Audio Transcript

#197: Loyalty Insights from Poland (68m)
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 from loyalty specialists around the world. Hello, and welcome to episode 197 of Let’s Talk Loyalty, an episode entirely focused on the loyalty industry in Poland. My guest today is Tomasz Makaruk, who is a doctor of economics and whose career is focused on marketing specializing in loyalty.
Paula Thomas

00:00:44
Tomasz reached out to me recently asking my permission to translate selected episodes of Let’s Talk Loyalty into Polish as a way to make my content more accessible. Even for people there who don’t speak English. So as you can imagine, I was delighted. I then became intrigued to learn more about his work. So Tomasz joins me today to introduce himself and what he does as you will hear for 13 years, he has been the co-owner and CEO of i360 a software house and loyalty program management company based in Warsaw.
Paula Thomas

00:01:26
What really impressed me is that he is also the author of many thought leadership articles on his loyalty marketing website. And now he also has a fantastic YouTube channel there in today’s discussion. Tomasz presents a comprehensive overview of the loyalty industry in Poland, as well as the key trends and issues of concern for loyalty professionals there. So I hope you enjoy listening today and learning from Tomasz macaroon. So Tomasz joining me today from Poland.
Paula Thomas

00:02:07
Welcome to Let’s Talk Loyalty.
Tomasz Makaruk

00:02:09
Hi, it’s my pleasure. Thank you for having me
Paula Thomas

00:02:12
Wonderful. It’s been absolutely fascinating to have met you and to hear about all of the incredible work that you’re doing there. I knew very little about Poland at all, so we’ll definitely be getting an expert’s view on the entire loyalty markets in your country today, tomorrow. So, and thank you for all of your preparation for reaching out to me a couple of months ago to introduce yourself. And we’re going to start with the usual question, I suppose, and because you are very familiar with this country where I live in the UAE, as well as your home country. And I know you have a wonderful surprise in terms of your favorite loyalty program. So let’s get straight into it.
Paula Thomas

00:02:52
Tell us your favorite loyalty program.
Tomasz Makaruk

00:02:53
Right? It’s my favorite loyalty program is Share from the United Arab Emirates market. So Dubai and Abu Dhabi up places where I believe the most experienced and creative people from around the world come to enjoy life, but also to benefit from what they have already accomplished in their countries of origin. Therefore, whatever happens in the UAE is unique. I mean, unique in terms of innovation and in terms of scale, and this also applies to why are they programs as far as I’m aware? So when asked, which market actually is the most advanced and dwarf benchmarking for loyalty programs, I would usually point to the UAE to the US and to Japan.
Tomasz Makaruk

00:03:40
So back to Share. Share is to navigate mobile app-based program run by the entire group with, for Vox, Cinema Lego and many other retailers as the so-called the anchors? I mean, I mean the most significant participants, technically it’s a point-based program, but the points are nominated in Dirhams, which is the UAE currency. So from that point of view, it’s actually the money backdrop. I, why do I like Share? I like Share because it feels like it works everywhere.
Tomasz Makaruk

00:04:21
I think it’s truly a vast network of affiliate partners that allow members. I’m also a member, which as a result, it allows me to receive membership benefits and there’s includes online shopping at partners, e-commerce stores in shops. So I really appreciate the attention to detail that their developers put into creating this program. Actually, let me illustrate it with an example. If you forget to identify yourself with a barcode, which is posted inside out at the checkout, you can actually upload your receipt later.
Tomasz Makaruk

00:05:03
You can literally scan it through the app to points. So, so the share ID that the way participants would identify themselves in the program is barcode-based and it’s presented through the app. So obviously no plastic ID cards here, of course. And then the program has an, a feature, a built-in chart into the app. So if you want to communicate with them, you can do it through the app. And finally we can split payment and pay part of the bill with points and part with cash or card or payment card.
Tomasz Makaruk

00:05:44
So it’s simple, but, but still unique, I believe
Paula Thomas

00:05:48
It definitely is the most. And when you sent me through your, your favorite loyalty programs, given your extraordinary expertise, I was really, I suppose, I suppose thrilled to see this personal recommendation is probably the best way to describe it, because what I noticed is I prefer to join a loyalty program after it’s recommended by somebody I trust. And we’ve been working together a little bit now. So for somebody like you to say that this is such a useful program and so easy to use gives me actually the nudge that I needed because clearly I’m resident in the UAE. I know some of the people running the share program and I’ve been really impressed again by their communication and the scale, but I kept resisting, you know, I think I’m just one of these people that hates any joining procedure at all.
Paula Thomas

00:06:39
So thank you for the recommendation. And I think it’s also reminded me the most that I definitely want to have the share program on the show at some stage. And there are a few people I know from my own very early career, many years ago here in the UAE. So the <em></em> group as well as probably just worth, you know, for our global audience, just to maybe explain a little bit tomorrow, I think just wanted to comment that we almost have so many hugely impressive family-owned groups of companies here in this Marcus, that they have enough different retail outlets to build like a coalition of their own.
Paula Thomas

00:07:20
It’s quite extraordinary.
Tomasz Makaruk

00:07:21
Yes, yes. It is in, in this, from this point of view, Dubai and Abu Dhabi. The UAE market is very specific, but it’s worth joining SHA I believe, I believe you were a giant.
Paula Thomas

