Ilya Frolov, General Manager of Infinite Rewards, Investor and Advisor of Oxygen Ventures and Director of Studiomint, understands exactly how companies can leverage data to better understand their customer’s consumer behaviors. Learn how Ilya’s reward program and platform company provides a solution for the acquisition, engagement and retention of customers.
John: Today I’m in Melbourne just by Albert Park, the venue for the Grand Prix. It is a great spot with surprisingly great weather. I’m joined by Ilya Frolov. Ilya is the General Manager of Infinite Rewards, which manages reward programs and platforms for a variety of universities and many corporate clients. The company aims to provide solutions for the acquisition, engagement, and retention of customers. Ilya is a man of many talents; as well as running Infinite Rewards, he is an investor and advisor for Oxygen Ventures, sourcing venture capital for technology startups. He even oversees the architectural and interior design firm, Studiomint. It’s fair to say that Ilya has provided strategic consulting direction to executives and management across an array of sectors, including technology, finance, telecommunications, and internet-based companies.
Today we’re going to talk about how all of this came to pass to get an understanding of what Ilya does to innovate for his own customers and how his reward company makes data work for his clients. We’re also going to learn about the nuts and bolts behind what is ultimately a great loyalty marketing program, where data is the key. Ilya, welcome to Customers Matter.
Ilya: Thanks a lot.
John: As I said in the introduction, you’re a man of many talents. Tell us about Infinite Rewards, how it started, and how you decided there was a need for a platform like this.
Ilya: Sure. Infinite Rewards has been around for quite a while now. It was actually the brainchild of serial entrepreneur Larry Kestelman, who founded and sold Dodo a couple of years ago.
John: Dodo, the telecommunications company?
Ilya: The telecommunications company, yes. Dodo, where “the internet flies.” It arose early during the lifecycle of Dodo. Being a very competitive market, telecommunications was tough in the early days. The primary products being sold were internet and broadband, and there was not much differentiation. They were trying to innovate on ways of acquiring customers. Their main focus was building the brand, and you would have seen plenty of their commercials. Their sponsors were involved in a lot of sports activities, but they still needed to innovate in different ways of acquiring customers. One of those ways was providing incentives. They shopped around Australia to see if there was an opportunity to use something off the shelf. They couldn’t find anything and realized they should just do it themselves.
John: What was your job back then? Were you involved in the business at that stage, or does this predate you?
Ilya: This predates me by a couple of years before my arrival to run the firm. I didn’t see the initial idea, but it was very much Larry’s brainchild.
John: What was the basic principle? What was he looking for that he couldn’t find, and what did he do differently?
Ilya: It was all about finding an incentive that provided value at a low cost from a business perspective, but provided enough value for the customers. When you are selling internet broadband, you want to give something else to the customers that they will enjoy, need, or want. He was trying to work out how to package that up and find what was missing in the market.
John: Ultimately, how did Infinite Rewards differ from other programs in the market? What set it apart? There are many loyalty programs today; I was at a conference recently where hundreds were cited with millions of customers in Australia. What separated Infinite Rewards both back then and today?
Ilya: Back then, there were very few competitors in the rewards space. This was the early 2000s, so everything was still in the early days of technology. The only major one around was the Qantas Frequent Flyer program. There was nothing of tangible value that provided something interesting to clients. It was born out of that, and they basically collated a number of different brands together to get exclusive discounts. They packaged it into a nice presentation and provided things like “show and save” offers for restaurants and dining during those early days.
John: When did you come along and how did you get involved in Infinite Rewards? What was that process?
Ilya: I joined in 2009. It was only a consulting job at the time. I was at the end of my IT career and wanted another challenge. I met Larry through Dodo, and he said, “I have this other business with huge potential. There’s a massive technology driver behind it, and you could really turn this into something.” I decided it was a no-brainer to take advantage of the opportunity.
John: You brought technology know-how to a customer-facing loyalty scheme. What happened? How did you apply that know-how, and to what effect?
