#165: 2022 Loyalty Trends, Gamification and Subscription with Epsilon's Vice President of Loyalty Strategy

PAULA: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.

PAULA: 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.

PAULA: This episode is brought to you by Epsilon and their award-winning People Cloud Loyalty Solution.

PAULA: Personalization should be integrated into the entire customer experience, including your loyalty program.

PAULA: With this in mind, Epsilon recently released a guide outlining six key components that will put you on the path to personalizing the entire loyalty experience.

PAULA: This guide challenges you to do some housekeeping and reconsider how you think about your current and future loyalty personalization efforts.

PAULA: So to download your copy of the report, visit epsilon.com forward slash Let’s Talk Loyalty.

PAULA: Hello and welcome to episode 165 of Let’s Talk Loyalty.

PAULA: A fascinating discussion about the key consumer behavior trends that have emerged in the last 18 months.

PAULA: Trends that are critical to driving customer loyalty now in 2021, and are even more important going forward into 2022.

PAULA: Brad Macdonald is Epsilon’s vice president of loyalty strategy, and he joins me today to share his insights on changing consumer priorities.

PAULA: So that we as brands can connect with our members more powerfully than ever before.

PAULA: We also discuss Brad’s top three emerging trends, and the key strategic opportunities that Epsilon sees to successfully drive customer loyalty in 2022.

PAULA: So I hope you enjoy my episode with Brad Macdonald from Epsilon.

PAULA: So Brad Macdonald, first and foremost, welcome to Let’s Talk Loyalty.

BRAD: Thank you.

BRAD: I’m excited to be here.

PAULA: Oh, it’s great to talk to you, Brad.

PAULA: Tell me now, as you know, we’re gonna get straight into our usual opening question about your favorite loyalty statistic.

PAULA: I know you have a fantastic career, both them on the client side and obviously now with Epsilon.

PAULA: But before we get into all of that, tell me what is your favorite loyalty statistic?

BRAD: Yeah, so my favorite loyalty statistic is a pretty fundamental one, which is the 80-20 rule, which is that about 80% of a brand’s revenue comes from about 20% of its customers.

BRAD: This is one that I’ve, you know, in my career have seen over and over again, and it always intrigues me.

PAULA: Wonderful.

PAULA: Well, you know, I find it super reassuring, Brad, because literally, obviously, the depth and breadth of your experience to confirm that’s true, because I think I was probably, I don’t know, in school or, you know, certainly, you know, very young in university, perhaps, learning those kinds of statistics.

PAULA: And it almost sounds too good to be true, but more and more people on this show have said, absolutely.

PAULA: So I’m thrilled to hear that you find it is true in practice as well.

BRAD: Yeah, you know, I’ve spent quite a bit of my career on the analytic side of things and have had a chance to dig into this step, you know, firsthand and really see that it’s not always exactly 80-20, but sometimes it’s 70-30, sometimes it’s 90-10, but it’s always there, right?

BRAD: And there’s always some segment of customers that’s way more valuable than the rest and is obviously worth paying attention to.

PAULA: Totally.

PAULA: And I guess, you know, it doesn’t really matter if it’s 80-20 or 70-30, I guess the principle of focusing on the most valuable customers is the key kind of message.

PAULA: And I’d love to actually ask you, Brad, then just with your kind of experience, is that the kind of things that companies still need to be reminded of, or is it something they kind of know instinctively?

BRAD: I think that even though we know this, it’s hard to sort of believe it and to take action against it.

BRAD: And when you think about this stat, what it really means is that some of your customers are worth 15 to 20 times more than the rest of your customers combined.

PAULA: Yeah.

BRAD: And it goes back to that basic principle of it’s cheaper to retain a customer than it is to acquire a new one.

BRAD: But often we find ourselves focusing on the 80% more than we do the 20%.

PAULA: Yeah.

BRAD: And so I think it’s something we need constant reminders about.

PAULA: Yeah.

PAULA: Good.

PAULA: No, I’m glad you said it that way, Brad, because I think that’s exactly what we can be guilty of.

PAULA: The 80% of people who are out there, perhaps quite vocal on social media, or again, there’s a huge volume of them, so we can’t neglect them.

PAULA: But I suppose it can be disproportionate if we don’t keep, I suppose, that loyalty mindset top of mind when we’re planning our strategies.

BRAD: And I wouldn’t suggest that we neglect the 80% by any means.

BRAD: I think it’s just a matter of what’s the appropriate treatment for those customers versus your top tier of customers.

PAULA: Yeah.

PAULA: Perfect.

PAULA: Perfect.

PAULA: So tell us then, Brad, what has been your kind of career to date in terms of loyalty?

PAULA: I’d love to hear all about it.

BRAD: Yeah.

BRAD: So I like to tell people I started my loyalty career as a flight attendant.

PAULA: Oh my God.

BRAD: Yeah.

BRAD: So I actually graduated my MBA and went to work for Northwest Airlines.

BRAD: And the first day I walked in, my boss sat me down and said, congratulations on your graduation.

BRAD: We’re super excited to have you here.

BRAD: You start flight attendant training tomorrow.

BRAD: And yeah, I was quite a shock.

