Welcome to “Let’s Talk Loyalty”, an industry podcast for loyalty marketing professionals. I’m your host, Paula Thomas, and if you work in loyalty marketing, join me every week to learn the latest ideas for loyalty specialists around the world.Show is sponsored by Comark a global provider of innovative software products and business services. Comox platform is used by leading brands across all industries to drive their customer loyalty powered by AI and machine learning. Comark technologies allow you to build, run and manage personalized loyalty programs and product offers.
48s
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With ease for more information, please visit comark.com. Hello, and welcome to episode 1 49 of let’s talk loyalty where I’m joined by Peter Keselowski, vice president of consulting for the airline and travel sector at Comark and a CLMP or customer loyalty marketing professional. So in today’s conversation, Pietra and I talked about particularly this pivotal moment for loyalty in the travel sector. We discussed some of the great airline examples of projects and really innovative concepts, both for airlines, and also for loyalty for airports.
1m 30s
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Peter shared some of the newer models of loyalty that he’s seeing. For example, talking through the opportunity and important principles for driving a successful subscription based loyalty program. He also shared a concept around prepaid loyalty. And finally, we talked through the power of artificial intelligence, which is really starting to truly personalize our frequent flyer programs in ways that have probably never been done before. So I hope you enjoy this conversation with me and Peter Keselowski from Kumar So Peter Kozlowski, welcome to let’s talk loyalty.
2m 13s
1
How are you today?
2m 15s
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Thank you very much, Paula. Thank you for having me. I’m very well. How about yourself? I’m
2m 18s
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Good. I’m good. You’re in Krakow with us today. Are you
2m 21s
2
Correct? I’m sitting right now in the beautiful city of crackers. That’s where I’m heading water on a, on a daily basis.
2m 27s
1
Wonderful. Okay. I must try and visit you guys some days.
2m 30s
2
Beecher. You definitely need to come.
2m 34s
1
Yes, I definitely will. So am, as you know, we’re going to start our conversation today talking about our favorite loyalty statistic from a Comark perspective. So, so please do tell me what is your favorite loyalty study?
2m 47s
2
Yeah, thanks for that. The questions is interesting. One. Not that, not that I didn’t expect one. So I think it’s probably the most important that this 60, if you look at the measurement of the law, the programs, but I believe it’s a, it’s a statistic that tells us much more about how customers engage with our brand more from the emotional perspective. So typically when we measure loyalty programs, we look at the share of wallet. We look at the comparison of the basket value member versus no member. These are more of a financially driven statistics. Something that, that I became fan of was to measure actually how much customers are spending time in our digital channels, in our viewing our content that is not necessarily transactional.
3m 32s
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So time is spent on a website, really indicates to us, to what extent the customer gets engaged with our brand. To what extent he or she is having fun with us was being on our website. We are being on our, on our app, not necessarily transacting. So typically we are operating in a universe where loyalty program is highly transactional and we won’t go get this another incremental purchase for us. If we, if we have a customer who spends more time with us because he or she is having fun with our content. I think that that is a great proof of a higher level of engagement with the brand that probably is difficult to get quantified in a financial in the financial measures.
4m 19s
2
It tells us a lot about, about the engagement itself. So I think it’s very different to what we typically talk about, but I think it’s, it’s one of those that this is we chose much more and is much softer in terms of, in terms of the, how people engage with us. Yeah,
4m 34s
1
You’re absolutely right. And so software is a very good word pitcher. I have, first of all, I think it’s extremely important that we start to, to talk more about the, the, the, the softer side of measurement. And, and I know it’s an unexpected one, so, so thank you for bringing something very, very new to the table.
4m 53s
2
I mean, after that something pulled up, I think it’s interesting too, to see how programs really evolve. And I I’m coming from a travel space. That’s where I grew up. Pretty much. If you look at the, if you look at the loyalty programs and if you look at death, I mean, websites, if you entering being a member or a mobile app, they have a lot in common with the banking websites. Yeah. So putting my statement of my flights, it doesn’t differ too much to, if I do my bank account in something they’re all going to bank, whatever that rate is. Yeah. Whereas if we are able to provide to the customer, the contents that visualizes, that expresses they are activity, which are quite attractive, right.
5m 38s
2
And if they are being visualized in a nicely manner, I think that increases that the engagement, the customer, and motivate them to spend more time on that, on our website. And that leads us somehow, somehow leads us to the, to, to achievement of a, of a so-called emotional factor in the, in the loyalty, not just factor.
5m 58s
1
Yeah. Yeah. You’re absolutely right. And, and I grew up in the same area as you did. So you know, how I share your passion, particularly for the airline work you’re doing, and you have some other sectors I didn’t know about until actually today. So I’ll definitely want to talk to you about those as well. But, but I even said recently myself, Peter, to a couple of them, just colleagues, we were talking generally about our industry. And I really want to, and I suppose really strongly agree with you on the content piece because it is the destination very often that is, is what the customer’s buying. So, so I know it’s different, you know, whether it’s a leisure or business traveler, and we can talk all about that. But I think certainly for the, the sector that, you know, has been decimated particularly on, you know, people traveling for fun and for personal travel, like why can we not give them more inspiration about getting to Dubai for example, which I know you’re coming to quite soon, but I really agree that because, you know, I think our colleagues on the brands teams, Peter, and I’m sure all of your clients will, will know this to get the attention of a customer, for example, by, you know, creating and investing in TV, you know, to, to market your airline, it’s extraordinarily expensive, you know, and it doesn’t mean it’s wrong because it has the power of inspiration.
