Paula: 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.
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Hello and welcome to today’s episode of Let’s Talk Loyalty. Now many of you listening will no doubt have already heard about one of the most exciting loyalty programs to launch in late 2022 by one of the UK’s biggest grocery retailers, ASDA. ASDA is really well known and well loved, and it’s the last of the big grocery retailers in the country to launch a loyalty proposition.
As you can imagine, I was excited to find out why they’re investing in loyalty and why now after 72 years already in business. So joining me today to explain their thinking, approach and intentions is Matt McLellan, a Vice President for ASDA in the UK. What I think you’ll hear from Matt is a brand devoted to delighting its customers and one that realizes the power of data and dialogue with their customers to achieve exactly that. I really hope you enjoy my conversation with Matt McLellan from ASDA in the UK.
So Matt McLellan, welcome to Let’s Talk Loyalty.
Matt: Thank you very much. Hi Paula. How you doing?
Paula: I’m doing super well. I’m actually very excited, Matt. We’ve been, really excited watching you guys talking on LinkedIn and various other places about the launch of ASDA Rewards. So one of the biggest stories I think of the, of the decade, dare I see it, at the risk of a worst dating.
Matt: I was super excited for us. Really, it feels like it’s been a long time coming, but the whole business is completely galvanized around it. And it’s a huge change for, for a business. Like as, it just wasn’t something we’re thinking of doing and, and now we’ve got it. It’s been really successful.
Paula: Okay, so we’ll get into the whole story because I want to understand every detail of the, I suppose, the decision making, the challenges, concerns, successes, of course. So it’s about six months old now. So again, almost, you know, it’s still really early days to get these kind of insights, so incredibly exciting. But before we get into all that exciting detail then Matt, as you know, I always love to ask my guests a bit more on what do they admire in their own life in terms of loyalty program.
So given your role, running this ASDA rewards program, please do tell us what is your favorite loyalty program?
Matt: I, I prepped for this. I listen to your podcast. Obviously ASDA Rewards is my favorite program, but beyond that, I’ve got a couple. The first one, Amazon Prime, and I’ve, and I’ve been a member for that for, well, probably 10 years or so.
And the reason I love that, it’s, it’s just so simple and the value equation for me as a consumer is just awesome. It just works. And I feel I get great value from it. Predominantly their deliveries, but, we use the movies and bits and pieces as well, so a big fan of that. And then, Virgin Atlantic Flying Club.
Paula: Oh, nice.
Matt: I’ve been in for a long time. I used to live in Shanghai. Ah, and so I used to do flights between Britain and Shanghai. Six or seven times a year and, and always used Virgin. And actually the bit that made me, low there was once you get gold stages, you get to go in their lounge.
And Virgin’s lounge is just awesome. It’s got like cool table and like a vodka bar and all that kind of stuff. So really it’s the lounge and the, and the kind of experiences that you get with Virgin that kept me loyal to that.
Paula: Wow. Oh my goodness. Super exciting. And I will want to get into your actual background in Shanghai as well, but just before we move off it, I think I said to you off air as well, Matt.
For me, Amazon Prime certainly been, you know, said on this show, many times before, and I’m sure it will be many times again, but really, you know, I think it’s the, the psychological concept, first of all, that I’ve paid for this loyalty program. Therefore, the free delivery benefit is just so permanent in my mind in terms of my decision making to the extent that even now some of my grocery shopping is moving to Amazon.
So that was a shock even to me. But it’s for bulky things like water, for example, and it’s just such a competitive marketplace. And again, the delivery of all that kind of water that I love. So totally spoiled rotten with Amazon Prime. And yeah, I’m pretty sure that you’re paying close attention to the fact that it is a paid program. Of course, given your background as well.
So, so listen, Matt, before we talk about ASDA Rewards, tell us about your career because honestly, it’s quite extraordinary what you’re bringing into the ASDA business.
Matt: I’ve had a really great career and I’ve, I’ve really enjoyed it and I’d love to say it all planned out, but it wasn’t.
So, I grew up in retail, so my mom and dad owned the village shop in the Yorkshire Dales. In a little village called Kettlewell. So from like an early age I was, I was in retail and both me and my brother both went into retail in our careers, probably because of what my mom and dad did.
After Uni I joined, a retailer called Safeway who got, bought by Morrisons, and I worked in shops. And that was brilliant because you get to see customer experience firsthand. And then I went into marketing, by accident really. It was one of the placements on my graduate rotation program. And I really, I really loved it.
And after that, I was wondering what to do. And I came across a company called Dunnhumby who I, I hadn’t heard of. I was probably 24 at the time. But I quite like the idea of working for them because they, I could walk to work and they were literally based in, in the same part of town. And so I went out an interview and I was blown away by what they claimed we could do with, with the Tesco Clubcard.