00:07:35
Okay. I definitely will. So thank you for that. So they’ve got a new member as a result of today. So I guess the main reason that I wanted to bring you on the show at the mall was because you’re doing some extraordinary work in lots of different ways. And I’ll let you talk through, I suppose, all of the various different types of things that you do. But particularly, I think I mentioned, I don’t know the Polish loyalty markets at all. So maybe just introduce yourself, actually, if you don’t mind the kind of work that you do, and then maybe just tell a bit about the loyalty markets in Poland.
Tomasz Makaruk

00:08:09
Okay. So actually loyalty is, is my entire professional life is all around fly Alto. I’ve I have 26 years of professional experience. I’ve spent half of this time in with international corporations, such as Mars group, and Michelin started as a marketing assistant and went up to the position of marketing director for entire zone of countries.
Paula Thomas

00:08:38
Wow.
Tomasz Makaruk

00:08:39
And, for the last 13 years, I’ve been a coroner and a CEO of ivory 60, which is the sea-based loyalty program management company. So, from the very beginning of my career, <em></em> was, and still is my both profession and passion I create and manage loyalty programs. I take part in my other programs, I write my blog about loyalty programs. It’s my life.
Paula Thomas

00:09:12
Oh, for sure. And you have some extraordinary academic qualifications as well to most that you’ll have to give a mention to
Tomasz Makaruk

00:09:21
Yeah, I’m, I’m a PhD in, in economics from Columbia Economics. I have also participated in a Harvard executive education course. So it’s also was around the topics were around loyalty and promotions. Yeah.
Paula Thomas

00:09:40
Yeah. And I think that that mindset of understanding the deep complexity of economics must be extraordinary when you’re having conversations with different brands about their loyalty programs.
Tomasz Makaruk

00:09:53
Yes, it is. We where I can lay out the programs are managed the by large multinational corporations and those corporations, majority of them would be actually public companies. There will be, the stocks would be quoted on a, on a stock exchange, right? So it’s always worth understanding what’s the most critical, the single most important KPI of the CEO of a public company, right? And this would be, this would be the revenue per share. So actually the the CEO of a public company would like to create value for the shareholders by increasing the stock price value.
Tomasz Makaruk

00:10:41
And in order to achieve that, they need to increase their sales and increase their profitability. And here is where the loyalty program plays a very significant role. So yeah, the two, there’s this understanding of how the economic world works helps me a lot to, to create and manage and succeed within the loyalty.
Paula Thomas

00:11:08
Fantastic. So tell us then about the loyalty market in Poland, I’m intrigued.
Tomasz Makaruk

00:11:14
All right. So basically, when we discussed the geographical demographics of your podcast, listeners, you show me statistics that your targeted groups comes from such far-flung regions as the United Arab Emirates, the United States, United Kingdom, South Africa, Australia. I mean countries where the official language is English, right? However, if we were to do an analysis of a country where English, isn’t the official language, such as Poland, I believe we should begin with a few words of introduction about the country, about Paula itself, specifically for those listeners who live far outside of Europe.
Tomasz Makaruk

00:12:04
So Poland is located in central Eastern Europe is a member of the European Union, belongs to the Schengen area is a home for like 30, over 38 million people in terms of area. It’s the ninth, largest country in Europe. And in terms of GDP is the sixth-largest country in Europe. The market economy is developing since 1989. So in other words,, for 33 years now, the first loyalty program was created back in 1999. So the loyalty market is trying to free as all departments say.
Tomasz Makaruk

00:12:46
So
Paula Thomas

00:12:46
Wonderful. Yeah. And just because we were talking today, tomorrow, so I did look up the the geography because you know, with them, the situation you in Ukraine, obviously so serious at the moment. So I just wanted to share my support and concern for you as neighbors of Ukraine and hope you guys are all doing okay.
Tomasz Makaruk

00:13:06
Yes. Thank you for mentioning that we stay United and we very much help as, as far as possible, especially those refugees from Ukraine since there a regular wall, the,
Paula Thomas

00:13:23
Yeah, unbelievable. Okay. So listen back to the loyalty market there. And you’ve mentioned that the loyalty program Marcus is 23 years old, and actually it seems to be quite huge in terms of the sheer number of actual programs in existence. So maybe give us a sense of exactly what type of sectors are operating and the sheer scale of the market there in the loyalty sector.
Tomasz Makaruk

00:13:49
Okay. Okay. So that over like 130 loyalty programs aim to add the end buyer, meaning the business to consumer loyalty programs. And we know it because every year at I 360, we can them all and we sign up for the newly created ones. In fact, we participate in all of their loyalty programs on their market. As mentioned, we are really loyalty freaks here in parallel. There’s over 100 business to business incentive programs, but I will not discuss them today. I will focus on, B2C only That their value is applied to those adventures that are organized systematically and have that terms and conditions in writing in which the headline reads it’s a loyalty program.
Tomasz Makaruk

00:14:42
I mentioned this because one of the market trends we have seen in recent years, especially during the pandemic is the emergence of, of marketing activities. Who’s a set of rules, including all the elements that will make us say it’s a loyalty program, but the organizers actually don’t call it that. So they treat those ventures as part of their basic marketing offer. This is mainly visible in e-commerce at the same time, some of the actions which are called fly out the problems are actually loyalty cards.
Tomasz Makaruk

00:15:22
However, based on the adoptive methodology we classify them as loyalty programs. So actually, as mentioned at the very beginning 130 slightly over 130 B2C loyalty programs exists.
Paula Thomas