BRAD: And so I was working for Northwest Airlines at the time, and they were having labor issues, and they were afraid that their flight attendant union was going to strike.

BRAD: And so that’s, I won’t get into that today, but long story short, I ended up going through flight attendant training and actually working a couple of flights and servicing a first class cabin without any sort of service training at all.

BRAD: It kind of opened my eyes to this idea that how important the customer experience is and how important it is to focus on those high value customers.

BRAD: So it’s kind of a funny way to start, but it was a good eye opening experience that really made me want to learn more about, how do you create that kind of customer experience that creates that loyalty to the brand?

BRAD: And so at Northwest Airlines, I went on to take on a product development role.

BRAD: And during that time, we were acquired by Delta Airlines.

BRAD: And this was a great time to really be exposed to what customers go through during the travel experience.

BRAD: And, you know, we were tasked with learning about what the customer experience is, what it should be, and really putting ourselves in the customer’s shoes.

BRAD: And that was really where I developed my love for loyalty.

BRAD: You know, after Delta Airlines, I went to Carlson Hotels.

BRAD: They’ve got brands like Radisson, Country Inn, Sweets, Park Inn.

BRAD: And, you know, I had a formal loyalty role there helping to redesign their existing program.

BRAD: I then went to Regis Hair Salons, where we built out a brand new loyalty program.

PAULA: Cool.

BRAD: Yeah.

BRAD: And then, you know, during that whole time, I was actually an Epsilon client.

BRAD: And so I got to work with the Epsilon teams, the Epsilon loyalty strategists, got to work with the Epsilon technology.

BRAD: And so at that point, when I was looking for a new, a new, I don’t know, a change in position, I called Epsilon and said, you know, I’ve brought you a lot of business over the years.

BRAD: And luckily, they said, we’ll find you something.

BRAD: And so I made a transition from the client side over to the consulting side and have been there for about seven years.

PAULA: Oh, my goodness.

PAULA: Yeah, that is a great story, Brad and definitely the first flight attendant on my show.

PAULA: So talk about walking the walk and talking the talk.

PAULA: That’s a great start.

PAULA: And little known trivia fact, I suppose I started in the beauty industry in my own career.

PAULA: And so again, I know that whole, you know, customer facing role.

PAULA: So that’s kind of amazing that you built for a hair salon chain as well.

PAULA: And also, I just want to mention, you’re the second Epsilon guy on the show who also pitched themselves to get a job in the company.

PAULA: So I’m sure, you know, Joseph Taylor also did the same, and he was a guest on Let’s Talk Loyalty as well.

PAULA: And he again loved working with the guys there.

PAULA: So when he wanted to move from client side over to the tech side, he did like you, he called Epsilon.

BRAD: Yeah, I mean, I admired the Epsilon team that we worked with.

BRAD: They had such a depth and breadth of experience and knowledge.

BRAD: And it just was something that I had looked at and wanted to be a part of.

BRAD: So luckily they had something for me.

PAULA: That’s amazing.

PAULA: So what kind of work are you doing there now, Brad?

BRAD: So for the past several years, I’ve been leading our loyalty consulting team.

BRAD: And so we spend every day helping clients to design and redesign loyalty programs and to come up with that loyalty strategy that they need.

BRAD: More recently, I’ve transitioned into more of a product role.

BRAD: So I’ve tried to take some of that frontline client-facing experience and to build it more closely into our products, into our technology.

BRAD: And so I’ve really been focused on that, which has been really exciting.

BRAD: You know, as we’ve worked with clients directly and have built programs over the years, we’ve learned a lot and we believe that there are ways that we can build that more into the way that we do business at Epsilon.

BRAD: And so it’s been a great experience to take all those learnings and to use them in more of a product development role now.

PAULA: Wow, super challenging, but I think I’ve always felt that ideally you want to be the customer before you want to be the supplier.

PAULA: So I think that’s just a brilliant perspective, because then you can kind of go, that’s not going to work, even if we build it or, you know, what about we build this?

PAULA: So I think it must be quite an exciting thing to be doing.

BRAD: Yeah, very exciting.

BRAD: And, you know, a lot of those things that we learn as loyalty practitioners, you know, some of those principles around what makes loyalty successful, what do we need to arm ourselves to defend the loyalty program?

BRAD: How do we prove its value?

BRAD: So just some of those things that a loyalty practitioner goes through on a day-to-day basis.

BRAD: We want to take those things and make their lives easier any way we can through technology, services, whatever we can provide to our clients.

PAULA: And as you mentioned day-to-day, Brad, how are things going?

PAULA: Would you say in terms of the loyalty directors that you’re dealing with, as you said, I know you have a huge client base, but in the context of COVID, I think we all know the world’s turned upside down professionally and obviously personally for a lot of people as well.

PAULA: Well, what would you say the impact has been of COVID on the loyalty industry?

BRAD: Yeah, I know that’s been talked about a lot.

BRAD: And I believe that some of the things that COVID has sort of brought to the surface are things that will be around for a while.

BRAD: So even though COVID hopefully is a temporary situation for us, I think it’s made some changes and has exposed some things within the loyalty world that we all need to pay attention to.