7m 20s
1
But I think as loyalty professionals, maybe there’s a way we can start to compare, you know, how much attention am I getting in my, whether it’s the app or the website, but as you said in the digital channel and compare that to the attention on what it costs to get it in, in, in broadcast media, I really think that would change their, the conversations. Yeah.
7m 39s
2
So the, I fully agree and I think it can be federal expanded of course, to the, to the social media channels, which provide us a much more cost effective and much more measurable means of, of engaging with the customers in comparison to the, to the traditional broadcasting. We’re, I mean, the typical rule applies that 50% of the budget spent on the broadcasting and advertising is spent correctly. You really never know how which part is directly. Yeah, exactly. Right.
8m 9s
1
Exactly. Yeah. And, and I guess because we’re loyalty professionals, what we should say is yes, as much as we enjoy social media, it’s not our own and customers, for example, that we own their data or their attention. So, so again, I’m always of the FA you know, the advice would be, you know, if we can get them from social media, into our own opposite communications environment, I think that community piece, then we can build much more strongly. So it sounds like, yeah. Wonderful. Okay. Well, we definitely agree on everything to start off with. Peter’s
8m 42s
2
So true. So true. So
8m 43s
1
True. Great, great. So I think one of the main reasons that we said, you know, that there was a really important conversation that we needed to have is because I think we’re all beginning to feel hopeful and that the world is recovering and, you know, vaccination rates are, are extraordinary. Your sector, you know, has been obviously, you know, probably the worst effected dare I say it from a commercial perspective in terms of travel. So as we come out of COVID and I take frequent flyer programs that are going to have to evolve. So, so I wanted to get your perspective, Peter, and what you think is going to have to change as we move into the, I suppose, the new normal.
9m 23s
2
Yeah, that’s a, that’s a very good question. I think it requires a little bit broader, broader perspective. I think that the frequent flyer programs as the entire airline industry is in a pivotal moment. I mean, for the last one and a half year, the, the airlines were trying to survive. And I think the loyalty programs were pretty much yeah. Adopting that strategy. Let’s wait and see what happens. And I think it was a very right strategy, especially it was reflected in the way DMS were treating their top tier members, simply they were applying a tactic of extending the validity of your, your status and without really disrupting and putting additional complexity into the whole, into the whole spectrum, because it was complex enough.
10m 12s
2
I think what’s going to happen in the, in the next 12 months ready because we are, we’re just embarking on that on a pace of over a resume to travel. I think we will certainly, we’ll very soon learn the new patterns in that business. We don’t know them yet. So I think the only thing we know is that we don’t know yet how the market will look like what will be the partners of the customers. And it will be a very natural step that the loyalty programs in our industry will have to follow. We’ll have to follow that new patterns that that will change. So certainly if we are looking at, on the tier recognition, they will have to evolve.
10m 52s
2
They will have to adopt a complete key role, new structure and the qualification criteria that will reflect the real activity of the, of the, of the members in their programs. Same thing is going to happen with the parole, the acral and the, and the redemption rights. They will have to reflect also this new levels of activities of the members in the, in the Indiana networks. So I think we’re in a pivotal moment. We, we don’t know much yet. Yeah. I think we’re getting really first reasonable reports, how the structural, the traffic will change, how the motivations for travel will change, but they are not representative yet.
11m 35s
2
I think once we will be, yeah. You know, October next year, after the 12 months of a normal operation, everyone will be much more knowledgeable how the markets will look like. And I think, eh, frequent flyer programs will be, we’ll be getting adopted to that. I, something that will really drive that, that the change in the frequent flyer programs in airline ecosystem, there will be changes that will be coming out of a new revenue management approach, clearly that the former revenue management practices, which we have known for two or three decades day, they become not irrelevant, but they will not be as much applicable.
12m 21s
2
We will be having a completely new partners that will have to be followed with a completely new revenue management practices measures. And ultimately that will get translated into the mechanics and the operations of the, of the loyalty programs. So I think we are in, in a very exciting times ahead of us because we are, we are approaching a really big material change in our local ecosystem. I think none of other industries will experience such a, such a big change in the patterns of their, of their, of the customers maybe accept, but it’s more of a managing the growth except the e-commerce e-commerce space, but airlines really are turning around.
13m 7s
1
Yeah, you’re absolutely right. And when I think about other sectors, like perhaps, you know, hotels or, or, you know, retail, for example, and, you know, sometimes only now very much in inverted commas, the only concern that they really have to focus on is that, you know, the hygiene factors. So that’s the, the obvious piece that, you know, once you address that, and then people go back to their routine, you know, going back to their local stores, for example, hopefully they’ll recover very quickly, but I do think you’re right. And I’d love to get your sense pager on, do you sense more interest from the business Marcus in, in terms of travel or leisure? Like, do you have just your own personal opinion on basketball?
