“I grew up in a small town where any shop I entered, the shopkeeper would know me, my family and my preferences,” reminisces Bijaei Jayaraj, founder and chief executive officer, Loylty Rewardz (Loylty), Mumbai. But, with multi-national corporations and large corporations entering the market, with a customer base running into thousands, knowing every customer is a Herculean task. And businesses that do not know their customers are in danger because if for some reason they lose customers, they would not know how to bring them back.

“I am quite a hands-on person, but my vision is to enable my company to run even in my absence”

This is where Loylty steps in with its end-to-end customised solutions for consumer loyalty and relationship management. Relationship building is the crux of the loyalty building programmes. So, while customers earn points for giving repeat business, a range of activities to engage the customer – like emailing and messaging on special occasions, announcing special offers and the like are handled by Loylty. “The reward points are like the glue that stick all other activities together,” says Jayaraj.

In developed countries, loyalty business is a multi million-dollar business whereas in India, it is in its nascent stages. “In the next five years, it has the potential to become Rs. 7,000-10,000 crores,” says Jayaraj. There are not many players in the segment, and Loylty is already planning its next phase of growth.

Currently handling leading clients like State Bank of India and Citigroup in the banking sector and Weekender and Indian Terrain in the retail space, the company plans to expand into the travel sector, servicing hospitality and tourism industries. It is already negotiating with existing multinational clients to cater to their international business in southeast Asia and Europe. It is also in talks with a Middle Eastern company to design a loyalty program for them.

To cope with this growth, the company is looking at expanding its team and upgrading its technology to make it more robust. It is also in talks with an investor to fund its growth plans.

The initial hiccup

Jayaraj headed the loyalty program in Jet Airways when the company was becoming an international airline and also had announced its initial public offering. “It was tough and deepened my experience in the space of loyalty rewards,” says Jayaraj. This experience, along with his MBA from Indian School of Business, Hyderabad, encouraged him to start Loylty in 2006.

“But, it was a failure,” he admits. He realised that starting a business was not just about being an expert in your chosen field, but also knowing how to build a team, the technology and raise money. Organisation building skills were just as critical, and Jayaraj returned to the corporate world to gain experience in these areas. He took up the offer that credit card services company, MasterCard, gave him when he quit Jet Airways. And for him this was the right place to complete his learning that he yearned for before getting back to being an entrepreneur. “Loyalty programs and credit cards have a close relationship,” he explains, since this business is all about encouraging customers to repeatedly use their card as a mode of payment.

During this time, he also developed the solution – LIDSys – Loyalty & Intelligence Development System for Loylty Rewardz, which, though not functional, was a registered company that he intended to restart. Technology forms the backbone of any loyalty development program as it stores and analyses data and helps understand consumers better.

After his two-year add-on experience as an employee of MasterCard, Jayaraj resumed his entrepreneurial journey in 2008, with seed funding of U.S. $3 million from Hyderabad-based Ventureast. At the beginning, it was just him and two months later, the second employee joined and the team expanded thereafter.

Instead of going for small companies, the aim was to target large corporations. “That was the greatest challenge. We wanted to start big and no big company would trust a startup,” he says. But, he believes that the reason for top banking companies like State Bank of India, Citibank and Deutsche Bank trusting Loylty was its single-minded focus on the core business, the passion of the team and its understanding of the client’s business.

Taking rapid strides

The first year, the company had nominal growth and touched a few crores in year two. But, by its third year, in 2010-11, it registered a 550 per cent growth. This year, the company expects to grow by around 250 per cent.

Today, the company employs 68 people, most of whom have been recruited for their passion. In fact, more than the qualification or experience, it is looking for people with the right attitude, ideas and an understanding of technology and loyalty. “That is because there are no experienced people out there in this industry,” says Jayaraj. So, the company prefers to train its staff.

Now, in the next phase of growth, the company has a new challenge, that of transformation. Till now, there was no segregation of roles. But, as the company moves up from being a startup to an established organisation, it is the process of establishing formal systems, creating clear roles while maintaining a fine balance that still allows one to pursue their passion within the organisation.

“I am quite a hands-on person, but my vision is to enable my company to run even in my absence,” explains Jayaraj.

This is an industry on the rise and there is room for other players to not just enter, but also expand the market as retaining customer loyalty will be critical for the growth of any organisation. What is important is to see how well a company manages its competitors. Jayaraj believes that it can only get better from now on for Loylty.