E-commerce is the fastest growing retail market in Europe with sales in the UK, Germany, France, Sweden, The Netherlands, Italy, Poland and Spain being expected to grow by 18.4% to £156.67 billion by the end of 2015, and reach £185.44 billion in 2016. This prompted The Best Customer Guide's contributing editor Peter Wray, founder of UK-based loyalty consultancy Loyalty Matters, to examine what is being done by innovative new players in the e-commerce sector with loyalty marketing - which resulted in this very enlightening interview with Charlie Casey, CEO of 'new kid on the block', LoyaltyLion. This article is copyright 2015 The Best Customer Guide.

In 2015, overall online sales are expected to grow by 18.4% (same as 2014), but 13.8% in the U.S. on a much larger total. The growth of online sales at such a rate is estimated to inevitably reduce the market for traditional shops. By the time that online sales represent 5% or more of domestic retailing then the continued growth of online retailers will occur at the expense of conventional stores. In Europe as a whole, online retailers in 2015 are expanding 14.2 times faster than conventional outlets creating major strategic issues for store-based retailers.

This is the conclusion of a recent report by The Centre for Retail Research that has forecast the trends in online retail sales for eight European countries and the US for more than ten years. The calculation is based on the sales of goods (excluding fuel for vehicles and sales of prepared food in cafes and restaurants). Tickets, holidays, gambling and insurance are also excluded because they are not classed as retailing. 'Online' is defined as sales where the final transaction is made over the internet or at a distance, irrespective of whether the internet has been used for browsing and price comparisons. Sales made using mobile phones and tablets are included in their figures. Whichever way you define these numbers they signify a significant and growing trend that any organisation seeking to use loyalty marketing and customer insights to drive their growth cannot ignore.

LoyaltyLion (formerly Prizgo) is a digital loyalty framework for E-commerce retail. It combines a rewards programme with analytics to enable retailers to boost customer engagement, retention and advocacy on their sites. The approach by the co-founders (Charlie Casey and Dave Clark) has been to keep the offer to prospective B2B clients as simple and hassle free as possible. The ground floor entry level offer is for E-commerce sites with less than 800 orders per month and then climbs through Small-Medium-Large-Enterprise sizing options with increasing levels of service/support from LoyaltyLion to drive engagement and loyalty from customers. All options have a free trial window of 14 days to test the proposition before monthly payments to retain the service.

Speaking to Charlie Casey he said that he had the drive to build a start-up business since he was a young child. Leaving University he felt the need to build a credible CV with short spell at Deloitte followed by work with some Tech companies but he then pursued his own ambitions and teamed up with co-founder Dave Clark to create an initial idea of a 'meet and greet' events based mobile App. They developed a business plan that won them a slot in the Berlin based 'StartUpBootcamp' crucible in 2012. This initiative however seemed to be up against a limited market interest and scalability issues. Whilst developing their embryonic business with the support of 'StartUpBootcamp' they then secured a client business retailing a type of 'crowd-sourced' T-shirt designs that wanted a more 'gamification' based approach to encourage more repeat purchases. The research firm Forrester defines gamification as the insertion of game principles and mechanics into non-game activities to influence specific

This led Charlie and Dave to the idea that customer engagement, what they call 'soft currency' was an under serviced area for a customer loyalty programme. This thought then led them to develop a technical and marketing offer that could be easily and cost effectively utilised by a potential global market of E-commerce retailers who were searching for additional loyalty from their customer base. Their areas of expertise offered to their business clients include E-commerce, Retail Loyalty, programmes, Advertising, Customer engagement and Marketing Rewards.

Charlie is emphatic that their target audience is independent E-commerce stores that are in need of a white label customer loyalty offer that offers them flexibility to tailor loyalty rewards to 'their' specific customers and not bend themselves into some large, coalition style loyalty programme who are marketing their own brand. Charlie states "Consumer's differ, some like known rewards, and others prefer non-expected 'surprise & delight' benefits. We provide ecommerce stores with a better way to recognise and add value for their customers with more personalisation".

