. Drop then automatically scanned and analyzed all purchases made with those linked payment methods and subsequently rewarded consumers with Drop Points, which could be redeemed at hundreds of partner brands, including Uber, Lululemon, and Apple (see Exhibit 1). The company’s mission was to provide a seamless, “all-for-one” loyalty program that rewarded particular shopping habits for each individual customer. Before developing Drop, Fung had been a trader at CIBC World Markets Inc. and had co-founded a music company, Tunezy, which was acquired in 2013 by SFX Entertainment. Known for his bold moves and successful track record, as well as for building a collaborative culture, Fung encouraged employees at Drop to be creative (“think outside the box”) and bring their own ideas to the table. Target Market Across businesses in the late 2010s, conversations about customer loyalty circled back to millennials; and it made sense. In 2018, there were over 10 million millennials living in Canada, which represented 27.5 per cent of the total population and made them the largest population group.4 Luckily for most merchants, over 80 per cent of millennials already participated in loyalty and rewards programs and tended to participate in programs that were aligned with their lifestyle. In order to acquire these users, Drop focused its customer acquisition efforts on creating trendy and unique experiences, such as a pop-up avocado toast food truck and concert ticket giveaways (see Exhibit 2). Recently, a new demographic had emerged as another attractive target market for Drop. This group was largely made up of women aged 2534 who had children and loved collecting points through everyday purchases such as groceries and gas, and who were eager to save money whenever and wherever they could. Canadian mothers spent an average of CA$63,000 per year on their individual households as the prime decision-maker for most everyday purchases, making them a crucial demographic for loyalty companies to 2 All currency amounts are in U.S. dollars unless otherwise specified. Brand Loyalty, Executive Summary: The 2016 Bond Loyalty Report, January 2016, accessed November 13, 2019, https://info.bondbrandloyalty.com/hubfs/Resources/2016_Bond_Loyalty_Report_Executive_Summary_US_Launch_Edition. pdf?t=1488220126670. 4 The Nielsen Company LLC, Millennials on Millennials: Why We Matt
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