This episode features some fascinating research that was conducted with US consumers in early 2022, to understand how consumers motivators have changed as we slowly emerge from the global pandemic.
Listen to learn why we buy, why we advocate for brands, and of course why we stay – with a particular focus on some critical differences between the expectations of emotionally-connected customers, compared with NON emotionally connected customers.
Joining me to share these learnings is Martha Cohen, Vice President of Client Services at Kobie Marketing.
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.
Let’s Talk Loyalty is inviting you to come and join us to talk all about loyalty. We want to know what are the biggest challenges you face to capture the loyalty of your customers, ss we approach 2023. In partnership with Collinson, Let’s Talk Loyalty is planning a live session on LinkedIn. To talk about creating customer loyalty in the year ahead. I’m inviting all of you listening to share with me the burning questions and key topics you’d like to hear us cover, in a live discussion. Simply drop me an email. It’s firstname.lastname@example.org. Then we’ll pick the most popular ideas and questions and talk them through on our Let’s Talk Loyalty Live event, This November powered by Collinson. My email address again is email@example.com. Please do send over your questions and ideas and then join us as we talk loyalty, live together for the first time.
Hello and welcome to Let’s Talk Loyalty featuring a timely and quite fascinating piece of research that was conducted with consumers in the United States in early 2022, by our friends in Kobie marketing. It’s the first report from a longitudinal study to help us as loyalty marketers to understand how consumer motivators have changed. In particular as we slowly emerge from the global pandemic. The research focuses on a few key areas, such as why we buy, why we advocate for brands, and of course why we stay. And what I really like is that it has a particular focus on the critical differences between expectations of emotionally connected customers compared with non-emotionally connected customers.
Joining me to share these learnings is Martha Cohen, Vice President of Client Services at Kobie Marketing. Martha originally presented this research at a workshop at the recent Loyalty and Awards conference in Madrid, and it provided the whole group with great insights and discussion, which is why I’m excited to share it with all of you today. I hope you enjoy my conversation with Martha Cohen from Kobie Marketing.
Paula: So, Martha Cohen, welcome to Let’s Talk Loyalty.
Martha: Hi. Thank you for having me. I’m super excited to be here.
Paula: Yes, you did a wonderful presentation for us at the Loyalty and Awards Conference in Madrid last October, so, uh, about four weeks ago. So, I was super excited with the opportunity to share all of your research with the listeners of Let’s Talk Loyalty.
So, before we get into all of that, as you know, we always start the show talking about our favourite loyalty programs as industry professionals. So, coming from your perspective, Martha, what would you say is your favourite loyalty program?
Martha: Yes. So my, my favourite program of late is the Old Navy program. And what I love about the program is, um, for a person at a certain stage of life who maybe has kids like myself. The rewards multiplication factor is really important across their stable of brands. So, I do a lot of shopping at Old Navy for my children, um, but it is also connected to Banana Republic, it’s connected to Gap and Athleta. Um, and so what I like about that is rather than having a stable of brands that are maybe really similar or competitive with one another, it actually hits on the sweet spots of a couple of different ways that I like to shop for apparel. Um, so it’s an easy way for me to see those, see those rewards multiply out for myself, and, and get some added, added perks.
Paula: For sure, and I’m actually impressed you can articulate the brands, Martha. Um, and, and I guess I, I, I mentioned that because one of the things that can be a challenge and, and it’s particularly in this part of the world, I think when there’s programs that span multiple brands, there can be this, um, I suppose this extra layer of education to make sure that the member really understands that I can go to Gap, I can go to Old Navy. So, so would you say that members of the program, it sounds like it’s super clear when you, where you can earn all of those reward.
Martha: I think it is, much more so than other programs that I’ve seen like that. Uh, I think that Gap, Old Navy, and Banana Republic are, are definitely very household names, at least here in the States. Um, so people are highly familiar with them. I think they do get an excellent cross sell opportunity with Athleta being a lesser-known brand as far as in comparison. Um, their website is also just highly integrated, you’re always seeing the persistent banner across the top to show that you can shop and visit all four brands under that same house. Um, but you still see the very, um, you know, specific branding and personality and style of each of the brands once you click into their website. So, Banana Republic, I was just revisiting this morning and they have a wildly different aesthetic and feel right now than Old Navy. They’ve got a very Icelandic kind of voyage, um, feel to them, which is interesting, but you can, you can quickly see the connection but also dive deeply into the, that brand experience.