13m 49s
2
Yeah. So I think I could only just share the opinion because it’s not really proven by any, any form of analysis and statistics, but, but I think that the biggest structure change we will have in the, in the business travel, it’s not that the business travel will disappear. That’s what we know for sure, but it didn’t change. So I think we were getting first interesting reports. I’m referring here to, to J Sorensen report on the, on the changes over the motivation in, in, in travel. And it seems like that in on it is estimated on, on a long-term basis, the corporate travel, typical corporate travel on which the frequent flyer programs have been living.
14m 30s
2
They, it will shift, but in total we will lose approximately 20% of the traffic and that it will be primarily driven by the change of the behaviors, all the internal corporate meetings. So in the past, we’ve had a, quite a bunch of the air travel corporate travel related to the internal meetings. It seems like that today’s tools such as zoom, such as meets and, and Skype day became a re evaluate alternative. On the other hand, of course, we have a face-to-face meetings with the customers, and it seems like that this part of the corporate travel motivation will recover and we’ll come back to certain extent to the, to the similar numbers.
15m 14s
2
So I think in that corporate and a, and a business travel sector, we’re going to have the majority of the other shifts. And it will be really interesting to see what is the propensity of the corporate travelers to select the class of travel. Yeah. What’s going to happen with a, with a business class. I mean, we’ve seen the revolution two or three decades ago of yeah. Introducing a middle class between first and economy and it was a business class. Are we gonna see the similar shift that is happening right now with the business premium economy and economy, will, will business class be getting smaller on, on board the aircraft based on the propensity of select the premium travel seats?
16m 2s
2
I think that’s so interesting. And we just have to watch it. Yeah. And we just have to react to that, but I think we are starting a little bit, we have a knowledge from the past, we are starting in terms of the corporate travel with a little bit of the blank sheet and, and we will, and we will simply yeah. Write a new story about
16m 24s
1
You’re absolutely right. Yes. And, and I, I definitely feel from my side piece, again, my own opinion that a business travel will absolutely recover to the same level, but I think it will take longer because I think if you ask anybody, whether it’s more powerful to have a zoom meeting with your client or whether it’s all powerful, I mean, it’s just that the reality is they’re so exactly, exactly. And I think, you know, it’s, it’s, it’s part of the, I suppose, the corporate responsibility to not require people to travel if they are nervous. So, so that’s why the recovery might just take a little bit longer because they want to be, be very careful. But I think when they see, oh my goodness, you know, our, our competitors are going to see our clients.
17m 6s
1
And, you know, I think that it’ll all start to happen pretty quick. Hey,
17m 10s
2
Absolutely. Absolutely. And I think we are, we are getting the first signs of that. Of course, these are the very early signs and yeah, we just have to watch and what’s going to happen. But I think we have to be as a, as an industry, as a, yes, as a professionals in the industry, we have to be really open to accept this, this, this new partners, which will be reflected by the data ready and, and adjust the, our offerings, our products, and ultimately our loyalty programs to adopt, to reflect the new reality.
17m 43s
1
Yeah, absolutely. Yeah. And the reports you mentioned, Peter sounds fascinating. I think you mentioned Jay Sorenson and yeah. So what I’ll ask you, maybe just to send me a link. So anyone listening to the show can go onto the show notes and make sure that they can look at that. That sounds super interesting. Certainly. Great, great, great. And I suppose beyond airlines and I was really impressed. I didn’t realize that you also look out to the Heathrow rewards program and I’m always wishing, hoping and waiting that both Dubai airports and Dublin airports, my two most, most traveled airports might start. So, so do you also see that there might be growth coming into new sectors?
18m 23s
1
And I’m also even thinking, for example, Peter about destinations, because I think the whole travel industry needs to come together again, to my point earlier, even about content to inspire and, you know, maybe use these loyalty mechanics in other areas of the business, even beyond airlines to, to, to encourage people to, to get back on airplanes.
18m 43s
2
Yeah. I think speaking about destinations, I think it’s a, it’s a much bigger challenge to apply. Let’s say typical methodology of the, of the, of a low D program simply because we don’t have that represent representative rights. We don’t have really frequency of visiting the same destination multiple times. So that will definitely call for some models of building networks and partnerships, which of course is possible. But the complexity of such a, such a constellation is quite, it’s quite large. Yeah. You mentioned about the heifer for awards and the, and the airport loyalty programs. I think, I mean, this is not an absolutely not a new concept.
19m 24s
2
The British results already had their program for, for multiple years. But when, when the Bridger was Atari was being, was being split into a number of the separate private entities, he fro he fro rewards when would their own program, which I think is a really a benchmark in that airport industry. And I think that the, the key aspect of, of, and the value that the low D program for an airport operator brings is that this is one of the greatest. So for them to actually know who is passing through their terminals and what are they shopping patterns. So I’ve been, I’ve been hearing many times from a lot of the industry experts.
