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 for loyalty specialists around the world. this episode is brought to you by Epsilon and their award-winning people, cloud loyalty solution. I’ve always delighted to have Epsilon on board as a sponsor, and particularly today, as they were just named a leader in the Forrester wave loyalty solutions, Q2 2021 reports with the tub score in the current offering cash agree.
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This report is designed to help you as marketeers find the perfect partner for your loyalty program. So to download your copy of the report, visit epsilon.com forward slash let’s talk loyalty hello, and welcome to the latest episode of let’s talk loyalty today. I’m joined by Phil Ruben,
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A veteran with more than 30 years experience in the loyalty industry. Now in his role as executive vice-president of bond brand loyalty, Phil joins me to discuss one of the longest standing best known and most trusted sources of insights in the loyalty industry known simply as the loyalty report. It features research with over 25,000 consumers in north America. And this year in 2021, it covers exciting topics such as a clear focus on share of wallet, their updated view on the drivers of loyal customer experiences and my favorite current topic of all the idea of brands being loyal to their customers before expecting loyalty from them.
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So with that introduction and background, I’d like to welcome Phil
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Rubin of bond, brand loyalty to let’s talk loyalty so Phil, please do tell me, what is your favorite Loisy statistic?
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A favorite loyalty statistic by far is one that I refer to as comp customer, which is think about the way retailers measure their performance. They measured with a denominator of same store, so same store sales we’re in the customer marketing business, our challenges to drive growth through customers, right? As Peter Drucker, the management consulting strategy guru said the purpose of a business is to create a customer that the corollary you, that if you’re in the customer marketing and loyalty businesses to extend the value of that customer.
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So calm customer is a very simple metric. It’s one that’s way under utilized in our view. And it’s calculated very simple. It’s literally same customer sales period over.
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Okay. Same. Yeah.
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Oh, that would be comp customer sales. You can get into calm customer margin. You can get into comp customer engagement activity, all kinds of things. It also allows you to easily build a loyalty P and L, which is to look at your net comp customer growth. So net incremental sales on the same customer basis separating out acquisition or not. But typically you’d say you’d separate out acquisition, especially if, if you’re the person in the organization responsible for loyalty and retention. And if you, if you look at net customer margin on a comp basis, you’re looking at the Delta that change year over year, and then you can just take that program costs, reward costs inclusive, and you can build a neat little P and L.
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So that’s my favorite metric if I have to that’s my desert island metric.
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Well, I really hope we never have to have a desert island metric Banfield. Cause that would be a little bit sad, but no, it’s, it’s very clever. So I’m not what I’ve heard of. So you’re absolutely right. It’s, it’s definitely under utilized. I haven’t worked for example, in grocery or, or lots of sectors of course, but yeah, it makes perfect sense. And again, even building those P and L’s, I think there’s probably a lot of us that don’t get enough practice or expertise or guidance in building a credible P and L I think so. So that’s really useful. So thank you for sharing that. And, and I suppose to give some context as to, as to where all of this expertise is coming from, and let’s start at the beginning, Phil, how did you get into loyalty and tell us about your loyalty career to date?
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Well, it was sort of twofold, but I, it, it really goes back to a little bit of luck in that. So this, this will explain why comp customers, one of my favorite metrics. I was a finance major undergrad. I went to work for the original Macy’s department stores in their executive training program back when it was still the original Macy’s beautiful, went back to graduate school and with the idea, and this is sort of the second half of the abs, right? Booming stock markets. And of course being a finance undergrad, I wanted to be an investment banker in graduate school.
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I became more interested in the more I, the more work I did both academically and professionally while I was in school, got me interested in marketing. And then there was a course that I, second semester, second year of, of graduate school that was bought that was taught by the sky, came out of the university of Chicago, which is a real quant finance school, but it was, but it was basically using quantitative financial models to explain market share. And out of that came the idea, all kinds of ideas that ultimately I applied to loyalty, but real simply put, I flew to Chicago to interview with Leo Burnett.
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At the time they were the best advertising agency in the world. And my grandparents lived in Chicago and they lived downtown. And if I flew midway airlines, they would pick me up because it was the close inconvenient airport. If I flew into O’Hare, I was on my own to get into this city. So of course I flew into midway and really what happened is I flew this airline and fell in love with the experience with the customer experience, the culture, the spirit of midway, and wrote a letter to them because there was no, God hadn’t invented the internet or email for our purposes.