Paula: Super, super, yeah, yeah. No, I do think it’s important for the, the brand personality to come through, you’re absolutely right. So, uh, so what appeals to, to Martha as a mom is gonna be very different to what appeals to Martha when she’s traveling to Madrid, for example.
Paula: Super nice, great, great. Okay, so listen, I know, uh, you did an awful lot of research. I think it was earlier in 2022, Martha, to understand, I suppose what you’re calling, you know, the needs of the consumer you once knew. So, clearly there has been a dramatic amount of change, uh, driven by the, the, uh, the global pandemic we’ve just all been through together. So, tell us a bit about this research and where the idea came from, I guess first of all to, uh, to conduct something of this scale.
Martha: Absolutely. So, um, we’ve definitely been very focused on consumer research for quite some time. Uh, and I think everyone listening to this can really appreciate the amount of personal change that as individuals we have gone through, in the last couple of years. I was actually thinking back to this time two years ago and prepping for the holidays and preparing to be alone with my, you know, small personal family unit, and I, I, I almost can’t believe that that’s the way that it was, and it was that way for so long.
Martha: Um, so what was really important for the timing of this research was really to understand, uh, the motivators of loyalty, and how those drastic shifts, um, in our, our personal ethos have impacted how we show up as consumers. So, there’s, there’s really not a difference in, you know, who you are and how you show up as a consumer. It’s, it’s a very core kind of manifestation of your beliefs and values.
Martha: Um, so with this, we wanted to start the beginning of a longitudinal study that we’ll revisit every year. And kind of see those, see how those motivators are changing over time. Um, and I think that one of the things that we are very focused on at Kobie is, uh, self-funded loyalty programs, right? So, the idea is that, um, you’re creating something of value to the customer, that is also driving incrementality to your business. And so, as we’re chasing after kind of what could seem like a, a shiny object to the consumer and their, you know, their wants, there is always a way to position that back in a way that is incremental to your bottom line. Um, so we feel like this is a great way for us to look at that over time, and to be able to shift not only the benefits and constructs of programs, but even just the positioning, um, the integration with the experience of the brand overall. Um, so it really gives us a lot of levers to play with, which is really exciting.
Paula: Yeah. I love that terminology. A self-funded loyalty program. There’s an awful lot of debate and discussion, of course, between CMOs and CFOs all over the world. As we discuss and debate, you know, the, the costs and benefits of loyalty programs. So, can you explain that just a little bit more? Um, it sounds like something that is a, a core message that you’re, I, I’m guessing, discussing with all of the, the Kobie clients. Um, how do you measure self-funded? Is it based on the business case of retention, for example, or, I know you focus, for example, a lot on travel, so there is an opportunity to actually, obviously retail, um, the, the currency in those particular programs. So, can you just explain what you mean? What, what would constitute a self-funded program?
Martha: Yeah, that’s a great question. And I think retention is certainly one of the components in looking at, um, the cost of acquisition, which we all know is significantly higher than the cost of retention. Um, so there’s a lot of different metrics that we can look at and I think, um, I personally oversee our travel and hospitality vertical at Kobie but we also do oversee, um, several other verticals including retail, financial institutions, uh, and the like. And so, I think to your point, you need to look at the incremental behaviour, and that’s wildly different across each of those industries, right? So, what we try to figure out is what is the next best behaviour that we want that customer to take? We factor in a lot of things like breakage, um, and looking at that, which is, you know, a component that is, is important to maintain at a certain level. Um, so really what we’re looking at is frequency, basket size over time and seeing, you know, often even horse racing things together to see if we’re able to put those things in the wild. How we’re actually generating that comparative to, you know, other tactics or just a control group where we’re not applying that type of benefit or, or outcome to the customer.
Martha: Um, so I think a lot of it starts with us from a modelling perspective. We take the financials, we model it out, and then we just don’t throw stuff into the wild. Right. That’s highly risky when you’re talking about all this liability. Um, so we actually do a lot of consumer testing to put kind of straw man concepts into the wild to say what would be appealing, what would motivate you to take that next step? Um, before we actually put those elements, you know, more formally into a structured program.