20m 6s
2
I mean, why would a traveler, eh, and the points in the, in the, in the airport program, if they’ve got a frequent flyer program and simply the merchant can reward customer with the frequent flyer miles. Yes, that’s correct. But there is a one important aspect missing here. The airport operator of today’s world do not want to be really blind in terms of who their end customer is. If an airline holds a data, if the airline owns the data, that means that the, the operator of the, of the airport just provides the infrastructure. Yeah. The retail space, but has completely no control over marketing of the regular space and understanding of the end consumer because consumer would belong to, to, to the airline.
20m 56s
2
So I think the, the airport load, the program, which is put into middle of that is a great response to that. And it doesn’t really mean that at the end of the day, the frequent traveler, who is a member of BA exec lab or Virgin Virgin Atlantic flying club, isn’t able to earn those points because in the Heathrow rewards program, you can convert your end points to your frequent favorite frequent flyer program. But in between that key fro as an operator, the program collects a lot of information about customers, their spending patterns, the products they are, they prefer to bind their frequency of visits.
21m 38s
2
Otherwise they wouldn’t be able to actually do capture the data. And they wouldn’t be able to really identify who their most profitable end consumer is in the retail space. And a loyalty program is a beautiful element that fits into that, into that value chain.
21m 54s
1
Yeah. And it’s a great example of Peter as well. And I think, you know, I used to judge the loyalty magazine awards based out of the UK and Heathrow awards always came up and particularly, I believe won awards for, you know, best long-term loyalty strategy. So I think a lot of recognition should go to Heathrow for having this in place for such a long time and obviously making it profitable for themselves because we all know it’s a big decision to invest in a loyalty program. And as you said, there’s already the airline programs that the same people are members of and put this incredible value in the data. And I do remember noticing, and I’m guessing this came through, not just from looking at the airlines coming in, but probably from the loyalty data, but I don’t know if it was Heathrow specifically, but certainly another airport in the UK was doing a lot of its advertising in Chinese, in a Chinese language, Chinese script.
22m 49s
1
And I thought that was fascinating, you know, that they had a much better awareness and understanding of what their customers needed than I had ever appreciated. So it’s upsetting.
22m 59s
2
Definitely. And if you look at today’s airports, they are having, depending on the, on the exposure to the particular direction of the, of the travel, the offering be the far east Asia, the middle east, they are tailoring their retail offering. They are tailoring their marketing for that specific specific markets. I think the, the, the, the two majorly focused destinations there’s of their, of their retail in European airports, Arctic customers coming from the far east Asia and the middle Eastern customers, because they’re, they are spending patterns on deer forts while the departing is, is, is tremendous in comparison to what Europeans are spending.
23m 40s
2
So that’s a really, really interesting to see how they tailor the product, the, in terms of the gates, where, where they protect or terminals from which particular destinations are departing versus the retail offering they’re having in a, in a particular terminals.
23m 55s
1
Wow, wow. Clever stuff, huh? Yes. And I know also, and something that really interests me, and I know you do some great work. Peter is in the whole area of the, the, the B2B side almost. So I think it’s British airways and also Latin American airlines and even Iberia. I think you mentioned you do loyalty programs. Is that for travel professionals or, or what’s the kind of SME corporate saw as style of loyalty programs that you’re doing? Yeah.
24m 26s
2
I think that’s a, that’s a very exciting area because if you, if you look at the typical business customer of, of an airline at the typical company, they are being typically engaged with an airline for the, for the corporate managed deal. So if you’re a large corporation of the size of Coca Cola, Barclays bank, I mean, you, you sign them with your home carrier or the carrier work, which, which has a dominant position in your markets. You simply sign a corporate managed deal, which gives you a certain discounts. That’s, that’s translated to the discounts. It’s quite labor intensive because you need to have the account managers running after the, those corporate, those corporations signing this hundred pages deals on, on getting X percent discount on a specific routes.
25m 11s
2
So that’s working model. Yeah, that’s, that’s very well adopted model, but this is the model in which you cannot operate with small companies. And what we see in the market for the last more than a decade is that the smaller and smaller companies are doing business on distance. If we are talking about that markets like us, they are doing business on distance. If you are talking about a European or other can, other regions, they are doing international business. So with today’s growth or the technology globalization, a small company out of, let’s say Krakow, where I’m sitting here with 10 employees. I mean, they can do international business with a Silicon valley.
25m 52s
2
And at some point of time, they generate a propensity to travel, but simply they cannot qualify and they cannot really get engaged with an airline for the corporate managed deal, simply because they are turnover in terms of, of travel is too low. So that means that some of the small companies are simply being left unaddressed by, by the airlines, simply because they don’t have a proposition for them. So we believe that the low key mechanics as a form of rewarding incentivizing small companies can be a great alternative to the corporate managed deals to address small, medium enterprises and, and, and simply, and simply get them engaged.