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Back then connected with John , who most recently was their CEO of Hertz and told them I wanted to come to work. I told him about my experience that I wanted to come to work for midway and coincidentally, they were creating this brand management structure in the marketing organization. And one of the roles ended up, one of the roles was had a frequent flyer marketing, and this was 1989. There weren’t that many people to hire who had done that. So they took a chance on me because of my persistence. And it was an amazing experience. We, we grew the airline from 450 to $700 million in about, you know, less than year and a half.
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And, you know, back then there was a lot of innovation to do. And we were, we, it was, we were fortunate to have a pretty lean senior management structure. So it was really easy to get decisions made internally to do things. We were aggressive. John was aggressive and it was super fun days.
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Wow. Sounds like the dream job, Phil.
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It was a dream job in a lot of ways, not a dream industry because it led right up to the recession of 1990 fuel prices, doubled interest, you know, money and credit dried up. And we were under capitalized, but it ultimately led to, it led to working with mark LASIK and Peter Brown and the LASIK group and starting their office in Atlanta to work with Delta airlines. And it, it really turned out to be a great springboard into the, into the business of loyalty.
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Absolutely. And then how or dialogue come about. And I know that’s a very Irish pronunciation. My listeners in the UK will say our dialogue. So I do get some, some teasing about that. But tell us about the agency that you founded, I think 15 years ago now, or maybe 16. So tell us the story of, of your own company.
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Yeah, thanks. I had joined a firm that, that wanted to get into the loyalty business. They were private equity funded and had raised a bunch of money on the thesis of doing such, but in reality, they weren’t really, it wasn’t the right infrastructure to create a loyalty business. And so I was I as part of that executive team and as shareholder in that company and part of, yeah, part of the leadership team, we were having some challenges, not on the loyalty side. We were building the loyalty side. There wasn’t a lot to work from. So we had to sort of create everything.
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The legacy business was in turnaround mode and it really came down to, as a business, we really needed to focus on one thing. And that one thing, wasn’t the new business that we were starting, that I was starting, there was this loyalty practice. So I made, I was able to make a friendly deal to spin off this little group that I started. And that’s how we got started in the name. Our dialogue came from now, by this point, the internet actually was invented and it occurred to me that the fundamental to what we do is create a relevant dialogue between brands and customers.
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And so I bought the URL relevant dialogue.com, knowing that at some point I would have a use for it. Yeah. And then when we formed the company, I let the team convince me that our dialogue sounded a little bit more interesting than relevant dialogue rather than dialogue became the blog, but PR always stood for relevant. Okay.
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I love it. Yeah. And I never know how to name things or brand them fills. So yeah, I probably would have gone with the literal relevant dialogue. So I love it, but, but, or dialogue certainly has an extraordinary reputation and up until I guess this time last year, I guess when a bond brand loyalty actually bought out or dialogue. So you’re now executive vice president of bond brand loyalty. So congratulations, extraordinary role.
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Thank you. It was a really interesting time. We, we literally closed our deal February 7th, 2020. So it was about, you know, more or less a month before everything’s shut down interesting time to complete a merger, but you have now whatever 15, almost 16 months, post-close, we’re well integrated and doing all kinds of things beyond the legacy, our dialogue stuff, for sure.
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For sure. So with that 30 odd years, I had to do the maths there quickly 30 odd years of loyalty experience. And I guess the main purpose of today’s call is to talk about the loyalty report. So this extraordinary piece of work that bond has been publishing now for over a decade. And I think this year’s report has a sample of over 25,000 north American consumers and more than 450 loyalty programs. So, and it is an extraordinary piece of work extremely well-respected. And I know you’ve made a lot of changes as well, Phil, first of all, and how the loyalty report is, is designed and built and probably to the, the point of the opening paragraph, which talks about, you know, the unprecedented year.
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And I know that is the probably most, most used term of, of 20, 20, 20, 21. And, but there’s no denying it. It is unprecedented time. So, so tell us about the loyalty reports. When did you start getting involved with us, you know, and, and tell us exactly what what’s coming through.
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Well, the, the, the funny, the funny thing is that at, at our dialogue, before we became part of bond, yeah, we always looked at the loyalty report as a great source of data. And we use that. We use the data and the insights to validate a lot of our views and approaches in the marketplace. So we’ve always had, and I think a lot of the industry, if you look at what’s out there, it is absolutely one of the reference points for the industry. Yeah. And, and obviously part of what attracted us to bond and bond to our dialogue was aligned views.