BRAD: Probably the main thing is that every good loyalty program, every good loyalty experience has two sides.

BRAD: It has a rational side and an emotional side to it.

BRAD: And the rational side is really kind of a transactional experience with the customer.

BRAD: And so during COVID, that transactional experience or that transactional side of loyalty kind of dried up for a lot of brands.

BRAD: And customers were interacting with the brand less frequently, purchasing less frequently.

BRAD: And so what was left was more of the emotional side of loyalty.

BRAD: And so brands that we work with and brands that I’ve been watching that have been more successful during COVID are the ones that had already established that emotional connection with the customer.

BRAD: Or were able to pivot to more of an emotional relationship.

BRAD: And as some examples of that are within the travel and hospitality industry, we saw a lot of the airlines and a lot of the hotel brands that really showed a level of compassion and emotional connection to the customers by extending point expiration and extending elite status to their highest value customers.

BRAD: And so even though those customers weren’t interacting or purchasing as frequently as they did before, they really leaned on the emotional side of the relationship.

BRAD: And I think that’s something that’s here to stay.

BRAD: I think that’s something that should be here to stay.

BRAD: And I think COVID really exposed the need to have that emotional relationship beyond just the transactional.

PAULA: Yeah, it’s funny you mentioned that, Brad, because the last loyalty conference I attended before COVID in the UK in 2019 was exactly just identifying this awareness of the need for emotional loyalty.

PAULA: And I think you’re absolutely right.

PAULA: I think COVID has only accentuated, magnified and dare I even say multiplied the need for that.

PAULA: And I do think you’re right.

PAULA: There’s good examples with travel and hospitality in how they managed it so visibly.

PAULA: And I think in that industry or those industries, I suppose they realize how high the stakes are.

PAULA: And again, back to the 80-20 rule, how valuable the customers are.

PAULA: So I love those kind of examples in travel and hospitality.

PAULA: But also, I know you do work with the likes of, let’s say, Dunkin, for example.

PAULA: And forgive me, I’ll probably be tempted to say Dunkin Donuts at some point.

PAULA: So I know they rebranded a while ago.

PAULA: But what I love is, I think they did a lot as well, didn’t they, in terms of, you know, essentially that whole pivot to, you know, really focusing on whether it’s the contactless piece or the frictionless piece.

PAULA: And loyalty has been their strategy.

PAULA: Like I’ve been writing about Dunkin probably for about three years, but they’ve done extraordinary stuff to pivot in the last year or so.

BRAD: Yeah, they have.

BRAD: And you’re right.

BRAD: This extends beyond just travel and hospitality.

BRAD: A lot of our retail clients have done similar things.

BRAD: Dunkin is a good example of that.

BRAD: You know, with Dunkin, they were forced to change the way they do business.

BRAD: Same as a lot of other, you know, restaurants and retailers.

BRAD: And, you know, they were forced to create kind of this contactless experience with the customer.

BRAD: And, you know, it’s sort of a double edged sword because, you know, for a lot of people, you know, they want more automation and they want more opportunities or alternatives to order.

BRAD: They want different ways to pick up their orders, you know.

BRAD: So in a lot of ways, these were good things and good changes that were made.

BRAD: You know, the danger in that is that you could create an experience that pushes the customer away.

BRAD: So it keeps them even more at arm’s length.

PAULA: Sure.

BRAD: And so, you know, as they’re not coming into the store to see their favorite, you know, their favorite store associate or, you know, they’re starting to that human relationship.

BRAD: That’s a big part of loyalty is at risk.

BRAD: And I believe Dunkin did some smart things, you know, as they developed some of their their apps for easier ordering and online, online ordering and curbside pickup.

BRAD: They didn’t just create these things and then hand them over to the customer.

BRAD: I think they did a really good job of of humanizing it as well.

BRAD: So they created videos and articles to show how easy it was to to experience this simple and safe method of ordering.

BRAD: And they really did some things like that, that that added more of a human element to the automation, if that makes sense.

BRAD: And, you know, we saw that with a lot of other brands as well that, you know, so instead of just automating the customer experience, they did some things to also maintain that brand personality and maintain that emotional experience at the same time.

PAULA: Yeah.

PAULA: I think that’s a good point, Brad, because we’ve all been talking about digital transformation for a long time and obviously recognizing that COVID again just accelerated all of that.

PAULA: But yes, the downside of digital transformation is that loss of contact.

PAULA: And yeah, just dehumanizing it a little bit.

PAULA: So so amazing to hear that Duncan managed to, I suppose, find the fine line to balance the two.

BRAD: Yeah, yeah, I believe that they did.

BRAD: And, you know, I think that that’s something that’s a fundamental of loyalty.

BRAD: Like I said earlier, that goes beyond just just COVID.

BRAD: Yeah, is that, you know, as we develop these customer experiences, we have to keep in mind the emotional side of things and the human side of things.

BRAD: You know, the brands that we have seen that have been the most successful are the ones that have just this culture of loyalty and this this mindset that they want to maintain that relationship and a balanced relationship.

BRAD: Yeah.

BRAD: And not just focus on the transactional side of things.

PAULA: Yeah.

PAULA: Yeah, you’re absolutely right.

