Kyle Armstrong: Rewarding customers with airline miles or points
Feel you’re not being rewarded properly when you book your hotel room? One OTA is trying to address that. Kyle Armstrong, CEO & co-founder of Kaligo, tells WIT their plan.
Q: Describe the business, core products and services in one paragraph
Kaligo.com is an online booking platform that rewards customers with thousands of airline miles or points on every booking from the best loyalty programs around the world. A Kaligo customer can earn enough miles or points to fly for free after a single hotel booking.
Q: Who are your key customers?
Our customers are frequent travellers, who travel for business and leisure and who love earning miles and flying for free.
Q: Who are your key partners?
We are currently working with 30 partners and expect to have 50 by the end of 2015. They currently include: Singapore Airlines, British Airways, American Airlines, United Airlines, Hainan Airlines, Cathay Pacific, Qatar Airways, Etihad Airways, Thai Airways, Air Asia, Virgin America, Virgin Atlantic
Q: What business are you most likely to be compared to?
Rocketmiles
Q: How are you different?
We have a number of major differentiators including a significantly larger global hotel inventory of 365,000 hotels, multi-language experience (16 languages available), TrustYou reviews and mammoth bonus miles promotions.
Kaligo: “Instead of paying for expensive TV/Google advertising, we invest in rewards for our customers.”
Q: What problem are you trying to solve for your customers?
Customers are currently rewarded very poorly for their hotel spend compared with the rewards that are earnt with airlines and credit cards.
This is largely due to the current OTA market being mass-market and transaction growth focused. The large OTA’s marketing budgets are heavily invested into acquisition of customers and transactions, not retention and not loyalty (not much anyway).
We are solving the loyalty gap by instead of paying for expensive TV/Google advertising, we invest in rewards for our customers. They get a broad choice of hotels, at competitive rates and with amazing rewards – it’s a no brainer proposition.
Q: What problem are you trying to solve for your partners?
Our partners absolutely love us as we not only generate for them a significant amount of revenue (from all the miles and points we purchase) but we also provide their members with the highest miles/points accelerated earn rate they have ever seen. Essentially, the more miles/points a member earns, the faster they can redeem free flights and the more engaged and loyal they become to the airline or bank.
Q: What financial support did you have to launch the business?
We are founder, Angel and VC funded
Q: Who validated the idea first – investors or customers?
It was absolutely customers and continues to be so as we evolve, enhance and develop our products and experiences. The day we launched we had 10 paying customers in 3 markets. Our top customers have made over 30 bookings in 2015. Our customers make an average of 4 bookings per year – large OTAs average 1 booking per customer per year. We’ve offer a product that frequent travellers want.
Q: What is the revenue model and strategy for profitability?
We essentially look to make the same net margin that the larger profitable OTAs make. The key difference is that we invest into rewarding customers rather than paying for expensive advertising. In doing so, we acquire customers whose life-time value is 4-5 times higher than the average OTA customer.
Profitability will come through continuing to rapidly scale the number of customers we acquire and improving our supplier and partner economics.
Q: What is the market opportunity? How scalable is this business?
Based on research, frequent travellers that like to earn miles and points represent an approximate of 10%-15% of the customers that book travel online. However, given their higher purchase frequency, they actually represent 30%-35% of total online travel spend. We’re at the very beginning of a loyalty revolution in online travel and we see monumental growth opportunities ahead as more people travel, more people earn miles and points and the value and sophistication of loyalty programs develop.
Q: Who are the team members and advisors?
Our leadership team and advisory board includes senior executives from American Express, British Airways, Wego, Abacus, Microsoft, Virgin Australia, Delta Airlines and Lastminute.com
Q: Why do you think you are the best people to make this vision happen?
Our team are all passionate about travel, love frequent flyer programmes and we have a very strong performance culture built on achieving high standards in everything we do.