And so I joined them and I was very luck, lucky cause I joined them probably when there were about 150, 200 people. So pretty small. By the time I left, sort of 15 years later, they were the best part of, we got 2,500 people globally. And with Dunnhumby, I got to do some amazing stuff.
But with them and Tesco actually, and I’d worked for both. Throughout my career at Dunnhumby, and, I, the most exciting stuff is I got to go and set up Dunnhumby in China, which was never anything I’d ever planned to do. I, I went to live in Shanghai. I lived there for seven years on and off.
Before I lived there, I couldn’t have even pointed to it on a map. I mean it was, it was just not, it wasn’t a planned career thing. But loved it. And over there we, we set up the, Tesco member card. with, with Tesco.
And then we started working with, China Resources Vanguard on their loyalty program, their loyalty design, and with a few other sort of retailers as well, including the JD.com and, a couple of other retailers like that. I mean, it’s brilliant time to be in, in, in the, Asian market. Just an explosion of growth.
I also got to live in France for three years, so my daughter was born in Paris. And I worked with Groupe Casino, in France. And then, I moved to Tesco proper, cause Dunnhumby is part of Tesco. And I looked after customer propositions. And kind of customer strategy and insight and things like that, working with the insight function to, to bring new propositions and, and ideas for customers to life.
And then, about three years ago, I joined ASDA. And the, the thing that attracted me to as was it was the, a great, first of all, great culture and that’s born out to be true in my experience. Just brilliant people, but also a huge untapped resource in all the data they, they had. That wasn’t connected, wasn’t joined up around the customers and wasn’t really being used.
And I thought, what an opportunity to go and help a major company, turn around their strategy and, and become a bit more data-centric and customer-centric in what they were doing. And, and that’s what I’ve got to do over the last three years. And I accommodated with sort of six months ago as you, as you mentioned, launching the rewards programmer.
Which was a real dream, I mean, an amazing thing to launch something of that scale for that many customers and to have that much impact on the business. But we’ve only just got started. So I’m sure we’ll talk about that over the next half an hour or so.
Paula: We will definitely, for sure. Matt, so incredible career. I do think Dunnhumby is one of those names that until you know, it, it, it might kind of be very much behind the scenes, but those of us in the industry, as soon as you discover what they can do, it is absolutely as you said mind blowing. And I know you led the UK business for many years, so I have no doubt that, that, I suppose data insights, mindset was key to you being, I suppose super exciting for ASDA to bring into the team.
Matt: Yeah.
Paula: So just because we have, I suppose, very much a, a global audience, Matt, before we get into the, the ASDA Rewards side, will you just explain about ASDA as a brand? It’s so well known in the UK, but maybe not in the US or Australia. So will you just explain the brand positioning perhaps?
Matt: I can. Sure. So, so ASDA is a, a grocery retailer and a fashion retailer. We have about 670 shops across the UK. And we are the number three here in the market. We serve about 17 million, transactions a week. So we’re big. And we do around 20 billion plus of sales, a year.
Paula: Wow. Yeah.
Matt: And we’ve got the core ASDA brand, which is big grocery retailer. We sell lots of own brand. We sell lots of branded products as well. And really everything under one roof. And then we’ve also got a, a really great fashion brand called George, which is now also in Homeware as well, which is a kinda a homegrown brand. And that’s actually, that’s quite famous in the UK too.
And, and positioning wise we’re praised of middle, middle ground. So, we serve pretty much all the UK. So from, you know, super affluent people through to, people who haven’t got very much money at all. But our kind of our core group of customers are, are more, in the middle particularly families. So we over-index for young families. And they also love our fashion and, and George, products too. And, we’re pretty much, larger stores, big box stores. Although we are now getting into the convenience market, at pace.
For the last 20 or so years, we were owned by Walmart. And so we’re part of the Walmart family and, and therefore lots of our propositions that, your international listeners might be familiar with, like Rollback, they are in ASDA too, or they have been.
However, about a couple of years ago, Walmart sold ASDA. And it got bought by two entrepreneurial brothers, Mohsin and Zuber, and TDR Capital and they’ve really bought quite a cultural shift to the business. And I think under Walmart, great business, clearly, they did a lot for the brand and then they helped us, you know be the business that we are today. But we were one part of a you know, a giant international machine.
Paula: Totally. Yeah.
Matt: Under our new ownership, there is a real passion for the customer and a passion for sales and Mohsin and Zuber are brilliant entrepreneurs. And I mean, they’ve grown their business from, from nothing to really big global business themselves. And they’ve brought that spirit into ASDA and so that is why I think we’re, we’re daring to try some stuff that’s different.