00:15:36
Wow. Sounds quite fragmented the most.
Tomasz Makaruk

00:15:41
Yes, yes, yes he does. Although you can have very different perspectives, depends on how you would like to perceive the market. So let me, let me start from loyalty market categories. And then I will take you through some in-depth data analysis. So the four main categories of loyalty program, we’ve got points, programs, discounts, programs, hybrid, meaning those who combine points and discounts and money-back programs. We can also distinguish if like the category of multi partnership program and programs directed to shareholders within them.
Tomasz Makaruk

00:16:29
So the breakdown of problems by category looks like this, the points programs cover 12% of the market. The discount 35% hybrid would be 50. And of course it’s by quantity, the number of programs, not by value of the rewards market.
Paula Thomas

00:16:51
Okay. That’s a good distinction.
Tomasz Makaruk

00:16:53
And we have one multi-partner program with over 10 significant partners. It’s its payback. So based on what we have discussed the bath, the impression is that the liar, the market is very crowded and is fragmented, as you sat, however, this expression disappears when we look deeper into the data. And it turns out that only six largest programs reach and declared level of participation at the double-digit level. So let me explain this though. Okay. That repaired the report participation rate is the percentage of responses to the question which allowed the program do you participate in?
Tomasz Makaruk

00:17:39
And this is a question asked in a nationwide market survey of representative sample of adults. We will return to the study later in the discussion. If you allow this stage, it’s worth saying that the distribution of responses is such that 35% of the public say they do not participate in it and a loyalty program. So 65% of them participate in at least one. So meanwhile, the 10% of this, 65% who say they participate in at least of one, and they indicate that they actually participate in one of the six main programs. So there’s includes three programs from the retail grocery category and two from petrol stations and a drugstore chain program.
Tomasz Makaruk

00:18:28
And there’s also one shoe retailer program within those six. So at the same time, roughly 25% programs have a declared participation level of more than 1%. And that says a lot about the market. I believe even though the are over 130 of them, only 1% of the society would admit to participate in twenty-five largest programs, 25 largest of that. So As, as always in the case of, you know, analysis of the research results, one has to be very careful as they are based on the spontaneous declarations of respondents, right?
Tomasz Makaruk

00:19:10
Ultimately, however, the sum of these declarations makes up the entire market. So concluding this market discussion, it should be noted that 25 most popular programs are dolls of the most prominent market players in the categories. Thus,, we have a very clear phenomenon of scale if I may say so the most significant players dominate the market are prevalent and are prevalent in the advertising messages are CNS organizers of the most popular loyalty programs.
Paula Thomas

00:19:49
Wonderful. Thank you. That’s a really clear and in-depth analysis. So, so I really appreciate that. The one that said, I suppose, the most obvious that I would probably have expected would be an airline loyalty program. Is that something that happens, in the Polish market?
Tomasz Makaruk

00:20:07
Yes. We have a national area, Adeline, Korea, and they have their own layout, the program, but it’s not within that 25 largest ones.
Paula Thomas

00:20:17
Okay. Okay. My sense is the demographics in Poland means maybe few people get the, you know, the opportunity to, you know, become members of the frequent flyer program. Maybe as much as a view said everyday things like grocery and fuel and certainly drug stores.
Tomasz Makaruk

00:20:34
Yes. Yes. So that as always the main categories of the market to where the loyalty programs are organized, like for the retail stores about, but not the airlines.
Paula Thomas

00:20:47
Okay, brilliant. So how has it developed, you mentioned, I think it was 1999, the very first one started. So, so where did it all begin for Poland and loyalty?
Tomasz Makaruk

00:20:58
Yeah, so it was back in a previous century, it was 999 And that’s how big the market is. And then the test began on the first tool, loyalty programs, actually for two competing chains of fuel stations. These were, and still are at point-based programs. So now these were tests and now officially the oldest, the program is now celebrating its 21st anniversary. So When the market became saturated with catalogue of prices, of all those point-based programs, and after a few years, everybody started giving out actually the same type of crisis which consequently ceased to provide any diversity on the market.
Tomasz Makaruk

00:21:53
The stage of discount program begins, and this category of programs is still the most numerous. So mainly because it’s, I believe you will share this opinion. It’s much easier to introduce a simple discount program to the market than it is to, to implement the point-based program. So this class the class, which, which is developing very dynamically is the segment of money-back programs. It’s the smallest segment, but actually the most dynamic one in terms of its development. And of course money-back program would offer some sort of a refund of portion of the price spent on the payment cards, on the bank account, on mutual loyalty program account.
Tomasz Makaruk

00:22:41
It all depends how the program is structured. So among the Panamas, the popular problems in Poland, some which have been initiated back in the 20th century, like those two petrol fuel stations, programs, some of those whose history is just three years old. So that’s how the market looks actually finally, the, the youngest category on the market are the programs aimed at shareholders of public companies, the programs, which, which were implemented to ensure that shareholders, why Altec mainly by companies listed on the stock exchanges either here in Warsaw or, or abroad.
Tomasz Makaruk

00:23:29
And they would offer a certain sets of privileges to those who hold shares. Right.
Paula Thomas