Ilya: I looked at the current process from onboarding all the way to the customer experience to understand how technology could improve things through efficiency or other means. Providing a benefit is fairly standard; you get an offer, you show it, and someone redeems it. While I was there, the internet area started to flourish and mobile technology arrived. My mandate was to take the program to the next level. It wasn’t about the old “show and save” cards that everyone loved and hated at the same time; it was about the next evolution of the program.
John: So, what did you do?
Ilya: We were probably one of the first to focus on online rewards. It wasn’t just about the physical cards; we encompassed the onset of online shopping and leveraged that. We streamlined the process and provided offers around the world, not just in Australia. Shopping became global and open to everyone. We tried to enhance the customer experience because engagement was everything. We wanted to keep the client engaged and keep the program interesting and relevant.
John: What has that meant for the growth of the program from 2009 to today? How big is it now, and how deep does it go?
Ilya: That is a good question. I’d love to say it has grown tenfold and is going gangbusters. We’ve had our ups and downs. Technology has definitely been the driver of our resilience, but it has also been a burden because so many other products and companies have risen as competitors over the last ten years. For example, the daily deals phenomenon was a massive competitor that hurt our bottom line for a period because we competed on a discount model. However, we offered exclusive, long-term discounts while they offered heavy, short-term discounts. Because people just wanted the discount, they didn’t always care about the longevity. Those competitive pressures made us rethink how we continue evolving. Reflecting on our success today, we are still here, still growing, and we have a very strong base of corporate clients while opening new opportunities in traditional sectors. Despite external pressures, we managed to work through it and succeed.
John: Can you give me a feel for the cross-section of your customers and the opportunities you provide for them?
Ilya: More recently, we are focusing on three core target audiences. First, the transactional corporate client where there is a transaction between the brand and the customer—utility companies, telecommunications, and energy companies are great examples. Second, the education sector, specifically universities. Third, associations and industry membership groups. If you break it down further, our core end users are financially conscious. They understand that the cost of living is increasing and want to save intelligently. When we approach clients, we try to understand if our program fits their customer base. For instance, a medical association might not work as well because that’s not really the specific customer base that needs this type of program.
John: But for a student who is looking to save a buck?
Ilya: For a student struggling to pay rent, it’s a great program.
John: So you found a niche where you can offer genuine value, helping customers with the cost of living?
Ilya: Correct. That is the bottom line.
John: Which is quite a different model from an aspirational frequent flyer points model.
Ilya: Exactly.
John: You mentioned earlier that you originally had views for people to shop all over the world. I assume in this model it is more about shopping closer to home?
Ilya: Correct. We have realized that while it is possible to offer thousands of different brands, people really want to save on the essentials. They want to save money on everyday life—supermarkets, petrol, and the aspects of life that are their biggest expense items at the end of the month.
John: Now, there is another dimension to loyalty programs today, which is data. What is the role of data in a loyalty program, and why is it so important?
Ilya: Data is king everywhere, not just in loyalty. It is a key part of every business. Management should look at it to create strategy and insights. We collect as much data as we can for ourselves and for our clients as a value-add. Data helps us understand customer behavior, purchasing patterns, site activity, and satisfaction levels.
John: If we broke this down simply: if I am a university using your loyalty program, what could I know about my students through your data that I wouldn’t otherwise know? How might that shape what I do?
Ilya: We provide university clients with purchasing behavior data to understand what they are buying and when. By interpreting when they make certain purchases, universities can gain insights into their own initiatives. For example, if data shows a specific time of year is very difficult for students financially, the university could use that information to de-stress the situation or take some of the pain away from the student regarding fees or accommodation.
John: So you could potentially see the spending behaviors of the students over time to understand when they feel they can spend and when they can’t?
Ilya: Correct, to some extent. You can take that information and unpack it as a general cohort. You can compare year-on-year or semester-on-semester to understand their spending behavior and financial status. That can be used as an initiative within the university to provide further assistance.
John: That’s very interesting. We talked at the outset about your diverse businesses. Can you tell me about Oxygen Ventures and Studiomint? They are different, but you mentioned technology underpins them.
Ilya: Yes. Oxygen Ventures was born from the acquisition of Dodo. When Dodo was sold in 2012, I was having a chat with Larry, and I asked him what he was going to do next. He wasn’t quite sure yet.