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You kind of an aligned view of the world, especially, you know, bond, traditionally being bond, brand loyalty. And that notion of connecting people to brands was, is a little bit different, not to overly analyze it, but the loyalty is such an emotional thing when you get down to it is not a purely transactional state, even though a lot of it is for a lot of brands and a lot of strategies out there. They’re very transactional. I like to say transactional loyalty drives neither loyalty or transactions.
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So what we’re able to do this year, and my, my involvement initially, was just to help Aaron Dauphine and others scale the ability to share the insights with clients and partners and prospects, people who were, who were interested in, in the report. And that, and that was just sort of a natural way to look at it and think about how do we increase the value? What, what is, what wasn’t already valuable knowledge asset to level it up, to make it more strategic at a CMO level, relative to not just how well do you programs perform, but also how the brand performs and to think about things like the interaction of the relationship between the program and the brand, the brand and the program.
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And of course the customer’s relationships with both of those things, the brand and the program. And at the same time, recognize that you mentioned 30 years for maybe 40 years since really the beginning of modern loyalty marketing, the changes that were, that were taking place even before the pandemic really related to moving, to, to recognize the paramount importance of experiences over things. Yeah. And loyalty, at least for the leaders, the ones that we view, the, the, the companies and brands that we view as, as, as the loyalty leaders, especially globally, because that’s a lot of our business that, that we needed to better reflect the experiential pieces, which were already there.
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We’d already established in, in 20 and the 2020 loyalty report that if you break down the drivers of loyalty, they were, they were roughly set well that were 76% experiential and 24% transactional, transactional being defined as traditional accrual and redemption earn and burn points and free stuff. And we wanted to refine that a little bit more, and we had to develop this loyalty card system in our dialogue with five drivers that, that had received. And we had done our own primary research to, to, to develop, develop and validate that it just was sort of a natural convergence between that and this great tenure longitudinal data set from TLR to, to combine those and embed those.
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And we’d been so, so that basically we’re able to do that within the quantitative study that we deploy as one of the primary data collection vehicles for, for the TLR insights. And it was obviously an interesting time to go to field with this survey. Interestingly, the 2020 TLR study came out of market March 17th, 2020. Oh my goodness. So it was this perfectly clean look at the world pre COVID. And of course we went, we went to market to feel the study, you know, towards the tail end for some countries, you know, sort of when there was that proverbial light at the end of the tunnel.
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But obviously there’s still a lot large parts of the world that are, that are far, far from back to being quote unquote open. Right. But, so that was basically how that that’s, that’s how we, that that’s what led to the evolution of TLR. And we want it to be respectful of everything that came before and preserve the ability for brands that had used the data year over year to, to be able to continue to do so while at the same time layering in some of these new features and insights that we wanted to create.
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Yeah. Well, I mean, w obviously I talk a lot about my, my favorite loyalty statistics and you’ve already shared yours, but I think your 76% experiential versus 24% transactional is going on my, on my list of our favorite statistics, Phil, because that’s, that’s not what I’ve seen. Like it’s, it’s, you know, that’s incredible three quarters is experiential and, and just, you know, one quarter on the transactional side, that’s really powerful.
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Well, especially when you think about the thousands and thousands of programs that are out there in the marketplace today, and how many of them are still remarkably the same, their formula act points, rewards. And some don’t go much further than that. And it’s not to say that that doesn’t matter, but when it’s, you know, 76, 24, roughly 80, 20 experiential, and, and that’s, that was, that was a data point that a number of other folks, not just us had pointed to 20, 20 as the year where experience was really gonna overtake the traditional drivers of consumer choice.
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And, sorry,
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Go ahead. No, I was literally going to pick up on exactly that the drivers of loyalty, Phil, because you’ve mentioned, you know, there were five initially, and now they have expanded to seven. So I’d love you just to, to, to call out what, you know, in, in the bond loyalty report, what are the seven drivers of loyalty that, that you’re seeing? Sure.
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So the, the two new ones, which, which arguably were there before, and we think of them as foundational. And I say they were there before, because they’re not new ideas. And they’re things that I think we all as, as marketers would know, but, but they dialed it up in importance. And I don’t think they’ll go away the first one being safety. Yeah. And safety security, which is both physiological in light of the pandemic. But it’s also the security of your data. Of course.