Paula: Okay. Makes sense. And just as you talk about breakage and obviously, we’ll, we’ll get straight into the research then Martha. Would you say, you know, the, the perspectives, uh, with your clients have changed around breakage? Um, you know, either positively or negatively because, you know, I guess particularly coming through the pandemic, I think there was an awful lot more, you know, focus on, on those kind of liabilities. And, you know, I think we’ve seen a lot of change, of course, in programs as well. With currencies being devalued, for example, recently. So, what are you hearing? Is the perception of breakage, is it good, is it bad? And again, very different I know across verticals, but do you think there is that understanding that, uh, you know, burn drives earn, essentially.
Martha: Yeah, I, I think, I think that the burn driving earn is definitely, you know, pretty much widely accepted.
Martha: I think what’s particularly interesting for travel, um, is the, the ways that we were driving, alternative ways to drive revenue to the business outside of travel, during the pandemic. So we, you know, we see airline is, is really recovering and it’s chaos right now. Operations to meet the demands that have come back. Um, but during that period of time, there was a, a high amount of breakage and there was a lot of efforts that were made to say, you know, yeah, rescheduling was indefinite, or points were not expiring. And so those are the conversations that we’re having is, are, are we gonna swing the pendulum back too far if we think about something like no expiration of points? Or is there a happy medium? Is that something that you can easily change or is that something that’s upsetting to the consumer to have to track over time? Yeah, so those are really the more important points of what is the right amount of breakage so that you’re keeping that incentive at the right place while managing the liability.
Paula: Totally, totally, yeah. There’s a lot of thinking goes into it. So, thank you for that, uh, that understanding. So, I know this is a huge piece of research. Um, so give us an understanding. Which countries or markets did you focus on, and how many consumers did you interview?
Martha: Absolutely. We conducted this survey with 13,000 respondents, uh, and it was within the United States across five different industries.
Paula: And I’m guessing it was online type research, quantitative, to really get under, you know, under the skin of exactly what, uh, consumers are saying with this, you know, dramatic change in how we’ve all been impacted. So, so tell us a bit about it. Um, what did you learn? I know there’s a number of key points you wanted to, to tell us about.
Martha: Yes, absolutely. So, I we’re excited for the longitudinal nature, like I said, because I think we found four key areas of change that are significant at this moment in time. Um, and while we’ll continue to track those, there are other trends, of course, that are gonna manifest over time.
Martha: Um, but what’s specifically interesting about this go round is, um, really all four of the major areas tied together in the sense of experience and what it means, and I think it’s a lot around how people have changed the value of their time. Um, and what that means to them. So, you know, from anything from the great resignation that happened where people were completely changing, you know, jobs and fields, or they were moving because they were remote and they could, you know, spend time not in the car commuting, it all became about the value of the time. Um, so as we think about the four things that we saw, that shows up. So, the four things that we saw was really, um, what they want, so the ‘its’ out of the program, so, the, the benefits around that. The second piece is, is what they value, which is a nuance and a layer on top of the ‘what’ they want. Um, and we call this the value trifecta. So, there’s really. Three factors within this that are exponentially impactful to the program. So, it’s not a one plus one plus one equals three. It’s if you hit on all of these components of value, you’re driving the return substantially more.
Martha: The third component is a new understanding of advocacy. Um, so we’ve looked a little bit more about how our best customers have stratified over time. And then the last piece we’re calling the impact of pain and forgiveness. Um, and so there’s always been that aspect in loyalty of, you know, uh, you hurt the ones that you love. So, you know, how do you recover from that? And what is their willingness to forgive? Um, what can you do about it to focus on your highest value customers in those moments, to recover from a situation like that?
Paula: Yeah, I think there’s been a lot of pain and a need for, for forgiveness, certainly in the travel industry. I think anybody who’s been traveling recently, and you know, unfortunately we’re just all a victim of the, uh, well, I think what they’re calling it revenge travel, I heard it described this last week. So yes, I’m totally there. I’m totally there. So, let’s start with the first one then, Martha. What is it that people are saying that they want in your research?