26m 40s
2
What we see in Europe, such as small companies that have been doing international business have been very well addressed by the local signs. Yeah, I’d say if we look at there, of course, I think it was some years ago and I cannot, I cannot really recall the source of that, but easy just was, was reporting that 35% of their travelers on board are actually people who are traveling on business. For sure. And this were not the typical corporate travelers. This is sort of people who are doing the working for the more independent companies, small companies. So traditional carriers have started to realize that actually, this is a pretty nice, pretty nice portion of business. And this, this SME corporate loyalty programs became a Revit alternative on the other hand.
27m 28s
2
Okay. Just maybe to add one more thing on the other hand for the such as SME law, the program can be also a relevant tool to engage corporate large corporations in the markets where they don’t have a dominant position. So let’s take an Ikea. Ikea is a dominant player in the Scandinavian market. For sure. They’ve got a corporate manager will in SAS or Norwegian, but any United States, it’s a small company. Ikea is a small company, they’ve got a small setup. So probably they hardly can qualify to get a managed deal with a United airlines or American airlines. But if there is a reward program, they can enter, they can be incentivized and it can deliver them in tangible value and build a stickiness of Ikea USA to the, to the, to the particular airline brands.
28m 20s
2
So I think it’s a, it’s a really, really smart way of engaging small and medium enterprises. And in some cases, large corporations in the non-core markets.
28m 30s
1
I love us. Yeah. And there’s a lot of people in airline loyalty listening to the show Petros, you know, so I’ll be fascinated to hear, you know, who’s thinking about that particular segment maybe in the past, or certainly in the future, as you said, where we’re at this pivotal moment and it’s almost like he counted any market segment be left on a dress. So I think it’s a very clever strategy.
28m 51s
2
Thank you. Yeah. I think, I think the analysts are, are seeing that and yeah, for the last, for the last seven, eight years, thinking about it and they are changing those programs. If they have one, they have them, or they are simply adopting the completely new programs.
29m 8s
1
Okay. And another thing which I’m fascinated by is that whole concept of paid loyalty programs feature. So the subscription model and, you know, building those kinds of propositions, what’s your view on them from a, from an airline or travel perspective?
29m 23s
2
Yeah. I think it’s a very exciting new area. Overall subscriptions is an exciting topic. W w we are, we are, I think it’s been proven in number of the industries, especially after the Amazon prime effect. The subscription can be a really valid business model for, for selling services. And I, I can see that in the, in the travel space more and more, I mean, prime, many airlines are looking at the subscription based programs. I think it’s, it can be a really interesting model to be adopted, but it needs to be rethought fruit. So I think the worst, the worst effect that we can achieve is that, I mean, if everyone is subscriptions are popular, let’s just do something of a subscription and let’s convert for instance, our frequent flyer benefits into subscription format.
30m 15s
2
Well, that might not be enough subscription preconditions. If it, if it’s going to work, the precondition is that you really are able to deliver a value that Sherpas as the customer kind of a expectation if they buy something on it, off the shelf, and you have to have a right economics in place underneath in terms of your cost structure, that you’re actually able to offer those products, providing that superior value. So simple, simple packaging of existing, let’s say benefits into the subscription model might not work. And it might be just kind of a following that the print over subscription.
30m 55s
2
But I think you, you need to combine maybe your tier benefits with a completely new set of the services that really add value to consumer to, to be able to succeed in that, in that space. I think we will be seeing a lot of them. And lot of the new models emerging, the subscription model, we will see a lot of the successes like Amazon prime, like Spotify. We will see probably all of the failures and that’s the nature of the, of the, of the economy. And we, we just have to learn from that. But I think it’s, it’s a really exciting, exciting, eh, area. And with that technology advancement that we have, and being able to actually achieve that economics underneath, eh, this is really exciting, exciting area.
31m 43s
1
Yeah. Yeah. I think you’re right. I think it’s about getting the compelling proposition. And for example, I wrote an article probably about a year ago, Peter, in a different sector, but it was, it was in some ways disappointing, but in some ways a reality check because I was writing about subscription in almost like quick service restaurants or convenience retail and burger king has a coffee proposition and the BK cafe am concept had they, they had launched one, which was $5 for unlimited coffee. And you can imagine now that everybody thought this might be, you know, a really good idea to maybe just drive footfall into, into burger king may be in that morning kind of part of the day where they wouldn’t have had it, but they discontinued it very quickly.
32m 27s
1
Peter. So I think they’re in that case perhaps, and I don’t know because I haven’t drunk burger king coffee, but maybe the product wasn’t on a par with people’s coffee consumption behavior. So I agree. And
32m 40s
2
I think so subscription should be considered as a really thorough business model of selling services. We’ve kind of betrayed as a shortcut to get recurring recurring revenue because very quickly that’s one also the preconditions. If you want to be successful in subscription model, you have to give customers very easy way to exit. Otherwise the barrier to subscribe to any product would be too high and it will, it will be tailored for a failure as well. So it requires a completely new way of thinking of how we, how we package our products and services and what kind of the yeah. And the value it delivers to the consumer and only that can, that can lead to the success.
