Lithuanian startup Rewalon have spent the last year quietly working away at their business but now that they have secured a significant partnership with American Express they are ready to introduce themselves to the world. Rewalon describe themselves as a micro-rewarding service for business clients and have successfully launched in Lithuania where their service is fully established and next look to Russia for further growth.
The idea behind Rewalon is quite straightforward. Companies like to reward their clients and customers to retain service and loyalty. Small rewards like a coffee or bagel, a meal at a restaurant, cinema tickets, or other small value prize are simple, inexpensive gifts to give out, however this can sometimes be hard to organise and expensive to do. Rewalon offer to make it easy for their partner companies.
Companies can either enter the details of the clients they want to reward through Rewalon’s website or use an API they have developed that integrates with CRM (customer relationship management) systems. Rewalon will then contact the clients receiving rewards by SMS or email, the message will explain why the reward has been sent and comes with a unique redeemable code. The client then goes to the merchant that sells the reward, redeems the code and gets their reward.
One of the important benefits to this arrangement is that Rewalon can track how many people take up the offer so that the company giving out the rewards only pays for those rewards that have been redeemed. Rewalon have found that their average redemption rate is around 30%, so companies can save a lot of money using their service rather than paying for rewards in advance that might never end up getting claimed. Of course the rate is heavily affected by the value of the reward on offer, but I am told that even the higher value rewards have mostly seen redemption rates of 50%.
Rewalon have targeted partnerships with large chain stores and retailers because that gives clients more flexibility in where and when they can claim their reward. Instead of having to track down a small, unknown coffee shop for example, they could claim a free coffee from a chain that might stretch across the country. The gifts are available at the same price as on the merchants menu, so there is no loss of income or profit for the merchants giving out the rewards since effectively it is just someone else paying for the product.
In Lithuania and Latvia Rewalon already have some of the largest companies in the country using their service, the likes of Swedbank and Omnitel, and some of the largest chains providing the rewards. The announcement of their partnership with American Express is just the latest in a growing list of major companies, the only difference is that this time the name has international recognition.
Rewalon have taken on the responsibility of providing American Express’ customers with micro-rewards in Latvia. Their API has been connected to American Express’ Membership Rewards programme so now clients of Citadele Bank, the partner in that region, can easily select small rewards they can redeem quickly. The benefit of using Rewalon’s services here is that instead of having to wait months to build up towards some large reward clients will be able to claim small rewards on a regular basis and feel more connected to the brand providing them with prizes.
The business case has been tested, partners are using the service and clients are claiming rewards so now it’s time for the company to look to new horizons and Rewalon have cast their eyes upon Russia. They have already expanded and formed a company in Russia and are both connecting with merchants and talking to potential clients, work is well on the way to see Rewalon taking off there as well.
The six person team based in Lithuania have certainly been busy since the startup began developing this service in November 2012 and up to now investment has come from the Lithuanian Practica Seed Capital Fund. However they are currently in the process of attracting investors for their second seed round and they are open to the potential of expanding into other countries dependant on where their investors might be interested in taking the business.