Martha: So, what we’re seeing for customers is a difference, particularly in emotional connections. And those emotional connections really matter. So, when we’re looking at emotionally connected customers, which is what we want, they’re prioritizing completely different things than our non-emotionally connected customers. Um, so, uh, from an aspect, if you think about it, you know, if somebody who’s your friend says something ugly to you, it’s far more hurtful than if a stranger does. And so, we’re looking at that and they’re also expecting a return, of you know whether it’s you’re making their life easier, you’re respecting the relationship that they have, you’re honouring the status of, you know, the time or duration that they’ve been a customer of yours. It’s the same in personal relationships, uh, as it is with uh, with, uh, consumers and their brands. Um, so as we look at non-emotionally connected customers, what’s interesting is they want more rewards and they want more frequency to those rewards, so higher cost, and they expect to get that return more frequently, which of course can be more costly to the program. Um, if you think about it, you know, I’m going, uh, paperless. Um, if I’m not emotionally connected to it, I might think, okay, well I’m saving you money as a, as a brand, you know.
Martha: What are you gonna do for me? Versus if I’m very connected from a reciprocity angle, I might say, well, gee, I really care about the environment and I’m glad that you do too, I’m happy to sign up for paperless billing, for example.
Paula: I’ve had those exact thoughts, Martha. That’s incredible.
Martha: Yes, absolutely. I, I love this research. There was so much that resonated to me on a personal level. Absolutely, and then as we flip to the emotionally connected customers, there is an opportunity to gravitate or to, to provide their gravitation toward what is maybe lower cost, but higher value. So, they want things like access, um, they want to be recognized, uh, they wanna feel special and like what we have is exclusive, I don’t wanna think you have this with everybody else.
Martha: Um, and so what you can do in return is less, reward them less frequently, and again with things that are less expensive, but are more meaningful to that consumer.
Paula: And I probably should have asked you to clarify, uh, Martha, how did you measure, you know, did, did the member themselves, you know, define that they feel an emotional connection to the brands, or how was that, uh, done in the research? Because it’s, it’s one of those very intangible things that we’re all, I suppose, aware of, the importance of, of driving, you know, emotional propositions, for example, to improve that emotional loyalty. Um, so I’m just curious as to how the research study actually assessed, you know, which cohort is identifying as emotionally connected versus not.
Martha: That’s an excellent question. Um, so, uh, in the industry, certainly there’s been a lot of talk about emotional connections and that’s, that’s risen over the last several years. Uh, so I think everybody understands the importance of that. At Kobie, we look at six drivers of loyalty, um, and we really consider four of those to be within the realms of programmatic loyalty to be able to impact. So, the two that are outside of that are really brand, uh, the product itself. Um, so if you were on a, in an insular loyalty team and you maybe don’t have impact over, how does your brand show up in the market or the specific products that are being developed? Um, while those absolutely drive loyalty, the things that can fall within a program are, uh, rewards, uh, so bread and butter of, of what we’ve thought about for quite some time with respect to loyalty. Um, we think about, uh, convenience, so how are we making people’s lives easier? Okay. Um, we’re talking about status. Um, and then we’re talking about reciprocity. Um, so what we look at is Kobie’s developed a proprietary scoring tool, um, that has a mechanism to ask a series of questions that quickly allow us to score what that rating is for that customer. And depending on how they answer the questions, they may rank, to your point, not emotionally connected at all on the low scale, high or what those different levels are so customers can be motivated by multiple things. Um, it’s in fact a little bit more rare to see somebody who’s really only motivated by one of those levers. But we’re able to, through that scoring tool, suss that out among, amongst our respondents.
Paula: Yeah, yeah. No, that, that’s super helpful, Martha, and I’m glad you’ve, you know, I suppose identified as well the non-programmatic elements of loyalty, because I do think as an industry we tend to, again, have to defend our programs a lot of the time, and yet don’t have full control, certainly of things like brand and product, um, in most instances. And, you know, when people talk about brands that they’re loyal to, you know, there’s things like Apple for example, and why don’t they have a loyalty program? And we all know the answer to that one. So, so that makes perfect sense. Um, so that was a very insightful piece in terms of what customers want and the distinction I think is super helpful. Um, in that emotionally connected customers, as you’ve said, their expectations are so much, um, nicer, I suppose, to deliver as loyalty professionals. Uh, much more cost effective. And there’s an opportunity to be more thoughtful, I guess, in terms of making them feel, uh, that emotional connection as distinct from your non-emotionally connected customers. And I remember at the presentation you talked about the expectations about those rewards, and even things like the enrolment bonuses, probably would have to be more generous, more visible. And that is something that, again, can be hugely expensive, um, to acquire people into the program. So really big learnings.
