We sit down with Pete Howroyd, the founder and CEO of Swapi, an innovative company in the loyalty market.
Pete Howroyd tells us about his history and what his ambition behind starting Swapi was. He explains the importance of loyalty schemes for retail businesses, as well as the challenges you should expect to face
Please explain, who you are, what is your business and what it is it trying to achieve?
I’m Pete Howroyd, the founder of Swapi. I have spent my career working in loyalty, with businesses such as Harrods, Harvey Nicols, Myer and Sigma Healthcare. I started Swapi with an ambition to change the loyalty game. There has been little innovation in the sector but loyalty schemes are struggling with engagement, since today’s consumers are looking for something different and better. Swapi will take on that challenge. It’s an industry-first ‘digital wallet’ that lets shoppers to swap unspent loyalty points and cashback for valuable offers with a wide range of brands in the Swapi marketplace.
Why did you start Swapi?
As well as wanting to innovate, the idea was sparked by lockdown and its devastating effect on the global retail community. Some recent research reveals that the average person in the UK has £47 of hidden, unspent loyalty rewards sitting unused on their cards. As a whole that comes to £6 billion in the UK and £360 billion globally and it all comes down to lack of engagement and inertia when it comes to spending loyalty points. I started to think about ways to tackle these problems and unlock some of that tender to positively support the retail economy – and Swapi was the result.
What do you mean by the loyalty market?
The loyalty market is essentially every business and brand that has a scheme in place to collect and analyse customer data for marketing purposes, with customers being rewarded with incentives for demonstrating loyal and repeat buying with those brands. In retail, these programmes reward loyal customers with points, discounts, special offers or freebies.
Loyalty is what all businesses are striving for, particularly at the moment when spending habits are so disrupted. Loyal customers are generally more willing to try your new products, spend more money, repeat purchase and they’re much more likely to recommend your business to friends, and become advocates for your brand. They’re the best kind of customer.
Why is Swapi important to the retail sector?
It’s important because it will give consumers power over their points for the first time. Instead of being tied to one company, points go into the Swapi ‘digital wallet’, freeing them up to be spent with other brands. Power is shifting from businesses to consumers and brands need to keep up with this change. Swapi will help them do that.
The app will also tackle two of loyalty’s biggest problems: the wasted billions that sit unused on people’s loyalty cards, the points liability that sits on company accounts every year.
What can Swapi do to help retail bounce back from COVID?
Covid has left the retail sector in a perilous state, and Swapi has the potential to release some of that locked tender from loyalty programmes. It gives people more spending power and more of an incentive to spend. Valuable loyalty points often don’t get used because people don’t want to shop with the brand they’re linked to and they are left to expire. With Swapi, consumers can simply swap their value into a brand that they do want to shop with.
How do you attract big brands to sign up with a startup before launch?
Brands can see Swapi’s potential in providing a simple, innovative solution to loyalty’s biggest challenges, bringing benefit on all sides. Our business model is also very simple and similar to an affiliate-based model. We only invoice our brand partners if they benefit from using Swapi, meaning there is no risk for any of the brands in our marketplace. The Swapi marketplace is looking very strong ahead of our launch, and will continue to grow as the business develops.
When is the best time to attract investors when starting a business?
If you have a strong idea, start talking to your own network about it and build momentum from there. I have a lot of contacts in retail and loyalty and they’ve given me so much invaluable support and advice, not just in terms of building Swapi from an idea into a fully fledged business, but when it comes to where to go and how to approach the investment challenge.
We have raised £350,000 in seed funding. A collective of angel investors is backing Swapi, including Sean Wilkinson, President of the Incentive Marketing Association Europe and Jon Bowles, Founder of Cultural Capitalism. We’re just about to do a second round of crowd funding.
How do you sell your business to potential investors?
The simplicity of the idea and the experience of our team are the two factors that I think led to investment success. Potential investors have been quick to understand that Swapi provides a simple, innovative solution to loyalty’s challenges. For consumers, they get a bit of extra cash to spend, and more choice over how they spend it. For the brands that customers are swapping from, Swapi provides a positive message around points’ expiry and it helps to retain customers in the core loyalty programme. For brands gaining new customers from the ‘swap’, Swapi helps boost customer acquisition and provides a new source of revenue coming into the business – as well as meeting the challenge many businesses face of loyalty program liability. It’s a win on all sides, which I’ve found is a persuasive argument for the investment community.
What are the biggest challenges facing businesses in the UK today?
The biggest challenge is how to keep up with consumers’ ever-changing needs. Consumers want flexibility and convenience and many business struggle to provide this due to restrictions in their business model. Loyalty is a good example. Gone are the days when consumers would accrue and spend points in one place, as dictated by the business they’re shopping with. Times have changed and people want options around what to do with their points and rewards. Everything in retail is becoming much more customer focused and people are much more savvy and well versed when they’re shopping. Some businesses will be too slow to adapt to these changes and so become unattractive for consumers. This is another factor behind my development of Swapi. It allows brands to open up new ways of engagement and integration without any of the hassle, even if they have historic processes and architecture in place.
What is the biggest challenge you have faced with Swapi?
I’ve come from a corporate background and I had no experience or exposure to the world of finance. I would say however that like most entrepreneurs, I’m attracted to the challenge and I’ve actually found this aspect of building the business really rewarding. I’ve learnt a huge amount in the past year, and we are also lucky to have attracted a brilliant team to bring the Swapi idea to market, which includes some very experienced leaders across loyalty, business and finance.
What’s the best piece of advice you’d give to anyone looking to start their own business?
Just do it! When I had the idea for Swapi I was out walking my dog (Sheba) in a field…. that day I went home and incorporated the business on Companies House and wrote a very rough business plan. I started to talk to people about it and validate whether it was an idea worth moving forward. The more feedback I got the more confident I became that Swapi was a good proposition. I chopped and changed the proposition based on feedback daily until I landed on the plan that we’re working to today. So in summary I would say, if you have an idea, don’t take too long mulling it over. Get it down on paper, talk to people, get feedback, tweak & tweak and take the first step. Once you have taken the first step, its much less daunting!
Would you do anything differently if you could start again from scratch?
That’s a difficult question, but I would probably do a lot more research into how investment strategy works, the pitfalls and what kind of questions you should be ready to answer about your business. One wrong step and your proposition can turn from looking like a potential unicorn to a high-risk investment. It’s all in the art of communicating and being prepared with the correct data. This is one area of our business where I probably had the least amount of experience and I have been extremely fortunate to have had so much support from others who do know this area well. I made a few mistakes but I learned from them and now, as we go into our second funding round, I won’t make them again. It’s the best type of education when you’re starting an ambitious new business.