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Yeah. The security of your identity. Yeah. There’ve been so many massive data breaches over the last few years, especially they’ve probably always been there, but the last few years they’ve been identified as preaches, which relates to the, the importance of trust. And, you know, there’s been so much good research done by others specific like, like Edelman, for example, really focused on the idea of trust. So safety and security we think of as just a foundational non-negotiable regardless of your brand, your business, you have to be there. The other one is relevant communications.
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If you think back to the beginning of loyalty programs and why they were created, it was to get permission to track your customer base and create a database of customers so that you could target people behaviorally. And that’s never changed even though I think a lot of people have still lost sight of that being critically important, but in the year 2021 and going forward, and this isn’t a new thing that, that recognition and that willingness on the part of a consumer or a customer to sort of opt hop, not just opt in, but opt up and the implication of by opting in to membership, which is an opt up, I trust you as a brand and a company even more.
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And part of that trust is based on my willingness to share my data with you in return for you treating me, like treating me as a better customer overall, like giving me a better customer experience, part of which is using the data to send, to communicate with me in a relevant manner. So that I see that you’re using the data to be more relevant to me, which kind of goes back to how, like a core definition of what loyalty marketing is, which simply, you know, at least one person’s view is paying attention to customers and treating them accordingly.
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Yes, yes, absolutely
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Treat people in our own relationships that have nothing to do with selling anything. And, and so those are the two foundational drivers and then there’s five other there’s others that really reflect what we brought and what we had validated before. And then they’re even more important. It starts with recognition. So you, you know, you need which, which, which goes into personalization and relevance and remembering a customer, not just by name, but remembering something, them, number two, keeping them informed. So educating them on how to get the most value in their interaction with the business and the brand.
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Number three, the financial driver of unlocking financial value. Yes. Number four. And what is really defined in this year’s data set as a soup blur, super enabler, a critical, more powerful driver. And that is the driver of time there. A number of years ago, we talked about time as the new loyalty currency, but it’s our dialogue and bond sort of came out with that in parallel, coincidentally like 20 16, 20 17, it’s even more important now in part because it trends pre COVID.
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But, but also in part, because of how we all view time in light of what we’ve experienced the last 15 years. So, so time is the fourth of the, the other five. And then the fifth one is access, Which could be access to sort of unlocks in terms of exclusive offers, exclusive experiences, the proverbial unobtanium, it’s also access to the brand and its access to a community.
25m 9s
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Oh, nice. Yeah. Love that. Yeah. Okay. And just, can it, can I clarify the time one Phil, because my direct assumption on that one is, you know, for a higher tier frequent flyer member, for example. And certainly when I worked with British airways, we had, you know, a dedicated team and you automatically skipped the, the cold centric Q and as a gold member. So giving them time and superior service. So is that the kind of concept that you mean under that heading?
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Absolutely. It’s, it’s creating the most seamless frictionless experiences as possible though, though. There are, there is also another dimension of time, which is more city more contextual, which is the idea that there are times where you shouldn’t rush. You’ve got to get sort of the right cadence of touches with a customer, which could be, you could think about it like you’re in, or you’re in a restaurant enjoying a leisurely meal, and you want your, you want to get the most out of the experience and you don’t want to be rushed would be one. The other could be, you’re a prospect for a business and you don’t need to be reminded 47 times a day about how much business, how much value you can get from that business.
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Right. So, so, so time is a little bit relative there.
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Yeah. You’ve reminded me of the title of a book I loved years ago, nothing to do with loyalty, but it’s called in praise of slow. So, you know, slow experiences, you know, and certainly in a restaurant context, Phil, you know, I will go to certain restaurants if I know they don’t have a fast turnaround policy and I can enjoy the whole evening as a, I guess, a premium customer.
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Absolutely. And, and, you know, one of the things in terms of time in light of COVID, but again, this was before as well is as a business and a brand, you’ve got to show enough to your customers to make them believe that that your brand is worthy of their time.
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Yeah. Yeah.
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Because there’s so many, I mean, especially in the us, but increasingly in a lot of places in the world, there are a new, a myriad of brand choices to make for different things. And you’ve got to choose which one’s worth your time, especially when you’re going to more deeply engaged with that, with that brand or business.