Paula: Great, so let’s talk about, um, how customers, um, you know, really value things. So, you talked about, you know, exactly that, you know, what is it about, um, getting the value right in terms of the overall loyalty proposition that you, uh, that you, you got to understand.
Martha: Yeah, absolutely. So, getting the item right. You can’t get that wrong. And so, when I say item, it doesn’t have to be, you know, the physical thing, but the ‘it’, the benefit of being in the program. Um, so that’s, it’s a, it’s a nonstarter if you’re not showing something that’s appealing. And consumer behaviours, because loyalty programs have gotten to be so much more pervasive, they’ve come to understand the construct and they want to know upfront what that item or thing is going to be to add the value. So previously you might have said, oh, how cool a loyalty program, clearly I’m gonna get some benefit, I’ll enrol, I’ll crew points, and then I’ll figure out later what I’m gonna get with those points or, or whatever the mechanism is. Now customers wanna say, I’m not even gonna put skin in the game to enrol in the program or start to try to earn toward a, a particular tier or status if I don’t know what I’m going to get at these different intervals. So, they’re scrutinizing that, and I think you know, part of it is from the number of programs that people are, are enrolled in. We know that people are enrolled in, um, many, many programs and often defect from them rather quickly. Um, so they want to know that they’re investing their time in the right place. So going back to kind of my example of Old Navy at the beginning, on a personal level, I know it’s something that I can invest in because it’s a behaviour that is incentivizing me on top of my commitment to that brand already. Um, so I think that’s, that’s in place of making sure that you’re chasing what that customer’s gonna get in a very clear and compelling way. The second piece is the experience itself, has to be easy, and I love this about the Old Navy experience of how much it has evolved from a lot of just kind of the spend and get cash, literal paper coupons that they used to give out and it’s become so much, uh, less friction to redeem at the register. When you’ve got your points right there, um, it’s accruing and taking your cash bonuses that you maybe don’t spend and converting them to points. So, if it’s too difficult, you know, the days of, of taking your receipt and scanning it and uploading it is, it’s, it’s just too much. So, if the experience is hard, people aren’t gonna do it. So that’s the, the second component of the, the trifecta. And then the third piece is acknowledging the entirety of the relationship. So, when somebody is getting to a point of reaching a, a reward or a status or what have you, you wanna recognize not the transaction behaviour itself, but where this stands in the entirety of the relationship overall. So great! You’re halfway to silver, or only one more purchase and you’re gonna get this, or wow, you’ve purchased 17 times this year. Thank you so much for your loyalty. So that it takes attention away from the transaction when you’re focusing those, those moments on the transactions, it cheapens it and makes people forget about that emotional connection and you know, relationship that they have with the brand.
Paula: I love that. Yeah. That’s not something I think we talk about nearly enough.
Martha: They, we wanna create a sense of momentum, so we’re creating those stretch goals. Uh, for the, for the customer. And we’re just, we’re deepening the relationship and the appreciation in that process.
Paula: Yeah, and you’ve reminded me, um, we had the Loyalty Science Lab on again recently as well, Martha. So again, like you guys, I’m, I’m loving all of the learning and I can’t remember the statistic, but, um, they, they’ve done very explicit studies themselves about, as you said, the positioning. you know, sometimes it’s very different to, um, to highlight how close you are to the goal versus how far you’ve come from the start. So those things that sound like minor details, um, actually become much more motivating if you, as you said, recognize the entirety of the relationship. And exactly what people have achieved in the overall, um, visibility, I guess, of, you know, they’re stepping up, they’re behaving in certain ways and they’ve got expectations now. So yeah, I think it’s important for brands to have that recognition and acknowledge exactly everything that they’re recognizing.
Martha: I think. As we think about, um, Kobie’s customers, uh, one in particular, uh, London Drugs is one that we’re, uh, really proud of a new program that’s been put into market to really drastically shift that mindset. Um, to earn points on spend rather than visits. So, while we wanna look at frequency and that being an important indicator, it doesn’t necessarily, on its own indicate the value that that customer is providing in terms of incrementality. So, coupling a change in the structure of earn with a highly personalized, you know, way for those customers to be able to select their benefits. Um, and you know, how they wanna accrue points and spend them, um, has really shown to be, to be something that consumers are wanting.
