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Hello and welcome to today’s episode featuring industry insights from Giant Food, the number three grocery chain in the United States. Ryan Draude is leading Giant Foods loyalty approach with a unique perspective. As you’ll hear him explain, Ryan believes that loyalty leaders have a unique opportunity to create rituals that become meaningful moments in their members’ lives. And he is passionate about making sure we create tangible value in a way that matters more than ever to shoppers.
I loved Ryan’s willingness to be courageous with his work and especially how he said that he loves to often just shut up and instead really listen. I hope you enjoyed this masterclass in loyalty with Ryan Draude, Head of Loyalty at Giant Food.
So Ryan, welcome to Let’s Talk Loyalty.
Ryan: Hey, Paula, good morning or good evening where you’re at.
Paula: It sure is, Ryan. We have a long distance call and I’m super happy to see you standing, so proudly in front of your background there in your office in, remind me which city you’re in Ryan, today.
Ryan: Yeah, no problem at all. So, Giant Food is located right outside of Washington DC in suburban Maryland.
Paula: Oh my goodness. So I think I confessed off air that I have not been to Washington DC. So I definitely have some work to do. So listen, yeah, let’s get straight into it. I know you’re a listener of the show Ryan, and you do have some extraordinary credentials as well in terms of both your career and academically as well, which we’re gonna get into talking about today.
And I think that’s actually very noteworthy because you know, like certainly when I went to college, Ryan, I dunno about you, but like marketing was considered one topic and one subject. And loyalty marketing actually I don’t think was covered at all when I studied. Sounds like you went more recently and that emerged through it.
So maybe we’ll actually just start with that and then I’ll get into my usual opening question. But I am super curious as to how you got into this, I suppose, academic side of loyalty.
Ryan: No problem, Paula. And thank you for calling this out cause I think this is a wonderful area for future study of loyalty to occur.
You’re right. You know, when we were in school earlier, there was no formal study of loyalty programs, and you’re starting to see it come through now, and I’m happy to talk a little bit about that. I am an adjunct professor at Georgetown University for about four years now. Where I teach loyalty strategy within hospitality.
They have a program there, continuing studies for hospitality leadership. And so they put together an elective at the graduate level. Two talks specifically about loyalty strategy, and we’ve turned it into a program that really covers the philosophy of these programs. You know, the why and the how of, you know, why loyalty works in building long-term relationships, but also the the very acute, quantifiable aspects of it.
Running a loyalty program, as you well know, it’s almost like running a small bank. You know, there are costs, there’s liabilities and you need to measure it very effectively. So it’s a great opportunity to marry kind of the left brain and the right brain side of these aspects together.
But what delights me the most is that more and more colleges are recognizing loyalty as a defined area of study. And somewhere where you can build a career so that the next generation of leaders, you know, I can see very early on, Hey, this is something I really like. And can really build a long-term, very successful career around as well.
Paula: Amazing and well said, Ryan, because one of the frustrations that even led to me starting this show was exactly this idea that just because I really understand marketing, even digital and e-commerce and all of these things that I was so proud of, doesn’t necessarily mean I have the expertise. So I did my studies with The Loyalty Academy. I’m sure you’re very familiar with the guys there as well. And we do a lot of work with those.
But you’re absolutely right. There’s so much demand and so much opportunity and commercially it’s such a big responsibility. So at the end of the day, I’m delighted to hear that your university has brought you in and the piece I particularly like about it as well, Ryan, is you are a practitioner. And I often felt, when I went to university, there was an awful lot of theory discussed. And it wasn’t always something that translated into the real world. So thankfully you have.
Ryan: I was so spot on. You know, and I’ll just say on that front, my only public service announcement during our conversation today is for your listeners to consider going back to academia at some point. Because Paula, you nailed it on the head. Often in college you have incredibly smart professors who have no real world application. So they teach in theory, you know, they’re wonderful in a vacuum, but they can’t tell you what actually occurs and, and for folks like ourselves who have been out there, and have the war stories of what actually happens. It’s a great blend to say, let me tell you what the theory is. But let me tell you, you know, where it falls apart. How it breaks, how it impacts people. So that you can marry both of those together.
So I do say it is an incredibly rewarding opportunity to go back to your local college or even community college and say, is there an opportunity to become an adjunct? You can do it part-time while you’re doing your career or maybe even after you retire. My father is 83 years old, and is an adjunct professor down in Florida teaching courses, you know, after a very long, yeah, wonderful career as a marine officer. He’s also teaching as well, so, you know, you could do it at various points in your lives and it’s just really rewarding.
Paula: Amazing, amazing. Wow. I love that. Very inspiring Ryan. My own father’s 83. And actually I think I do still learn more from him than from anybody else.
Ryan: Right there with you.
Paula: So yeah, totally. All that wisdom, it said, it’s important to capture it. But listen, let me get back to my normal starting question. I got excited about that got carried away. But given all of this amazing expertise and your career and academia we just talked about, you must have a favorite loyalty program and of course, You’re not allowed to say giant foods.
