Thought Leaders in Mobile and Social: Interview with Kelly Passey, EVP of Business and Product Development at Access Development (Part 7)

Sramana Mitra: The thing that broke their model was that their discount level was unsustainable.

Kelly Passey: That is correct. I don’t think they had the close loop reporting in control, because there was a lot of fraud, multi-use and multi-redemption from the same person. We heard all kinds of horror stories there. Just managing the throughput was a challenge to their model. There are probably 500 analyses on why Groupon had problems. But I think they changed it around, and they are trying to take care of those merchant relationships now. They are adding payment functionalities for their merchant relationships, and they are adding goods.

SM: The reason I asked you this question is because our model, to some extent, is related in that you are also doing a group marketing offer for these merchants, and merchants are getting the advantage of a large network of members. There is deep discounting as well, but I think yours is probably not as deep as Groupon’s and it doesn’t break the model of the merchants.

KP: I agree with that. I would draw a delineation between private networks and private access to public facing access as an additional differentiator there.

SM: I think it is the merchants that determine whether the model is viable. What difference does it make whether it is a public or private network? If the margin is sustainable, then a large public network would actually be helpful.

KP: I agree. Our model works for the merchant community. We have less than 2% attrition issues within our network. Our merchants stay on again and again, whereas in Groupon’s model a merchant typically participates once or twice and then doesn’t come back.

SM: The thing I like about what you are saying is that today we hardly pay attention – I have all those United Airlines miles sitting in my account, and I am not using them. I also have hundreds of thousands of British Airways miles and I am not using them. It is not so easy to figure out how to use them and they are not obvious. But if I had a mobile app where I could quickly search and be able to use on the go, I would probably use those miles much more effectively.

KP: That is similar to the model of Viggle I mentioned earlier. You have thousands and thousands of miles accrued and not using them.

SM: You should talk to British Airways. They are lousy. You can’t find a single flight. As far as mileage redemption is concerned, British Airways is absolutely dreadful. Nowadays we have stopped traveling on British Airways as a result of that.

KP: We are knocking on the doors of a lot of those partners right now. We just kicked off a product called Paradeals, and we are in conversation with a lot of those providers. What we found by talking to airlines, as an example, is that some of the airlines still use reward administrators. We can’t just integrate with the airlines, we have to integrate with loyalty providers who manage their accrued loyalty points for them. I agree with you, those programs are 100% terrible.

SM: It was nice talking to you, Kelly. It was an interesting discussion. Thank you for your time.

KP: Thank you very much. Take care.

This segment is part 7 in the series : Thought Leaders in Mobile and Social: Interview with Kelly Passey, EVP of Business and Product Development at Access Development
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