Paula: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.
Paula: I’m your host, Paula Thomas, and if you work in Loyalty Marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
Paula: This episode is brought to you by Epsilon and their award-winning People Cloud Loyalty Solution.
Paula: Epsilon is now offering my listeners access to the Forrester Maturity Assessment, a 10-minute quiz that will help you assess your loyalty program across six key areas and receive recommendations on how to improve your approach.
Paula: For more information and to take the quiz, visit emeo.epsilon.com forward slash letstalkloyalty.
Paula: So welcome to this episode of Let’s Talk Loyalty.
Paula: And as listeners will know, this is our second year of the show.
Paula: And because it’s the second year, I wanted to, I suppose, go back to basics in many ways, and really look at some of the underlying principles that are guiding the development of loyalty programs.
Paula: And I guess it’s inevitable in this particular pandemic, and hopefully soon post-pandemic, that there are a lot of things changing.
Paula: So the show, because it’s called Let’s Talk Loyalty, I really believe gives us an opportunity to talk about, I suppose, the human emotions of loyalty beyond loyalty programs.
Paula: And as a result, today’s guest is somebody who is no stranger to the industry, and certainly is going to give us great insights on what’s going on in the world at the moment.
Paula: So Nathan Beaver is a partner at Kpmg in London in the UK.
Paula: So first of all, let’s say a quick hi to Nathan.
Nathan: Hi, Paula.
Paula: How are you doing?
Paula: Good, thank you.
Nathan: Good to be here.
Paula: Great, great, great.
Paula: And just for listeners, Nathan, I’ll just explain that I saw you speaking on another conference recently called AI Conferences.
Paula: And a lot of the research work I know that Kpmg has been doing is really to understand the new customer.
Paula: So you’ve got some amazing research you’re going to share with us, Nathan.
Paula: And the word I think that just landed very much for me was trust.
Paula: And in fact, actually, Kpmg is the first company that I’ve had on the show for a second time.
Paula: So we did do an episode way back here with Kpmg in the Southern Gulf, as you know.
Paula: But listen, before we get into all of the amazing work that you’ve done recently from a research perspective, Nathan, tell us first and foremost, what is your favorite loyalty statistic?
Nathan: Oh, that’s a good one.
Nathan: I’ve got a couple, but my favorite is probably that the average household is enrolled in 29 loyalty schemes, but actively only engages with 12 of those.
Paula: Oh, my goodness.
Paula: Wow.
Paula: Yeah.
Paula: You know what?
Paula: You’re actually not the first person to quote that one, Nathan, but it’s because of the power that I think it comes up, actually, from time to time.
Paula: And it always makes me feel like a little bit of a failure.
Paula: You know, if only half of these are delivering any results.
Paula: But anyway, plenty of opportunities to improve.
Paula: So tell us, what is your overall professional background and how did you end up doing this kind of work with KPMG?
Nathan: Yeah.
Nathan: So I spent my entire career in what you might most easily call the front office, but fundamentally everything that I’ve really focused on historically and continue to do going forward is in a market where we all compete in highly commodity and highly competitive spaces.
Nathan: Any organization is really going to differentiate on their brand, on their value proposition, and on their customer experience.
Nathan: So that is everything I do, is how do you help an organization differentiate its position, its product, its experience in the market?
Nathan: And then secondly, especially these days, how do you now digitally connect and transform the organization around the customer to really realize that market differentiation?
Paula: So I guess, you’re probably not getting very much sleep at the moment.
Paula: I’m guessing.
Nathan: Not in the world where we as consumers have had probably one of the most profound behavioral shifts since probably the 1950s in terms of how we engage with brands, how we engage with organizations, the channels we’re using.
Nathan: And then more importantly, the fact is that this behavioral change is going to get ingrained because the world in which we all find ourselves today isn’t going to change anytime soon.
Nathan: So when we do return to whatever we define as a new normal, I still believe that we will predominantly take forward a lot of the behaviors that we’re ingraining in ourselves today.
Paula: Absolutely.
Paula: So it’s almost like we are learning a new way of being.
Paula: And actually one of the statistics from these reports that we’re going to discuss really struck me, Nathan, where you basically said 91% of consumers do not want to return to a pre-COVID world.
Paula: That was incredible to read.
Nathan: And then part of the reason for that is what people have realized, I guess, is two things.
Nathan: So one is everyone is now questioning their purpose in life.
Nathan: But part of within that, questioning and addressing their own kind of health, what they want from life.
Nathan: But the second part that we have seen is why people don’t want to return to a pre-COVID world is just the degree of channel shift that’s gone on and how most consumers, I think we had a status of 89% of customers are now engaging with new channels for them, which for many is digital versus a branch or a store or some kind of physical location.