Ryan: No, of course not.
Paula: Other than that.
Ryan: Definitely not.
Paula: Tell us.
Ryan: Absolutely. And I have my mug here to prove it. I am a big fan of Dunkin Donuts, have been for years. Anyone who lives on the East Coast loves Dunkin Donuts. They are everywhere. You know, very affordable, good coffee, amazing donuts. I probably had way too much in my life.
But, I love the loyalty program because they really make it easy to engage. And that’s one of the big barriers of a good program is just being able to jump in and do something with it. So I love how they’ve set up their app that you see the office immediately, you know where you stand in terms of your point profile.
And now they’ve created a variety of different ways that they can redeem points. Now, however, Paula, I will say, you know, they made that change late last year, if I remember right. And there was a little bit of backlash because before you could use your points for any size drink and any type of drink you wanted.
And now they have it very specific that you can use points only for certain items. So they created a little bit of a backlash. In that they essentially devalued the program, but increased the flexibility of what you could do with the points.
And I think that kind of reflects a lot of the issues that us as loyalty leaders face is, you know, how do you get the most out of all your products and create an interest across the portfolio. But at the same time, managing the cost of the program to make sure that it is still effective and one that you can support. So I feel their pain because I know it’s tough to hear that type of negative feedback, but yeah, unabashedly, I’m still a big fan.
Paula: Okay. Well, well done you. I’m trying to stay away from delicious donuts most of the time, because they’re too good. So there’s certainly loyalty built in right there, but you’re right. Actually, I think the piece about devaluation is something that, you know, certainly on this show, Ryan, we probably need to discuss a lot more as we go forward because there has been a lot of big programs that, again, I think the media picks up on the devaluation in a very negative way, which is very difficult for the program owner to manage. Of course. I mean, they will anticipate it, but of course once the business decision is made, there’s absolutely no control. Of course they have around that narrative.
But interesting. Actually, I was talking recently here, you know, different sector completely, but with Skywards, you know, as an airline in terms of, you know, exactly what was happening and you know, where they were consulted and they were, you know, like the business channels and stuff were asking about the, you know, the issue. And they just said, look, we haven’t changed our pricing in 10 years. And really it is a restructuring of the reward strategy. So, they were very convincing, I suppose.
So I guess what I’m trying to say is for any loyalty program owners that are here and listening and concerned if they’re being asked to devalue something, there’s definitely a narrative that I think it’s important to share, and to have some upside as well, because even Boots in the UK, Ryan, I know you’re very familiar with the pharmacy sector, but they also did on paper, devalue the currency. But actually, what they did was they put different value, much richer value into other areas of the program.
So, I think it’s super interesting, the challenge, as you said, there’s always this business to manage in terms of running a loyalty program. So Dunkin is no exception. I haven’t had their coffee, I will say, but I believe the coffee’s good.
Ryan: It is. It’s not as strong as like a Starbucks or whatnot, but it is incredibly delicious. And again, I visit them way more often than I should, so that’s a good concern.
Paula: For sure. And I’m guessing it’s probably more affordable than Starbucks and to be honest, I think.
Ryan: Fair enough. Yeah.
Paula: So, you know, that’s something you are super conscious of. Again, I know in terms of Giant Foods and your industry overall, there’s just a lot of people looking for ways to find value. So it certainly sounds like Dunkin has managed that I said to you off air. Actually, my one, curious piece around Dunkin is the fact that they don’t own their domain name dunkin.com.
Now, pardon me, they probably own dunkindonuts.com. But if it was me, I know I’ve come from a background again in airlines where I worked with British Airways and we didn’t own ba.com for many, many years and it was a very high profile, very embarrassing issue.
Ryan: Oh I’m sure.
Paula: But you know, it really is important I think, because you know, with this show, Ryan, we talk about loyalty in a very holistic way. It’s not just our points and our programs. It is any kind of experience with the brand. And, you know, I just think it would be a nice thing if they could get dunkin.com maybe for the future.
Ryan: Yeah, there’s a very interesting story behind that we haven’t heard about yet. But, you know what I’m gonna go do some research on that cause now I’m very curious to understand what’s really going on there.
Paula: Totally, totally. And if we can get them on the show to share the story, we’d be delighted to.
Ryan: It would be better.
Paula: There you go. So listen, let’s get into the work that you’re doing, Ryan. Day-to-day you’ve got this extraordinary company you work for, and again, a lot of our listeners around the world of course, will know some of the big brand names in grocery in the United States, but give us a sense of Giant as a brand, and market share and profile.
Ryan: Probably all. So, I work for a grocery chain called Giant Food. Now Giant is part of the larger Ahold grocery conglomerate, which is a global entity based in the Netherlands. So a lot of folks don’t realize this truly is an international company.