So the loyalty program, I, I, I really don’t think would’ve happened under previous ownership. But was one of the first things that Mohsin and Zuber and TDR wanted us to do. As they, as they bought the product, so, as they bought the brand. So, it’s, it’s a great brand. We, we have about 150,000 employees.
We’re really well loved in, in the UK. We’re, we’re well established and we’ve got an aspiration to be the number two retailer in the UK in the next couple of years, and I think we’ll do that.
Paula: Wow. Oh my God. I love the ambition Matt. My God. Super exciting. And also the change of ownership, because as you explained, it seems that that was key to new things being tried first and foremost.
So obviously you’ve got much more control, as you said, than you might have had within, such a giant company like Walmart. But it actually, it’s, it’s amazing to me, and I remember when we talked the last time that you guys were explaining that actually you are the last of the big four grocery retailers in the UK that didn’t have a loyalty program, and you’ve launched this 72 years. After starting the first store, which I just think is a gorgeous statistic.
So, so tell us why was loyalty something that the business decided? And did it come, I suppose, immediately you’ve talked about this kind of intention of looking after customers? Was it something that the brothers were very clear they wanted to do from the outset?
Matt: Yeah, there were, and so, I think cause they were, sorting out whether to buy, after or not. That was definitely one of the things that attracted them to it, that we didn’t have that. And they, they see that could be a valuable asset. And, and a great, great driving mechanic and a brilliant way to show love back to your customers and we’ll come on and talk about that.
But they were so, they were pretty clear. We, we want to do something like this fast. So almost within a few weeks of them walking through the front door, I was asked to put a paper together on, on why we would do it and how it, and how it might look.
The good news is we’d been kind of thinking about it a little bit in the background. It was a bit of a pets passion project for me, hoping that someday day we could do it. So we had some ideas and we, we’d done some customer testing and concepts. And the reason that we wanted to do it, I think, was, several fold.
One is, we had all this data, from lots of different touchpoints with our, our customers, but we had no real way of joining all that up around a singular customer idea. And of course, a loss program allows you to do that. So that was the first thing. And, and that has been, really, really important to the transformation of the business, and, and will be, and going forward. And we’ve just recruited a, a, a VP of Data Analytics to harness all of that and to transform the way that the business works and to use all that data that we’re now getting.
The second reason was, we felt we had not got the advantage of some of our competitors have been able to have a, a dialogue and a relationship with our customers that a launch program allows you to do. And so, you know, we, we, of course we had email addresses and of course we’ve got people’s phone numbers when they sign up for scan and go and all that kind of stuff.
But we’d have the permission, all the, all the mechanism really for having, a, a, a dialogue and, and a relationship with them beyond, you know, what they were doing in our shops or, or on our website. And we saw that loyalty was really an important part of that. And then I think fundamentally there is a, a real shift and, and a belief under our new owners that you, you’ve gotta put the customer at the heart of everything you do, and you need a way of saying thank you back to them for shopping because they’ve got a choice.
Especially UK market is probably the most intensely competitive grocery market in the world. They’ve got lots of choice. And so we want to thank our customers and, to do that properly and to implement a customer first strategy. Really, you, you need a mechanic, like a loyalty program at the heart of it.
Paula: Absolutely. Yeah, so compelling, Matt. And you know, I do think, you know, data is very, you know, often something that is the, the kind of core driver. And I’m impressed to hear that I suppose especially coming from, again, entrepreneurs and private equity mindset, that they already had an understanding of the value of that data. I sometimes feel it as loyalty professionals or analytics people, there’s a lot of education sometimes that has to be done so greatly.
Matt: That’s definitely been, that’s definitely been my experience, sorry. There’s definitely been my experience sort of around the world working with lots of different retailers that, you know, sometimes just quite a persuasion job to be done.
Paula: Absolutely. And I think the thank you piece stood out to me a lot as well, Matt, because so many again, start loyalty programs going, oh, this is a great way for us to get customers to be more loyal to us without forgetting that the brand has to move first. And it’s quite rare for me to hear any loyalty professional being so clear that it is, first of all, a tool to demonstrate loyalty before expecting it. Would you say that, that’s true?
Matt: 100%. So I think a loyalty program should be around saying thank you to our customers, rather than expecting them to say thank you to us.
Paula: Amazing.
Matt: I think people sometimes have it the wrong way around, as, as you said that is, I think that is, in my psyche, probably from you know, the way that grew up in my dad’s shop and stuff.
But also, I mean Dunnhumby is a brilliant brand in terms of that, that customer first philosophy. And you know, David Ciancio used to run the loyalty programming for Kroger, who’s like an eye to eye think in this world. And you know, Clive Humby himself and Edwina, and, and the leadership team at the time, they, they all had that real innate you, you are there to say thank you to your customers. That’s what, that is what it’s about. That it’s not about, them showing loyalty to you. It’s about you showing loyalty to them.
