Update 06/06/2016: Here’s an article from CNET outlining the official details of the program.
T-Mobile is expected to partner with Loyal3 to give shares of stock to customers in what could be the most ambitious customer loyalty program ever devised.
Many readers found this site through investing in IPOs at Loyal3. Though not directly IPO related, the news may dramatically raise the visibility of Loyal3 which could lead to more IPO opportunities.
Existing postpaid subscribers that download a new T-Mobile phone app before June 21st will be eligible for a single share of stock. To claim the share, customers will need to open a Loyal3 account. Furthermore, T-Mobile subscribers that refer friends and family as new customers will receive up to 100 additional shares per year. The promotional hashtag will be #GetThanked.
It appears that Loyal3 is successfully implementing its first so-called Stock Rewards™ product offering.
This is great news for the maturing fintech start-up.
In addition to the stock, the initiative will reward customers with a free pizza from Domino’s (DPZ), and a free Frosty from Wendy’s (WEN) each week.
The implications could be huge for customer loyalty programs and for Loyal3.
T-Mobile will gain more engaged and sticky customers with this promotion because stock ownership has been shown to increase customer spending and brand loyalty. Loyal3 will be introduced to an abundant pool of new brokerage customers. As of Q1 2016, T-Mobile had 65.5 million customers.
Update 06/06/2016: The CNET article indicates that this program is not meant for Loyal3 to gain new customers.
this program isn’t a way to push you to use Loyal3 as a broker. (Customers are actually unable to use it beyond getting their T-Mobile shares.) – Roger Cheng – CNET
Loyal3 has been in the news very little since a slowdown in IPO activity. Assisting with this customer loyalty program is likely a new revenue stream for Loyal3 which helps solidify its business model and fintech stature.
Loyal3 Stock Rewards™ – The Ultimate Customer Loyalty Program?
For some time now, Loyal3 has advertised its “Stock Rewards™” program on a customer sales page on its website. The product offering describes how airline rewards and other customer loyalty programs have been around for decades. But some rewards that offer stuff, it claims, may diminish a brand.
With Loyal3’s program, companies can offer something more valuable… ownership. Check out the video below or at this link:
Based on some casual research I’ve done, offering equity to customers on a broad scale has never been attempted before.
Last October I reached out to Loyal3 to ask them about the Stock Rewards™ product offering because of an article I read in an Australian newspaper. But it wasn’t T-Mobile that I was asking about, it was Domino’s.
So this time around when I read about the free pizza as part of this T-Mobile deal, I was intrigued.
Will Domino’s Offer a “Piece of the Pie” Too?
My curiosity in the Loyal3 Stock Rewards™ program was sparked by an article I read in an Australian newspaper dated October 2015 that mentioned Domino’s Pizza in the US was in talks with Loyal3 about a stock rewards program.
That led me to another article from a few months earlier that mentions Domino’s had been exploring a stock rewards program, according to former Loyal3 CEO Barry Schneider.
So I dug in a little and learned that Domino’s launched a customer rewards program called Piece of the Pie in September. But there was nothing mentioned in the program about receiving company stock for eating pizza.
I reached out to Loyal3 to confirm conversations with Domino’s. Here’s the response I received from a spokesperson:
Unfortunately we can’t disclose details around specific deals or partnerships, but we can confirm that we have been in discussions with many companies about loyalty stock rewards programs. Our IPO services also offer IPO companies an opportunity to gift IPO shares or distribute IPO stock at a discount as a reward to their employees and other stakeholders. – Loyal3 Spokesperson
I also asked about regulatory and IT infrastructure hurdles that might be a challenge to administering this program. The response was that the program was intended to be SEC compliant, and the IT infrastructure had not been built yet (but the IT platform was modern and scalable and it wouldn’t be an issue). My take from that answer was that the program was in the works but not ready for prime time.
Lastly, I asked the following open-ended question.
Is there anything else you’d like to share with my readers (many of whom are customers) regarding the future of customer loyalty stock rewards programs at Loyal3? The response was this:
We share in the excitement and enthusiasm for the concept of customer loyalty stock rewards, and we hope this is something we will be able to bring to our platform in the near future. It’s on our product roadmap and we’ll keep you posted. – Loyal3 Spokesperson
T-Mobile is expected to make the announcement on Monday at the Un-carrier event
As for Domino’s, is it purely a coincidence that T-Mobile added a pizza bonus to this deal? Maybe they’re all talking. Maybe Domino’s is close to adding a stock rewards program to its Piece of the Pie program. The name is certainly appropriate.
Perhaps Wendy’s too?
Implications for Loyal3 and IPO Opportunities
Since late 2013, Loyal3 has administered 18 IPOs and follow-on offerings on its platform, and each company subsequently became available to buy in Loyal3 brokerage accounts. Knowing what we know, I expect T-Mobile will become available on the Loyal3 platform for stock trading this coming week.
The idea that the customer, shareholder, and company can build a powerful brand relationship together is part of what’s driving investable IPO opportunities. And Loyal3 has been the fundamental driver of it.
So anything good for Loyal3 is good for IPO investors.
If the T-Mobile customer loyalty program is a success, the same model could be replicated with many consumer brands, led by Loyal3. Imagine Starbucks, McDonald’s, Target, or even Apple implementing something similar. Consumer demand would likely be there. It’s a matter of Loyal3 convincing company management teams the benefit of customer stock ownership.
And as the successes pile up, perhaps pre-IPO companies will consider a partnership with Loyal3 to help administer their IPO directed share programs. At least, it’s something we can hope for.
Disclosure: The author is long TGT and AAPL. The author has no current relationships with any other companies mentioned.