Ahold has five grocery chains in the US. All along the eastern seaboard, Food Lion down in the south. Giant here locally. Stop & Shop up in the northeast, Hannaford’s food and the Giant company. So we are actually the number three grocery retailer in the US when you put together all of our chains, behind Albertsons and Kroger, who are one and two.
So we occupy a very important position and Giant here locally in what we call the Mid-Atlantic area, Paula, DC, Maryland, Virginia is actually the number one grocery retailer. We have 165 locations. In those three states, in about an 18% market share. And so that’s fascinating when you think okay 18%. And you are the leader in that area. It shows you how competitive grocery is in this area that you have so many different players. And Paula, it’s not just traditional groceries like Safeway or Kroger’s, it is the big boxes like Costco, Walmarts. The low cost providers, so many more now, like the Aldi and the Lidl’s that have come in.
Ethnic stores like H Mart, you know, go toward Asian populations or Latino populations. Dollar stores have become increasingly into grocery, especially in the current value focused time. And then you have the tech players like Instacart.
All that put together is a crazy amount of competition and we’re all selling the same thing. You know, so it’s very commoditized when you think a can of beans that you’re gonna get from our store is by and large the can of beans that you’re gonna get from the variety of these other competitors.
So, where can we be different? Obviously, a loyalty program is one of the key areas of differentiation, and so I know we’ll go into detail a little bit more there, but you know, that’s really where we’re hanging our hat. One of the things I say, Paula, that scares me the most is a competitive grocery store opening a half mile closer to where my member or my customer lives. Because so often what it comes down to is price, inconvenience. The lowest price right now, especially in a recession and trying to stretch the dollar with inflation. And the fact that I don’t wanna drive too far, I wanna get my groceries quickly.
So we need to think outside the box in terms of building programs that give value. That make it easy. And, dare I even say, try something different to connect with the customer. Because often it is the sea of sameness, Paula. It’s points, it’s the same thing you’re using for the same type of opportunities. And points are things that you can touch. It’s not tangible.
And you really need to figure out ways of being able to connect. And other industries have done so well with that airlines, hotels where the programs, in addition to having a currency. Solve a problem for the customer or make their lives easier or even delight them.
And so that’s really what we’re trying to chase is, you know, what is that ritual that we can establish with our customers? That can really make them feel connected to us.
Paula: I love it. And I mean, so many things I wanna pick up on Ryan. First and foremost, you’re absolutely right. The physical reality and the threat of increased competition on the ground in the real world with the, a brand like yours that has such an incredible footprint has to be ever present.
But even my own behavior, Ryan, I’ve started to notice recently, and you’ve already kind of alluded to it, but. You know, the tech e-commerce threat, for me, that switch only happened very recently. So in your sector, I mean specifically, so I’ve been buying books like the rest of the world on Amazon for 10-15, who knows how many years.
But I did start to feel recently that some of my grocery shopping that I was getting delivered from, in fairness, probably a luxury retailer here in the grocery sector. And I just went on Amazon and I started buying my water. And other kind of, you know, everyday essentials on Amazon, which, you know, I’m sure you’re painfully aware of all of that.
But it means, honestly you’ve got so much work to do, you know, in just as you’ve said in terms of, I like what you said, try to do something different. Cause that whole sea of sameness, the jadedness around loyalty, to me, that’s a very real problem. And especially in mature markets like you are in.
Ryan: Absolutely. And I think a lot of loyalty programs, Paula are often afraid to take a chance. And so the safe path is to do what other people are doing. Hey, if it’s working for them, then obviously they’re doing something right. So let’s just build a similar model and sometimes that idea of sticking your neck out, you know, and even dare I say, failing and learning from it, you know, offers tremendous value, you know?
And that’s something that I hope loyalty leaders are, they have the courage to try to consider ways to think outside the box. And that doesn’t mean blindly taking chances or even thinking that you’re the smartest person in the room and you know, saying, well, cause I put this on my whiteboard, you know, it’s gonna work.
You do need to talk to your customers. You know, you need to have this idea of shut up and listen. You know, like we talked about, you know? You know, sit back and let them tell you what their pain points are, you know where the opportunity is. And then look at your resources and what you’re able to do to marry that with what you can provide. And, tremendous opportunity and times in my career where I feel like we’ve been able to do that successfully.
Paula: Amazing. Well, we’ll definitely get into some of those stories now, Ryan, but I like the way you have framed the, you know, let’s call it the formal terminology, I guess would be the market research.
Ryan: But I’m quite saying it right.
Paula: But I like the informality of what you said, because I sometimes feel with market research, it is so structured and regimental that you kind of tend to, again, glaze over it and go, you know, you don’t tend to always spot the opportunities. Because it starts to feel again, a little bit the same. You know that of course people are frustrated and you get a lot of that kind of feedback.
Of course, everybody wants their groceries for free, so it tends to have sometimes limited value, whereas this mindset that you’ve articulated about shut up and listen is coming from a real place of wanting to hear.
Ryan: Absolutely.
