Rob MacLean - Points.com

In this episode of the Canadian Equities podcast Rob MacLean, CEO of Points.com joins Robert Cooper to discuss the loyalty commerce industry, and machine learning. For the full length version of the Canadian Equities podcast connect with us at acumencapital.com/podcast.  

Transcript

Moderator 0:00

Welcome to Canadian Equities, a short biweekly podcast series, where we speak with top business leaders and hear their perspectives on the industries in which they operate for the full length version. Find our link in the podcast notes or connect with us at acumencapital.com

0:15

Today on the Canadian equities podcast, Rob McClain, CEO of points, international joins host Robert Cooper as they discussed the loyalty commerce industry and machine learning points. International was founded in 2000 and is the leading loyalty commerce provider to the global aviation hospitality and financial services. Points combined insights, technology, and resources to make the movement of loyalty currencies, more intelligent for around 60 loyalty programs worldwide.

Moderator 0:46

Rob the loyalty commerce business is a very niche sector and points as a leader. What are three things that our listeners need to know about the business that cuts to the heart of the business model itself?

Rob Maclean 0:59

Well, Robert, I think there's, there's probably a couple of things. I had a jump on. I think, you know, first off the market is much larger than the average investor would realize. Uh, I think we all, uh, in some way, participate in loyalty. The scale of loyalty is really, I think, surprising to investors outside of, uh, of our business, you know, loyalty programs, you know, annually sell more than$50 billion worth of miles and points. Uh, every year there are hundreds of millions of members. Uh, the average American, uh, would be in between 25 and 30 loyalty programs. I think about our business alone, we have access to approximately a billion member accounts through our various partnerships., and obviously the concept of loyalty is global. So I think that would be the first thing that I think is critical to understand. It really is a significant market. I think the second thing is really around, um, the fact that loyalty programs have evolved over time to be really financially driven. These are big revenue machines, they're financially, uh, important to their parents. And they're, they're really focused on monetizing, um, their assets, which are those hundreds of millions of members that are, are participating. You know, I think of our top partners, they generate billions of dollars of revenue each for their parent companies. And so that profit motive, I think, is a, is a bit of a surprise. They're also very, very high margin businesses. And I think this context is important when we think about points and how we fit into, into the business, because these guys. Uh, are, are really, uh, chasing a profit mode of, uh, they're not just giving away free seats and giving away free hotel beds. The last thing around that financial point of view is, you know, the banks and third parties are starting to recognize that here through the pandemic American Delta and United along, just as a reference of three large loyalty program, uh, companies, they raised over$20 billion by collateralizing their loyalty program. to raise that capital during a time during the pandemic where they needed that. So I think, I think that broader understanding of the financial power of, uh, and financial motivation, motivation of the loyalty programs, uh, is really important. And then for us, our, our, um, uh, you know, our business is very focused on helping them fuel that. Profitability and that revenue growth, we are a buyer and seller of miles. We're typically the second or third largest buyer or seller of miles in these programs. And so, you know, our business model has really been designed to help these guys, these big loyalty programs generate more revenue and more profitability. And so I think we'll talk about, uh, this I suspect or in the course of the podcast, but, um, as these a loyalty programs evolve to having more and more of a growth mandate, I think. You know, in a really good spot to help them, I'll help them do that to the benefit of, of their programs as well as the points.

Moderator 3:59

Okay. Points, deals with a ton of data. And it's only possible to make sense of it with some machine learning tools. Give us a layman a sense of how machine learning works and speaking more broadly, what is on the horizon for machine learning and its applications.

Rob Maclean 4:16

Yeah. I mean, for us, some of the numbers I just spoke about, uh, obviously we're dealing with large complex data sets, uh, from a whole bunch of different sources and geographies. They also come in. These data sets are coming in, in pretty high velocity. So if we're working with 60 plus partners around the world, we're collecting that data on a fairly frequent basis and a pretty broad set of data as well. And so, you know, for us getting through all of that data to make us smarter with our offers and our promotions and our pricing, et cetera, uh, is critical to our value proposition. So we, we frankly have to be. I'm very good at it and kind of traditional methods of data processing and analysis, just, just aren't cutting it, uh, to be, to be very Frank. So the conclusion for us was kind of a need for that machine learning and these algorithms to start doing some of that heavy lifting, um, really to keep pace with all of the, the volume of data that's coming in. for us being able to, um, Start automating means we can take some of our people resources and have them more focused on kind of calibrating the models, um, while the machine so to speak is often of, uh, learning or, uh, making kind of these incremental improvements along the way and collecting that data and driving transactional. But we want to be able to take our kind of skills, uh, and kind of plug that in to be able to, to kind of tweak the, um, the models themselves. So, you know, right now we've, we're running hundreds of algorithms and models really designed to do things like optimize pricing, you know, how do we target the right members? Um, how do we stretch their investment levels? How do we engage them more frequently? So you don't end up in that kind of spam filter. Uh, and just frankly, all of those calculations are beyond our ability to keep up with it from a, from a manual standpoint. So, uh, given that, um, you know, machine learning has been a process for us or a journey for us where we're just getting better and better at it every day, um, it's, it's critical to our ability to drive revenue growth. Um, as we add more and more partners into our.

Moderator 6:25

There's a stiff competition for talent in the tech world. How do you compete and ensure you have the best people in a tight tech labor market?

Rob Maclean 6:34

Yeah, it's a great question. Um, it's a very topical one, uh, for sure, because your assessment of the market is exactly right. I'd say, you know, first off we work really hard at it. Um, we're about 300 people, uh, and heavy dose of technology and product, uh, in that mix. for us, it's really important to have a compelling value proposition for, you know, not only new talent, but our existing team. And we do all of that kind of typical things Robert than you'd expect, you know, competitive pay and perks. We are, even pre pandemic, we encourage flexibility, remote and hybrid kind of work environments. I think that. That's going to continue. It's certainly been a challenge. I think for most companies here over the last 18 months, but, we had a good start on that. Uh, we've proven to be reasonably effective with the fully remote, but you know, being flexible in that, uh, on that front is really important and we are a growing company. So I think that helps the fact that we are able to provide opportunities to grow and develop on the job, both for internal candidates and prospective candidates. Uh, that's, that's important. Um, you know, one small thing we do, uh, maybe not so small as we do compete for these best employer awards. Um, we'd been lucky enough to be selected or, or, um, chosen on a variety of lists over the last decade. And I think, for me, it's not necessarily about patting ourselves on the back. It's more about insurance. We stay current with the trends and what are best practices out there when you're competing for these kinds of events, you have to be continuing to evolve. So I find the team works really hard at that, uh, and get a lot of input, um, out of those processes. So, you know, that that's been a really lots of hard work, but, um, really effective for us to stay. You know, what we think is a, at the top of the employer environment here in case. Um, obviously you look, you just, you're, you're trying to get fit. We're 300 people, as I mentioned. bad apples stand out around here. So, uh, we, we spend a lot of time just making sure we get the right fit, um, in terms of person, cause there's a lot of talented individuals out there. You have to have a little interest in travel. You have to have a little interest in, in working hard and having a bunch of fun. Um, but if we can get that fit, right, we feel pretty good about it.

Moderator 8:50

Rob McLean, founder and CEO of points international. Thank you for joining us in the Canadian Equities Podcast note that this podcast is not making an investment recommendation on any companies discussed. We welcome your comments on today's episode or any other episode. Connect with us at Acumen Capital dot com.