PAULA: That mindset versus the mechanics.

PAULA: So, yeah, I know you guys talk about loyalty being an outcome rather than just a program.

PAULA: So it is something I think has to go through the whole organization.

PAULA: And even in simple terms, again, when I was writing, I remember about Dunkin.

PAULA: I remember remarking on the simplicity of the fact that, you know, the Didi Perks brand is always front and center on their website.

PAULA: So there is a feeling that it’s the dominant way to make your life easy, I guess, in whatever way that as a consumer, I want to connect with the brand.

PAULA: And I think sometimes it’s that simple visibility and reminder of how easy it makes your life.

PAULA: That, I think, is a principle as well, that lots of brands sometimes just maybe overlook or it gets lost as they, you know, start to to build out their strategies.

BRAD: Yeah, you’re right.

BRAD: And, you know, I believe that, like I said, just a minute ago, this is part of what makes brands successful with loyalty, is that they don’t focus on loyalty.

BRAD: They focus on loyalty as an outcome, but not as loyalty as a program or loyalty as a discipline or loyalty as a department.

BRAD: You know, they really focus on, like, just how do we create a great customer experience that makes people want to come back.

BRAD: And a loyalty program may or may not be a part of that.

PAULA: You’re right.

PAULA: Controversial.

BRAD: It is, but I believe it’s true.

BRAD: And that’s what we really try to push our customers towards.

BRAD: We try to push our clients towards this idea of we often call it big loyalty, but it’s that loyalty is gained through the entire customer experience and not just through a program.

PAULA: Sure.

PAULA: Yeah.

PAULA: Yeah.

PAULA: Yeah.

PAULA: No, that makes sense.

PAULA: And I do think that that’s a huge big thing that has been much more openly discussed, I would say.

PAULA: And again, just since the pandemic came along, I did an interview and it will actually be released just next week with them, with Fred Reichelt, who’s the creator of Net Promoters Score.

PAULA: I’m sure all of your clients are using his work and he’s written a new book.

PAULA: And what really struck me actually, Brad, was he uses the word love and loving your customers, which again, is all about human connection, exactly as you’re saying.

PAULA: And that came through.

PAULA: And I found it just really refreshing to hear that the business world is starting to go.

PAULA: Yet we’re human beings, first and foremost.

PAULA: I might just want, yes, a quick cup of coffee from Dunkin, but actually I want it in a way that really feels nice.

PAULA: And again, I think maybe reconnecting, certainly, as we get back into the retail environment is something we’ll see more and more of, particularly maybe coming into 2022.

BRAD: Yeah, I love that word love, right?

BRAD: I think that’s a good way to think about it.

BRAD: We often use the word empathy when we think about that customer experience and what we want it to look like.

BRAD: So really putting yourself in the customer’s shoes and trying to understand what do they need and what are they looking for and on an emotional level, what do they want?

BRAD: And then if you start with that mindset, I believe you end up with a much better experience and program than if you start with the mindset of how do we increase transactions or how do we increase revenue through loyalty.

BRAD: I think that if you focus on really that empathy and that love and really creating a strong relationship with a customer, then you will naturally get the increased transactions and the increased revenue.

PAULA: Oh, brilliant.

PAULA: I’m happy we can use the word love in business conversations, Brad.

PAULA: I don’t think I ever saw that coming.

PAULA: So I suppose we’re in December now as we released the show.

PAULA: And I think as we’ve definitely agreed, there’s going to be more and more focus on that, importance of empathy, emotional loyalty and connecting with our customers.

PAULA: But I love to get a sense again, just of what other trends do you see coming now?

PAULA: We’re all sitting down to finalize our budgets for 2022 and obviously all the plans and campaigns.

PAULA: But what else do you think that people listening to this show should be thinking about in terms of trends for loyalty next year?

BRAD: Yeah, I mean, I love the conversation that we’ve had around the empathy and the human connections.

BRAD: I do believe that that’s a trend that will continue through 2022 and beyond.

BRAD: I think that a lot of brands are looking for ways to reconnect with their customers and to create a deeper relationship.

BRAD: I think that over the last couple of years, we’ve seen the rise of subscription programs, which is interesting, because it’s almost like customers are raising their hands saying, hey, I like you as a brand, I would really love to be even more deeply involved with you.

BRAD: And so I think that there’s this interesting transition that’s happening, where we’re moving away from the traditional loyalty experience and we’re moving into this world where we can create an even deeper relationship with customers through this empathy, through this emotional connection, but also through allowing customers to engage with us even more deeply through things like a paid program, subscription programs, and really giving them those opportunities to raise their hand and say, I want to be more involved with you.

PAULA: Yeah, I’m a huge fan of that, Brad.

PAULA: You’re definitely hearing more interest in subscription programs, are you?

BRAD: There’s lots of stats out there on subscription programs, and enough of those stats tell me that it’s not just a trend, but that it’s a shift that we’re seeing that’s here to stay.

BRAD: A couple of years ago, I would have said that that might work for some brands, but it’s not for every brand.

BRAD: I’m becoming more and more convinced that it’s something that every brand has some sort of opportunity to take advantage of.

PAULA: Brilliant.

