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Mobecom (ASX:MBM) and the $30B customer experience management opportunity
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  • Customer loyalty programs have evolved from frequent flyer points and small generic discounts into a massive customer experience management market
  • Market researcher Grand View predicts the global customer experience management industry will be worth a whopping $30.5 billion by 2023
  • ASX-listed Mobecom (MBM) has a unique position in this market as it helps brands build their own compelling customer experience management platform
  • Mobecom's Mosaic tech platform helps brand create and manage their own unique omnichannel customer loyalty programs
  • But it's more than coupons and discounts; the tech uses artificial intelligence and data-driven analysis to create a sophisticated enterprise solution
  • With multi-billion-dollar clients like Starbucks Australia, Vodacom, British American Tobacco and Nedbank, Mobecom is reshaping the loyalty industry as we know it
  • Further, Mobecom is able to keep track of what customers buy and subsequently transition from a rewards service to a recommendations platform
  • Major enterprises across the world have paid large amounts of money for compelling loyalty platforms, like SAP's $10 billion buyout of Qualtrics in 2018
  • And with shares worth three cents each in a $16.4 million market cap, Mobecom presents a unique opportunity for investors to get on the ship before it takes off

Customer loyalty programs have exploded over the past several decades to the point where it's unusual for a business to not have some sort of rewards scheme in place.

What started out as frequent flyer points and airlines converting miles flown into a unique form of currency has expanded to getting every fifth coffee free, 10 per cent off your next pair of sneakers, or some free movie tickets with your pizza.

But it goes beyond customer retention; the loyalty and rewards industry — more appropriately known as customer experience management — is a massive market.

According to market research from Grand View, the global customer experience management industry is expected to be worth a whopping A$30.5 billion by 2023.

Qantas' loyalty division, for example, made an impressive $1.2 billion in revenue over the 2020 financial year.

In fact, the Qantas Loyalty made $341 million in earnings before interest and tax (EBIT) over the year — almost doubling Qantas domestic operations EBIT and far outpacing its international and Jetstar segments.

In March 2021, Qantas said it was ready to honour $3 billion worth of frequent flyer miles. Its rewards program is estimated to be worth around $5 billion, or more than half of the airline's market cap.

This is all to say that the customer experience management industry is nothing to be scoffed at.

And ASX-listed Mobecom (MBM) has a unique position in this market as it helps brands build their own compelling customer experience management platform.

The omnichannel customer experience

Mobecom's Mosaic software helps businesses across a range of industries customise, operate and manage their own loyalty programs.

The cloud-based tech, which operates in a software-as-a-service (SaaS) model, leverages a client's supplier, partner and merchant networks to help them tailor rewards programs for their customers.

It's all based on the omnichannel focus of the Mosaic tech, which offers a seamless transition from a digital customer experience to real-world rewards.

Beyond simple generic discounts and buy-five-get-one-free stamp cards, Mobecom's tech uses artificial intelligence and data-driven analysis to create a sophisticated enterprise solution.

What's more, the company targets the top-end of town. Rather than get lost in the myriad small businesses trying to keep customers engaged to simply stay afloat, Mobecom has a string of multi-billion dollar clients reshaping the rewards and loyalty industry as we know it.

These customers include Starbucks Australia, Vodacom, British American Tobacco, and big-four South African bank Nedbank.

The real value of customer experience management, however, goes further than rewards and retention: customer experience management paves the way for an effective recommendations engine.

Rewards to recommendations

Alongside offering customers rewards for their loyalty comes unique customer analytics.

By offering loyalty programs through a digital service, the Mobecom tech is able to keep track of what customers buy and subsequently transition from a rewards service to a recommendations platform.

A customer may have made previous purchases based on the discounts offered through a business' loyalty program. The business sees this.

As such, when new products are launched, new rewards put in place, or if the customer simply has not made a purchase for quite some time, the business can now make use of prescriptive data analytics to personalise offers or target specific advertising towards that customer.

Interestingly, this is exactly what the biggest players in the buy now, pay later (BNPL) market are doing.

Afterpay started as a way to simply facilitate transactions between merchants and customers in a new way. Yet, as the business has grown, analytics and data have become a core part of the services it offers.

"As consumers continue to lower their spending in discretionary categories, retailers must reach them where they are — it's no longer about depending on customers to come to your store or site," the BNPL giant said in 2021

"Think you're doing enough by having a robust eCommerce presence? Think again."

This means Mobecom has the same core business model as Afterpay — using analytics to keep customers returning to their favourite stores, online or in-person.

But there's a major difference. By building a customer experience management platform instead of a transactions platform, Mobecom's tech ensures customers develop a strong relationship with the brand while the business keeps track of their needs and wants.

Mobecom is doing to the loyalty industry what Afterpay did to Layby.

What's in it for investors?

If a strong core business and a large addressable market isn't already enough, several major enterprises across the world have paid significant amounts of money for compelling loyalty platforms.

In November 2018, enterprise software giant SAP agreed to buy Qualtrics for the equivalent of $10 billion cash.

Qualtrics' core focus is on customer experience management.

Realising the potential the future of this market holds, SAP made another major purchase just two years later. In November 2020, SAP bought Emarsys — which describes itself as an omnichannel customer engagement platform — for over half a billion dollars.

Meanwhile, global advertising enterprise Publicis Groupe struck a deal to buy outcome-based marketing specialist Epsilon for $5 billion.

Epsilon's marketing services act much like the analytics-driven capabilities offered by Mobecom's tech.

The takeaway is this: Mobecom is in a unique position in the Australian customer engagement management industry, which is set to boom in the coming years.

Big corporations with teams of analysts have noticed the potential of the industry and spent billions of dollars to grab their own piece of the pie.

For ASX investors looking for the next industry to disrupt the world of retail like BNPL did, customer engagement management is a shrewd choice.

And with shares worth three cents each in a manageable $16.4 million market cap, Mobecom presents a unique opportunity to get on the ship before it takes off.

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