33m 23s
1
Yeah, you’re absolutely right. Again, I totally agree. Peter a member, when I was writing that article, I was looking up the website for the dollar shave club, which was them again, I’m sure many listeners are familiar with it the very first time that, you know, a model was created to where you could subscribe for razors to be shipped to your home on a, on a monthly basis. And I know it was acquired for about a billion dollars, I think by, by Unilever at the time. But when I went onto their website exactly, to your point, Peter, it literally had, you know, do you want to leave our program very obvious and very reassuring way to go if this isn’t working, we’re not going to hold you in hold your house to do so.
34m 4s
1
So I think that’s something that people are afraid of actually in business. And I totally get that. You know, you don’t want to lose people add too easily, but I think they need that, that trust element, if they are going to invest in something that’s recurring from their side.
34m 18s
2
Absolutely. I fully agree. So, so I think we, we will see this, this new emerging models of subscription. I think the airline industry has an appetite for that. And we were clearly saying it, but, but I think w w we’ve had some cases, very good cases, how I kind of aquatic subscription model have been, I’ve been working. I mean, I, I recalled my, my customer jet blue, who has been offering a subscription for a month. All you can jet Thur where essentially you were purchasing for kind of remember to, for right now for a hundred dollars that the ticket, which allowed you to unlimitedly use your general flights across the U S yeah.
35m 3s
2
And that was only valid for, for a month. And they were offering that in a low season, which was a great opportunity for the people who wanted to discovery us and, and some Caribbean and, and really it proved that it provides a real, real value to the end customer. Whereas on the other hand, it was making a great job for, for jet blue, for whom that was a particular month with a low season. So I think this kind of creativity is being required to build a subscription products, not just packaging, simply the benefits and trying to charge for them because you cannot accrue them for instance, for that, for the, for the traditional tiering qualification.
35m 47s
2
Yeah.
35m 47s
1
Yeah. Well, I really, really love that idea. I think that’s extraordinary now. And I was thinking about air Lingus, which is my, you know, home carriers, you know, and, you know, I think there are a few domestic locations, for example, so it wouldn’t be as exciting if they tried to do it just within Ireland, but if they were able to build a proposition like that, for example, where you could travel beautiful
36m 10s
2
Island. So, oh,
36m 11s
1
You’re totally right. You’re totally right. But, but for example, I think if, if you were able to do it, let’s say for the continent of Europe, you know, if you can do it on a constant level and again, in a low season, I just think people would just really re remember how much they love to traveling and maybe get over, you know, th th those current things. So, so I love that creativity so well done to jet blue at a hyperlink is this listing.
36m 36s
2
You never know they’re my customer as well, so brilliant. We’re going to get connection there.
36m 41s
1
Oh, fabulous. Well, listen, we’re hoping to get them on the show as well at some stage Peter. So if you can then mention that to them, that would be awesome. No problem.
36m 48s
2
Great.
36m 49s
1
Are there other business models as well then Peter, and, you know, as we said, subscription is a hot topic. You already mentioned emotional loyalty. So again, I think not as a business model, but as a, as a strategy and as an intention, but what other models do you think that particularly airlines and travel and loyalty operators should be thinking about as we come into this kind of new normal?
37m 13s
2
I think something that I’m, that I’m watching very closely. And, and I think that can, that can get some momentum, are the, are the formal, the prepaid know the programs where, where you are being rewarded only under the condition that you initially prepaid the budget that you are then using for, for spending on the products and services? I think this model of course, has its complexities has quite a high barrier to enter only very specific high frequency businesses can, can really afford to going to our direction or on VINs customers that, that it’s worth the prepay a balance of a, of a cash to that has been the news.
37m 53s
2
But I think we might see in a, in a, in a coming future, more and more of such a prepaid programs, it’s similar to subscription. It requires really re really strong business modeling behind it, of course, but this, this has, this fulfills a few, a few conditions. I mean, on the one hand you are improving your cashflow position. That’s, that’s a more of a financial matter on the other hand, your tightening, and you’re building a stronger affinity to the, to generate that additional incremental purchase. If you already prepaid the, the balance together with that, if you are able to incentivize at the higher level customers for that, I think it could be really interesting for sure.
38m 37s
2
It’s not for all the brands for sh I’m not, I’m not sure today hat, to what extent it can respond to the airline needs such a prepaid programs, but I’m more ensured that if you are able to collect some cash from customers upfront before delivering a service, it’s, it’s a really attractive for especially CFOs. But if you’re able to balance it with a great experience for customers and value for them, I mean, such a prepaid programs could be actually interesting alternatives to what we have in the market right now. Certainly it’s not for everyone.
39m 12s
1
I know, but definitely, and again, the purpose of this show, Peter is to bring new ideas exactly like that, that maybe we haven’t thought about before. And I haven’t seen it done and, you know, certainly in my, my own experience, but when I think about other verticals, I know certainly Irish consumers, I probably know the Irish consumer market at better. Well, you know, there is a real appetite for pre-paying and there always has been particularly around, you know, maybe Christmas time for example, is something people know that have a big and level of expenditure. And this is probably just in the grocery market, but I think the same proposition would appeal to leisure customers. And again, certainly in Ireland, and I’m sure around the world, and as you said, for, for the company, I think the proposition is super powerful.