Nathan: And 83% who shifted are now staying within that channel.
Nathan: So if you’ve moved from your daily visit to the branch to now fully engaging with an organization through online, why would you want to go back?
Nathan: You realize that that channel works, you realize that there’s trust and security in that channel, and then you realize that actually you’ve now created more time for yourself.
Paula: Absolutely.
Paula: And time is an incredibly valuable and precious resource, as we all know.
Paula: So you’re absolutely right.
Paula: I’m seeing more and more people kind of going, why did I ever spend two or three hours on a train every day?
Paula: So it is a very profound shift.
Paula: So you’ve done two pretty huge pieces of research, I think is what I can see, Nathan.
Paula: So one is called Meet Your New Customer, and the second one is called Customer Connections.
Paula: And I know all of the listeners to the show can get access to all of those.
Paula: So maybe just tell us a bit about those two pieces of research and what’s coming through.
Nathan: Yeah, so the foundation of both of those is fundamentally how we’ve been tracking consumer sentiment and changes in demand and changes in behavior pre, during, and I’d like to say post-COVID, but it’s really pre and during COVID.
Nathan: And what we are seeing, I guess, from a new customer perspective is the emergence of different values, different behaviors, different needs.
Nathan: And at the core of all of this, though, and this is not just the UK perspective, but we’re seeing it across pretty much every market, is this drive towards an integrity economy that requires businesses to really deliver their products, their services anchored on trust.
Nathan: Now, in the short term, this is all about safety.
Nathan: So whether you’re dining out, whether you’re actually going back to the workplace, then it’s very much around health and safety of the consumer or the employee.
Nathan: But in the longer term, it’s very much back to this question of purpose and this people purpose planet above profit question that customers want to see and want to engage with an organization that stands for much more than they have done before.
Nathan: And that really just creates a large question, I guess, for the audience of this podcast in terms of now, as an organization, they work for moving towards and increasing their focus on purpose.
Nathan: What does that mean for the loyalty schemes in the future?
Paula: Well, yeah, that’s exactly what was coming through, Nathan.
Paula: And so I think you’re right.
Paula: And the reason I said that the whole trust economy insight really landed with me is that’s exactly how I personally feel.
Paula: And I’m trying to understand how does it impact the loyalty programs that I’m advising and again, people listening to this program.
Paula: So what challenges do you think the loyalty market is facing right now?
Nathan: It’s a great question because loyalty schemes don’t always equate to having loyal customers.
Nathan: I think a lot of loyalty programs are guilty of rewarding customers and not necessarily making them more loyal.
Nathan: And especially over the years and increasingly at the moment as brands and the bonds between the brands and consumers are increasingly slipping and changing.
Nathan: So the question that comes to the loyalty program, which is if the loyalty program has historically maybe put too much emphasis on economic point or economic vouchers in return for purchases and sharing of personal data, the challenge now for loyalty programs becomes two parts really for me.
Nathan: So one is, what is the role of the loyalty program in the value exchange question?
Nathan: And what is the role of the loyalty program in supporting the broader organization’s strategic focus and direction around purpose and around trust and around integrity?
Nathan: And how do loyalty programs support the organizations in achieving that?
Paula: And can I ask you, how are you seeing that with your clients?
Paula: I mean, I don’t know any of your clients by name, and we don’t need to really, but I have said on this podcast, certainly in the last two or three months, Nathan, that I really believe that the loyalty programs are really elevating to board level prominence.
Paula: Whereas before, it might have been fairly isolated and running, perhaps successfully in the marketing department.
Paula: But it sounds like you’re hearing and seeing that it’s becoming a core part of the business.
Nathan: It is for many organizations, especially in a world where increasingly customers, or especially in this kind of post-COVID world, that purchase decisions are now based on value for money, ease of buying, and trust in the brand.
Nathan: The role of the loyalty program is underpinning all of that, which is if a customer is looking for value for money from a product, what makes them turn left to one product which has got value for money versus right to another product with value for money?
Nathan: And that becomes the question, the challenge to the organization, which is therefore how do I wrapper my product and service with not only my experience but with tools like my loyalty program that is a way of driving that repeat customer purchase, that repeat advocacy.
Nathan: So the loyalty program is becoming a key differentiator to support an organization in driving customers to their app, their website, their retail store.
Nathan: But the other element that loyalty programs are able to give now is because of that broader ecosystem and partnership network that most loyalty programs are increasingly using, the use of third-party partnerships who are focused on charity or are focused on engaging into community, into society, and allowing consumers to be able to redeem points, redeem vouchers, redeem outcomes through those societal charity and local organizations, for me, becomes part of your differentiation.