Paula: Fantastic. Yes, and if they want to come on the show at any time, we always looking for new guests, Martha, so, uh, please consider them very well.
Paula: Great stuff. So, I know then you have also a new understanding of advocacy in your research. So, tell us exactly what came through in this part.
Martha: Absolutely. So, um, the way we used to think about advocacy is that customers were really going to talk about and promote the things that they bought alone, and this is who we saw as brand champions. And certainly, that is a very valuable cohort when we look at our, our customer segments. Um, but when we actually layered on top of it and, um, compared our net promoter score, to the average spend of consumers, we found four buckets. So, we had our high net promoter scores and high spend. And then on the other side, we had our low net promoter scores and our low spend. That group, the, the not satisfied, not spending, we’re gonna set that aside. And that’s not an area that we wanna focus on. So, we’re really focused on the other three areas, um, that create those, those different buckets. So, as we look at, um, our champions, right, we know that we wanna keep promoting those spending behaviours and rewarding for them for that. That’s what’s important. Um, you know, the, you. You’re gonna get that word of mouth through them regardless. So as much as you can amplify that voice and give them opportunities to share, keep rewarding them in meaningful ways, you’ll keep them engaged. We have what we also are calling our, our humble missionaries. Um, and so this is our group who is maybe very high advocacy but low spend. Um, so I think about this personally of my, my brand of eggs that I shop for at the grocery store. Um, and I don’t spend an inordinate amount of money on eggs, probably not any more than the average consumer. Um, but I talk about them like crazy. So Vital Farms is one that I love. Um, and they have these little chicken newsletters that they put in. You can scan and see the specific farm where your eggs came from, and it just makes me, makes me feel good. So, I talk about it all the time to. So those are our humble missionaries.
Paula: Very nice.
Martha: Um, and then what we have last is our, um, our curmudgeons. So, they may be low advocacy, um, but then they’re, they’re high on the spend. So, this might be a situation where you’re kind of trapped, so to speak. So, it might be a geographic area where you’re hooked into a telecom provider, or a specific airline based on the hub. Um, and they’re stuck with you, but we want to get them to a better place. So, our opportunity with this group is really to try to cross sell them into other, um, valuable services or products that may increase their satisfaction over time, or consider experiential components that are going to reduce the friction, that that may be plugging some of that interaction that they have. So, each of these consumers, if we just tap into the, the brand champions as we call them, we may be missing out. In fact, um, over 40% of our advocates, if we look at those curmudgeons and missionaries across all these different verticals are missed out on if we’re not looking at it in that way.
Paula: Fascinating. And, and what I’m thinking about as you’re explaining that Martha, is, you know, I’m hearing more brands, I suppose, exploring, you know, rewarding those type of behaviours which are non-transactional.
Paula: For example, your, your humble missionaries. And you know, given how, um, the Egg brand, what’s the name again? Martha? Because it sounds like one I need to look up.
Martha: Vital Farms.
Paula: Vital Farms. It sounds like they have a very thoughtful approach in terms of clearly the core product. So, I doubt they have a structured loyalty program. But having said that, There are ways to, um, to recognize advocacy because before you came on this podcast, they may not have had any opportunity to know that you’re an advocate of them, for example. But I’m certainly hearing, and I’m excited to hear that more and more loyalty professionals go, yes, we’ll recognize the behaviour. And of course a refer a friend. We do have some traditional methodologies, but there are huge amount of people who are advocating for the brand. And in fact, I don’t believe any brand can survive without advocacy because honestly marketing is just too expensive. So, you actually need your customer base to advocate. Like it’s the only way. So, so are you hearing more of that from your clients?
Martha: Absolutely, and I’m so glad you said that because, um, while we certainly, uh, believe in programmatic loyalty and creating those where it makes sense, we also believe in the components of, you know, the data and the, the academia of loyalty as it can be applied to the larger brand loyalty. So, it doesn’t always show up in the program. For us, loyalty is the extra layer on, that makes being a loyalty member the pinnacle of the brand experience. So, if you think about, like we talked about habit, status and reciprocity, which are three of our emotional drivers, there are ways for those things to show up for all customers. And what if there’s an accelerant to that in the membership program? Or to your point, rewarding something like advocacy, it doesn’t have to be, I’m giving you, you know, X points for, um, a review, but it might be celebrating or spotlighting a customer. You know, maybe they end up in your little newsletter that shows up in your egg carton or they get a tweet on, you know, Twitter or any of those things. There’s, there’s subtle ways that are not, um, needing to be kind of a, a crazy kind of scale or structured way of, of honouring that type of relationship.