PAULA: Yeah.

BRAD: Yeah.

BRAD: And every one of our clients has asked for help with subscription programs.

BRAD: And we’re really trying to help them figure out, what set of customers does that make sense for?

BRAD: What kinds of things should we provide to them through a subscription program?

BRAD: And how do we make it work financially?

BRAD: Because we’ve had lots of clients that have great ideas around providing subscription to their best customers.

PAULA: Yeah.

BRAD: But when you do the math, it doesn’t always work.

PAULA: Of course.

BRAD: And so we’re really trying to help our clients understand where does it make sense and how does it make sense.

BRAD: But let’s find a way to really engage with your top tier of customers in some way, whether it’s through a subscription or a paid program or an elevated set of benefits.

BRAD: There’s an opportunity there somewhere.

PAULA: Yeah.

PAULA: You’re absolutely right.

PAULA: And yeah, I think the important point that you’ve said absolutely is it’s not the perfect solution for everyone.

PAULA: And, you know, unless the business case does make sense.

PAULA: And there is, you know, still, I think, you know, a knowledge gap, as you said, trying to work through and support clients to figure out exactly how to build it in a way that’s going to drive incremental revenue.

PAULA: And again, I suppose the overall experience.

PAULA: I was really fascinated by, I suppose, the, you know, just increasing awareness that it’s to me, I think, again, probably COVID related in some ways, because what it does give the consumer is, you know, that level of certainty that I know, you know, I can get, for example, unlimited coffee or whatever the particular product is.

PAULA: So, yeah, I think as loyalty strategists, we’re probably getting more interested in this human side of just exactly what is the deep rooted need in the customer’s mind that they might not even be aware of when they raise their hand to connect with us more.

BRAD: Yeah, I think you make a really good point that, you know, what’s sort of the psychology behind that customer who wants a paid program or a subscription?

BRAD: You know, obviously they like the brand enough that they’re willing to, you know, pay in advance to continue to receive services from the brand.

PAULA: Yeah.

BRAD: So it’s such an interesting opportunity.

BRAD: And from a loyalty perspective, I’d love to learn more about, you know, what drives customers to make that decision.

BRAD: And at what point do they get to that point where they say, I’m willing to put money forward in order to get your services on going.

BRAD: That’s the ultimate state of loyalty right there.

PAULA: That’s exactly.

PAULA: I’ve used the word extreme loyalty and ultimate loyalty, Brad, because again, you know, people have, you know, given us their data in the past.

PAULA: They’ve given us permission to market to them.

PAULA: But to give their credit card details and permission to bill them, as you said, in advance on a monthly recurring basis is a gesture of trust that really can’t be underestimated.

PAULA: I think it’s amazing.

BRAD: Yeah, yeah, it is.

BRAD: I would love to learn more about it.

PAULA: Great.

BRAD: You know, I’ve often thought that we have loyalty a little bit backwards where, you know, for a lot of brands, they expect the customer to do so much before we’re willing to give them anything in return.

BRAD: You know, you have to be a loyal customer to us and you have to visit us so many times before you earn a reward and then we’ll give it back to you.

BRAD: And it’s sort of backwards.

BRAD: Totally, where I think a lot of brands need to shift their focus towards, you know, how can we invest in the customer and how can we show them that we’ll be loyal to them so that we’ll get their loyalty in return?

PAULA: Yeah.

BRAD: And so the dynamics of that with like a paid program or subscription program are so interesting that, you know, it’s kind of like how can we provide something that is so valuable or an opportunity to establish this relationship in a two-way manner that we haven’t had before?

BRAD: And so it’s just there’s something there that I’d love to learn more about.

BRAD: And, you know, we need to establish within the loyalty community as a way to, you know, as a new way for customers to interact with brands.

BRAD: And I think that loyalty and subscription is kind of what that’s evolving towards.

PAULA: Yeah, I have a feeling we might be having a lot more conversations about this, Brad, because my brain is in overdrive here, but I won’t go too much further into it now.

PAULA: But I think you’re right, there’s a knowledge gap and there’s a really powerful model there.

PAULA: So we need to get really underneath exactly what’s driving it so we can get those kind of outcomes for our clients.

PAULA: Exciting for sure.

PAULA: Another one I wanted to pick your brains on was this whole concept of, I suppose, charity and I suppose cause related marketing as it relates to loyalty.

PAULA: Because I don’t know about you, but certainly what I hear a lot is, you know, there’s lots of research being done around propositions that are fundamentally based on a lovely, I suppose, connection and charity idea.

PAULA: What’s your view on that as an idea going into 2022?

BRAD: I’ve thought about this quite a bit because we have had clients ask us for help in developing features of their programs that are cause related.

BRAD: And so we’ve been doing a lot of work with clients over the past year or two.

BRAD: And I think it’s a growing trend that that brands want to be doing this and that customers are asking for it.

BRAD: But I’m a little bit conflicted because there’s a disconnect from what I’ve seen on the loyalty side, where all the research we’ve ever done says that customers want it, brands want to provide it.

BRAD: But when you put it into practice, it’s something that doesn’t often get taken advantage of.

BRAD: And I think that there’s an opportunity that we have to do things differently.