Paula: Amazing. Amazing. And the other piece, and I’m picking up on everything you referenced in terms of why, to answer my question about, you know, starting it, you know, so recently.
But I think the piece about having the opportunity for a dialogue with the customer is also you know a very important distinction because again, you could say thank you, but can you have an actual two-way dialogue? Can you have the opportunity for them to talk back? And I think that’s something that is very often trivialized, dare I say it, either in the business case or in the overall thinking. But I think as a consumer, that’s actually what I probably value the most.
Matt: Yeah, I, I think I totally agree. I think being able to feedback and feel like you are listening to, as a consumer by the, you know, the, the brands that you use. I think that’s really important and, and I don’t think that should be a little add-on. I think that should be something that’s kind of built into the core philosophy of whatever you do, and we’re certainly doing that with ASDA Rewards.
Paula: Amazing. Amazing. And then listen clearly, you know, from the top down, absolutely clear, everybody was excited and obviously gave you some tough time challenges, which we’ll also talk about as well in terms of launching something. But how was the rest of the business, I suppose, because I don’t think you can do it either bottom up or top down. It of course has to come from, from bottom and top equally. So what was the, the feeling, I suppose, on the shop floor, again, this is a very traditional brand, had been operating in a very different way.
So what kind of response did you get from your other colleagues when you started to plan this?
Matt: Pretty overwhelmingly positive actually, and, we weren’t sure whether that’d be the case or not. Because it is, it did a change but our shop floor co, I mean, we met as we were designing the proposition.
We, we met with obviously lots of customers and, and we met with lots of colleagues as well and got their inputs. And it, it felt like, so the comments from my colleagues, but they’ve almost been waiting for it. This is something they’ve wanted for a long, long time. And it’s been, yeah, every time we used to do colleague conferences or you know, listening groups, there was something they would always ask for and we would finally bring in it.
So from a shop floor point of view, I think people were really excited and you could see that as we launched the stores that we, we piloted with and then we rolled out, like the, the support was just phenomenal. Some of the stuff they were doing in the stores to get customers excited, which is brilliant.
And then, and then in the office, I think similar, I think lots of people could see the power of the data, and I think we’re excited about having the, the, that connected customer view and using that to drive their, their parts of the business forward that faster and make better decisions.
I think lots of people were also quite excited about doing something so new and innovative and a real beacon of, new ownership and entrepreneurialism, like trying to do something and doing it fast and doing it in a quite a different way to some of our competitors. And and I think got very quickly how this could drive, you know, some of the top line sales and would also help us drive, you know, relationships to our customers and also relationship to our suppliers and, and, and, I think there was pretty much broad support everywhere to be honest.
It didn’t feel like it was a fight. That doesn’t mean that it was an an easy business case. We, we went down to, you know, real degree of detail to make sure that what we were gonna do is gonna be smart and commercially sustainable, cause you don’t wanna launch something that you have to roll back on.
But I think everyone was pretty positive that we should do it and try it. But to make sure and kind of help on the journey, we were very deliberately careful with how we launched the program. So we, started with 16 shops only. We co, we codenamed the project, project Marvel, because it was all about a group of superheroes coming together from across the business to do something.
Paula: Nice.
Matt: And we had 16 Marvel stores to begin with across, west Yorkshire and, and Birmingham. They were, they were, they were fundamental to changing the proposition. We completely changed it based on their feedback.
Paula: Really? Wow.
Matt: When we launched the MVP looked different, felt different, was a different color. There was, there was just tons of stuff with it that we built, we built into, later iterations of the program. And then, we, we launched basically in, in phases. So group of store by group of store, and eventually did the full rollout to sort the half the stores and got it last August and September.
And that was quite important because you could feel there was an evangelism from the stores that already had it about what it was doing for their performance and what they were, it was doing for them as like feeling of excitement in the stores as, as kind of, shopkeepers.
And so they were that, that actually turned out to be genius, although slightly unplunging. But it was genius in retrospect. Because it meant that they were doing some evangelizing on our behalf and actually we were getting stores basically writing to me or, or to my team, like Mark Baxter and people who’s really, him and his team are the real brains behind office.
But they, you know, like, wishing, can you come to our store next? Please all happen to our doors next. We want it first. Which is, you know, when you’ve got something that you know the stores are desperate for because their customers are asking them about it. You, you know, you’re probably onto a winning proposition.
Paula: Absolutely. Yeah. And again, I mean, what I’m, what I’m equally excited about hearing you say, Matt, is that the back office staff were buying in from the very beginning as well, because I think sometimes for front facing staff, again, that the shopkeepers that you mentioned, you know, they, you know, obviously want to take care of their customers instinctively.