Paula: Like, it’s very different than going through the motions, and I think that’s what I really like. So I might call this episode, shut up and listen and see.
Ryan: You and I should trademark that, you know, then we can hopefully prop off as well.
Paula: Totally, totally. But the other words that you used, which I love, and I know you’re very proud of Ryan, in all of your thinking, is this idea of loyalty as a ritual.
So you know, I know it’s part, again, of your kind of teaching, back at the university, but would you explain why do you think loyalty programs and tools and mechanics, why do you consider that as a ritual in business?
Ryan: Yeah, absolutely. So, rituals are these formal ceremonies where human beings connect with each other. And what makes us identify as part of something larger than who we are.
And, you know, rituals occur very formal. You know, a president being sworn in. A sporting event, you know, a wedding, but can even be everyday common things that you would never even consider. Paula, myself, going to Dunkin Donuts every morning and getting my coffee is in itself a very subtle ritual.
It’s me saying I’m ready to start my day and Dunkin gets to connect with me as part of that. So, the idea of where I wanted to take that, you know, in speaking about it and teaching about it as well, is loyalty programs have an opportunity to seize upon that, to turn their relationship from one that can be transactional, you know, very rich and powerful, but yet still merely transactional to something that really is more emotional in nature.
And the example that I often use is just one that I think anyone can really relate with is on the airline side. So when you look at airlines that give you status, think about when you’re able to get on the plane earlier than anyone else. That is a ritual. The early boarding.
You’re relieved of the stress. You get on there. There’s no one ahead of you. The overhead space is completely open. There’s no one staring at you to create that anxiety or that stress, but you were able to settle. Before any of these other poor people who have to get on 20 minutes later, which is a very stressful situation.
Oh my God, where am I gonna put my stuff? Everyone’s looking at me, you know, how do I sit down as quickly as I can? But they have built a ritual there where they are solving an issue for their best customers. Now those people are still earning points. Absolutely. And able to do a lot with them. But every time that they fly, they are connecting with the loyalty program and saying, because I’m a member, because I’m this elite member, I receive this wonderful benefit. Thank you. You know, whether it’s United or Delta, you know, or what have you.
And that often could be more powerful as a reason to stay. And to give that long term relationship then points, you know, which could be used, you know, kind of on an infrequent basis, but you can’t touch and you can’t connect with.
So that idea of a ritual is something that I go out and talk to companies and say, you know, where can you connect with your customer? Don’t just think of your points or your currency. But where do you interact? Is it in a store? Is it on a website? Is it via contact center? There are so many different ways that you can connect to try to either solve a problem or to accentuate something really wonderful that you do for them.
Paula: Absolutely. And I have to say, I always have that sense of feeling a little bit smug. When I get to board early as well, I should to, my ego is all over it. I’m like, yeah, I’m one of the whatever. So yeah, that’s probably not a good thing to confess, but you’re right, I mean, You know, it’s definitely, it makes me very conscious about the status that I have earned and very concerned about losing it.
So, as you’ve said, the redemption piece is super important, but at the end of the day, all of those soft benefits, as we call them emotional benefits, they’re the ones that actually make me behave in a very tangible different way, in a way that I can’t necessarily always articulate. So, I think on this show we’ve talked a lot about this idea, and I like your wording about the ritual piece because what I think it does, Ryan, is it makes it more of a part of the customer psychology, like the human essence of all of us.
Whereas when we talk in, you know, formal language, like emotional loyalty and transactional loyalty, That might be appropriate in the boardroom, but I think when we’re inspiring our teams, it’s nicer to remind people, as you’ve said, that you know, there is a place that you want your brand to have in the life of your customers. And how can you make that something that they value in lots of creative ways?
And it seems to me like you like to think creatively and out of the box and do things that maybe haven’t been done in particular industry. So any other experiences you can share, Ryan, like even from your previous career, because we haven’t talked about it too much before Giant Foods, but maybe tell us about some of the other programs you’ve been involved with and some of the work that you’re really proud of.
Ryan: Thanks Paula. I appreciate it. I’ll tell you where that loyalty spark started, which was back when I worked in the financial services industry. There is a student loan lender called Sallie Mae during the United States, which is the largest lender for folks going to college or graduate school etc.
I was in their direct marketing group, newly minted MBA coming out of Georgetown. Really excited. But my goal was to get folks coming in to take loans. It’s that direct marketing mentality. You’re hunting, you’re trying to acquire, you get ’em in and then you move on to the next target.
An issue that the company was having was we were losing a lot of loan holders to other competitive lenders. They were frustrated that they didn’t understand what they were getting into. They didn’t understand the terms. Think of an 18 year old trying to navigate the idea of borrowing $40,000 a year.
They’re not equipped to be able to handle that yet. We treated them like a sophisticated, financial, you know, adult, you know, who could understand what they’re doing. And so, Paula, you know, what I heard over and over was listening into our contact center. Parents and students who after they graduated six months later, they go out to their mailbox. And there would be a letter from Sallie Mae. And it would be a bill for $1,500. And it says, now you now owe us $1,500 a month.
