Define a strategy of loyalty program for Google Pay.

Lay the land : Google Pay is a Payment service, enables NFC payments, instant transfer of money to friends and family. Channels - Online and In-app and Watches.

 

Clarifying Questions : Why into Loyalty programs? What is the problem as Google Pay we are trying to solve or cash-on the opportunity?

 

Problems/Opportunities : Adoption rate is not as high as Competitors (in agreement with the interviewer)

 

Vision : Google Pay to be the default payment method

Mission: To integrate loyalty program for Google Pay

User/ Cohorts : B2C and B2B (Merchants network) and US as the Geo region and California. For this exercise, I am considering rope-in more Merchants because the more Merchants, the opportunity for their user-base to switch to Google Pay.

Business Goal : Increase in Market Share

 

Constraints : Time constraint is 1 year to 2 years.

Current State with Capabilities and Systems :  Payment service, NFC payments, instant transfer of money to friends and family. We don’t have our own loyalty programs to offer to our users.

Alternatives/Competitors : Apple Pay, PayPal, BNPL players (Adyen, Affirm, Klarna, AfterPay)

Solutions  Ideas (Assumptions) : 

1. Building or Acquiring or Partnerships

Considering the time constraint - Keen to take the path of partnering with fast-growing vendors that offer Loyalty programs and offer seamless integration with Merchants Infrastructure.

To unpack what the Loyalty program could offer (high level)

(Assuming for this exercise - For the initial test and launch , Costco as the Merchant and California as Costco has more store presence) . Google Pay to support brick-n-mortar and Online.

1. Costco customers receive loyalty points of eg : On every $75 dollar spend, receive 5.5% back in loyalty points, validity of 30 days to redeem.

This is captured against Costco Loyalty cards and avoids issuing another card. 

2. CostCo (monetary benefit) to receive from Google Pay :. For $1000 revenue in a week, we will pay you a percentage, with Google Pay being the payment method. Eventually negotiate for Google Pay to be default payment with more incentives offered.

AND/OR

3. Google Pay to offer credits/discounts if Costco leverages Google Workspace or Google Cloud.

4. Working with the Banks to combine Loyalty program with Debit/Credit cards - Not prioritising for Year 1, but for 1 Year to 2 Years

5. Work with NFT, Crypto providers to integrate Google Pay - loyalty programs with Wallets and buy NFT’s (games/paintings/photography etc) - Bit of blue-sky thinking but beyond 2 years.

 

Differentiators : Types of incentives to the Merchants and their customers.

 

User Metrics : Increase in adoption (eg : from 30% to 60%)

Business Metrics : Increase in Market Share (eg : from 25% to 50%)

Clarifying questions

• Is this for B2C users and not for merchants? For this answer, assuming that it is

• Assumption - Is the goal is to increase number of transactions and average transaction values?

Customer segments to focus on

• Users who transfer funds to other users and make payments to businesses using Google Pay can be segmented based on the volume and value of payments to businesses into High, Medium, and Low.

• The target segment for this feature would be users with high volumes of payments to merchants.

Use cases/requirements

I would like to first look at how Google Pay currently incentivizes its users. It provides coupons after a certain number of transactions that either give cash to the user or can be used for a vendor.

In some ways, there is already a loyalty program in that as your transactions increase, you get a reward.

 

The difference between the current system and a proper loyalty program is that in a loyalty program, the terms would be clear upfront. The loyalty program has to offer greater benefits as the volume and value of transactions increase. The rewards need to be guaranteed and not a lucky draw model like the coupons Google Pay currently provides.

Solutions

Ideally since this is a loyalty program, at the start when a user opts into the loyalty program, there should some sort of fee or buy-in which will encourage stickiness as there are many competitors to Google Pay. This fee could then be refunded through points on meeting certain targets.

 

Each transaction would generate a certain percentage of the transaction value as points. The points could be used to purchase coupons similar to the ones Google Pay provides today on the platform.

 

The transactions that would generate points would be payments to merchants registered on Google Pay and not payments to individuals. I am not aware of whether Google Pay collects a percentage of every payment at a registered merchant, but it is important to incentivise payments and not fund transfers.

Google Pay could have tie ups with prominent platforms like Amazon for which coupons could be purchased on Google Pay using the points collected.

Pros

This can drive transactions at merchants much better than the current incentive system.

Cons

This will put it in direct competition with credit cards.

Credit cards make money on every transaction done at a merchant. If Google Pay does not make a similar cut, it could lead to a significant cash burn.

Recommendations

Assuming that the objective is to drive the usage of Google Pay for purchases at merchants, I would go with the above approach of having an initial buy-in fee and then providing a certain number of points based on the transaction value. This can drive significant increase in usage as the user is clear on the benefits over time and each transaction contributes to his/her rewards.

Measuring the impact

The metrics that would have to be tracked are:

Percentage of users buying into the program

Number of merchant payments per loyalty program customer

Revenue from merchant payments (Depending on whether Google Pay does collect a percentage of the sales)

Revenue per loyalty program customer

 

Strategy of loyalty program for Google pay

 

What is Google pay ?

- Google Pay is a digital wallet platform and online payment system developed by Google to power in-app and tap-to-pay purchases on mobile devices, enabling users to make payments with Android phones, tablets or watches.

 

What are the countries in which it is available ?

Available currently in 29 countries including India, USA, France, UK, Hong Kong etc

 

What are the use cases of Google Pay ?

- Make payments to Public transport system

- Make in-app purchases

- Use mobile phone to scan QR codes and make payments

- Digital Wallet functions

- Make utilities payment  

- Ecommerce purchases etc

 

What is the business objective (for Loyalty) ?