00:23:35
Well, I love that idea. I have to say to most. And I think, you know, that I really, I really value innovation and this is an idea that’s starting to emerge. I’ve heard, it mentioned certainly in the Australian markets, I’ve heard it mentioned in the U S so really pleased to hear you have that model also in Poland.
Tomasz Makaruk

00:23:54
Yes, yes, yes we do. It’s the latest category to come and the youngest one, but these programs are, are still developing and judging by the amount of kids I had on my block. On, on, on the article about the loyalty programs aimed at shareholders, it’s also of this category I believe will grow in the, in the future because it was one of the most popular article I’ve written for the last like six months.
Paula Thomas

00:24:31
Wow. Well, I’m glad you mentioned your blogs most because I think it’s the perfect time maybe to actually just tell our listeners about that and we’ll make sure to link to it in the show notes. And I know it’s all in Polish, but thankfully we have Google translate. So certainly I’ll be definitely going to read that article that you’ve written. So tell us about your marketing blog.
Tomasz Makaruk

00:24:54
Ah, thank you. The address is a marketing business blog. In fact, it has a section in English translating the most popular and the articles, which among those read very, very often the sole. So you’re all invited, but mainly I share my experience from day to day work and description of anything that was either intra, which I found interesting or something which was new or unexpected to me. And I share my experience, with other loyalty professionals.
Paula Thomas

00:25:35
Yeah. And what impressed me, I guess, was the sheer scale and the audience that you’ve managed to create, because what I think sometimes happens and the word blog is of course perfectly correct. But sometimes it’s confused as you know, something that somebody is doing it as a hobby where you’re doing it professionally, you’re sharing thought leadership and you have an extraordinary audience reading the blog.
Tomasz Makaruk

00:26:02
Thank you. Google analytics says, we have around 7,000 unique visitors a year. So it’s in terms of being a B2B blog. It’s, it’s a quite a high figure, which I very much appreciate. And I would also like to say, thank you to Paula for letting us translate your podcast transcripts selected podcast transcripts, which we publish. And I, I really very much appreciate,
Paula Thomas

00:26:37
Well, you’re doing amazing work with them. I know the first one, my articulation mightn’t have been clear enough for the transcription to be clear for you, but you seem to be doing it beautifully well now, so I’m really honored actually to have my content there in Polish. So, so great work for you and tell us then Tomas, about how I suppose the programs are evolving there in, in Poland and maybe some of the most popular ones.
Tomasz Makaruk

00:27:04
Okay. So the three most popular programs in Poland. So the first one would be my bid on the car, a program of, for the retail chain called {indescernable}, which is owned by Jeronimo Martins. And your listeners from Portugal might recognize it. And forgive me if I butcher the pronunciation here as being kudos, this has been in Poland. Yeah. The second one would be Orlando, which is the program by the Orlan fuel station chain owned by the company, which is controlled by the Polish government, but also one club, which you will obviously know of the Ross man chain, which is one of the few entities on the market that actually run two loyalty programs at the same time.
Tomasz Makaruk

00:27:59
An interesting perspective on the market is also shown by analyzing their like top, top six or top 10 most popular programs of the last decade. So in this group, we have like 12 programs, which rotated between 2011 and 2021. Some of them stayed at the top for the whole time. Others dropped out and were replaced by the newly created problems. So having said that, I’d like to also mention that when analyzing the market, it’s always worth looking at events who’s if you like organizers would prefer to hide them from the public.
Tomasz Makaruk

00:28:41
I’m referring key to the process of closing of ineffective loyalty programs. So, so far we have experienced the closure of several critically, actually critical loyalty programs whose membership data sets numbered in millions, even. So I’m thinking of a leading telecom program, several for the retail chain programs, including the Tesco club card property now to your, most of your listeners, which disappeared from the market last year. So all those events were triggered by one of the two factors, either ownership changes or the bankruptcy and liquidation of the, of the organizer.
Tomasz Makaruk

00:29:27
That’s what we are dealing here with like a particular trigger when new owners would introduce a new or that, or a new set of rules and naturally try to increase the effectiveness and efficiency of the activities of the company they bought or acquired. So, as we all know, out loud, the programs specifically dollars where millions of participants would consume like millions of dollars of the budget annually. So both in terms of the operating costs and the network costs. So the temptation then is for the new owners or new managers in like one fell swoop, close the program, and significantly improve that projected financial results by, by freeing up the budgets that are moved from the expense line of the income statement to the profit line.
Tomasz Makaruk

00:30:22
So we’ve got very strong, most popular list of flyer programs, but we have also experienced closures for the last 20, 23 years of the market history.
Paula Thomas

00:30:38
Okay. My goodness. Well, first of all, I’m glad I didn’t have to pronounce those Polish names myself. So thank you for explaining those for us and on the Tesco closure. And I will mention, and again, also link in the show notes. We had a wonderful interview with the selling group just about a month or so ago out of Denmark. And my understanding is the selling group in Denmark has bought that grocery chain. So we’ll be expanding in the Polish market. And I know what’s not, you know, I suppose reassuring for people who lost millions of points, but I do believe there will be a new loyalty proposition coming because Salling Group is definitely investing very heavily in loyalty.
Paula Thomas