BRAD: I do think that there is a shift in customer trends that they are more seriously looking for opportunities to support brands that reflect their values.

BRAD: And so brands that share similar values and that support causes that the customer also supports, I think there’s a trend moving towards that.

BRAD: I also think that we haven’t been very creative as loyalty professionals in providing a way to make that connection in the past.

BRAD: So, you know, a lot of times in the past, when we talk about supporting causes, it’s been, you know, well, let’s just make, let’s create an option for customers to donate their points towards charity.

BRAD: And that’s where I haven’t seen that work really well in the past.

BRAD: It tends to work well when we have a crisis.

BRAD: So, you know, during Katrina and some other natural disasters, we see a huge influx and customers wanting to donate points or miles to help out.

BRAD: But in more of a steady state, we don’t see a great use of that.

BRAD: But I do think that there are some more creative ways that we can do it, that allow the customer to support the cause but also benefit from the brand as well.

BRAD: One example of that is, you know, we worked with Carters over the past year, helping them redesign their program.

BRAD: And instead of just allowing customers to donate points, what they did, which was interesting, is they set up a program for customers to recycle their used kids’ clothing.

BRAD: Within the Carters stores, and as they do that, they can earn points for it.

BRAD: And so it moves beyond, you know, this idea of just donating points.

BRAD: It moves towards this idea that, you know, I, as a customer, have these old kids’ clothes and I need to get rid of them in some way.

BRAD: I love that for them to go towards a good cause.

BRAD: And Carters is helping me do that.

BRAD: And on top of that, I’m being incentivized to do it through the loyalty program.

PAULA: Yeah.

BRAD: And so, you know, I think there’s some creative things like that that we can do to more effectively support causes and build that more into the loyalty experience.

BRAD: So I do think it’s a growing trend and I think it’s something that we’ll see a lot more of in the next couple of years.

PAULA: Yeah.

PAULA: No, I’m glad to hear that, Brad, as well, because again, I’ve seen all of the research and again, I think as human beings, we want to see ourselves as being generous, as being charitable and as, you know, wanting to donate those points maybe on a regular basis.

PAULA: But then when it comes to whether it’s redeeming the flight or whatever it is, and I need every point that I’ve got, I think the reality, as you said, is it doesn’t always happen unless there’s something particularly emotive.

PAULA: And I was looking at some of the stats.

PAULA: In fact, I know you’ve got huge clients.

PAULA: So, for example, I think Walgreens has 190 million members.

PAULA: So you’ve got the scale to see what actually happens in practice.

PAULA: But I think you’re absolutely right.

PAULA: It needs creative solutions.

PAULA: So the Carters one is a lovely idea.

BRAD: Yeah.

BRAD: And I think it’s such a good idea because, like I said, loyalty helps facilitate that opportunity.

BRAD: We’re not just paying customers to donate their points, or we’re not just taking their points and giving them to another organization.

BRAD: But it’s really creating that opportunity as part of the overall loyalty experience.

BRAD: And I think there are some more creative things we can do like that.

BRAD: We have other clients.

BRAD: I can’t name them right now, but they’re looking to do similar things and we’re working hard to help them figure out how to do that.

BRAD: There’s one particular organization that wants charity to be a pillar of what their loyalty program is moving forward.

BRAD: But they’re going to do it through community outreach and they want to do it through education.

BRAD: And some really cool kind of creative things that move us beyond this traditional, just donate points.

BRAD: It really creates it as an integral pillar of the program.

BRAD: So I’m excited to see that one come to life and others like that.

BRAD: Like I said, we’ve got lots of customers asking for it and I think it is a trend that’s moving forward.

PAULA: Okay, yeah.

PAULA: And I think you’re right.

PAULA: I think what customers are saying is, don’t just tick the box in terms of the check once a year or the checkbox to donate points.

PAULA: I think they want to see brands in action.

PAULA: So I think that Carter’s example is brilliant at first of all, you know, sorting the pain point for the members.

PAULA: You said where, you know, the clothes have to be gotten rid of somehow.

PAULA: But to know that it’s going into a worthwhile, whether it’s a recycling or regeneration project.

PAULA: And as you said, there’s something in it for them.

PAULA: I think that’s a lovely way of closing the loop.

BRAD: Yeah, agreed.

BRAD: And I’d love to see more things like that from other programs going forward.

PAULA: Yeah, yeah, for sure.

PAULA: So any other trends then, Brad, that we need to think about?

PAULA: As I said, we’ll be talking about Christmas before we know it.

PAULA: And then 2022, I’m sure will land very quickly on us.

PAULA: So what else do you think for the loyalty managers and directors listening could be considering in terms of creative ideas or concepts?

BRAD: Yeah, I guess the last one that I would highlight is gamification.

BRAD: You know, this is something that we’ve been talking about for a few years now, and everybody wants to do it.

BRAD: I think everybody sees the benefit in it, but I think we’re just scratching the surface with it.

BRAD: And, you know, I think to start off, I should maybe clarify what we mean by gamification, because a lot of people, I think, in the past have viewed gamification as, you know, well, let’s take a loyalty offer and let’s add a spin the wheel face to it.