39m 59s
2
Absolutely. Absolutely. It has a number of strengths. And if you’re able to build also a trust to the brand that actually customers are willing to, pre-pay the service that they’re going to buy in the future. Yeah. I mean, it’s a big vote of a trust as well. So to certain extent, it’s also an expression of a overload team. If you trust the brand to an extent that you can prepay something in your, you are hoping that the promise that you can get a superior product and, or a value is going to be fulfilled. That’s a, that’s a big thing to achieve.
40m 33s
1
And it definitely builds the anticipation as well. Peter, you know, I don’t know about you, but for me half, the fun about traveling is when I make the booking, you know, and it’s like, it’s, I, I immediately start looking forward. Like, it’s not like I’ve already built a booked for example, to go for Christmas. And so I’m already looking forward to that because it makes it real for
40m 51s
2
Absolutely. Absolutely. And you extend the entire experience totally. Actually from, from, from the moment when you think about travel after the mall and when you really do that. Yeah.
40m 60s
1
Yeah. Love it. Okay. Definitely want to follow and already I’m thinking like this time next year we’ll have to repeat the conversation because
41m 9s
2
I want
41m 9s
1
To see. Yeah, for sure. I want to see which ones have already happened to which ones, as you said, that the post COVID stuff, we don’t know how to expect a complete day, but it’s, it’s definitely gonna be interesting. So the final area that I wanted to ask you around is, you know, the big buzz words about artificial intelligence, which I think people are equally excited by and sometimes terrified by depending on who you are, but it definitely has an incredible value that it can bring to businesses. You know, he can start to apply intelligence to it. So, so I’d love to know, you know, what are you doing I suppose, for the loyalty market? Like what, like, what is Comark doing either from a personalization perspective or how else are you leveraging this amazing ad?
41m 55s
2
Absolutely. So artificial intelligence is a, is a kind of, kind of a term that is with us for like two or three years. And then it got really a lot of bounce in the market, totally were companies like, like Comark where they get engaged with the artificial engines is a subset of AI, which is machine learning. And it’s nothing really scary. It’s these are, these are simply the algorithms which are around us, which are providing to us a number of the different recommendations based on the, on the analytics of a large substance of data, the area in which, so if the, this algorithms are around us, I mean, they’re being used by the major web browsers that we are using Google.
42m 37s
2
Of course they are being used by, by Amazon. So the entire recommendation engine, it’s something that is actually machine learning based right. Is doing and how we leveraged that. We leveraged the machine learning in, into, into verticals, one thing and delivering the personalization. And I’m talking here about it, personalized communication, personalized offers, and the other angle that is in detecting of the frauds. So loyalty programs are very nicely exposed to that, to the fraud activity because more and more value is being carried within the balances of the loyalty programs.
43m 19s
2
And not naturally it’s, it’s an area for which the hackers and, and yeah, let’s say crime world has an appetite for, oh, so we, we are deploying our, our AI machine learning algorithms in order to actually detect the anomalies in the behavior of the accounts, balances, transaction patterns, in order to determine not to define what it is, our really fraudulent transactions or our customers, but in order to identify whether they are within the standard pattern or what there is a normally, if there is an anomaly that indicates to us, it could be a potentially fraud, a fraud transaction.
44m 1s
2
It’s a much more proactive way of detecting the fraud. This is a fairly new model has been adopted. We have adopted that from the banking industry actually where initially this Stein type of a solutions by calmer have been deployed in order to detect the money-laundering activities and measure to measure the particular transactions or accounts, how they are exposed and how, what kind of level of risk and is with them in terms of the money laundering. And then we have adopted that solutions for, for, for loyalty programs. And it really works and brings in interesting results.
44m 41s
2
So personalization Frout, this is for the moment what we, what we are doing with that with machine learning, I’m more than sure that it will be other areas as soon address with that technology.
44m 52s
1
Yeah. And I have one, you know, and it’s purely an idea as, as a consumer, but it’s been in my mind actually just from a conversation I had a few weeks ago, Peter. So I’ll put you on the spot now and see if I’m, if I’m just, you know, hoping for too much, but it sounds like the, the capabilities of AI could really support this kind of concept. So, so my idea was literally around, I love getting, you know, communications from any frequent flyer program or in fact, any loyalty program that I’m engaged with. And, and, and I know there’s a level of personalization within us, but what I sometimes think there might be another opportunity to really look at my, like maybe my points balance.
45m 32s
1
So if I happen to have enough points to go, maybe business costs back home to Ireland, but alternatively, I could get two economy tickets to the United States, like, like to create or package the, the options for redemptions to inspire me to travel. Is that something that you think is, is feasible or is it being done or am I totally crazy, but I keep kind of going, I bet you, there’s more I could do with this. And I just, you know, I don’t see airlines yet proactively sending out that kind of like personal, like not just personalized, but personal to Paula as suggestion, that, that, that this is what I could do when I do get the balance up.
