In Munich we interviewed Bernhard Brugger, CEO PAYBACK Europe.

He shares great insights regarding the challenges prior and during the PAYBACK launch, why PAYBACK today is much more than a multipartner loyalty program and which advice he can share with first time entrepreneurs.


Interviewer: Hi. Today we are in Munich with PAYBACK (, and next to me is sitting Bernhard. Bernhard, who are you and what do you do?

Bernhard: I am Bernie, CEO of PAYBACK for Europe. Europe in our terms it’s Italy, it’s Poland, and it’s Germany where it all began. Hopefully next year there are some more countries coming up.

Interviewer: What did you do before you started this company?

Bernhard: I don’t remember. I have been within this company for 14 years, before that I was responsible for the key account management for the Media Saturn Holding within Philips company. So I did basically the sales.

Interviewer: What triggered you to become an entrepreneur.

Roland Berger and he was involved in consultations in the Miles and More program within the Lufthansa. He talked about having a program similar to Miles and More, but on a much broader basis, on a day to day basis, for the day to day shopping behavior of the customers. I met him a couple of time at the airports and he told me about the idea and I thought to myself this is cool, this is a great new idea, I should join this, I am young so let’s do something else.

Interviewer: Let’s talk about the business model of PAYBACK. Can you briefly describe how the business model is currently working and how it may be changed over time?

Bernhard: Currently we are seeing ourselves not as a loyalty company, we see ourselves as a multi-channel marketing platform, that’s basically the answer as to how it changed over time. When we started we looked after having a loyalty program, as I said, on a day to day basis, joining a lot of partners who are relevant for the customers, for example the food retail, for example gas stations, and some other retail chains where customers are used to buying things. We thought to ourselves to have the next wave of the good old client, let’s say it that way. So to collect the data of the customers, to have value for the customers in it, and to provide them with additional benefits. So we started as a purely loyalty program but we now we have developed over time on an offline basis, to a marketing platform, and today we see ourselves as multi-channel marketing platform by bringing in all the digital channels.

Interviewer: What triggered this – I wouldn’t call it a pivot – but the change in the business model?

Bernhard: I don’t think it’s a change in the business model, it’s the evolution. And it’s a key evolution because only having the data and only providing the value for customers at the point of sale is not enough, so have to communicate with the customers, you have to tell them what’s in it for them. And what customers are expecting today is that – they are receiving all the time a lot of different ads from all the digital channels, from the TV stations, from the radio, from wherever, so there is a mass of communication targeting all the customers – and what customers are expecting from us is we know about what they are doing and we should use the knowledge to give them offers or coupons which are relevant for them and which are personalized. So on an individual they’re expecting from me or from PAYBACK that what they are receiving is relevant and is personalized. So this is the logical evolution of knowing the customers and serving the customer better. So we went into the serving of the customers, as I said, starting on an offline basis with our account statements, and now having a multi-channel platform in place where you have the coupons wherever the customer is.

Interviewer: Can you tell us a little bit more how you managed this transition from pure offline player to a multi-platform player, and especially how the current offline platform is working.

Bernhard: There is no offline platform anymore. We are a multi-channel platform, that’s the important thing. Our belief is there is no digital customer, but there are customer who are going into points of sale, who are used to having a mobile with them, who like to communicate of Facebook, who like to Twitter, who like to go whatever websites, and our strong belief is not to educate customers to do what you want them to do, our strong belief is to be there where the customer is. So there was no change. If you have a DNA as a company to look after the customer, you have to integrate what’s coming next. And the big change – if you like to use the word – the big change is to really invest in the new technologies and try to bring in everything you need to be there where the customer is, and to integrate all the new channels. And this in terms of change this was our major achievement to bring the coupon from the offline account statements into this multi-channel marketing platform, and having the coupon ready wherever he is and the same coupon. So he has the same coupon offline that he has online, that he has on the mobile, that he has on the Facebook or Twitter or whatever, and again on the terminals, which is the inter-link between the points of sale and the digital world.

To build this up needs a lot of effort, needs of a lot conviction, looking at more traditional partners and sponsors that we are having in our system, to convince them that digital is not only a word, that they really have to fulfill it if they look at the customer, and to have the right systems to have this in place. So we are quite proud because the multi-channel marketing platform we have in place is unique in the world. This as a transition and, to be honest, it was costly.