And they would say something awful. I can’t afford to pay this. I never knew what I was getting into. And that’s what stuck with me. You know, our customers saying, I never knew what I was getting into yet. We were putting them in this situation. So on the back of envelope, it’s one of those crazy little stories, you know, on a napkin. Actually, I modeled out. A program that said, well, what if we told them before they ever signed that first promissory note, what the estimated cost of their total education would be?
Not just borrowing for one year, but to say, Ryan, you wanna go to Georgetown? It’s about $50,000 a year. So for four years, you know, that’s 200,000. You’re probably gonna get this amount of student loans. Your parents may be able to contribute this, you know, and you put those details in. So after all is said and done, do do, do it. That’s a calculation. You’re probably gonna owe $1,500 a month.
Now, knowing that right now, do you think you can afford that? And being able to do that for any school in the nation using real college costs. And so we built this system that actually did that because we wanted our prospective customers to know what they were getting into.
If they knew what they were getting into, they wouldn’t hate us as much. They may not like us, but they would respect the fact that we were educating them and empowering them of the decision that they were making. Because Paula, after they took that student loan, what do we want them to do? Take a credit card as they went into the working world, start a checking account.
We wanted to build a long-term relationship, you know, which is where the whole loyalty idea. You know, wow. There’s really an opportunity for a career here. So, going back to the idea, it was listening to customers. Actually, you know, going on to the contact center and spending an hour every week. Just listening in with other agents and hearing the emotion, hearing the issues.
Aggregating the data to say, you know what, Here’s a real opportunity here. It may not be something that you can financially quantify, but there is a ton of emotion in these folks saying, they don’t know what they’re doing.
Let’s help them. Build the system. I ended up getting a patent for it, even though I never made a cent off it because the company owns it. I’m really proud of that, Paula, in that we helped people by listening to them and building something that hopefully steered many of them away from bad debt. And toward a school that they could afford, and at least having the right conversations with parents and guidance counselors to be able to do so.
Paula: Incredible. The very fact that you, you know, have to use the words that at least they wouldn’t hate us. I mean, that is unbelievable, you know?
Because we’re all good people, especially in loyalty. I genuinely believe everybody who listens to this show wants to take care of customers, as you have demonstrated there. But you’re absolutely right. Like I worked for an e-commerce brand where there was a cross sell in the flight bookings we used to do.
And it was, it was absolutely unethical and people did hate us, but commercially the business thought it was doing a good thing for the business because they were selling more car hire. And they were connecting the dots with the complaints and the upset and the drama behind the scenes of customer service.
So it blows my mind that you actually had to, I suppose, formally recognize that problem as one human being in the company. And then I’m guessing you probably also had internal resistance. Because again, there was probably a risk that they would go to the lender that didn’t bother with the education piece and would just sign it away and, you know, it would feel like the problem was never gonna arise. But did you have internal resistance in that situation?
Ryan: Absolutely. There were senior leaders who said, why do you wanna open the curtain to expose them, to a point where they may not come and do business with us? And then there were senior leaders who got it.
And said, you know what, this is doing the right thing. While we may lose some folks, the ones that stay with us, will stick with us. And build longer relationships with us. And, thank God that group of folks, one. You know, and I, and I think with your listening population, Paula, you know, you have folks that are on the younger end of their career.
You know, where there’s an opportunity, you know, to show the courage, to think outside the box and have the idea to say, yeah, what if we tried something different? But then there’s also those folks at the senior level who just always need to keep their eyes open to the opportunity to do what’s right.
And, that there’s risk involved in doing so, and hopefully they have the courage to think very similar to how those folks did as well.
Paula: Amazing. Amazing. And one of the insights you’re absolutely right is, it is the mindset of we want loyalty from our customers a hundred percent. But actually, the first step in that relationship is to demonstrate our loyalty to them.
And I think as an industry to actually go, how can we be loyal to, in your case, these students and really be of service is absolutely the mindset that I think our whole industry is coming around to recognize. Because at the end of the day, I can only imagine how the relationships went for those poor students who didn’t have the benefit of your courage and having that education piece at the point that they took out.
And again, I don’t live in a country where I had to take out a $200,000 loan to educate myself. So it is pretty terrifying. And loyalty. Loyalty and financial services I think particularly Ryan, I dunno if you’ve worked in any other financial services, but to me it’s one that, you know, it’s very mature, but almost, you know, a victim of a lot of the complexity, I guess, in that business because, you know, they tend to have siloed relationships with customers and it’s hard to see almost the wood for the trees, I think in financial services.
Ryan: Yeah, I agree Paula. And I worked at Capital One, so I worked on both the credit card and the banking side as well. And so much of it is commoditized as well. Very commoditized, you know, you’re selling effectively. The same type of products, you know, loans, credit cards, banking, vehicles, And you’re trying to figure out, you know, how can I make myself different? And so often, so much is put into the marketing and trying to, you know, get a pitch person.