I think it’s cultural in, in most of that kind of profile. And again, I suppose customers are often saying, well, look, there’s other brands of loyalty programs, so, so they’re facing that kind of, you know, perhaps oversimplification in terms of why we should have a loyalty program because everybody else does, which clearly we would never say on this show, but it is actually something I think we’ve all heard, even dare I say it at, at higher levels in some organizations.
But I can understand that that, momentum and excitement that you talked about galvanizing the company. But then it’s the back office stuff that I do think, you know, as you said, relationships with suppliers, the whole merchandising side of the business. So, so would it be fair to say that they got it as well straight away in terms of what it could do for them? Or did you have to educate people in terms of what it could do?
Matt: There’s a bit of education, although I think, you know, our, our home office is, is what we sort of support office in ASDA. Our home office colleagues were also equally excited and are as equally sort of just as customer centric as the people on the shop floor.
It’s kind of recruited for almost ASDA. So I think they could see it, philosophically they could see it. I think what we had to work out with our home office colleagues was more commercially, how do we make it a sustainable modern. How do, how do we, make sure that we can do something that’s really meaningful and interesting and exciting for customers?
That we’re clearly we’re gonna have to invest quite a lot of money in it. How do you do that, and commercially, how does that ladder up into your PnL? And then how can you work with the supply base that we’ve got, to come on, the journey with us and how the things that this proposition allows them to do, to reach some of their consumers or potential consumers that, you know, allows you to monetize it, and create some income, to offset the cost of, of the, the, the reward in the first place.
And all of that, we’re still, I mean, we’re still alliterating, we’re still really in, you know, our version one of the, of the, of the proposition. With version two, hoping to kind of roll out early next year. So we’re, we’re, we’re tweaking around how do we get the commercial proposition right?
How do we have something that’s really brilliant for consumers and suppliers and for the business? Cause it needs to be for all three. But we’re doing that side by side with our colleagues in, in the home office and you know, they, they’re fully supportive cause everyone wants it to work. And everyone’s excited about what it’s done already, for the business.
Paula: So it sounds like a combination of patience, but impatience, like the best of both worlds. Like normally a loyalty proposition, of course. And, and launching a program of this scale would take anything up to, in my experience anyway, Matt like up to three years. But I think you did it in three months.
Matt: Yeah.
Paula: Am I right?
Matt: Yeah. I did.
Paula: Tell us about that.
Matt: And I’ve got, I’ve got the scars and the bags and the, the late nights. Let’s kinda prove it, but, we did, so we, we, we had quite a small. First of all, I mean, we, we had to literally start from scratch. So no technology, no inspirations with our tills, you know, no real single customer view, no loyalty team.
We had to recruit all of that. So, the, the first iteration was created by me, a lady called, Kelly Speight, another lady called Caroline Green, like in a room working out what could we do quickly? And then, that, that’s what got us to the MVP.
Then we started recruiting the, the, the senior team. So we were very lucky to get Mark Baxter, in who’s our Senior Director for Loyalty to really kind of help to charter proposition and, and get it landed and, and, and help us scale it.
And we, we did first sort of concept all the way through to the MVP in the 16 stores. The year was about three months. And I mean, it really was an MVP. It was, a, a functioning app. It gave you the, the core proposition of some money back as you shot, which we’ll come on and talk about and, it, and it, it worked to the tilts. It didn’t work online at that point. It was just an in-store, proposition.
But it gave us enough that we could learn literate from. And the colleagues gave us even more feedback and the customers in the stores gave us even more feedback. And then, we basically, as we scaled out across the estate, every time we went to a new tranch of stores, we almost went with a slightly updated and tweaked proposition.
And we changed lots of elements of it throughout that, throughout that sort of first year. So it was three months to get kind of the MVP up and running, and then about another nine months before we went to the full scale. And, and that gave us the certainty around the business case and it gave us that galvanation of colleagues that we’ve talked about, and it gave us the chance to tweak and improve the proposition as we went.
Because we really wanted to make sure that when we launched it nationally, we were launching something we were very, very proud of and very, very confident in, and could really believe as, as a business. We had one chance to get this right. And I, we definitely all felt that in me and my team.
Paula: No pressure.
Matt: One chance. And you know, and thankfully we think we did.
Paula: Totally.
Matt: But but yeah, we had to get it right.
Paula: Totally. And were points ever part of the proposition, Matt? Because they’re very clearly not, and I, I do want you to talk, talk through what you did launch, but was there ever a time that you thought, we need a points program?
Matt: Oh yeah, definitely. There was a, we were time, we looked at almost everything. So, when we were first concepting and, and going through our kind of development stage, we had lots of ideas, including you know, sort of more traditional points-based programs. In the end, the core that that’s not what we launched with and, and what we’ve gone with is a core proposition that it’s all about pounds, not points.
