Uconomy: The business of customer loyalty

Customer loyalty is a problem for new businesses and one startup believes it may have found the solution through a mobile application service.

Uconomy, a Cape Town-based company, claims it offers an integrated m-marketing and mobile loyalty option to the SMME and consumer market. Considering the importance of loyalty amongst the world’s large companies, the claim is worth considering.

Henry Land and Florian Lucke, the founders of Uconomy, are targeting companies ranging from township entrepreneurs right through to established medium-sized businesses in the formal sector with their service. It’s part of the company’s effort to capitalise on the success of traditional corporates when it comes to business loyalty schemes.

“It is much more expensive to get a new customer than to retain an existing one,” says Lucke.

The idea is that technology enables the customers to buy goods and services via their cellphones at discounted prices – a practice they say saves money for their clients, making them more profitable.

“Small marketing budgets and lack of resources to create an engaging and ongoing conversation with clients seriously limit a small business’s potential to thrive,” says Lucke.

Lucke says he and Land saw the need for a low-cost, highly accessible marketing platform for small and medium businesses. “The service gives each business owner a better stand to compete in the face of corporate competition,” he claims.

What Uconomy takes from each client is information on what the client offers. A tailor-made package is then created and Uconomy drives the process. “There is no need for them to download software, send out SMSs or do anything along those lines. We manage the service using the information from our clients,” explains Lucke. The model is pay per customer.

“What makes Uconomy unique is the way in which we link small businesses and consumers in a marketing network where all you need to participate is a first-generation, very basic cellphone”, explains Lucke. “This opens up the power of mobile commerce to every small business unlocking even the lower-income segments of the consumer market.”

The founders believe their startup gives formal and informal businesses the chance to push their marketing message to prospective customers who have already indicated their buying interest, while at the same time offering group buying and cross-business loyalty rewards.

Uconomy says its possible impact is far-reaching, as the company “unites” SMMEs and consumers in a marketing network where an internal currency stimulates demand regardless of the economy. It’s clear that the company falls into the center of the mobile industry, specifically tailored to the social mobile commerce and loyalty category sub-sectors that are the subject of a large degree of marketing research.

Their key features include mobile marketing (SMS, USSD, mobile web) for customers who demonstrate a strong buying interest alongside what the company claims is the “seamless integration of social commerce and loyalty rewards campaigns”.

The idea was inspired by a Swiss based co-operative bank that runs a marketing network for small businesses. The company was incorporated in September 2009 and plans to launch an updated version of their website tomorrow. Both founders are sole shareholders.

Because the company’s package is accessible via all mobile handsets, the company claims it’s suitable for small businesses from all industries, formal or informal. Perhaps the largest selling point is the fact that the platform caters to cash-only businesses – a phenomenon across emerging markets.

Though Lucke says the company does not have any direct competition, it is clear that parts of Uconony’s operations compete with conventional group buying sites like Groupon and Dealio. When it comes to informal group-buying schemes, small-business marketing companies and bulk SMS service providers like smsportal.co.za, the company also faces competition. There is also little evidence to suggest coupon magazines are about to simply disappear across emerging markets, despite the rapid technological development happening in many regions.

Uconomy evidently harbours international ambitions, even if it is a longer-term prospect. Given the “nature of our offering”, as founders put it, they are clear that if successful in South Africa their business can apply to“any other emerging economy”.

Despite prospective challenges, the company is confident that five years from now they can stick to the goal of serving as an established brand in the South African market and sub-Saharan Africa as a whole.