27m 44s
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Absolutely. Absolutely. And, and just in summary, so that’s the seven drivers and that’s super care. So thanks for talking those through Phil. And I think my favorite evolution of the report as I’ve, I’ve just obviously been through the executive summary, was this, this whole idea of first of all, starting to measure the sense of reciprocity, which I think is the term that’s used. So I think as you’ve explained really well in the introduction, there are so many reasons to, to measure loyalty and you know, how successful it is, but always bring from the brand’s perspective. And I’ve been talking about this because somebody quoted their favorite statistic that, you know, consumers believe that the purpose of a loyalty program is for the brand to demonstrate loyalty to them.
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But the vast majority of marketers think it’s exactly the opposite. Like we’re again, driving behavior change. So, so that’s an extraordinary evolution. How, how did that come through?
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So, so if you go back again to why, why do loyalty programs exist? The, the proposition or the quid pro quo, the reciprocity was always, we’re the brand, you’re the customer prove your value to us. We’ll make your world a little bit better.
29m 1s
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Right?
29m 3s
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And over time we recognized, and this goes back to like the mid, the mid to like 2015, I think was when we first sort of laid this, this idea out that recognizing the shifts that we, that we observed in the marketplace that was no longer sufficient, number two, too many loyalty programs, too much homogeneity among those loyalty programs. So to really stand out and to really pay off the corporate strategy promise, especially to the investment community. Oh, we’re, we’re a customer corporation, right.
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That you really had to recognize that customer loyalty starts with the brand showing loyalty to the customer, not the other way around. And that was a very provocative thing for us to go out and talk about in the marketplace six years ago.
30m 1s
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Totally. And I still think it is, so I’m really happy we’re having this discussion, sadly.
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Yes. That’s the madness of having done this for 30 years. Like, come on. Let’s, let’s all get better because the better we all anyway. So, so what, what, what we, what we, what we’re able to do, and this year’s TLR was actually establish the correlation. So number one, we established the correlation that when the customer feels the brand is loyal to them, not surprisingly, it makes them feel more loyal to the brand. Amazing.
30m 49s
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The program does that in parallel, but the real winners is when the, and we also bring in marketers perspective. So we did a marketer survey as well. And we identified to your point a minute ago, the big divergence between marketers believing that they’re loyal to their customers and customers not believing that the rate, I forget the number, but it’s roughly two to one in terms of, in terms of that discount.
31m 25s
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Yes. It is a disconnect exactly what it is, Phil. Yeah.
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And then the other really cool thing relative to that sort of, that notion of reciprocity. And we could talk like we could, we could do a whole like hour just on the idea of reciprocity prostate, but the other, the other thing that I, I think is a big evolution in terms of the insights and this year’s TLR is we’ve taken that notion of reciprocity as a function of the seven loyalty drivers and how they drive the business outcome, which is why we all do, of course, driving share a wallet.
32m 7s
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Ah, okay.
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Would also probably be in my top five, I’d be my top five loyalty metrics. But, but yeah, the, the, you know, whereas, and we still, we still, we still track this metric that we’ve used before overall satisfaction, but the problem with overall satisfaction, like the problem with net promoter score and, you know, right. Kelps, let’s say it’s maybe a second best book, not as the best that he wrote. My view was the loyalty effect. So probably the best book on loyalty marketing, but the problem with net promoters tore the problem with overall satisfaction is you can’t take that to the CFO.
32m 55s
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You need to be able to take that to the CFO. You need to be able to take that to your stakeholders, especially your investors. And this goes back to as marketers. And this is a little bit of my finance perspective, but the, the ultimate question for those of us who do this kind of work, and it’s even more so for CMOs today, because CMOs are the C level officer being held accountable for driving profitable growth is how do you demonstrate that you are driving profitable, organic growth from customers?
33m 38s
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One of the ways you do that is by growing sheriff wallet. One of the ways you measure that is through the comp customer metric, which gets to what we see. But again, it’s from a very small percentage of companies out there where you actually hear a CFO or a CEO on a quarterly earnings report, actually talk about those kinds of metrics to, to the investment community. And, and it, it’s an underdeveloped area, a huge opportunity to, to really sort of bring this notion of customer marketing or loyalty marketing, even more to the forefront, which is words come, but it’s, it’s certainly amid, amidst all the other marketing, bright, shiny objects.
34m 30s
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I still feel like after 40 years, we, we don’t quite get the respect we, we should for, for the work that we do.