Interviewer: When you started this company what happened to the major drawbacks or problems that you accomplished?

Bernhard: We were, whatever, 32 when we started the company. And to go to the Metro or to the big retail partners and saying , hey, listen we have the next big thing and that it will be a huge thing which is called PAYBACK, and we will collect data, and we will have a multi-channel loyalty scheme – which is unique in the world because until 2000 there was an online field, and then we started it on an offline base. So I don’t think that was a multi-channel scheme, a big one, in place anywhere in the world. And to convince those guys wasn’t too easy because we came to the big retail guys and they said, I don’t know, and they asked us who will attempt, who is part of the community of the club? And then we said we are planning. So the first answer was, “Call us if you are off the planning stage and if you have a portfolio ready,” so it’s a chicken and egg discussion.

So we had convinced Dr. Koerber from the Metro, he was one of our first big supporters and believers, so thank you again Dr. Koerber. He said okay I will join with my departmental stores. And we had Dea which was during those days one of the few big gas station chains. And another company had the contract that they had the chance to pull if Metro is not part of the scheme. And again we were in very good discussions with the Telekom and Metro had a contract that they had the right to pull out if Telekom doesn’t join. So it was a card house. And, to answer your question, which was one of our major challenges, at one point in time the Telekom said – which is now one of our partners – but fourteen years before they said, yeah we will join but it has to be Metro and it has to be Dea. So we thought to ourselves, and we were young, we were 25 people, very ambitious, we planned to start four months later and the Telekom said so that’s the only chance that we would sign the contract. And then we sat and we thought to ourselves, no, it’s important to be independent, because only if you’re independent can you bring a lot of big guys together and be, let’s say, the moderator of the platform. Then Telekom said okay we will pull out. Then we had to go back to Metro and tell them, listen guys, please stay with us, we will make it, and we will put some additional marketing money, and we promise we will have seven million customers at the end of the year, so believe in us. And again to go to Metro and tell the same story and to the other partners like Apollo for examples. Fortunately this was a make or break and if they would have said, “In that case no,” then would only have had a good idea.

Again Metro said, okay, I believe in your ideas and I believe in the restructured plan we’re having, and they said okay let’s go on. But this was one of our big disappointments or, let’s say, challenges before we started. And during the last year also one of our big dips was the loss, to be honest, of Obi which is one of the biggest or the biggest do-it-yourself chain in Germany and which was a big and important partner for the whole portfolio and for our company. So this was a challenge as well, and during those days we weren’t as big as we are today. So those were let’s say the two major overcomes we had to manage.

Interviewer: In terms of corporate strategy, as you said a multi-channel marketing platform, so this would mean that you’re competing with other multi-channel marketing companies like Google or so—

Bernhard: Is Google a multi-channel marketing platform?

Interviewer: Well, it’s a Google channel. They do retargeting and all the stuff as well. But what distinguishes PAYBACK from other multi-channel marketing companies, and how do you think you need to continue creating some competitive advantage over them?

Bernhard: First of all we are not competing against those guys. I think we are kind of unique, because as I said we have the multi-channel marketing platform but our big asset is that we have a multi-partner platform, and we have really cool, big sponsors or partners within our scheme, and that’s our biggest asset, and nobody has this connectivity to the retail. I am a strong believer of the retail, and out of this we have customers who are not only linked to us, they are linked to us and to their beloved retail formats wherever they are shopping. So we have this huge asset that we have customers coming from all those partners and going to the others through our scheme. We know a lot about those customers and Google doesn’t know that much about the customers because they have no clue about transaction data, let us say in the offline world. And, additionally, we know what’s going on in digital, and we are working to be even more digital all the time and brining in online or digital official partners to have a broader knowledge, and again to fulfill the customer needs to shop offline and shop online and to display via the multi-channel market platform. So that’s why I think we are in quite a good position, even against those big guys like Google, Facebook, and everybody is thinking about what to do with the data, what to do with the customers, how to advertise, whatever. So we are not competing on a broad base because we are only using the data and the platform of our partners within our portfolio. But we have this strong portfolio, so that’s the asset. And we have the whole customer base which to rebuild is not easy.

Interviewer: Did you think about, maybe you’ve heard of them, of this IBeacon technology. How would PAYBACK use such kinds of technology? Would it be more of make it or buy it decision?