00:31:20
So hopefully that is a solution that’s one, but I guess you’re absolutely right. The most it’s, it’s an easy decision for a hard-nosed financial person to, to change the optics of a business just by, you know, removing their actual legal obligation to, to previous members of a loyalty program and change the finances just with them, but by letting everybody down and not giving them what they owed them. Yeah. It’s pretty tough, pretty tough. But anyway, I guess it’s life. So I’m so not to worry. And, but I do think there’s a lot of closure of loyalty programs. I mean, we’ve seen it in the US for example, we’ve seen it all over the world and I would love to just get your perspective on, you know, how are they perceived maybe by business owners and managers in Poland?
Paula Thomas

00:32:11
Because as we said,, there are certain triggers if, if the ownership changes or the business closes down, or there is actually a, a bankruptcy, but in terms of how loyalty might be perceived or respected as a driver of profitable behavior, is that something that you think Polish business owners really buy into or do they still need, it needs convincing
Tomasz Makaruk

00:32:35
Refer to the, the Delfi report publishing 2019 called why loyalty programs fail. And, in this study, the second most important factor in layout fee program failure, which was identified is the lack of ability to document and analyze the loyalty programs effectiveness. So actually like over 90% of the experts participating in the panel discussion of on which this report was based confirmed that that inability to calculate program effectiveness and efficiency, or these two metrics is a cost of potential program failure.
Tomasz Makaruk

00:33:24
So then the lack of these skills needs executive stability, that the program is consuming too much money and then leading to ongoing budget pressures and so on. So on, you know, the story, right? So some of the panelists of the Delfi reports actually stated that the inability to demonstrate that correlation in between actions that are taken on their loyalty program and the increase in sales and margins resulting from the program leads managers to consider for treats such a program as the additional costs, additional cost line in the XL spreadsheet of the cost of doing business, which in 10, in turn, makes them to the question that the actual value of the program.
Tomasz Makaruk

00:34:15
So the Delfi report panelists mainly emphasize the company’s revenue growth, perceived the activities leading to building buyer loyalty as another actually additional costs rather than investment in the future proposition, of a bond. So these factors actually lead to the closure of the top-rated programs on the market several times already.
Paula Thomas

00:34:42
Yeah, you’re absolutely right. And it, it does, it causes us all, I suppose, a huge amount of difficulty. I remember myself when I was in a telecoms loyalty program, I’ve talked about it a few times on the show, but I was always most uncomfortable when I was asked to prove, you know, that, you know, the correlation between loyalty activities was actually causing that behavior change that, that we set out to achieve. So clearly it’s a global issue. I think if either of us had a magic wand and also we might try and make that one disappear, but I don’t think it’s going away anytime soon. Yeah. Tough one tough one. But tell us then I suppose about, you know, the participants and what kind of perspectives you hear from consumers in the Polish market about these, I suppose, top six programs and you know, what kind of household penetration you, you experienced.
Tomasz Makaruk

00:35:35
Okay. So again, I’d like to start with a few words about the structure of households in, in Poland. So basically over 14 and a half million households in Poland, the research says 65% of poles participate in at least one loyalty program with the average household participating in free programs. Okay. So from this perspective, the market is still very, very mature, right? As, as in the United States, for example, the average household would participate in 18 loyalty programs.
Tomasz Makaruk

00:36:16
And as far as I can remember being active making purchases in eight of them, right? So there’s 75% penetration rate of, of loyalty programs has remained more or less unchanged for the last like five years. So that’s what the penetration of <em></em> is, but actually what this thing wishes a Polish consumer and that participation in loyalty programs is their activity. So if someone engages in the program, it’s active participation, actually 85% of those participating are active participants, meaning they normally repeat purchases, they identify themselves.
Tomasz Makaruk

00:37:01
So with the program app or still a plastic ID card at the checkout and, and so on. So of course, so of course this, this definition would depend on, on the different market segments. So it would mean something different to be active at the petrol station or the grocery retail chain. But this is the ratio we have observed in this market, which to my understanding is quite, quite similar on the, on the other market. So the highest, it’s also worth mentioning that the highest penetration rates are recorded in among the youngest part of the population, meaning in 18 to 49 years old, over 80% of people in age demographic, regardless how you analyze this group, which break down, you use the membership in at least one of the loyalty program.
Tomasz Makaruk

00:37:59
When we talk about university graduates over 85% of those with a university degree participate in at least one loyalty program as well. This is at least what they, they did a national market study in terms of gender. We’ve got a female majority out of 10 participants in layout the programs women in Poland. Of course, this ratio differs in each market segment again, right? In the case of clothing, retail chains, 90% of participants are women. Similarly, in the case of take a gas station chain, right?
Tomasz Makaruk

00:38:43
So that the percent of participants are man, like the rest of the world, the leading market segments, in which programs organized food and clothing, retail chains, gas station chains, and drugstores.
Paula Thomas

00:38:58
Excellent. And it’s actually is very reassuring as well to most, to hear that it is a younger demographic. And because we often hear feedback, that’s, you know, the younger people sometimes are more cynical and more demanding and more, I suppose, conscious of the privacy and what they’re giving up in return for that membership. So I know 18 to 49 is quite a broadband, but good to hear that it’s resonating across all demographics for you.
Tomasz Makaruk

00:39:27
Yeah. But at the same time, I’m often asked how by the program organizers, how can they increase that participation level? How can they grow the market share, for the loyalty program? And having, having said that basically the potential to grow is within the target audience, which is most difficult to acquire, meaning those less educated than all the stall from, from one perspective. Yeah. Like you said, it’s good to see that the young, younger part of the population actually participates, in loyalty programs without any worry that they are bought for their loyalty data or personal data and so on.
Tomasz Makaruk