Effectively do something. Cash into a cash pot and that cash pot can draw down on it whenever they want or they can save up for the little moments that matter, like Christmas or birthdays or you know, back to school and things like that. And that, that turned out to be, really something that sets apart, from our competition even where some of our competitors so are pretty easy to convert into a currency.
You know, a a Clubcard point is worth a penny. You know, and that, that’s relatively math to do. There is something that is just tangible about seeing at the end of my shop. I got this much from my cash pot balance increased by this amount. And we deliberately went, once we realized that was really quite a motive, we deliberately, we, we really overplayed that.
And as we’re evolving the app and some of the stuff that we’ve got coming later this year, really played into cash pots and saving for moments that matter and you know, much more, about, you know, getting that, that cash at the center, as high as possible. And we, therefore, we did some interesting stuff.
Like we, we’ve launched a new promotional mechanic where when you buy something, you don’t get the discount straight away. You get money straight back into a cash pot. So I might buy a bottle of Coke for two pounds, but get, you know, 50 P straight into my cash pot, which, yeah, that feels great as a consumer because two pounds are great price in the first place.
And I, I’ve got 50 P and I can spend that on whenever I want, or I can save it up to treat myself a bit later. Or I can draw down on it if times right. And it’s the end of the month and I just need to, to pay my shopping bill. And we’ve been pretty generous. So, you know, our loyal customers in a 13 week period, they’re easily earning 20 to 30 pounds in their cash pot.
Paula: Wow. Amazing.
Matt: And, and the way they do that, we’ll come on and talk about it, but there is, it’s not really linear. So it’s not, spend a hundred pounds and you’ll get a pound in your cash pot. It’s much, it’s sort of much more complex than that behind the scenes or the customer is pretty much do something, get paid.
Paula: Okay. I like that. So I, I’m sure you do have an underlying, you know, reward rate essentially like, like all programs, but it sounds like you never communicate that.
Matt: We do not.
Paula: You don’t need to. That’s amazing. I think that helps simplify the whole thing.
Matt: It does. We and we delivery don’t. And that is because it’s actually different for different people and, and it’s different based on how engaged they are with the program.
So at the core, there is a, a basic accumulator. If you keep spending, you hit targets and you get money into a cash pot when you hit the target. That actually by the way, is personalized for different people. So the stretch and the amount you have to do to, to get, unlock certain amounts of cash pot are different. We’ll just drop trialing at the moment, but it seems to be going really well.
And then, other things you can do are you can complete missions. So a mission might be, buy five fruit and veg in the next two weeks and get 50 P into your cash pot. Or it might be, hey, we know you’ve never bought George before. We’ve got George sale on. Come and try our clothing range and we’ll give you five pounds into your cash pot. I mean, it is pretty much you can do anything. And those missions, they are deliberately built around being gamified. What we wanted to do is make the shopping trip and the customer experience like more fun.
Cause that is very much part of the ASDA brand as well, which is we can have a bit more fun than some of our competitors with our brand. And so others I think done gamification where it’s a bit more like a scratch card or a spin to win mechanic and they’re great, you know? I like those. But we want to make it more absolutely inherent into your shopping behavior. Do stuff, complete mission cards, get a reward for doing it. Very, very explicit.
And then the final way you can earn money, or actually there’s one, two other ways. The next way you can earn money is through buying certain products, predominantly supplier sponsored. So you buy your Coke and you’ll get 50 P and your cash pot, and you can buy as many of them as you want.
Paula: Amazing.
Matt: You combine in a hundred Cokes. And get 50 P every time. And that is how some of our loyal customers are really building up cash pots quickly cause their, their favorite products happen to be star products.
And then finally, we’ve just launched a co-branded credit card and a rewards credit card, and you get a a percent back into your cash pot for everything you spend in ASDA and you get 0.3% back everything you spend out of ASDA. So, we’ve got, you know, quite a lot of customers already have taken out that proposition cause it’s great value. And you’re building your cash pot. And it is the cash points that came. People love to see that cash pot balance and when I go to shops. And how many colleagues or even customers. And I’m introduced around what my role is. The first thing to do. I can’t believe it.
Let me show you how much is in my cash pot, how much is in yours. It’s like a competition around who can earn the most. Which is brilliant. And so, that’s, we’re really playing on that. That is, that is such a core part of the proposition.
Paula: Yeah. Yeah. And at a time as well, Matt. I mean, it can’t be overstated, you know, how difficult I think the UK market is at the moment for people everyday having to stretch their household budget. And the simplicity, even of the terminology that you’re using around a cash pot is something that I can really see being seriously meaningful to your customers.
Matt: Yeah. It’s, it’s really resonated and you are right. I mean, it’s, I don’t think there’s anyone, I mean, you’d have to be incredibly wealthy not to feel like you’re being impacted by the cost of living at the moment.