46m 9s
2
Yeah. I fully agree. I think the industry is, is starting to do it yet. So w we are seeing such and such initiatives, but they are not that we’ll say popular. I think the major difference if we look at the frequent flyer programs, and let’s say the e-commerce platform is, I mean, you are in the airline world, you are operating with a modern, newest technologies supported with the AI, but you’re also operating with a very, let’s say legacy systems, which are not yet adopted to operate in such a manner. If you are, if you are in the e-commerce space, we’re pretty much technology is completely modern. It’s not older than two, three years, which, and follows the newest technologies from the AI, from a cloud native architectures.
46m 56s
2
I mean, they are much more prepared for, for adopting this model, but I think alien world is, is on that path of, of digitalization, of digital transformations of adopting the newest technologies. Yeah. And I think you will not have to wait long to see the brands offering you such a, such a proposition Level of personalization.
47m 21s
1
I love it. I love it. Well, watch this space as they say. So my final question for you then Peter, is what is your favorite loyalty program?
47m 30s
2
That’s a good question. I’m not going to mention the program that I’m a member of because it would be to, to, to, to, to, to easy to measure our customers, although I would love to, because it will be too easy as well. But I think the program that I really appreciate that really, I mean, for me, it’s a kind of a mastermind of a, of a law. Two world is a, is a program of Starbucks rewards. I’m not a big fan of the, of the coffee itself. I mean, if you travel to Italy, you know, you can get a better coffee in, in a small Italian cafes than, than at Starbucks. But if you look at how the program was architecture, it’s just an amazing thing, how it balances the value for the customer with financial performance.
48m 20s
2
I mean, Starbucks rewards was one of those first large global programs, which adopted the prepaid model, right? Where you are being extra rewarded. If you prepay your balance, actually, that’s how they started. But now it’s just an option. And if you, it, it balances the, this, this customer experience with the financial goals of, of, of Starbucks. So if you look at the, at the prepay model, I mean, I’ve read the article. It was something year ago that in total Starbucks rewards was sitting last year on $1.6 billion of cash that was prepaid by the customers. And if you look at the breakage that comes together with that over approximately over a hundred million dollar a year, that generates you, that that raises the question is Starbucks rewards kind of a quasi banking business.
49m 11s
2
Totally. And if they were able to do it this way, that that’s just a great thing. Ultimately, they are borrowing cash from their consumers are the negative or the negative interest rate. And that’s, that’s the beauty of that. Us, the customers they happy and they, and they feel, and they feel they’re being treated very well by, by the brand. So for me, simplicity of the program fulfilled under the financial goals of the, of the, of the Starbucks together with a great experience, the customers are, are getting, it’s been just a masterpiece from Starbucks rewards.
49m 50s
1
Well, I agree. And it’s a great word, Peter, a masterpiece. I totally agree. And I think I might have read the same article that you did, which actually we must stop, you know, Starbucks, actually, a bank, you know, exactly
50m 3s
2
Sell coffee. That’s
50m 5s
1
Brilliant. Brilliant. Well, I’ll make sure again, to route that one out and link it in the show notes here, Peter. And so, listen, it’s been a fabulous conversation. I’m very excited about all of your ideas and to see what you do now, as we said in the next 1224 and who knows in the future. So is there anything else that you wanted to mention that before we wrap up?
50m 26s
2
I think, I think had a good conversation. We, we, we covered a lot yeah. On a high level back, but quite a lot of topics. So probably we could go on for hours like that, but the listeners probably wouldn’t stand it. I’m not sure if they would send it. So, no, I appreciate very much the time and that, that, that interesting discussion we had and nothing to add.
50m 46s
1
Okay. Wonderful. And we’re releasing this show. I know just a few days ahead of when you arrive over here in Dubai for the loyalty and travel awards, I’m so very excited to, to finally meet you in person. So yeah, it’s a super exciting and great to see that, you know, that you’re really supporting the industry because I think that’s what the conference is doing overall is saying, well, look, we want our customers to travel. We also have to travel. So, so just wanted to acknowledge that. So listen, it’s been a fabulous conversation, as you said, Peter. So from my side, Peter Keselowski, vice president of consulting for airline and travel loyalty from Comark under CLMP. Thank you so much for let’s talk loyalty.
51m 27s
1
Thank you,
51m 27s
2
Paula. I appreciate time.
52m 31s
1
This show is sponsored by “The Wise Marketer”, the world’s most popular source of loyalty marketing news, insights and research. The Wise Marketer also offers loyalty marketing training, both online and in workshops around the world through its Loyalty Academy, which has already certified over 150 executives in 18 countries as Certified Loyalty Marketing Professionals. Thanks so much for listening to this episode of “Let’s Talk Loyalty”. If you’d like me to send you the latest show each week, simply sign up for the show newsletter on Let’s Talk Loyalty.com and I’ll send you the latest episode to your inbox every Thursday, or just head to your favorite podcast platform, find “Let’s Talk Loyalty” and subscribe. Now, of course I’d love your feedback and reviews and thanks again for supporting the show.