00:40:16
But from the other perspective, if you want to grow your new or your program penetration in the market, then you should attack those, all the part of the population, which is, which is difficult then to acquire
Paula Thomas

00:40:30
For sure. Well, I think we all know what’s difficult to acquire in a lot of cases, so certainly not unique there, but yeah, I can hear it’s coming through from your clients as much as, as ours here in the rest of the world. And I’d love to understand Palmerston, what type of programs and rewards are you seeing in the markets?
Tomasz Makaruk

00:40:49
So from the perspective of the end-user, that I believe that the purpose of participating in a loyalty program at the end of the day is to get rewards, right. That’s why they participate. And therefore, it’s, it’s interesting to see what benefits they having participants receive or being are being offered. So the most popular bonuses that household get from participating in programs, mainly discounts, then the ability to pay with, for the purchases with clients, they can also choose course the price from the catalog in point-based programs.
Tomasz Makaruk

00:41:35
There is a money back and there is the opportunity to support the charity. This distribution has been, has been consistent for years. So let us analyze what does it actually mean? So first of all, it shows we are talking about a relatively low purchasing power society or for which rebates are critical aspects of managing their household budgets. So the average salary in Poland is only like 1300 us dollars per month. And this is still the gross value. I mean, before taxes. And this is like, what, four times less than the value of from the, from the U S market, right?
Tomasz Makaruk

00:42:18
So at the same time, the differences in the cost of living in between Poland and the states is much lower, which means that the purchasing power of Polish salary is relatively low. This is why to my understanding discount loyalty programs are so popular here.
Paula Thomas

00:42:38
Wow. Yeah, it’s incredible. When we know that our industry is actually helping people manage their monthly budgets,
Tomasz Makaruk

00:42:44
This is exactly what, what is happening. Yeah.
Paula Thomas

00:42:49
And just when you mentioned the catalogs, the MOS, are they typically printed catalogs? You know, like the traditional ones, I think you referred to, that’s what you started with in 1999. Are they still printing catalogs these programs or have they moved to digital?
Tomasz Makaruk

00:43:04
Th there used to be like, like 10 years ago, but, but now nowadays it’s all digitals and these are either presented on the website or within the mobile application, sort of the layout of the program.
Paula Thomas

00:43:20
Okay. Cause I do,, my perception is that is a digitally savvy country. And I would have expected that you would have a lot of mobile apps for your programs, do you?
Tomasz Makaruk

00:43:29
Yes. Yes we do. And actually, when I was listening to your interviews with other guests, I’ve noticed that you used to ask, what is the fibrous statistic about the loyalty program? Right. For, me, such a statistic is the loyalty program app usage rate. I mean the percentage of the population or program loyalty program, but this events that use a loyalty program, a mobile app. So for the last 10 years, this has been the most rapidly growing ratio I would say.
Tomasz Makaruk

00:44:09
And it is now at the level of 74%. So what does it mean in practice, roughly speaking? It means that 65% of the population participate in at least one of their loyalty program and 74% out of this 65% use loyalty programs, mobile app. Let, let us stop here for a while. Okay. And discuss how participants take part in the loyalty program. So looking from the organizer’s perspective, how organizers communicate with participants in diet programs, and this also refers to the catalog of prizes, which you, which you mentioned.
Tomasz Makaruk

00:44:55
So 74% is nearly three-quarters of all those participating in loyalty programs. The smartphone and the mobile app are used to first identify themselves at the, in the program and the checkout, but also to check the available balance, select the rewards, activate coupons, utilize, click, and collect functionality, pay with, pay for purchases. W what else you can do with the, you, with the mobile app. So this raises the question of how that remaining quarter of the participants who do not use the app participate in loyalty programs.
Tomasz Makaruk

00:45:36
And there are still people I, which, who identify themselves with a plastic cart or log into the program website, or still use paper catalogs. Although I myself have not seen an a for like five years already, the most, probably some of them would be, would be produced. Some people still call the hotline, but otherwise it’s a very, very digital society right now. And it also applies, to the loyalty programs.
Paula Thomas

00:46:11
Yeah. It makes total sense. And glad to hear that that digital savviness is coming through and being adopted because at the end of the day, who needs printed catalogs, I think there’s so much wastage. And even we had Ikea on the show here at the Moss and it was early 2021. And they had just, even as a huge global brand renowned for relying on their catalog to do all of their sales really, and marketing Ikea had discontinued it as well. So I’m glad to see you. Haven’t seen it in a few years there. Wonderful. So what other trends would you say you’re seeing as well as the move towards digital digitalization?
Paula Thomas

00:46:51
What other trends are you seeing there as well?
Tomasz Makaruk

00:46:55
Okay. There are several, one of the major trends is that user penetration has been hovering at 74%. Even though these mobile application functionalities have been increasing, namely the ranch of functionalities embedded in the applications. I mean, such as pay type features, self-checkout click and collect, pay, and go, and, and many others. So we, we have quite a stable penetration of mobile app usage, but then whatever happens inside those applications, I mean, the wrench of functionalities is, is growing.
Tomasz Makaruk