Paula: For sure, and, and I do love words as well, Martha, so I’ll be, I’ll be stealing some of yours. Um, and again, it’s because of the language that I think loyalty professionals who listen to this show, you know, can find super useful. So, for example, positioning, loyalty as the pinnacle of brand experience. I think again helps reinforce what we talked about earlier in terms of, yes, the brand has to do its job, the product has to be exceptional. And then of course we layer on often as a point of differentiation, of course, the programmatic loyalty. So, I really like that, uh, idea of the pinnacle of brand experience.
Martha: Yeah. One, one particular customer of Kobie’s who’s a, a global, um, sportswear and footwear manufacturer. Um, we love their approach to this in that, um, they have several apps that they allow to consumers to, to engage with. And while spend is a really interesting component, they leverage single sign-on to be able to track different types of behaviour. So you may have one person who’s buying, um, you know, one expensive pair of shoes a year. But they’re using the running app all year round. They’re engaging in the community. Um, you know, they’re writing reviews for different products. They’re just, to that point, they may be that humble missionary, but they can see that through the technology that connects the data from single sign-on. So, if we think about even just, uh, enablement of that, there’s a lot of different ways to go about that.
Paula: Super clever. My goodness. Wow. Sounds fascinating. So, our last point, uh, to discuss in the research then Martha, is the impact of pain and forgiveness. So, I’m super curious to hear what came through. Again, I know you focused specifically on kind of travel and hospitality as a vertical. So, what did you learn about, um, you know, given what people have been through, what are they saying to us about the impact of, of pain and how forgiving they may feel?
Martha: Absolutely. So, uh, Paula, you mentioned at the start of this, particularly within travel, um, we, we know that this was a big issue during the pandemic. Certainly, in retail, in quick serve, we saw this as well, where staffing levels were incredibly low and people were very frustrated. Um, so I think that the first learning is, is very intuitive and that’s surprising. So our emotionally connected customers are more, uh, sensitive to a bad experience. Right so let’s just say you have one fast food restaurant. You’re just stopping cause it’s the first thing off of the exit. Um, you know, if you have a bad experience, eh, you’re annoyed, but you move on and maybe you pick something different next time. But if you are an avid Chick-fil-A customer, um, and you have a terrible experience, you’re gonna react more viscerally to that bad experience, even if it’s the same as kind of a stranger brand, let’s call it. Um, so I think that that’s pretty straightforward and not surprising. Um, but what is interesting is based on the emotional loyalty scoring, um, people respond differently based on that. So, our habit customers, our status customers, our reciprocity customers, all will feel different levels of pain from that type of, of situation.
Paula: So, what is this emotional loyalty scoring that you, that you’re talking about, Martha? Sounds super interesting.
Martha: Right so in our study and, and we’ve scored, um, many different customers across our, our customers brands. Um, and if we look at folks who are habit, status, and reciprocity, um, and then we layer that on with their spend. What we see is that our reciprocity, motivated customers are by far the best forgivers. Um, so again, no surprise, it’s, it’s a relationship. Things happen, you know, we get it. We can recover from this. Um, so any, anywhere that reciprocity is showing up for a consumer in their score, whether it’s a loan or is habit reciprocity, status reciprocity. All of those folks are, are likely to forgive more so than others. When you layer on top of that, spend, um, we start to see some differences across our different verticals. Um, so in particular our status customers are, um, are least forgiving group. So, they are least likely to understand when something goes bump in the night. And when you factor in where they’re spending, um, they’re spending above average your status customers in travel, um, in FI, financial, and in some cases in retail. The juxtaposition of that is they’re spending more, your status customers and they’re harder to recover from. So, we really need to think about mechanisms of, um, what would be a meaningful way to recover from that. So, Amtrak is one of our, our clients at Kobie. Um, and one thing that we love that they’ve done is something we’re, we’re calling proactive service recovery. So, we’ve talked about service recovery in the industry before. Um, but it’s, it’s an automated way to recognize when there’s been a significant delay and give that customer something automatically. The really cool layer on top of that is that we’ve constructed it in a way that. Um, it’s a message that goes to all writers when something happens with a delay. Um, and, uh, if you’re not a member, you’re given the opportunity to see, oh, we’re so sorry that this happened. If you join the program, you’ll automatically get these points at the time of opening your account. So it applies to all, uh, members. And even can take a kind of hairy situation and turning it, turn it into an acquisition opportunity. Um, so those are some ways that we think it’s, um, the automation of it and the speed with which we’re addressing that is really important. Um, and then I, I will say in in FI what we do see is, you know, money matters to people. It’s highly personal and highly, you know, dedicated or, um, top of mind to your survival. So in particular, FI we see a, a, a significant amount of trouble in recovering from that. Um, so we’d wanna spend some time on those high value customers, especially in both of those verticals, um, to make sure that we’re constructing a recovery plan.