BRAD: And, you know, that is a form of gamification, but, you know, when I talk about gamification and when we at Epsilon talk about the opportunity with it, you know, we’re really talking about using some of those game mechanics to change the way that we interact with the customer.

BRAD: So, you know, within gaming, it’s all about this engagement loop.

BRAD: And, you know, I think that that’s the same mentality that we can take from a loyalty perspective.

BRAD: And the end result should really be behavior change.

BRAD: And so, you know, I think that there’s a big opportunity to focus on this from a loyalty perspective.

BRAD: You know, we see a lot of we see a lot of brands doing this very successfully.

BRAD: One in particular that I love, I’ve been using Duolingo for the past few weeks.

PAULA: Oh, cool.

BRAD: And I’m trying to learn French because we have a French exchange student.

PAULA: Oh, well done, you.

BRAD: So anyway, I’m trying to learn French.

BRAD: And, you know, the Duolingo app does a great job of making you want to interact with it.

BRAD: Every free chance you get, you know, so whenever you have a free five or 10 minutes, you just have this itch to pick up the app and learn more French.

PAULA: Oh, my God.

BRAD: And they’ve done it by making it very interactive.

BRAD: They’ve done it by, you know, they’ve got leaderboards in there where you’re competing against other people who are learning French.

BRAD: OK.

BRAD: You know, they’ve got these streaks where it’s like, you know, if you if you do your lessons every day, then you you they tell you that, hey, you’re on a six day streak.

BRAD: See if you can get seven days cool.

BRAD: And, you know, they’ve they’ve got this concept of earning, you know, rewards within the program and different status levels.

BRAD: So they’ve they’ve taken all these game mechanics and they’ve combined them in a really great way to make me want to interact with the app.

BRAD: And, you know, I think that’s a great example of where the potential is with loyalty.

BRAD: We’ve seen this with a couple of different programs.

BRAD: You know, one client of ours is Dell.

BRAD: I think Dell has done a great job with their Alienware program in building in a lot of these game mechanics and really engaging with with those customers in a way beyond the transaction.

BRAD: And I think there’s a huge opportunity there, especially with with brands that may not have as frequent transactions with their customers as others.

BRAD: You know, finding that way to engage with them on a regular basis and create that top of mind awareness that they need between transactions to keep those customers loyal.

PAULA: Yeah, yeah.

BRAD: So anyway, I think gamification is something that even though we’ve been talking about it for a couple of years, I think we’re just starting to see what the potential is of it within loyalty.

PAULA: Yeah, I definitely agree, Brad.

PAULA: And I did have Mitch Kennedy, I’m sure you know, on the show last year.

PAULA: And what I loved, actually, what he did explain was, you know, the whole gamification mechanic really even enabled them to, you know, get people to, you know, read terms and conditions, for example, which I was blown away because, you know, for me, certainly the sales cycle of buying a Dell computer is not something I’m going to do, you know, on a regular basis.

PAULA: And so you’re absolutely right.

PAULA: The opportunities to engage are quite limited, but certainly some extraordinary results coming through and great to hear that they’re using it within the gaming community as well, even more by the sound of it.

BRAD: Yeah, yeah, Dell has been sort of the poster child for us as we’ve looked at things that they’ve done creatively and things that we’ve helped them do.

BRAD: You know, we really love to see other brands do something similar.

BRAD: And, you know, it’s an interesting, an interesting, I wouldn’t even call it a trend in gamification because it’s becoming mainstream.

PAULA: Sure.

BRAD: To the point where, you know, we all interact with our devices.

BRAD: We all interact with, you know, online entertainment and media every day.

BRAD: And our kids are being raised with this.

BRAD: And so it’s not just something that’s a passing trend.

BRAD: I believe that this is the way that, you know, like Gen Z’s and beyond are being raised with.

BRAD: And, you know, so I believe that they’re being raised on, you know, even in education and at school and everything now is sort of a gamified experience.

PAULA: Sure.

BRAD: And so I believe that, you know, brands need to keep up with that and can learn from a lot of, you know, other apps, other experiences, you know, how to use those game mechanics to really shape customer loyalty.

PAULA: Yes.

BRAD: So, you know, it’s something that I’m excited about.

BRAD: I think it’s there’s something there for every brand.

BRAD: So I think every brand could benefit from it one way or another.

PAULA: And you’ve reminded me I did a show as well.

PAULA: I think it was earlier this year, Brad, and there was just a really nice point made about making gamification culturally relevant.

PAULA: And again, I know you guys have offices, I think, in 40 different cities as we speak.

PAULA: So what they talked about was they were using this particular brand was using cricket, for example, as a way to educate and inspire people maybe in Asia and then using soccer or football in other countries where those kind of passions and those games were things that people really wanted to connect with.

PAULA: So I thought it was genius.

PAULA: So I think you’re absolutely right, we’re probably only getting into gamification and understanding its full power.

BRAD: Yeah, agreed.

BRAD: I don’t know anything about cricket.

BRAD: And so your capital is a good one.

PAULA: Exactly.

PAULA: I was the same.

PAULA: I’m like, well, that would not work for me.

PAULA: And I don’t think in Ireland we’re particularly good on our cricket.