John: Because it was a healthy exit?
Ilya: It was a very healthy exit, yes. We were brainstorming, and he asked me, “If you had this much money, what would you do?” I said I would love to invest in technology companies because that is my passion—helping other businesses grow and build. He thought it was a great idea, and that’s how Oxygen was born. It uses my technology background and passion combined with Larry’s ability to build brands and businesses on a large scale to help budding founders.
John: How big is the Oxygen Ventures fund? How many businesses have you invested in?
Ilya: We’ve been at it for six years and have invested in six companies. Between initial investments and follow-ons, it totals close to 15 million dollars. We are still looking at other opportunities, but we want to make sure the current ones are successful rather than just placing more bets. We are focusing on helping them grow and succeed.
John: What is the spread of the technology businesses you’ve invested in?
Ilya: They are still in the early stages, mostly two or three years old. They are building teams and exploring international markets. The underlying theme is data and big databases. A couple are in the ad-tech space, one is in core networking technology, and another is in a professional marketplace.
John: Do you have a specific ROI goal, or is it more philanthropic?
Ilya: I think it’s a bit of both. There was some initial altruism, but Larry is a businessman, and the aim is to provide a return. Success for us is ensuring we have healthy exits. We don’t have a specific benchmark other than making sure they don’t fail. If we provide enough support, mentorship, and guidance, they should be successful.
John: Then there is the architectural and interior design firm. How does that fit in?
Ilya: That one was a surprise. One of my early passions in high school was architecture. I had an eye for it, but I ended up becoming a mechanical engineer instead. A good school friend of mine had the same passion, and she became an interior designer. We reconnected years later, and I encouraged her to take on an outstanding project. Out of that, the company was born. Today, I’m focused on looking for ways to disrupt that archaic industry because nothing has changed.
John: They often see clients as patrons rather than as businesses that need a return.
Ilya: Exactly. Whether it is residential or commercial, it is an interesting business. It’s a non-technology business where I am trying to implement technology from a process and customer-centric perspective. I’m trying to understand the data and the customer to build a business, not just focus on the design aspects.
John: You are running Infinite Rewards as the CEO. What is your role in the other companies?
Ilya: For Oxygen Ventures, I am the Investment Director and I sit on the boards of some portfolio companies. For Studiomint, I am a director and shareholder. I am more of a high-level advisor, though I get deep into the roots of the business when needed.
John: This must keep you pretty busy. What do you do in your spare time?
Ilya: I have two kids who take up the rest of my spare time. I make sure they get as much attention as possible because they are the future.
John: How old are they?
Ilya: They are six and three—two boys.
John: That’s a joyful thing.
Ilya: Yes. Everything needs to be a balance. What motivates me is the ability to multitask and have several things going on at once. I enjoy applying different methodologies and thinking from one industry to another to work out how they can gel together. I love drawing the dotted lines between situations to find opportunities to streamline things.
John: You and Larry have remained friends as well as business partners. How often do you catch up, and what is the relationship like?
Ilya: It is still as strong as ever. I try to catch up as often as possible. He is on his path with new ventures like the NBL and property development. I have my kids keeping me busy. We definitely cross paths to have healthy discussions about the future and what is going on in our businesses; that is critical to our success.
John: Finally, if you were advising businesses that are being disrupted—or are thinking of disrupting—is the combination of understanding the customer and technical know-how the most important thing, or is it the passion that drives it all?
Ilya: It is definitely passion, but passion is usually born out of the founder or CEO. The vision of that person drives the company forward. My philosophy for all startups and founders is: do not stay behind the desk. Get out there and speak to your customers and end users. You have to understand their opinions and how they use your product so you know what to change. An insular approach usually leads to failure. For larger enterprises, success revolves around a customer-first approach. Brand loyalty is becoming frivolous these days; people remember experiences, not brands. If you can be customer-centric and service-oriented, you will succeed. Innovate, be agile, and stay at the forefront of technology to use it to your advantage rather than fearing it.
John: Thanks for sharing that with us, Ilya. Thank you very much.
Ilya: Thank you.