And the fact that if you’re doing your shopping and not really changing your behavior very much. You can earn, you know, 30 quid a month pretty easily as a loyal customer in ASDA. And therefore have a, you know, a hundred quid plus for Christmas. That is really meaningful.
Paula: Totally.
Matt: And that makes a big difference. And, and we found that to be very, very emotive. And we, and we, it’s, it’s interesting you picked up upon thing like the terminology. We, we wrestled with a lot of that it, it’s not by accident. We, we spent time researching it and understanding what would matter and what was easy to communicate.
These are things that definitely changed if we evolve the proposition for sure. I don’t think it was called a cash pot initially. But we, we learned that that was, that that was what matters. It was pounds, not points. Do stuff and earn into your cash pot.
Paula: No, and, and absolutely Matt, and that’s why I picked up on it because I think we all know, you know, that the kind of, you know, checklist of things that a good loyalty program has, within it as a, a core principle or philosophy.
But I think things like terminology, the copywriting, the positioning are sometimes either diluted or forgotten or who knows what along the journey. And there isn’t always that relentless focus back to what is actually the customer picking up on like what is actually exciting them. And it could be that that one word, the cash pot has become a single differentiator for ASDA Rewards that no other program perhaps has the same level of, of loyalty too, as a concept.
So I, I think it’s genius. And again, I’m glad that you explained that it got that level of attention, because again, it’s something, I think it can be either by, you know, committees of marketers or kind of competing.
Matt: Yes.
Paula: To name things or, or describe things or whatever. It can get super complicated.
Matt: It, it really can. And I think, you know, you’ve got to have, I was really lucky that, you know, I got to work at, at Tesco for a long time before as doing. And Tesco’s brilliant at understanding propositions and, and, it was something that I kind of learned when I was there and getting that proposition right and being single minded on it.
And making sure that it’s got, it’s based in some truth and that people get it. And, and you know customers, you know their mind and if you get it right, you are, you are onto something. That is so, shown you have to spend a lot of time on that because otherwise the danger is a loyalty program becomes a bit like a trade driving mechanic.
Paula: Totally.
Matt: It becomes something you switch on when you need to drive a bit of trade and you reduce the generosity when you don’t. And it can do that, by the way, and and that is an important part probably for most loyalty programs, especially in grocery retail. But that is not its core purpose. It’s core purpose has to be to build an emotional connection with customers and to say thanks back to them because they’ve got a choice.
Paula: Yeah. Absolutely. So six months in, Matt, as you said, you’ve gone nationwide towards the end quarter four of 2022. Here we are just at the end of quarter 1, 2023. What are you measuring a success? What can you share with us?
Matt: So clearly we’ve got lots of dashboards.
Paula: I’m sure.
Matt: Pretty much we could cut there anywhere you want, but, the, the key things that we focus on, are how many people have, signed up to the program? So and how many of them are actively using it?
And what percentage of sales are we converting linking to the, the loyalty card that goes through our, our tills or online? And then we also of course look at the customer experience. How do people feel about it? How is it being rated, and is it driving things like our value perception the way that we want it to, as, as an overall brand?
And so, we are delighted with how it’s gone. We’ve got, way over 7 million downloads. We have got, a roughly 40, 50% of our sales are going through linked to rewards already, which is way ahead of what we expected to be clear. And this keeps growing.
Paula: Of course. I’m sure day by day. Yes. Yeah.
Matt: Cause I’ve really got an idea. Yeah, the, the overall thought rating from consumers is pretty good. But we, we know you’ve got some stuff to work out, you know, with the tech and, and bits and pieces. And also with, with the kind of the journey. But actually we’ve got a great team working on that now. And we’re pretty excited about it, but, but you know, the scores are good.
And it, and it compares, it’s right there with all of our competitors. And I think as the core proposition customers have, they’ve really landed on this cash pot, just the cash bottle is king. So we’re, we’re pretty, we’re more than pretty happy with how it’s going. And, more than that we can see this it’s had a tangible impact on our sales. And we could measure that interestingly through, it’s quite complex. So credit card analytics before and after, and using some anonymized data that we had. And we can see that it’s had a, a meaningful impact both in our sales and, also in our market share.
So, we’re pretty happy from a performance point of view, that we’re also getting a great return on the, we’re caught a lot of investment. That we’re putting into the program.
Paula: Wow. Yeah, it, it is. It’s always hard to prove incrementality math. Now, given your background, I’m guessing you’re more qualified than the rest of us. So it sounds like you do have stuff that you feel very confident about in terms of proving the ROI.
Matt: We do. We definitely do. And, and unfortunately I, I’d love to share the members cause we, they’re really awesome. They’re probably quite sensitive.