PAULA: But yeah, I think the point about relevance is something we all know as loyalty professionals.

PAULA: But I thought that was a good overlap between the gamification and the culture piece.

BRAD: Yeah, absolutely.

BRAD: And to get started in gamification, I think that there’s a lot of creativity required for it.

BRAD: But also a lot of looking to others who have done well in this space.

BRAD: And that’s really the approach that we take when we help clients with the gamification is that there are some kind of tried and true principles of gamification.

BRAD: Loyalty has always had tier levels built into it, but building more on those tiers, adding intrinsic benefits, leaderboards.

BRAD: There are some kind of tried and true things that we recommend to our clients, but it really requires creativity on top of that.

BRAD: Like you said, to make it culturally relevant, to make it relevant to the brand, to bring out the brand personality, to really create that behavior change that we’re looking for.

BRAD: And so, while there are some kind of tried and true principles of gamification, it really does require that level of creativity, and that’s part of the fun of it too.

BRAD: It’s one of the things that we get excited about as loyalty consultants, because it’s that opportunity to do those fun brainstorming sessions and really get creative and think outside the box.

BRAD: And so, it’s one of my personal favorite things to work on.

PAULA: Oh, for sure.

PAULA: And I have to say, Brad, you’ve inspired me.

PAULA: Now, you say you have an exchange student who speaks French.

PAULA: I have a husband who is actually a native French speaker, and I still haven’t quite gotten round to upping my level of French.

PAULA: So I have work to do certainly by the sounds of it, huh?

BRAD: Yeah, well, it’s I would recommend Duolingo.

BRAD: I’ve learned a lot in the last two weeks.

PAULA: OK, well, thank you.

PAULA: You’re going to keep me accountable now that I said it on air.

PAULA: So that’s fantastic.

PAULA: And is there anything else, Brad?

PAULA: I think, you know, I’ve certainly learned to load.

PAULA: And, you know, I think we’ve talked about already, certainly the huge impact of COVID, which, you know, we all know it very well, but I think it bears repeating, you know, the dramatic changes in consumer behavior.

PAULA: And certainly as we get into 2022, everything you’ve talked about, whether it’s the importance of human connection or the, you know, evolving field of subscription, all of the ideas around emotional or cause-related loyalty and gamification as well.

PAULA: I mean, there’s just so much to be thinking about.

BRAD: Yeah, there really are.

BRAD: And I know that we’ve talked about a wide variety of topics, but, you know, they really do come back to, I guess, the first thing that we talked about, which is this idea of, you know, how do you create this culture of loyalty, where loyalty isn’t just a single program, loyalty isn’t just a single initiative, but it’s really like every opportunity that you have to interact with a customer can be a loyalty-building experience.

PAULA: Yeah.

BRAD: And, you know, having that customer intimacy and that empathy helps you create those experiences and helps you put yourself in the customer’s shoes and think about what would make me more loyal at every interaction I have with the brand beyond just earning points for a transaction.

BRAD: Yeah.

BRAD: Even though that’s an important part of it, I think that the world of loyalty is much larger than we often think about.

BRAD: And the brands that are most successful are those ones that have that wider view and that really have a culture of loyalty versus a loyalty department.

PAULA: Well, on that note, Brad, I think it’s the perfect place to finish up.

PAULA: I’m guessing there’s lots of people listening to this now who would love to pick your brain.

PAULA: So are you comfortable sharing how they can find you, maybe on LinkedIn, for example?

BRAD: Yeah, absolutely.

BRAD: So, you know, my email address is bradley.mcdonald at epsilon.com.

BRAD: You can reach out to me directly or I’m easy to find on LinkedIn as well, if anybody would like to find me there.

BRAD: And happy to connect with anybody who wants to chat about it.

BRAD: I love to geek out on loyalty.

BRAD: So please reach out.

PAULA: Wonderful.

PAULA: And I just have to ask as a closing question.

PAULA: Macdonald is certainly a name that’s very popular in my home country of Ireland.

PAULA: I believe you have a bit of a Celtic background.

PAULA: You might share that with us just as a closing point.

BRAD: Yeah, my family originates from the Isle of Skye in Scotland, actually.

BRAD: And, you know, so have been there a few times and have visited the family, the family castle and kind of where everything came from.

BRAD: And it’s such a beautiful place.

BRAD: I’m itching to go back as soon as I can.

PAULA: OK, brilliant, brilliant.

PAULA: Well, for clarity then for people listening, it’s Macdonald with an M-A-C, Donald.

PAULA: So I’m sure plenty of people can obviously reach out to me or find you quite easily then on LinkedIn.

PAULA: So that’s it from my side, Brad.

PAULA: Is there anything else you wanted to mention before we wrap up?

BRAD: I think that’s it.

BRAD: I appreciate the time that we’ve had to talk and it’s been very enjoyable.

PAULA: Wonderful.

PAULA: OK, well, listen with that, Brad Macdonald, Vice President of Loyalty Consulting Strategy at Epsilon.

PAULA: Thank you so much from Let’s Talk Loyalty.

PAULA: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.

PAULA: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.

PAULA: For more information, check out thewisemarketeer.com and loyaltyacademy.org.

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