You know, as opposed to things like service. You know, can you pick up the phone a minute faster than you did before? Can you answer an email a day sooner? Can you actually connect with folks and want to establish yourself as a service provider? And I think a lot of companies do the math and say, building service is gonna take way too long and way too expensive when I know I can go hire the celebrity instead. You know, or just throw a lot of money at, mailer’s, emails. And that’s a shame because yeah, the companies that have established themselves as incredible service providers.
USAA, which is a big, financial service insurer in the United States is uniformly known for being phenomenal from service. They sell the exact same stuff. Any other insurance provider sells or bank, but people love them because they feel special. Because they’re agents and their people are taught to treat every customer, in a very specific way. And, yes, it is expensive. It takes time. But above and beyond anything we do, Paula, you know, points, anything else.
Treating customers right to me is the ultimate loyalty program. I think if you do right by them, you know, those are the things that will make them stay with you. You know, versus any other thing that we’re attempting to do.
Paula: Yeah. Couldn’t agree more. Ryan. And I did have Fred Reichheld on this, on this show.
Ryan: Ah, that’s great. Yeah.
Paula: It was about a year and a half ago now. But what blew me away was, you know, he used the word love in, you know, on a business show all the time. He was like, love your customers. And I’m like, oh, we’re going that far. We’re using the L word. There you go. Controversial.
Ryan: But you know, I use Mr. Reichheld ‘s books in my teaching class, because the philosophy of what he taught is phenomenal with the ultimate question and some of the other efforts he has there, you know, and that idea of design. Don’t just teach folks the mechanics of business. Teach them his philosophy of understanding how customers feel and being able to react and relate to that. So he’s been wonderful for this industry as well.
Paula: He sure has. Absolutely. And I know you had a great example in Choice Hotels as well, Ryan. I know you spent a few years there. So will you share that one with us?
Ryan: Yeah, no thanks Paula. So I was fortunate to be able to lead their global loyalty program called Choice Privileges.
Choice Hotels is at this point a global hotel entity, one of the biggest in the United States, and getting bigger around the world as well. Choice traditionally has focused on economy to midscale properties. These are often, at least in the United States, The type of hotels that you would come across on the roadside, you’re taking a road trip and you need to stop for the night. You get off the exit ramp, and then there’s likely a Choice hotel. It is not usually a high end, chocolate on the pillow, type of hotel, but they’re clean, they’re consistent. Free wifi. You know, good. And they’re everywhere. You know, so, it was a very interesting opportunity to come in.
When I did so they introduced a new type of hotel called a Cambria. A Cambria is an upper mid scale, business traveler focused hotel. So very different than what they did before. Because now they’re going after business travelers versus these leisure travelers, you know, senior citizens or kind of small business folks.
You know, now it’s folks that are going to the office and at the end of the day they come back to the hotel and they wanna unwind. So they came to the loyalty program and said, well, what are we gonna do special for these guys? And when you took a step back, you just can’t do what you always did and say, well, let’s give them a bottle of water when they check in.
You know or something like that. You know what, they can expense that stuff, you know, that’s something that they can, you know, the company will pay for. But like we talked about before, Paula, we shut up and we listened, you know, and so we looked at, we looked at the feedback from the market research, and what it showed us was, yes, these are business travelers, but what they wanted at the end of the day, was to just disconnect from work. And just hang out in the hotel. Maybe socialize, but unwind. And the wonderful thing about these new hotels was that every one of them had a full restaurant and bar located in them. And so then we got to thinking, okay, okay, we got this great opportunity for them to connect. We know what they want. We know what type of travelers they are. Let’s try something different.
And so what we developed, Paula, was a coaster. That was unique to every one of the hotels. So we had them in DC, Miami, Fort Lauderdale, Los Angeles, and the coaster had local artwork that featured something of like, you know, from the geography that that was local to the area.
We got a artist to do it.
Paula: Beautiful.
Ryan: And with checked into the loyalty program. If they signed up at the hotel or if they were an existing member, we would give them the coaster and say, with this coaster, you can go to the restaurant and bar. And you can get a free drink, whether it’s leaded or unleaded, you know, if you wanna get a wine, go for it. If you want a soda or water, you know, more power to you.
But this idea being that the loyalty program enabled them to facilitate that connection. Now we’re starting to think about rituals here. Right. You know, because they got the coaster, they went there, they’re sitting there, they’re enjoying themselves and you know, one drink probably turns into maybe appetizers or maybe a meal. More drinks. So the revenue of the restaurant goes up.
But also they feel connected during their stay because of the loyalty program. Again, points. They’re never gonna see during the state, you know, it means nothing but this coaster was something that was like their passport, you know, to have that connection for the night.
