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Accelerating mobile commerce and loyalty programs with Sionic Mobile’s Ronald Herman

So many retailers are shooting to emulate Starbucks’ loyalty program. But they’re falling short. Way short. Why is that?

On the Tradestreaming Podcast this week, I speak with the founder and CEO of Sionic Mobile, Ronald Herman. Sionic is a mobile commerce platform provider and a fast-growing loyalty marketplace. We chat about the challenges and opportunities for SMBs to really embrace mobile commerce and how his firm designed a solution to minimize this friction. We talk about how e-gift card rails weren’t designed for large loyalty programs. Lastly, we discuss the industry’s struggles with a payment consortium and how a marketplace structure could be a better mousetrap.

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Below are highlights, edited for clarity, from the episode.

Loyalty and mobile commerce: two sides of the same coin
We actually define mobile commerce a little differently than the rest of the market does. We tie rewards and customer rewards to the amount spent inside a shop, restaurant, and service place. But we also bundle that with advertising, special offers, and soon, with digital couponing that’s personalized down to the location of the mobile device. Very big retailers have very loyal and enthusiastic customers but for secondary tier and SMBs that can’t afford a big loyalty program, we can help augment their operations through our loyalty marketplace.

The difference between enterprise retail and SMBs
We started Sionic Mobile six years ago with the same chicken and egg scenario most entrepreneurs face: how do we get users onto a platform without inventory? For us, inventory is the ability to pay with your phone and collect rewards. We decided to go down the e-gift card rail. Our backend actually goes out and buys a digital gift card for the exact amount of purchase, presents it on the phone at the point of sale, and then turn around and credit rewards to the customer. Our whole goal is to create a big, rich marketplace where you can use an existing app on your device, accrue points, and spend them at any of the partners on the marketplace. No need to carry 27 loyalty punchcards.

It’s been really successful but as we get larger partners on the network, it’s a very costly proposition for companies like Staples and Lowes. So, now we still manage the payment but we integrate it through the payment terminals like Ingenico and Verifone or directly into large retailers’ POS systems. This way we cut out the expensive e-gift card rail which wasn’t developed for this purpose.

What’s coming down the pike for mobile commerce and loyalty.
My very first company back in ’92 used artificial intelligence to convert hand printed information into digital. I have AI in my blood. Recently, my friends at GM coined the term “cognitive commerce.” Cars are smart, know if you’re low on fuel, what the weather’s late and the last time it was servcies. IBM Watson will analyze these car habits, along with driving habits and soon, shopping habits. The dashboard and infotainment buttons will change based on what the car believes you’d be interested along the roof.

What happens when passengers leave the vehicle? You’re kind of in a black hole. What we’re doing, with the same IBM Watson backend, picks up where you leave the vehicle and takes customers round trip through the IBM cognitive commerce engine. You’ll have a much better dining and shopping experience based on the history of your habits.

 

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Transportation apps find success with payment technology

Uber and Lyft may have had their sights set on disrupting the taxi industry, but they ended up changing consumer expectations for commuting. Frictionless and invisible payment capabilities within an app have created a new niche for fintech companies. Transportation apps with the ability to buy on the go are moving the point of sale away from kiosks and ticketing counters and into a commuter’s pocket.

“To be able to do more digitally and on the move is making people’s lives more efficient,” said Jonathan Donovan, head of product at Masabi, a software company specializing in mobile transportation ticketing. “The Uber and Lyft style mobile commerce is becoming a basic expectation in other areas of transportation.”

Masabi’s cloud based software solution JustRide brings payment functionality to public transportation apps. Merchants and travel providers connect their existing apps to the JustRide API.

Incorporating an app with a solution like JustRide benefits both the merchants and consumers. Transit authorities can run customer management through the JustRide back office, including reporting, refunds, and validation. There are also integrations for Masterpass and Apple Pay that allow consumers to purchase tickets with mobile wallets. Since users can manage their rail cards online, travelers don’t have to be paranoid about knowing where their rail cards are at all times, eliminating the annoyance of reporting a lost card (something I experienced firsthand while living in New York City).

Along with better customer management, more data and user information helps transit authorities better understand how travelers behave. And since POS hardware is in a customer’s pocket, maintenance costs, like  purchase as many paper tickets or emptying kiosks of cash, drop.

Masabi’s most established U.S. partnership is with Boston’s MBTA. Over half the tickets sold in Boston are through the JustRide app integration. Cost savings have allowed the MBTA to reinvest $70 million into other investments.

Masabi’s recent partnership with the New York MTA has created a lot of buzz. Commuters traveling on the Metro North and LIRR railways can now purchase tickets through the JustRide integration on the MTA eTix app.

Since the deal with the MTA went live, there have been 600 thousand ticketing transactions, a nice start for a new market.

MasterCard and Kiolis recently invested in the company. MasterCard’s global presence helps Masabi with payment facilitation, like the continued integration of Masterpass. Keolis is one of the largest French transportation groups with rails, buses, and airport services, and a new deal to bring mobile ticketing to over 70 French cities is already in development.

Donavan views the partnership with Keolis as a blueprint for future partnerships, moving into trip planning platforms with payment functionality.

“The expectations of riders are increasing as more functionality is entering into the sector. Mobile ticketing integration into trip planners is making the travel process digital. Reserving a shared bike, buying a train ticket, and finding a cab from one location isn’t that far away,” he concluded.