34m 38s
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Well, thank you, Phil, because I constantly feel that. And I’m like, am I the only one who’s feeling hard done by? So listeners, yes. We’re all feeling. And so don’t worry. It feels got it. We definitely all have it. So I’ll pick up on a couple of things that you mentioned there, first of all, just on the homogeneity, if I’m pronouncing it correctly, I always do love to see north American statistics. And just because again, the market is so mature. And so average number of memberships I see in the report is that 16.7 average number of active memberships is 7.4. So already a huge, you know, divergence. And I’m sure that’s probably come through in all of your previous reports and puts you at the whole concept of share of wallet is something I’m hearing coming up now in a lot of conversations, I think in the past, it was all around that kind of emotional piece that we talked about before and experiences.
35m 32s
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But now it is about share of wallet because, you know, ultimately that’s where the opportunities.
35m 38s
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Yeah. And, and the, the, the data points, you just mentioned that the 7.4 and the 60, those are, those are upticks, but those are notable upticks from years prior. Now, whether those will revert back to the name we won’t know for at least another year or two, what they reflect. And I think this is where share a wallet for this cheer becomes a critical metric is the fact that there was so much customer volatility because of the pandemic, of course. And again, I think that’s one of those things where there was a certain level of cognitive dissonance buyer’s remorse, even among loyal, locked in.
36m 27s
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Customers popped in being an air quotes, but so many, so many habits. And so much inertia was disrupted because of the pandemic, literally because certain stores were just like they had to, you know, Macy’s one was closed. They closed all their stores in March, for example. And what that led to was peop consumers being forced to try new brands to do business, whether it was going to a different grocery store because they had paper towels and toilet paper, or because they couldn’t go to their favorite restaurant. So they were shifting to ordering food to be delivered.
37m 10s
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And there could only get what, whatever those factors were led to a significant, whether it was the most we’ve ever seen. I don’t know. But depending on whose data, you look at 30 to 40% of customers tried new brands and switched, you know, two thirds were too majority, tried new brands, 30% switched, and didn’t go back. The question becomes going forward. And I think this is where the insights and tail are so powerful this year is because we don’t know whether those customers are going to come back.
37m 52s
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And more importantly, because not everybody’s delivering the same caliber experience. If somebody goes and they’re forced to try a new bread and they, they have a good experience, it’s going to be that much harder to win them back. And it’s also going to be that much more incumbent on the brand that they were new to. So you do what they need to do to retain them. So it, it really feels like we’re on the cusp of this sort of new, intense battle for the share of customer that we, you know, that you, that you as a brand, you as a business think you deserve, but it, you can’t play the same cards that have been played for the last 35, 40 years and expect to win going forward.
38m 47s
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And I think that’s particularly true. And this is one of the areas we, we dive deep in and TLR it’s especially true among the younger
38m 56s
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Consumers. Yes,
38m 60s
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Absolutely. But also older and fluent because they have the ability to be that they’re just as discretionary. And they have a lot of, a lot of things in common, which is just another really interesting area. I mean, it’s a, it’s a fascinating time to be doing this kind of work right now.
39m 23s
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It is. And you’ve reminded me of something, one of your statistics that I’ve pulled out, which I really hadn’t seen here certainly. And it’s on the payment side actually. And that within gen Z at 57% of them are using this buy now pay later. So, I mean, that’s an extraordinary, apparently maybe a new hygiene factor. If you want a loyal gen Z customer, maybe, you know, you have to provide the payment functionality, which wouldn’t have even been on my radar before in terms of a driver of, of business with, with a customer segment.
39m 57s
2
Yeah. It, it, it is really interesting, you know, a friend of mine, Michael Rouse, he used to be the general manager of American express loyalty and membership for awards, and then went on to work for Klarna, used to love to wave a credit card. I get a conference and talk about this is 1950s technology, right. And that, yeah, that business hasn’t radically evolved in more years than the loyalty business hasn’t evolved. And so, you know, you see companies like Alliance, data systems, buying bread, you see a lot of innovation around new cards that actually have traditional credit, but also have, you know, traditional credit or revolve offers value propositions, but also adding in a buy now pay later, and you look at businesses like Peloton who’ve, who’ve had exponential growth because of their dealing with affirm.