00:47:39
And it’s, this is one of the areas where the layout of the market is very innovative. Another trend is, as already mentioned, the closures of the inefficient loyalty programs. I’ve mentioned the Tesco club card. Although I wouldn’t say it was, it was an inefficient program. It was a different trigger idea. It was due to that like, man, like I mentioned before, right. It was due to the change in the ownership structure. Sure. Another trend would be the launching of new premium programs as a supplement to the mass market offer. It is combined with the migration of part of the user database into the lower tier.
Tomasz Makaruk

00:48:25
Let me give you an example. Recently, visa introduced a program called the visa benefits program and the program, which is offering benefits related to visa premium cards. And at the same time they’ve moved, they basic program called visa alpha to fit into the white label program for selected banks. So these are the major, major trends.
Paula Thomas

00:48:48
Wow. That’s fascinating. I hadn’t heard about Visa having a premium program and other markets.
Tomasz Makaruk

00:48:54
Yeah. They, they have, they have one in Poland and they have one in the neighboring countries. Yeah.
Paula Thomas

00:49:00
Wonderful, wonderful. And things like I suppose, payments then is that I suppose, becoming part of your industry there, like in other countries,
Tomasz Makaruk

00:49:09
Yes, actually that the most, if I was to point to the most important and the, the, the, the major trend, this would be the development of dose pay type of features. So you can feed pay with the mobile application of the loyalty program, or you can just link your credit cards or debit cards to the loyal, to the mobile app of the loyalty program. And there is no need to actually have your wallet with you. It’s enough to have a phone and you can pay for your purchases with the mobile application of, of the loyalty programs.
Tomasz Makaruk

00:49:52
It works slightly different in different programs, but at the end of the day, the development is, and what’s unique here is that you can actually do one transaction and it’s combined, I mean, your identification at the checkout and your payment process, I don’t know, a combined. And it’s just one process.
Paula Thomas

00:50:15
Yeah. And you mentioned to me as well, once before at the most about the concept of an autonomous retail outlet, and it sounded very sophisticated and something maybe like we’ve seen in the US for example, with, with Amazon store. So can you tell us a bit about that particular one?
Tomasz Makaruk

00:50:31
Yeah. I mean, it it’s a concept it’s, I would say proof of concept at the moment, but it works in several cities. It’s like a spore for loyalty programs participants only. So you can actually purchase if you are a member of the loyalty programs. So there is no human person, human beings there, it’s all based on artificial intelligence. So when you enter the store and you have your mobile application of the loyalty program, you can purchase whatever is there on the shelf and you just move out, right?
Tomasz Makaruk

00:51:12
You, you, you go away and your, your purchases are being tracked by the Camaros. And actually you pay by the app automatically.
Paula Thomas

00:51:23
Wonderful. I’ll be dying to talk to some of those type of retailers as well tomorrow. So if you know anyone, please send them my way. And it’s been, I suppose, a long time that say in Ireland, for example, there was the traditional version, let’s say where we have scan and pay, you know, but in a mom’s store. So I think the big difference you said is if there’s nobody in the store and obviously you have to identify yourself to get in. So there’s no, I suppose, risk of theft. It’s absolutely incredible to have the whole store completely autonomous and for loyalty program members only.
Tomasz Makaruk

00:51:57
Yeah. It’s like the next step of self-checkout, right? Because with all the self-checkout activities, you have to scan, the product will be on mobile or the cash register and then pay by yourself. But it’s, it’s a, it’s the next step, right? You don’t need to do actually anything that comrades which truck, what you take from the shelf. And then this cost is actually added to your, to your account or subtracted from your payment card.
Paula Thomas

00:52:27
Excellent. Excellent. I’ll be dying to try when actually I do remember reading an article about the Amazon go proposition, and I believe one of the senior people was mentioning, one of the feedback they had actually from customers was they almost felt like they were stealing because they were, they weren’t having to prove to somebody that they’d made a payment. So I think psychologically, it’s probably just a huge change as well for us as customers to get used to this idea that I am paying, but, you know, I don’t have to prove it to anyone. I think it’s brilliant. Wow. Wow. And then things like gamification tomorrow. So that’s something we like to talk about as well on the show.
Paula Thomas

00:53:09
Do, does that come up in the programs there in Poland?
Tomasz Makaruk

00:53:11
Say it again.
Paula Thomas

00:53:12
Gamification, do you find that?
Tomasz Makaruk

00:53:17
Yes. Yes, definitely. Yeah. I mean, gamification is first of all, the way to participants, that’s also the way to make your program alive. If, if I may say, so it’s something that basically would encourage your participants to be active in the purchases and identify themselves at the checkout and take parts of the program benefits. And one of the ways to achieve that would be either to organize a lottery, a sweepstake, a competition, or use gamification techniques, right?
Tomasz Makaruk

00:53:58
From, from computer games, different retailers approach it differently. We’ve got either mobile games or just either games for fun or games, which will give you loyalty points, or it’s a technique basically to draw attention to the program or acquire the younger part of the population, different objectives here. But they’ve definitely given suffocation is something which, which is used very often.
Paula Thomas

00:54:30
Wonderful. And I think it mentioned to me there was a particular example there in the insurance industry, which I think I’d only heard about in South Africa, but it gave him a vacation style program. Can you mention a bit about that one for us?
Tomasz Makaruk

00:54:45
Yeah. You mean the one where you actually being trucked your, your, your behavior is being tracked by the mobile app and as a result of this activity, you can receive discounts in your next insurance policy. Is that the one I’m in
Paula Thomas