- Achieve more repeat usage of G-pay

- Network effect i.e. more people must interact with one another using their wallet

 

What is the primary user personas (with respect to Loyalty)

- young, m/f, age:22-32, professionals

 

What are their unmet needs ?

- Must be able to spend more

- Must be able to show-off to their family and friends

 

Design of the Loyalty program -

- Incentivize the users for repeat usage e.g. provide access to an exclusive Google Pay club in case their usage exceeds X #times in a given month

This incentive must be in a tiered fashion e.g. Silver, Gold, Premium Gold

- Set triggers and flash promotions e.g. every user that transacts using Gpay between 8-9 am of each day can win upto $XXX (a large amount)

- Reward users when their share their purchase using Gpay online (or offline)

Users can have a specific code that their friends can use during their purcahse cycle to avail discount

- Another set of incentives and triggers must be set when the users share messages and deals amongst each other (via messages)

 

Risks -

- The loyalty program can be 'hacked' in certain unexpected ways to avail more discount

- Users can send 'fake messages' to each other in order to get discount

- Users can simple make more transactions and then revert/cancel their transactions

 

Go to Market -

- The program must be launched on an 'invite only' basis in a particular country

for example, each of the users in India can invite only 20 of their friends

- The feedback and buzz around the launch must be measures (via metrics) and then scaled (after tweaks if required)

- A strong set of 'channel partners' must be created via tie ups with trusted brands so that the users can be incentivized

 

Phase 2 of the launch

- Scale to worldwide audience

- Launch in new crountries with the Loyalty program in-built

- Add more #Channel Partners

- Add gamification i.e. action --> Reward --> Progress to the loyalty program

1. Clarify

• Could you clarify the word “loyalty”? It means the retention rate, doesn’t it?

• Any specific target market? => India

2. Company & Product

• Google Pay

  • What is it? => A digital wallet platform and online payment system

  • How does it work? https://pay.google.com/about/learn/ 

    • In store => Tap your phone to the payment device => DONE

    • In app/web => Click Buy with GPay

    • Manage:

      • Credit and debit cards

      • Ticket and boarding passes

      • Loyalty, gift cards, and more.

  • Devices supported => Android phones, tablets or watches

• Google

  • Strength

    • Big data

    • Excellent infrastructure

    • Highly-qualified engineers

  • Weakness

    • Based in US

    • Revenues heavily rely on digital ads

3. Strategies

 

 

4. Recommendation

 

• Do right now:

  • Partner with water and electric suppliers to allow people to be able to pay via G Pay.

  • Partner with house renting platforms to integrate G Pay into their platform.

• Take into consideration

  • Meanwhile, consider the tax and other fee system to decide whether we should partner with Government to allow people to pay tax and other public fee through G Pay

  • Besides Loyalty, gift cards from the suppliers, we can build our own membership system to reward users having high retention rates.

  • We should minimize as much as possible the device requirements to make sure everyone is able to use them.

Answer:

1. Clarifying questions

• I’m not so sure about Google Pay since I haven’t used it before. I only know it looks like the virtual wallet allowing people to pay for their bills at stores accepting Google Pay. Could you explain a little bit how it works so I can understand it more completely, thank you? 

• Can I ask whether Google Pay is available in iPhones? No

• Do we have any specific market to target? India

• Do you have any goal or metrics to define the definition of loyalty? => No

• Is there any constraint? => No

• Is there any goal? => No

2. User groups

There are a myriad of kinds of people using Google Pay, but I think I will categorize them into 2 main groups:

3. 1. Store staff: He is staff of a store in which shoppers are allowed to pay their bills via Google Pay. 

   2. Payer: He is a person who uses Google Pay to pay his bills instead of cash.

Which group of users do you want me to go ahead? => Payer

As I know that the gap between the rich and poor in India is very big. And the behaviors of each class are significantly different.  So I will break the payer group down into 3 different groups based on their class:

• Upper class: 

  • High-income or huge possessions.

  • Going to luxurious places

  • Spend a large amount of money per transaction

  • Use the up-to-date smartphone

  • Market size: 20%

• Middle class

  • Medium-income, well-educated, most of them are white-collar employees

  • Often Go to supermarkets and convenience stores to buy goods and places for the middle class, like mid-coffee shops, mid-restaurant, fast-food, food court, …

  • Spend not too much money per transaction

  • Use the cell phone with function enough to meet their demands, and don’t want to update the newest version if not necessary

  • Market size: 50%

• Lower class

  • The income is below the standard

  • Not pay outside of essential things (like food, accomodation, …)

  • Use the low-price cell phone with the old version to meet the basic demand like calling, texting, web browsing, ….

  • Market size: 20%

• Other

Which group of users do you want me to define the strategy for? 

• I don’t think we should focus on lower class because the money they spend is not too much

• If we focus on the upper class, we can earn more money per transaction but the market size may be not too large

• If we focus on the lower class, we can have more transactions but the amount of money per transaction may be not too high.

• In my opinion, I will focus on the largest market size first (Middle class) because I believe that in the future this segment will still go up and maybe the middle and upper classes also share some behaviors, interests, and values.

3. Use cases

According to the points of use cases, I think we should go through the Using Google Pay for monthly payment use case first.

 

4. Strategies

• Make sure our system has partnered with all supplier companies, such as water and electrics.

• Provide the simple UX for house owners and renter do the transaction

• Simplify the process and contract to make sure users not need to put too much their efforts in these tasks

• We can provide some special promotion for users when they use the long-term payments to reward them. (E.g: gifts, special customer services, vouchers)

• We should offer the function to allow people to connect with suppliers for feedback about their services. And we also help users know the newest announcements from suppliers, such as schedules for electric maintenance, ... 

In conclusion, I think we should develop the solutions for two other use cases to help people can do all payments in one platform, which must be very convenient for them. People easily are hooked if they use the product for daily tasks.