And, what I really loved about it Paula was kind of similar to the airline example. Other people who may be checking in, see someone get the coaster. And they say, wow, what’s going on there? You know, why? Why is that person getting that? Well, they joined the Choice Privileges program. Wow. How do I get to do it? You know? I wanna be a part of that too. You know?
So you facilitated this great opportunity to highlight the program with the product itself, the hotel stay. And marrying loyalty with the product. So we were delighted, you know, that our leadership had confidence in moving forward with this. We had to go through a lot of loopholes, you know, illegal to make sure, hey, you know, we’re not encouraging people to drink. This is okay to get an alcoholic drink, all that good stuff. But the results were wonderful. We increased the restaurant revenue. We increased the number of enrollments at these properties, but we also increased the member recognition.
Kind of going back to Mr. Reichheld ‘s, elements of like net promoter and feeling important. And when we asked these folks, did you feel recognized during your stay? It went up like 25 to 30 points because they’re like, yeah, you know, you gave me something special.
So it’s a wonderful program. I believe that it’s still active. As of the state, which is about, you know, eight years after we introduced it. So, really happy with that one, that we were able to think outside the box and create this ritual, which was really special for the customers there.
Paula: I really like it, Ryan. And you know what I’m hearing as you’re describing it, like to me, there would immediately be a sense that I would be welcome in the bar and restaurant, like beyond the fact of knowing it functionally exists. Of course, that’s always an expectation, but it’s super easy as a business traveler to go and hide in the room.
Order room service, do my email and really isolate, you know, especially as a woman, dare I say, in business, sometimes it’s a little bit weird if I’m gonna go and sit in a bar. But to feel welcome, like the barman’s gonna know who I am. Somebody else might have a coaster, you might have a, you know, a chat with people about that.
So, I can see all of these little, like opportunities to almost create a community, and then when it comes to the next business trip, absolutely that experience will stay. So I’m pretty sure that it had a very strong emotional result as well as the functional value that you explained for us.
Ryan: I like the way you phrased that, Paula, that idea that we effectively, you know, gave people like a passport to go, belong. You know, to be a part of something. You, you gave me an invitation, maybe an invitation is a better word. You gave me an invitation to come be social and to hang out. And I, and I think you hit it on the nail.
You know, lot of people just sit in the room, they isolate, you know, but hopefully this encouraged them to kind of step outside the box and realize that, you know, there is an opportunity to connect and it feels special. And if we accomplish that, you know, fantastic.
Paula: Amazing. So bring us full circle then, Ryan, your current role. Giant Foods, as you’ve explained, it’s an increasingly intensely competitive sector. And grocery is something that we all do in so many different ways. But you are really, I suppose, later focused on using your loyalty program as a differentiator. So how are you translating all of this career experience into this?
Probably the most competitive sector, dare I say, of all the ones you’ve done. Maybe, maybe that’s, I don’t know fair to say, but tell us how are you doing? Oh God.
Ryan: And you know, I came into this role back in late 2019. I left the hospitality area to come to grocery. Probably three months before COVID hit.
And, you know, getting into grocery, you know, I was fortunate cause I know so many people lost their roles, based upon COVID. And I don’t take that for granted, you know, of you know, just being, you know, fortunate enough to be in the right place at the right time.
What was interesting about the COVID years Paula is, for grocery they were very lucrative years because at least here in the United States with the lockdowns, people didn’t go to work. And they didn’t go to restaurants, so they needed to get food. And what that often meant was they just went to the grocery store to get everything they needed. So yeah, it was, I’m not gonna say easy, but you know, it kind of took care of itself for several years.
However, in the past year, as the world has opened, people go back to reality. They’re going to restaurants, they’re going back to work. We’ve gotta fight for our share again, you know, because loyalty is up for grabs, you know, people are willing to venture out. The recession has hit incredibly hard where there people are looking to stretch their dollar more than ever before. A lot of the government benefits that the United States has given out have been pulled back. So shoppers that we could count on before that were able to subsidize their shopping are not able to do so.
So again, they’re looking to get the most out of every dollar they have. So, where does loyalty come into that? You have to build a program that truly gives value and not just for platinums, you know, or that type of thing where, hey, if I spend X amount of dollars, I’m gonna get something special. No. You know, in this industry you gotta try to help every individual you can.
What I find fascinating about grocery Paula is we know eight out of 10 customers that come into our store. I’ve never had a member activity rate or, you know, an overall activation rate that high. Hotel it was about 40 to 50%. You know, if you were doing really well, you knew about 50% of the folks coming in that had that loyalty relationship.
Here, it’s 80% we, so that part is nice. However, they are not loyalist. There is a small group of folks that will shop with you all the time, but then so many of them are just very casual shoppers. Well, this week I’m gonna go to Giant. Maybe I’ll stop by Safeway. I’m gonna get my produce here. You know, so yeah, they can be very picky. And you only get part of that share of wallet.
