We have said it multiple times this year, and we’re true to the prediction: 2021 is the year of loyalty. This new partnership between Klarna and Flybuys is proof that we’re on the right track. It may be only April, sure, but we’re sticking with it.
Two days ago, the Swedish BNPL company and Australian loyalty program announced they would be working in conjunction with each other, allowing shoppers to collect Flybuys points whenever they use Klarna.
The Partnership Explained
From May 1st, Flybuys users will collect ‘vibe’ points every time they shop with the Klarna app.
Simply put, for every $1 the shopper repays on purchases, Klarna rewards club and Flybuys members will collect one ‘vibe’ point. Once enough ‘vibe’ points are collected, users can then convert them to three Flybuys points.
According to Loyalty & Reward Co, which helped develop the partnership, the businesses are ‘generous’ in the point process, returning 1.5 percent of all spend back to consumers with Flybuys points ( i.e. three points worth $0.5 for every $1 spent).
To incentivise shoppers to try the new partnership, Flybuys members get an extra 1,500 points when they make their first purchase using the Klarna app.
This service aims to cross-pollinate points for shoppers, especially those who have used BNPL services before.
“This partnership with Klarna opens up new opportunities for our members to collect points and even more ways to be savvy with their shopping and be rewarded for it,” says John Merakovsky, the CEO of Flybuys.
Will this partnership be the first of many? | via Klarna
There are obvious benefits to the consumer with this collaboration. Firstly, when a shopper chooses to buy something using Klarna, they’re reducing upfront spend and gaining points to use on later transactions with Flybuys.
Secondly, as noted by Loyalty & Reward Co, shoppers can ‘triple dip’. What does that mean? When a Flybuys member joins and downloads the Klarna app, they are instantly rewarded with 1,500 Flybuys points. Then, for instance, they shop with a retailer like Cotton On or Mecca through Klarna – here, they will earn Klarna ‘vibe’ points and additional loyalty points with Cotton On Perks or Beauty Loop points.
What about the benefits to the two businesses? Again, these are quite clear, as far as I’m concerned. Klarna launched in Australia in early 2020 and is still a little slow on the uptake of BNPL users. Compared to the juggernaut that is Afterpay, the platform needs to secure its place in the game.
About four percent of Australian BNPL users currently have an account with Klarna, so it needs to ramp up its customer intake; Flybuys is the perfect candidate to help. With this new partnership, Klarna will have access to eight million active Flybuys members.
To put this in perspective, Afterpay has arguably the lion’s share of the BNPL market in Australia. According to Power Retail, 90 percent of BNPL users have an account with Afterpay, with Zip coming in second with 36 percent of the market share. Klarna needs to differentiate itself as a leader of the market – this partnership might just be the way to go.
What’s more, Klarna is establishing itself as a BNPL provider that encourages ‘responsible’ spending. With the partnership, Klarna aims only to reward repayments, not spending. This incentivises shoppers that repay in the required time frame, “so debt doesn’t get out of control,” explains Loyalty & Reward Co.
It’s not just Klarna that reaps the rewards with this new partnership. Flybuys, which has over ten million cardholders, will now have access to the Klarna customer base. As mentioned by Loyalty & Reward Co, Klarna’s demographic is typically the Next Gen shopper, meaning Flybys will have access to a younger audience.
Additionally, Flybuys shoppers can earn extra points whenever they shop using Klarna and reward shoppers for purchasing items in new categories and platforms. Ultimately, this means that the business will earn more revenue by selling more points.
The First of Many Partnerships
This is the first and ‘revolutionary’ partnership of its kind, explains Fran Ereira, the General Manager ANZ of Klarna. “This is a revolutionary partnership bringing together the world’s fastest-growing shopping app with Australia’s most popular loyalty program,” she says.
“Our partnership has been proudly designed for modern consumers. Shoppers want more flexibility in payment options so they can get what they want now, but they also want to be rewarded for taking this option. Klarna’s partnership with Flybuys rewards both our customers by tripling their points collection and rewards potential.”
With the maturation of online shopping over the last 12 months, and e-commerce pushing 30-35 percent YoY growth as we enter the first year post-pandemic, retailers and services will start to capitalise on the market growth.
Rewarding shoppers for purchasing is nothing new. But as far as we’re concerned, this is the year that businesses have to really start shaking things up. Living in a post-pandemic economy, shoppers want to look for brands and businesses that reward them for shopping online.
If a business that is well-established and trusted among consumers, (Flybuys) partners with a newly-established brand (Klarna), chances are the shoppers will take advantage of the partnership and reap the rewards. Everyone’s a winner.
Klarna and Flybuys’ partnership is the first step – retailers and companies need to start joining forces to develop loyalty further, capture a new demographic and solidify their places in the industry.
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