00:55:07
That’s exactly the one.
Tomasz Makaruk

00:55:07
Yeah. So actually it’s very unique and it’s a very modern approach to loyalty, but at the same time, I personally would worry what else about my behavior? This mobile app would know what I do, right. So I, I’m very careful driving myself and I never, never talk over the phone when driving, unless I have the, their hands pre speakerphone. But I would have some, if you like worries about such an approach, I don’t believe this will be like a nationwide phenomenon as the next step it has been used in, has been used in, in the insurance industry.
Tomasz Makaruk

00:55:59
It’s definitely something unique and worth mentioning, but I don’t know. How about you? Would you agree on someone knowing where do you travel? How far do you drive and so on?
Paula Thomas

00:56:11
And I think I’m probably I’m okay with it as long as there’s a reason that I am being rewarded for my driving behavior at the most. So I think you’re absolutely right. And it’s probably a separate privacy concern that there’s extra data perhaps being tracked. But I remember for example, looking at some Google data and my entire, you know, location, and this was 10 years ago, was all available on a map that I didn’t realize was being tracked, tracked. Pardon me? And I really was. I found it very disconcerting. I have to say, and I presume that’s still happening.
Paula Thomas

00:56:51
So I probably do avoid opting into those kinds of things, but I feel like that there is a lot of opportunity to improve our driving, you know, so, you know, rapid accelerating and braking. And again, there’s probably, it’s easy to generalize, but certain demographics that perhaps drive riskier than others. So if there’s a way to reduce the risk and increase the safety, I think in principle, I like it, but I think it’s down to the brands to help me trust that that’s what they’re going to do with the data and reward me for being that safe driver.
Tomasz Makaruk

00:57:26
Yep. I see your point. I mean, as long as we speak about safety on the road, then definitely I subscribed to from this in our personnel data collection, because they will definitely collect a lot of, a lot of data about each participant. It’s a bit controversial to me.
Paula Thomas

00:57:46
I agree. I agree. Well, maybe a topic we’ll pick up another time to pause and so much to discuss. So listen, my last question then was just for anyone who is listening and as you know, our audiences is truly global. And if they’re interested in finding more about loyalty conferences and or what’s going on there in Poland, what would you recommend that they do?
Tomasz Makaruk

00:58:08
Okay. So the leading conference in Poland, I mean the leading layout of the program conference in Poland is called the layout, the planet, which at the time of this recording is going to be held in April, 2022 in Warsaw. This year, it’s held under the name loyalty in the era of digital-first. And it’s like a two-day event, which, brings together over 200 loyalty experts, practitioners, from across Poland. We are, if I may say so also very proud of the golf partner of this conference.
Tomasz Makaruk

00:58:49
Gold sponsor. One of our key account directors is a chairperson. I mean that the moderator of the, of the entire forum, of course, we also act as the, as the speakers. I used to do it myself for several years, but now I have given this opportunity to the younger generation. If, if I may say something
Paula Thomas

00:59:12
Super nice and you have a couple of awards as well there, I think don’t you.
Tomasz Makaruk

00:59:17
Yeah. Yeah. We have a very linked to those lines, the conferences, the organizers, or recently lounge the new industry competition called loyalty heroes. But in addition, there is also AFI awards, loyalty, Sammy, the golden arrow and so on.
Paula Thomas

00:59:35
Okay. So plenty to keep everybody busy. Tomas, I think that’s it from my side. Is there anything else that you wanted to mention before we wrap up?
Tomasz Makaruk

00:59:45
Right. I’d like to say thank you very much for this opportunity to present the layout of the market in Poland. It’s, it’s a privilege. And once again, thank you for letting us translate your selected podcast transcripts and promote that in Poland.
Paula Thomas

01:00:06
Wonderful tomorrow. Well, listen, it is absolutely my honor to be the content provider for you and to be able to be translated into Polish, I’ll make sure that we do link to the marketingbusinessblog.pl and in the show notes. So everybody can find you. Are you comfortable with people connecting with you as well? I’m also on LinkedIn, if they need more information.
Tomasz Makaruk

01:00:27
Sure. I am on LinkedIn and there’s my email at the blog page. So definitely yes.
Paula Thomas

01:00:34
Wonderful. Okay. Well with all that said, I’m going to wrap up and say a huge, thank you for all of your insights, expertise, and support to Tomasz Makaruk from in Poland. Thanks for Let’s Talk Loyalty.
Tomasz Makaruk

01:00:49
This show is sponsored by The Loyalty People, a global strategic consultancy with a laser focus on loyalty, CRM and customer engagement. The Loyalty People work with clients in lots of different ways, whether it’s the strategic design of your loyalty program or full service, including loyalty project execution. And they can also advise you on choosing the right technology and service partners on their website. The loyalty people also runs a free global community for loyalty practitioners, and they also publish their own loyalty expert insights.
Tomasz Makaruk

01:01:34
So for more information and to subscribe, check out theloyaltypeople.global.
Paula Thomas

01:01:50
Thank you so much for listening to this episode of Let’s Talk Loyalty. If you’d like us to send you the latest shows each week, simply sign up for the Let’s Talk Loyalty newsletter on LetsTalkLoyalty.com. We’ll send our best episodes straight to your inbox. And don’t forget that you can follow Let’s Talk Loyalty on any of your favorite podcast platforms. And of course we’d love for you to share your feedback and thanks again for supporting the show.