Paula: Yeah. All fine.
Matt: So I won’t, yes, I’m not lying, I can’t. But but I mean they are, they’re brilliant. And we measure that. We’ve measured it through several ways. So, and I’m, I’m really lucky that I’ve got a great, data science team Stef Maczkowski, leads that for me. And, we’ve measured it through, anonymized credit card, transaction for ASDA. He can see how an individual consumer’s behavior changed before and after joining the program. And, I’ve made that sound a lot simpler than it really is.
Paula: I’m sure.
Matt: How respectful tell you how confident that is? I’m no analyst.
Paula: No, me neither.
Matt: But what they’ve done is amazing. Then validated that with external sources, so we’ve used MasterCard, APT tool to look at stores with penetration, high penetration versus not. We did the same thing with banker card. It’s all correlating around the same number, which is you know, several percent impact on our sales and for a business the size of ASDA.
That is, that’s massive. And that seems pretty sustained. So it’s not like a, it’s a one hit wonder. It’s just something that, that seems to be continuing and the uplift we can see also from the, the consumer analysis that we can do is coming predominantly from people shopping a little bit more frequently.
So, I think that means they’re choosing ASDA for a shop when maybe they would’ve chosen one of our competitors. And we’re seeing stickiness and retention increase. So we of course, like any retailers, segment our consumers in based on their, their shopping behavior and, and shopping patterns.
And we’re seeing that our loyal customers are when they join the program, go on to be far more sticky to the ASDA brand and remain as loyal customers. Than those who we’ve not converted onto the program. And so this year is gonna be around getting as many of our consumers onto the program as possible to build up that base and ideally, get way beyond you know, half also linked to the program, if not closer to 60 or 70%.
Paula: I’m sure. Listen, we’re coming up on time, Matt. So I guess my final question just quickly is, we mentioned data as perhaps the single biggest reason I suppose, that senior leadership wanted this program. Given that you are achieving such success already so early, do you feel like you’re managing to get your head around that? Is it, is it proving useful at this stage or is it too soon to tell?
Matt: No, it’s definitely, it definitely is. And we are, that that was a real core part of, of why we wanted to do it. So, we’ve done several things. Through Stef and, and his data science team, we’ve started to build out our deeper understanding of who our consumers are and our customer DNA, as we call it. So that is the attributes around you know, propensity to buy certain categories or certain brands or certain products, loyalty, behavior, you know, price sensitivity, all that kind of stuff.
We’ve got our, our views of that already and they’re being used across the business. As I said, we’ve just recruited a VP of Data Analytics, a guy called Simon Jury, who is also got extensive experience in sort of Dunbhumby and, and several other places.
Paula: Wow.
Matt: And his, his job is to take off that data under the data sources and use it to inform the, the way that we make commercial decisions across the business.
So embedding into things like pricing and promotions and range decisions at store level. All of that is much better informed when you’ve got some customer data at the heart. And so, he’s only been in the business a couple of months. He’s already all over things like our promo analytics and our ranging analytics.
We’ve partnered with a company called Quantium who are part of the Woolworths Group in Australia. And they provide a platform that allows us to serve that data in a, in a really easy way for non analysts to use and interpret. And also we can share that with our suppliers. They pay a fee for that but they can access it as well.
And that’s we’ve already got. You know, best part of 70 or 80 supplies using the Quantium platform. To improve their relationship with ASDA and to help the decision making for the categories and for their brands. So that data revolution, that changing in culture around how do we get data into more decisions and in part in particular, the customer data that’s already well underway.
Paula: Wow. Wow. My goodness. Well, I have to say Matt, it’s it’s enthralling to hear such an incredible story as we said, coming of age and I really do hope we can stay in touch and that you will continue to share the story of ASDA Rewards as we go forward. Have you anything else that you wanted to mention before we wrap up?
Matt: No, I don’t think so. I think I’d love to come back in a, in a year and tell you about how we’ve taken the program and evolved to version two or even a version three, because some of our ambitions are I mean, they’re really exciting. And so, if, if we can even do just 30% of what’s in the, in the team’s minds honestly, we’ll be leading a revolution.
Paula: Absolutely. Yes. And I know you’ve also been shortlisted and you’re finalists for some of the International Loyalty Awards. So please God, I will see you there in person in London in June and hopefully there’ll be some celebrating happen. So…
Matt: Fingers cross.
Paula: Yes, absolutely. Fingers cross. Matt McLellan, thank you so much from Let’s Talk Loyalty.
Matt: Thanks. Take care.
Paula: This show is sponsored by The Loyalty People. A global strategic consultancy with a laser focus on loyalty, CRM and customer engagement. The Loyalty People work with clients in lots of different ways, whether it’s the strategic design of your loyalty program or a full service including loyalty, project execution.
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