UK-based loyalty tech startup Lux Rewards has been acquired by global rewards company Enigmatic Smile in an eight-figure deal, marking a significant moment in the evolving loyalty technology landscape. The acquisition follows a period of substantial growth for Lux Rewards, as it navigated early challenges and shifted its business model.
The exact purchase price has not been disclosed.
Industry Consolidation
The acquisition reflects the growing consolidation trend in the loyalty tech industry. Businesses are increasingly focused on customer retention and are investing in sophisticated rewards programs to meet rising consumer demand. Lux Rewards, after a challenging start, adapted its strategy and achieved considerable success.
Initially, Lux Rewards struggled to scale despite early backing from the Just Eat accelerator. The firm faced near closures around the pandemic. To overcome these obstacles, Lux Rewards changed its approach, pivoting from a direct customer model to focusing on enterprise partnerships. This involved integrating its rewards programs within established platforms, such as banks, airlines, and employee benefit providers, thereby leveraging their existing customer bases. This strategic shift proved fruitful.
A key partnership was secured with Barclaycard in 2021, alongside similar deals with British Airways and Mastercard. These partnerships enabled Lux Rewards to scale its reach, ultimately serving 105 million cardholders and achieving fourfold year-on-year revenue growth by 2024.
Bish Shmeir, chief executive of Enigmatic Smile, emphasized the value Lux Rewards brings to the table, stating: “Their growth speaks for itself, and their leadership team has built something extraordinary. Together, we’re creating a global loyalty powerhouse.”
Loyalty Tech Industry Growth
This acquisition occurs within the context of an expanding loyalty tech industry. According to data platform Statista, the market is projected to surpass $41 billion (£32.35 billion) by 2032 as businesses prioritize customer retention efforts. Research by Zinrelo further indicates that 75 percent of consumers now prefer brands offering loyalty programs, making them a key driver of purchasing behaviour. This preference is fueled by the rise of neobanks and challenger banks, resulting in consumers carrying more cards in their digital wallets.
Gamification is also reshaping the industry, with over 45 percent of consumers reporting that engagement-driven rewards influence their purchasing choices. These trends highlight the dynamic nature of the loyalty tech sector and its importance for businesses aiming to foster customer loyalty and drive engagement. The acquisition of Lux Rewards by Enigmatic Smile is therefore particularly timely, positioning the combined entity to benefit from these market dynamics.