Nathan: Not just a traditional loyalty program of so many points equals a discount or a free product, but allowing consumers the choice to spend on the things that matter to them in the communities and in the local society that is local and personalized to them.
Paula: Yeah, and actually that’s the kind of language, Nathan, that we use a lot as loyalty specialists or dare I say experts.
Paula: It’s the differentiation between the transactional loyalty and the emotional loyalty.
Paula: And again, I know there’s a lot of very well-intentioned brands that we’re all looking to do something through a CSR program, for example, in the past where there’s definitely a realization that it’s important to give back.
Paula: But I think what we are seeing more and more of is the principles of both charity and community coming through as essential pillars of a loyalty program.
Paula: Is that fair to say?
Nathan: 100%.
Nathan: I couldn’t agree more.
Nathan: And you’re not only seeing that in loyalty programs in terms of what we as consumers have in our wallet, have on our phone, but you’re also seeing that as employees, as increasingly organizations are, not only what purpose they stand for, but allowing and engaging with their employees around giving them the opportunity to engage with causes, communities that are important for the employee.
Nathan: And so what that’s doing is creating employee loyalty, not just what we’re seeing as a trend in the consumer market.
Paula: Yeah.
Paula: And do you think this is happening globally, Nathan?
Paula: I’m not sure if these two reports, you might talk to us about the reports themselves, but are they UK specific or are they in multiple markets?
Nathan: So multiple markets, so we cover, I think we cover now more than 25 markets globally.
Nathan: So this trend around integrity and purpose is ubiquitous, whether I’m on the west coast of the US, somewhere in Europe or down in APAC, what an organization stands for, and my role as a consumer in understanding, recognizing that and valuing that is the key challenge that everyone’s trying to overcome at the moment.
Paula: Yeah, and it’s almost hard to come up with good examples, and I’m going to put you on the spot and ask, do you have any loyalty programs in your own mind, either historically or even in the UK market at the moment that you do think are doing loyalty well?
Nathan: So for me, the best program I’ve seen, and there’s quite a few around, but one which I think most people will be familiar with is probably the Hilton one.
Nathan: And why and what have Hilton done to make their loyalty program not necessarily saying it’s the best in the world, but better than many is they’ve done a few different things well.
Nathan: And for me, those things are, number one is they’ve been clear and they’ve thought about what does it mean for me as a consumer as I engage with a loyalty program?
Nathan: What do I want from it?
Nathan: So they offer me the ability to be able to personalize that.
Nathan: So I get much more personalized rewards.
Nathan: I get much more content relevant and personalized to me.
Nathan: They’re very good at moving you up through the initial rankings of status, which feels progressive as a user.
Nathan: They’ve really applied elements of gamification in that to try and adjust and change consumer behavior.
Nathan: They’ve made the redemptions accessible.
Nathan: I think too often many of us have engaged with loyalty programs, which we’d have to win the local lottery and spend all of that before being eligible for an iPod or a Walkman or even a modern iPad.
Nathan: They’ve done really well for me at making those redemptions accessible, but also opening those up to a broader partner network.
Nathan: Whilst they do want to keep you within the Hilton ecosystem, they still also recognize that, back to my other point, that consumers want to spend on the things that are important to them, and they give you that option and ability to do so.
Paula: Okay, yeah.
Paula: I love that, actually, and I’ve been using this word quite frequently, Nathan, which I think is what you’re talking about with Hilton, which is the liquidity of points.
Paula: So my favorite example I read recently that there’s a huge e-commerce store in Japan called Rakuten.
Paula: It’s essentially like the Amazon of Japan, and you can use your Rakuten rewards points in 600,000 merchants in Japan.
Paula: So that’s something that I think we can all definitely learn from.
Paula: So I think anyone listening, you know, if there is a way to form partnerships, it certainly sounds like something that’s come through in your research.
Paula: And I also loved your point about the accessibility, and I do a lot of writing about loyalty programs, as I think you know, and I remember when Starbucks rewards last year, in fact, when they made a lot of changes, I think mainly in the UK market, sorry, in the US market, probably the UK as well, but I know that you can get, like, for example, a shot of flavor in your coffee as a reward, which is obviously super accessible.
Paula: I’m not sure how many Starbucks rewards you need to get that, or stars, but it is definitely a very accessible reward.
Paula: So lots coming through.
Paula: You probably stay in a lot of Hilton, so that’s really good.
Paula: Well, that’s true.
Paula: I know.
Paula: Are you going back to the opposite?
Nathan: In the last couple of weeks, I’ve been in a couple of times, and I’m in again later this week.
Nathan: So I think for many, I think we’ve all, for me personally, enjoyed the opportunity to spend more time at home with the family, but I think just a variety of environment, looking forward to just kind of a bit more travel, just to create a little bit more stimulus.