Bernhard: The more technology possibilities are improving, the more you can bring in new ideas in your thinking, in your platform, in your company, in your strategy, whatever you call, then you we the chance before us. So if you look at the evolution of our scheme, we haven’t had the code until now how to bring in all the local customers and local partners, and I think that’s very important. If you look at the mobile devices – that’s maybe one of your next questions – what’s next, so I think still we have to count on our strength, which is our big partner portfolio, but we have to enhance it with all the online official partnerships, and we think we have a real value proposition for digital partners or digital companies.

And it’s about having local partners and serving our customers on a digital basis, but bringing in all the local shops as, let’s say, kind of coupon tried to do it or to bring in the market. But I think from our perspective we can create a whole ecosystem and this is then important, and by doing this for sure the local and then the Beacon technology for the big sponsors and for the local partnerships are very interesting. And the only thing you have really to consider if you have 20 shops in a mall, for example, and if you have the technology everywhere, and if everybody is sending out messages on a minute basis to the customers who are walking down the mall with their iPhones or whatever phones, it’s spam, and the customer will it off. So you really have to make sure that you are very careful how many messages on which base you’re giving to the customers. And by saying this, yes that is one of our foxus we’re thinking about how to enhance our ecosystem with the local sponsors, with Beacon technology, with the push technologies, and in the middle of all is for us the mobile phone. So if you talk about digital, you talk about mobile in the future.

The second question, make or buy, I don’t care. So make or buy is not the question, the question is who has which rights and who is the master of the data and who has the rights to the customer communication and the customer connectivity. And the only thing where we are crystal clear, we in our heart – if I say we it’s all the time our multi-partner portfolio and we as a fulfiller and as the manager of the program, so we don’t see ourselves independent, we are a big community with our partners – and if I say this we have to have all the data rights, we have to control the data, we have to control what’s happening with our customers, who is communicating with our customers, so if there is a good technology out there to buy we will buy it. Why invent something which is better outside? If not we will do it by ourselves. We are investing internationally this year over 80 million Euros in IT and technologies, so we have both possibilities.

Interviewer: Bernie, in terms of market development, what trends do you see currently in the multi-channel marketing sphere?

Bernhard: Basically what we just discussed, and it’s not a trend, it’s a fact everything will be on the mobile devices, and how they will look like in two or three I don’t have a clue, you have to ask Apple or whoever. But to have the mobility via bigger, smaller, whichever devices, this is the future. So we don’t think about having a card or not the card or stuff like this, this is not interesting for us. Interesting is, again, what the customer is using and that we fulfill the needs of the customers by whatsoever device on a simple base. So it has to be simple, it has to be fun, it has to be trustworthy, and it has to be relevant. Those are the four key values of our company, and if you fulfill those four key values you can build on everything what happens next. And you have only to make sure that you have the right resources in your company to look after the next wave, to execute what you are planning, and have the money to build it up. That’s important.

So from my perspective the coming together of mobile, of payment, of local business, that’s the way we are thinking about the next steps, and I think not only our company is thinking about this.

Interviewer: Bernie, you as an entrepreneur maybe have some kind of insights that you can give advice to other first-time entrepreneurs. What are you top two or three advices to entrepreneurs?

Bernhard: First of all, believe in yourself, be persistent, so if something happens which you have not planned don’t give up. I think as I mentioned we have a lot of partners but none of them signed the first time. So we went out the door we came back through the back door. And that I think is important. Find the right partner, as I said not only the right partners to give you money, the right partners to have connections, ideas, good strategy, and help you to grow the business, help you to look after what is important, and really to focus on the right thing. And be open to the suggestion or to the advice somebody else is giving to you.

I think one of the things which is most underestimated, be really hard on the execution. Just a good idea and just a good setup and whatever, somebody can copy it in three months’ time, six months’ time, twelve months’ time, take whichever number, but if it’s a cool idea there are guys outside who are thinking, Hey, why shouldn’t we copy this. And if they execute better they will make the race. So really look after the execution and don’t make any compromises on quality. And don’t forget to have a private life.

Interviewer: Thank you very much Bernie. Let’s have a look at PAYBACK in some years.

Bernhard: Thank you very much. Bye-bye.

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