Paula: Yeah, yeah. Well, I wish you guys were here in Dubai because certainly, uh, you know, my experience with, uh, my financial institutions, uh, there’s some recovery required, unfortunately. Um, but, but wonderful to hear about Amtrak, you know, didn’t know they were a client of you guys. And of course, because I’m not in the US I don’t have the opportunity to engage with them, but it sounds like they do have a significant loyalty program and are obviously applying a lot of the learnings from your research. Do they?
Martha: Absolutely. They have been, um, in market for, um, over 50 years as, as a company. Um, they, uh, have had a loyalty program in place for 20 years. Wow. Um, so we are very honoured to be stewards of their program and partner with our team there. Um, rail is definitely, uh, quite less than it is in other places, in particular Europe. Um, and so there’s, there’s a lot of interesting nuances that can be applied in that, in that model. Um, and also a lot that we can learn from, from our, our partners overseas and how they handle loyalty and ridership.
Paula: Yes, for sure. Of course, we had the presentation as well in Madrid, um, from Renfe Trains, the, the Spanish tour operator or train operator. Pardon me. So, yeah. Um, super interesting. So, I must have a look at Amtrak as well. So, I, listen, I think I’ve asked all of the questions about the research piece, Martha. Um, I’m guessing a lot of people listening to this episode might be curious to get a. So, can you tell us, first of all, where can they access it? Do they contact you or where’s the best place to, to, to get some insights directly from you guys?
Martha: Absolutely. Uh, we, we have a lot more information on our website, uh, so people can absolutely take a look there and, and drop us a line. Um, we did this research, um, with the intention of making it shareable across the marketplace, so it’s certainly something that we wanna share and tailor, you know, to certain folks. So, kobie.com is a great place to start.
Paula: Great, great. And just to spell it, k o b i e.com, just in case anybody’s not familiar with the brand.
Martha: Correct. Thank you. Yes, absolutely.
Paula: Great. So that is all the questions I have from my side, Martha. I’m trying to think if there’s anything else that we should touch on today. Was there any other kind of ideas or insights you wanted to share with our, with our listeners before we wrap up?
Martha: Yeah, I think I, I would just say, um, hopefully some of this resonated to your listeners on a personal level. Um, and what we love about this research is there are highly tangible ways to address this changing consumer. So, I think the most important takeaway is just to acknowledge how much our personal changes have manifested, like we said, in that consumer behaviour. And knowing that knowledge is power. So, we love being able to score these customers and even create predictive models that allow us to know non-members or, um, new customers as they’re required, what their behaviours are to tailor that personalized experience. Um, so there are great solutions out there, um, and we’re really excited about this new frontier of loyalty. I think that there’s, you know, a lot of momentum and pent-up demand, um, for engagement and relationships with brands. So, we’re super excited about that future.
Paula: Very well said Martha. And yes, from my perspective, I’m excited that you are planning to continue the work in terms of a longitudinal study, as you said at the outset. So, we can look forward to hearing, you know, year in, year out, exactly how it evolves over time. So with all of that said, super interesting and I wanna say huge. Thank you. Martha Cohen, vice President of Client Services at Kobie Marketing. Thank you so much from Let’s Talk Loyalty.
Martha: Wonderful talking with you, Paula. Thank you.
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