A story in the Jamaica Gleaner, the country’s leading newspaper, reported this week that Digicel Group has acquired a controlling interest in the financial services company, Prism Holdings, for an undisclosed sum. Digicel is the leading telecommunications provider in the Caribbean, with operations in 31 markets including Central America. They also make some pretty cool commercials, this one featuring Usain Bolt.
Prism was founded in 1993 in Barbados by Edward Ince and Mike Parris, and has roots in credit card processing and merchant services. If memory serves correctly the credit card processing line of business became part of Certegy at one point and was ultimately acquired by FIS. Today, Prism continues to offer payment systems, information management and data centre services. It also owns a loyalty processing software platform which powers Magna and other loyalty programs in the region.
The interesting part of this announcement relates to the future of Magna, the merchant discount program operating across 6-7 nations in the English speaking Caribbean. Founded in 1997, Magna was billed as a coalition program and grew to include a network of over 500 retail merchants and more than 1 Million members across its footprint.
Magna was the first notable loyalty program in the region outside of Jamaica’s 7th Heaven frequent flyer program. With the absorption of Air Jamaica by Caribbean Air, 7th Heaven has joined a portfolio of FFP’s operated by Caribbean Air.
Magna was launched at a time when Caribbean consumers were unfamiliar with loyalty marketing. The Magna program was far ahead of the market at that time and, if we were handing out awards, I would vote a “lifetime achievement” award in consumer loyalty for Mr. Ince and Mr. Parris in recognition of their visionary approach.
When Magna was introduced, the consumer cared little whether it was a true coalition or a merchant discount network. What did matter was the ability for them to shop at merchants within the network, swipe a membership card and earn around 1% back on their spending. When members reached a specified threshold, a cash certificate was automatically mailed to them, allowing members to cash the certificate in at participating merchants as a discount to their purchase.
With the launch of Grace Kennedy’s GK Value Rewards at the commencement of 2015, Magna suddenly encountered its first formidable competitor. Jamaican consumers are indoctrinated in the promise of loyalty programs, and are noticing the distinction between a discount network and a true coalition. The defection of some key merchants from the Magna program may have signaled some cracks in the model, and the sale to Digicel is testament to the need for a fresh start.
The strategic relationship formed through this acquisition points towards Digicel’s possible launch of its own customer loyalty program. To date, both leading wireless carriers have been highly promotional in their marketing efforts and timing might be right to redirect some focus and budget towards customer retention.