And so our goal is to say, well, how can we try to get them to choose us every week, not just once a month? You know, but on a regular basis, and go back to the idea that we’re very commoditized. You know, we’re selling the same can of beans. That a lot of our competitors are, maybe a competitor is a half a mile closer as well. You need to think outside the box. It can’t just be the sea of sameness. With the usual type of things, you know, points that you can redeem for, you know, grocery, you know, savings, etcetera.
We do have a gas relationship, which we’ve had for over 10 years where you can redeem points for gas. A lot of people use that, but a lot of our competitors do it too. So where we arrived last year, thinking outside the box was. Well, what if you could use our points to redeem for our private brand products, the products that we produce that have our name on them?
So it’s only us, you know, who has access to them. And we hyper reduced the valuation so that they get the ultimate yield on the points and get things for as cheap as possible. And so let me give a quick example. We give a dollar or a point for every dollar spent. You get a hundred points. Typically, you would get a dollar off your grocery bill or 10 cents off a gallon. Everyone does the same thing. It’s pretty common. Well, but what if those hundred points could get you a $4 gallon of milk, or even just a few months ago, a $4.25 cents thing of eggs? So now your value per point went from 1 cent per point. Up to four and a half cents per point.
But the psychology there, Paula, was, I wanted every customer to say, you know what, with what I’m spending, at least I know if I go to Giant, I’m gonna get my eggs for free this week. Or I’m gonna get my milk for free. And, you know, free, you know legally is, yes, they are getting the points for it.
But that psychological aspect of saying, every time I shop, the program did something for me. It didn’t just earn points, but I walked out of the store with something of value because of engaging with this. And when we did that, the engagement of that group of folks shot up significantly cause they are looking to stretch their dollar.And knowing that at least five bucks of, you know, something they would’ve paid for was free this week. Really made a difference in what we were trying to do.
So that program has grown to nearly a million products redeemed in under a year. And we’re delighted at the amount of engagement that we’re seeing with it and constantly looking to try to evolve it. We’ve now gotten to a point where we have five points. We’ll give you like a lime or a lemon. Or a free donut. You know, things usually cost like 70 cents, 80 cents. But only five points. You know, typically you couldn’t do anything with five points, you know, it was worthless.
Now five points gets you something free you know, and, you know, again, it’s small, but it’s very powerful. From a psychology point of view to say, this program is looking out for me, it’s giving me value every time I engage. And how critical that is. So, that’s where we’re looking at now, you know, is really trying to, in this era of value focusing on elements like that.
Paula: It’s incredibly powerful and very inspiring actually, Ryan as well. So thank you for sharing those numbers and the rationale behind it because I do think there is that, you know, to go back to your point at the beginning, you know, the frustration, the jadedness, and very often the inability to see the value in any program.
So we’ll collect all the points, we’ll cut all the coupons, but at the end of the day, you know, they might collect in a pile either on my phone or, you know, or elsewhere in a drawer. So, to see and hear that you’ve actually had a million redeemed is absolutely extraordinary.
And I remember from our pre-call as well, Ryan, there’s about 4.4 million members in your program currently. Am I right?
Ryan: That’s correct.
Paula: Amazing, amazing. So listen, I’m very conscious, I have about 20 more questions, but we are running out of time, Ryan, so I’ll finish with one and, of course say that what I really hope is we can continue the conversation.
Ryan: Oh, i’d love to.
Paula: Bring, bring you back next year? Absolutely to continue. Because 12 months flies by in this world of broadcasting, I can tell you that for nothing. so we’ll definitely want to keep there very close to the work that you’re doing. So, I suppose just in closing, I want to, you know, celebrate the awards that you won recently, and let you maybe tell us a bit about that and just anything else that you wanted to say before we wrap up.
Ryan: Thanks Paula. I appreciate you giving me that opportunity. No, we’ve been delighted to be recognized by several groups this year. We are one of only three grocery chains in the US to win the Newsweek, Best Grocery Program. Three years running.
Paula: Amazing.
Ryan: 21, 22, 23. And then also Loyalty 360 gave us Best in Class and the Platinum Award for Loyalty Strategy.
So, going back to, you asked Paula, that reflects the efforts of so many folks within this organization that have supported us, you know, down from my loyalty team, to the leaders and the finance team who are willing to make the investment because they see the value in what we’re doing to create incrementality and to retain our best customers.
And it all comes down to that idea of building a long-term relationship and how that is facilitated. So thank you for allowing me the chance to recognize that.
Paula: Wonderful way to finish up. So with all of that, I will say Ryan Draude, Director of Loyalty, CSM, and Digital at Giant Food. Thank you so much from Let’s Talk Loyalty.
Ryan: Thank you so much, Paula. Take care.
Paula: This show was sponsored by The Wise Marketer. The world’s most popular source of loyalty, marketing, news, insights, and research. The Wise Marketer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 500 executives in 38 countries as certified loyalty marketing professionals.
For more information, check out thewisemarketer.com and loyaltyacademy.org.
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