41m 1s
2
It really is changing the landscape. It’s, it’s, it’s democratizing access to anything it’s creating open to buy for consumers, that’s driving demand and, and, you know, between that and all the, all the pent up demand from COVID, there’s a lot of, there’s a lot of business at stake these days. You’re
41m 23s
1
Right. Yeah. And again, I mean, I’m, I’m very familiar with the concept of the convergence of payments and loyalty, but in my head, that was always just the functional piece, not the delayed payment, you know, this, this whole payment plan concept. So, so really love to see that coming through. And, and we’re not going to get to do justice to everything in this report just because it’s so an extensive, even the executive summary. And I want to pull out a couple of my favorites in terms of, and the brands that are coming through. And what I also want to thank you for is giving me a prospect list for podcast interviews. So I now have a three times 13, so 39 less I’ve only had one or two of them on the show fail.
42m 6s
1
So, well, certainly 39 bronze that are coming out as best in class. So I love the fact that you are kind of, you know, identifying the, the leading loyalty businesses in all of these kind of core categories. And so my favorite, I think just came out as one of the first, which was the Adidas and creators club. So I don’t know if you’ve worked with that one, but I just love the, the whole concept of community and scores very highly on this key point that we talked about, that the brown does loyal to me.
42m 37s
2
Yes. I couldn’t have asked you to pick a better example.
42m 44s
1
So
42m 45s
2
We’ve, we’ve done a lot of work in that category with, with the two global leaders. And, and, and I’ll just say we’ve had good times with the, with the situation we love, love the three stripes as well, even more so. Yeah, it’s, it’s, it’s a fascinating and great example of innovation and innovation in terms of loyalty proposition paying the proper homage to a point based system, but, but not in a purely transactional way.
43m 28s
2
And one of the things, one of the things we identify in TLR, both for credit cards and for Omni tender or non-tender loyalty propositions, is it, and, and you know, this, this isn’t a new idea. Somebody, somebody, another publication came out with this a couple of years ago and they said, or they were promoting an event, I think. And they said, if you’re not rethinking your loyalty program and proposition you’re in the minority. And so we’re seeing a lot of that. And I think what, what the Adidas Rodney does has done with craters club is look at the marketplace. Look at, certainly look at, look at Nike, which is one of the most valuable brands in the world and the dominant player size wise in that business with a long legacy around membership through what was originally Nike plus and became Nike membership.
44m 30s
2
Yeah. In, at Nike’s assiduously non-transactional of course, you know, membership is a very soft benefit type of proposition, what did, but, but it it’s missing going back to the loyalty drivers it’s missing on that core driver of recognition. And this, this also plug another chapter in our military report because we did one on tiers, but what did, what craters club has done? So exceptionally well is, are a couple of things. Number one, the integration with the Adidas brand and what the Adidas brand represents is pitch perfect.
45m 12s
2
Number two, they use points as a mechanism for, for the brand and for customers from a members to keep score so that their value is known. And then the tears allow the Adidas to recognize the value of members. And they do this with, with, with, with a rich set of benefits that are not about getting free stuff. And they’re not about getting discounts. They’re all about how do you get the most from Adidas through creators club, as the mechanism, and, and so a terrific organization, if you look, and this is public, if you look at the Adidas corporate site, they have a strategy and it’s explicit, it’s explicitly shared on their website.
46m 8s
2
Their strategy is to, is to, is to dominate the game through, through being centered around the customer. And creditors club is clearly the mechanism, the enabler to do that. And they’d be a great, they’d great guests on your show and happy, happy to help there, Paula, just to do a little plug. Okay.
46m 32s
1
Well, the sooner, the better, as far as I’m concerned, Phil, so we will take that one offline, but what a beautiful story and thank you for articulating it, because again, I haven’t, I haven’t explored. And in fact, anything in that space, you know, so really to, to see a brand that’s so commissioned and coming through in your report am as best in class. So very, very impressive work from Adidas. And to pick up on the point that you mentioned as well about the tiers and because actually this did surprise me, I would say Phil, because, you know, as far as I’m aware of Starbucks rewards, for example, took away tears a couple of years ago, I think literally just two years ago. And my, my understanding was that was in an effort to simplify the program, but coming through very clearly, I think the quote that I saw in the summary was three out of five members would do more business if given access to an enhanced tier and they do feel a sense of reciprocity and that word again, I’m a multiple of nearly three times as much, 2.9.