Nathan: And I think as interesting as the room I find myself based in, a change of scenery would be quite nice occasionally.
Paula: Absolutely.
Paula: So I’m just going to summarize, I suppose, what I learned from reading through the research.
Paula: I suppose the quick summary is, you know, the new customer, spelled with a capital N and capital C, is digitally savvy, value conscious, and principled.
Paula: And you also talk a lot about the ease of interaction.
Paula: Is that something you see directly connected with the COVID situation as well, Nathan?
Paula: Or is that something that was increasingly coming through anyway in your research?
Nathan: So it was coming through anyway, and for many organizations, and you looked in this, Paula, it’s just accelerated it.
Nathan: So to my earlier point, which is, you know, COVID has accelerated the channel shift for most consumers and for most organizations are now struggling to respond to that because they have a business that’s geared up to deliver a demand model, a channel demand model that looks different from the demand model that they now have today.
Nathan: So the work that we’re doing is helping organizations do two things, really.
Nathan: One is that shift of capability to be able to respond to the new channel and then they’re scaling up an industrialization of that because, A, that channel is not going away anytime soon and the demand within that, but also, B, which is during early stages of COVID.
Nathan: As consumers, we were quite nice.
Nathan: We were quite happy or we didn’t mind too much if the parcel that was going to arrive on Saturday morning didn’t arrive till Tuesday.
Nathan: We took the bigger picture, but we’ve already ricocheted back to our pre-COVID levels of expectation and demand.
Nathan: And so the challenge for most organizations is consumers have now carried those into the channels through which they’re now engaging.
Nathan: So we’ve got a demand and an expectation that we want with organizations that are, you know, scrabbling to respond and deliver to that.
Paula: Wonderful, wonderful.
Paula: And I suppose my favorite part, just to recap, is everything anchored in trust.
Nathan: Everything anchored in trust.
Nathan: It is the right to play.
Nathan: Before you’ve got a right to win.
Nathan: And organizations that struggle to do that, and for many, you’ll see that in the market.
Nathan: Those who have prioritized profit over people have seen both the sentiment for their brand as well as then the subsequent kind of economic return really decline.
Paula: Absolutely.
Paula: So I suppose I’m going to wrap it up now, Nathan.
Paula: So just from your side, if you could, I suppose, just sum up one thought that you’d like to leave the audience with today, as I suppose we are spending a lot of money on our loyalty programs.
Paula: What do you think we should be thinking about from your perspective?
Nathan: So for me, be mindful of the trends of the new customer that is emerging through and ultimately in the end post-COVID.
Nathan: Recognize that consumers and customers, we will shop around and we will remain fickle.
Nathan: So be clear about number one, the segments that you’ve got emerging and what triggers will make them shop and engage with the brand that loyalty program is underpinning.
Nathan: So those new segments and those new behaviors require you to think a little bit differently.
Nathan: Two is those new experiences as well as the new products and services are resulting in your customers changing their values and needs.
Nathan: And then finally, technology.
Nathan: Technology is there to make life easier and to make it simpler for customers to purchase and engage.
Nathan: So think about how you use, fundamentally take advantage of the digital channel shift.
Nathan: Customers have digitally channel shifted, build on the opportunity, make it easy for them to purchase, make it easy for them to engage.
Nathan: And then ultimately you’ll move to a position where you’re not just rewarding your customers, but you’re making them more loyal.
Paula: Yeah, yeah, absolutely.
Paula: That’s the bottom line.
Paula: And I’ve mentioned the two reports already, Nathan, that we’re going to make sure we link to in the show notes.
Paula: I believe you have more research coming online in September as well that our listeners can access.
Nathan: Yeah, so we published last month the annual report on the top performing customer experience brands in the UK.
Nathan: And in September, we will then release the global report.
Nathan: So, it will help organizations really understand who are the high performing customer experience organizations in their market, or more importantly, the markets in which they’re looking to enter into.
Nathan: And therefore, the bar that has been set in that market, and therefore, what you have to compete and deliver against.
Paula: Well, plenty of fascinating information there, Nathan.
Paula: Anything else you want to mention about new customers or Kpmg before we wrap up?
Nathan: No, just a big thanks to you, Paula, for having me on, and thanks for the questions.
Nathan: And no, really looking forward to carrying on the conversation in the market around loyalty.
Nathan: It’s a huge topic, and quite frankly, a topic that every organization is dealing with, struggling to deal with, or in many cases, being successful at dealing with.
Paula: Wonderful.
Paula: So Nathan Beaver, partner at Kpmg Uk, thank you so much from Let’s Talk Loyalty.
Paula: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.
Paula: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.
Paula: For more information, check out thewisemarketeer.com and loyaltyacademy.org.
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