LoyaltyLion built and operate an in-house technical platform with nothing out-sourced. In the first full year of operation they have grown from a base of 70 stores to around 500 today, adding a new online e- retailer every day. Their growth is accelerating from both organic (more people visiting the LoyaltyLion site and app pages as they get featured / 5* reviews etc) and driven with inbound marketing via blogs. Whilst LoyaltyLion's focus is on their E-commerce business customers they do track memberships which are now at the 650,000 level. They are using Amazon AWS to deliver a variety of cloud-based computing services including a wide selection of compute instances which can scale up and down automatically to meet the needs of their application in a cloud based environment. From the start LoyaltyLion have been available to any E-commerce retailer anywhere. This currently requires them to operate in four languages which add to their operational complexity. Asked what he would do differently if able to roll back the clock Charlie said "Starting again I would not embrace this complexity at the outset. The UK market for e-commerce is a large enough market for a start-up". We also discussed the approach relative to the mainstream of customer loyalty programme business models and Charlie observed "plastic cards are very outdated; our focus on the on-line E-commerce sector allows customers to interact in the relative privacy of their own homes or smart-phones".

LoyaltyLion founders also have some very strongly held principles of being non-intrusive to the members of their programmes that are operated by their focus being entirely on their E-commerce business clients; Charlie was very specific "we absolutely do not wish to track customers across multiple stores as an ethical issue matter not because of the inevitable complexity issues". LoyaltyLion are covering the key elements of B-2-B marketing with a focus on the financials, the decision makers, the organic build database, the value proposition and the management of that relationship. They have benefited from the support of one of the EU's best connected accelerator groups for start-ups, from experienced angel investors and their own willingness to keep questioning their own business model robustness in a fast growth sector. They have focused on an under-serviced business sector and they are riding a rising tide of sales growth in their B-2-B business model.

The challenges will probably arise as they gain more visibility from the major loyalty programme players, as the global client base will inevitably place ever more technical, cultural and ethical pressures on their core principles. Competitors such as Shopify, Vend, Loyal2.com, Online Rewards and Google Wallet are all examples (both large established and small start-ups) that are competing in this growth market. LoyaltyLion will face some serious challenges in this competitive environment and profit may not be instantaneous but that is not the point of loyalty programmes. It's about building a connection with your customer, and that connection is vital for running any business.

My impression was that LoyaltyLion understand this imperative on the connection side but may be under- estimating the need to increase their ability to provide a broader based consumer spend analysis which is what historically has attracted the investor community to scale based consumer loyalty programmes. Mobile App driven loyalty is a growth area and some commentators are citing this as the future dominant platform for loyalty connectivity. "Mobile is no longer just a channel; it's an essential part of the integrated marketing mix and the content it contains is just as important as a flawless and innovative execution," states David Brown, Executive Vice President/GM, MXM. This agency has form in this space as MXM was cited by Forrester in 2014 as one of the pre-eminent customer engagement agencies, and by Gartner as a top digital agency.

LoyaltyLion also faces some established players in this emerging 'Omni-channel' marketing environment. One big player already is 'Shopkick' who are expanding their in-store business clients. This 2009 heritage player has developed some formidable momentum and after a test run last year Macy's in the USA will expand the use of Shopkick's shopBeacon technology to all Macy's stores nationwide. Once live, as shoppers enter any Macy's nationwide, shopBeacon will remind those Shopkick app users who've opted in to receive notifications to open their app. During the initial phase of the programme, customers will receive the currently available Macy's promotions, deals or discounts. In early spring 2015, these Macy's offers can be even more precisely tailored to facilitate increased consumer engagement and promotional and marketing relevancy.

LoyaltyLion may have identified a niche in the on-line E-commerce growth sector for a simple and cost effective loyalty solution but the next step may require more visibility to the end customer? The strategy for the company is to eventually migrate into physical stores, and Charlie added that "We are very ambitious, but looking back over the last 12 months we are happy with our progress so far".