47m 32s
2
Yeah. It, it, it, it, you know, again, kind of go back to the if, if loyalty marketing is, is understood or accepted to be how, how a company have a business and a brand pays attention to customers and treats them accordingly. Yeah. And you can’t treat every customer exactly. This with the same value, nor should you economics economic logic defies that. Yeah. You’ve got to be able to, and this is, this is what Adidas has done at scale with their tier structure. And then just the whole, the, the mechanics of creators club is to show customers that they know how valuable they are.
48m 17s
2
Yeah. Yeah. Like he doesn’t do that. They don’t do that at scale years ago, when we actually, our first year at our dialogue, we, we were fortunate enough to win the business from Nordstrom to redesign what was the original Nordstrom rewards program, which was no tiers, tender only. And Nordstrom was this company legendary. Right? Of course, every customer is every customer on the floor in the store is valuable and should get this exemplary Nordstrom service. Right. Which was great. But you know, the law of finance says at a certain point, you can’t do that for every customer.
49m 2s
2
And so we helped them go from no tiers to four tiers. And not according to us, according to other more, more highly paid consultants who, who, whose name I will not reveal. They identified that, that, that, that new program created a billion dollars worth of incremental value for that business. Wow. I can say this because this was more than 10 years ago, but, but the value of tiers is, is well known. Especially if we think about the importance of experience versus transactional richness, we see it in the airline industry, even though the airline industry shows some challenges in the report relative to tears and people view, we got different perspective from airline members about tears.
49m 57s
2
I think a lot of that has to do with the sample and it has to do with people not traveling as much in COVID, but we also saw the hotels in the airline companies come out at the very beginning of COVID and say, wait, wait, wait. We know you can’t travel, or you’re not going to travel. We’re going to protect your status. Why not? Because you’re getting more free flights and hotel rooms because you’re getting a better experience through that status.
50m 21s
1
Okay. Well, you’ve convinced me fail. I’ll put that back up on my level on the, on the respect spectrums. So thank you for clarifying that there’s way too much to go through in, in full detail. Phil, what else would you like to cover now? What’s your, I suppose, favorite insights from, you know, all of the incredible amount of work that you’ve put into it. And, you know, as I said, a showcase of 39 extraordinary brands coming through, what’s your favorite learning with this year’s loyalty report?
50m 52s
2
I have to go back to the, the, the, the way that the seven drivers lead to the outcome of share of wallet is gets way beyond some of the traditional metrics we’ve used as an industry in terms of success. And because that share of wallet is measurable, and because it will resonate with the most important people in the company, organizationally I’ll, I’ll, I’ll just suck up to the CFOs of the world a little bit. But as, as the client CEO of a very successful company once said, and he was a finance here, this was, this was responding to a presentation.
51m 40s
2
He said, if the answer’s not money, you need to rephrase the question. And that’s the scorecard of business that companies get valued. And that’s how they drive a higher valuation is through the ability to demonstrate demonstrably, better manage customer, you know, develop and manage customer relationships. So that would be my, my exciting takeaway.
52m 9s
1
I love it. I love it. It’s all about share of wallet, fail my goodness. So the final question of course then is how can listeners access the report?
52m 18s
2
So the report will be available is available now, actually one on the bond website, bond, brand loyalty.com. Fantastic. It’ll be prominently featured, and there’ll be the ability to download the very exact same exact summary that, that, that you’ve read through and ask so many good questions about, thank you,
52m 41s
1
Literally. No problem. My goodness. Yeah. Yeah. And, and again, so that executive summary freely available to anyone and everyone, and to your point earlier again, it’s not because you’re in, in bonds now that it’s, it’s the reference point. I do think this is almost the Bible of the industry, or certainly one of them. So, so I’m thrilled to have an early access to it, to, to learn so much from you today. And yeah, just want to say, I hope we can continue the conversation. So Phil Rubin, executive vice president of bond brand loyalty. Thank you so much from let’s talk loyalty.
53m 14s
2
Thank you, Paul. It’s great to be with you.
53m 20s
0
This show is 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, both online and in workshops around the world through its Loyalty Academy, which has already certified over 150 executives in 18 countries as Certified Loyalty Marketing Professionals.
53m 50s
2
Thanks so much for listening to this episode of “Let’s Talk Loyalty”. If you’d like me to send you the latest show each week, simply sign up for the show newsletter on Let’s Talk Loyalty.com and I’ll send you the latest episode to your inbox every Thursday, or just head to your favorite podcast platform, find “Let’s Talk Loyalty” and subscribe. Now, of course I’d love your feedback and reviews and thanks again for supporting the show.
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