Loyalty As an Inspiring and Energising Lever for Digital Transformation in MOL Group (#627)

Paula: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.

Paula: I’m your host, Paula Thomas.

Paula: And if you work in Loyalty Marketing, join me every week to learn the latest ideas from Loyalty Specialists around the world.

Paula: I’m delighted to announce Capillary Technologies as the new title sponsor for Loyalty TV.

Paula: Capillary’s mission is to bring the Loyalty Market out of the 1980s and into the present, ditching the slow, chunky manual services of the past.

Paula: Capillary is all about making Loyalty Management easy with scalable AI-powered tech that turns Loyalty Managers into superheroes.

Paula: Say goodbye to outdated methods and check out the exciting new way to achieve Loyalty Excellence in 2024.

Paula: Hello and welcome to Let’s Talk Loyalty and Loyalty TV.

Paula: Today we’re back chatting with our friends in the MOL Group, an integrated international oil and gas company headquartered in Budapest in Hungary.

Paula: MOL Group is active in over 30 countries with a workforce of 26,000 people, a track record of more than 100 years in the industry and a market capitalization in excess of $6.5 billion.

Paula: Our guest is István Mag, who’s head of the Digital Lab for MOL Group.

Paula: And he joins us today to share how the MOL Group has transformed itself in recent years from a traditional fuel retailer to a digital ecosystem led by loyalty.

Paula: Listen to hear this incredibly impressive story of how this loyalty-led digital transformation is driving business growth while also inspiring and energizing employees across the eight countries the program operates in, in Central Europe.

Paula: I hope you enjoy our conversation.

Paula: So, István, welcome back to Let’s Talk Loyalty.

Paula: And for the first time, welcome on Loyalty TV.

István: Thank you very much for the opportunity.

István: It’s good to be back.

Paula: Amazing.

Paula: It has been a very exciting two years for you guys.

Paula: And honestly, I feel like your, your personal profile and even the company profile has just exploded, István.

Paula: So first of all, congratulations on that.

Paula: I know everybody watching and listening today will be dying to hear what you’ve been up to.

Paula: What I remember from our last conversation was how ambitious you were with this digital factory and the scale of what you were planning.

Paula: So we’re here today to see how it’s all been going.

Paula: And I know it really has been transformational.

Paula: So a really big story to talk about.

Paula: But as you know, we always start off with a very consistent opening question, because we love to know what do you admire as a loyalty or digital professional, dare I say it?

Paula: You do have very broad experience, István.

Paula: So please kick us off and tell us what are you currently admiring as your favorite loyalty program?

István: Thank you, Paula.

István: As I generally approach these questions, it’s always from a business perspective.

István: I use a lot of programs as an individual as well, but I can’t avoid not looking at it as a business person, as a consultant, as a digital professional.

István: And in that sense, we are monitoring ecosystem apps a lot these days.

István: I’ll talk about why we are doing that now.

István: Well, one of the ecosystem apps that we monitor closely is Revolut.

István: It’s a financial services app that is very successful in Europe.

István: They have approximately 50 million users.

István: And they approach loyalty in a very interesting way.

István: They have a subscription plan, which allows you to obviously pay for additional benefits, which can be financial, like higher cash back or experiential, like having a subscription to Purpaciti Plus, which is, as you probably know, it’s a generative AI-driven conversational search engine.

István: And also financial times.

István: So you get a lot of benefits for this subscription.

István: But then they have also introduced what they call RefPoints, which is a more traditional loyalty program.

István: How you earn points is by using your Revolut bank card, and then after earning those points, you can spend them on experiences, experiences including hotel stays or airline miles, or real experiences like guided tours in a foreign city and the likes.

István: So considering that it’s a financial services app, they really offer a lot of things that you can enjoy.

István: And it’s just an amazing customer experience.

István: There is a touch of personalization here and there as well.

István: What I really like is that obviously as a financial services app, they know that you are abroad, because they see that you are spending abroad.

István: But when you come back home and you do your first transaction in your home country, then they just send you a push notification, which is like welcome back to Hungary.

István: We hope you had a great visit.

István: We hope you had a great journey.

István: And I think that’s delightful.

István: So there’s a lot that we can learn.

István: And we are trying to learn as well, because actually we are already in some ways as incumbents, we are already competing with them for our customers’ attention.

István: So it’s very inspirational.

Paula: Very inspirational.

Paula: And that’s what I love about asking that question, actually, István, because I do have a Revolut account back in Ireland.

Paula: But unfortunately, of course, you know, I’m disconnected from that proposition.

Paula: In fact, I think it’s even been logged out for me for some technical reason I haven’t figured out.

Paula: But there you go.

Paula: I think that’s a compliance issue, of course, as well, because I’m not resident.

Paula: Anyway, the key is 50 million, as you’ve mentioned, first of all, in terms of a customer base.

Paula: And I absolutely agree, financial services is often a sector that’s like the least agile, the most risk averse and the least likely to go for an ecosystem strategy.

Paula: So I’m amazed to hear you describe it as that.

Paula: So like to me, absolutely a bank, absolutely partnerships and benefits led.

Paula: But an ecosystem is an even bigger word.

Paula: So and so that’s impressive.

Paula: And I know that’s a direction you’re going yourself.

István: Yes, that’s right.

István: We started Loyalty, we started with Loyalty, obviously, as our first kind of business outcome and goal.

István: But definitely, I mean, our aim is to build on Loyalty and form an ecosystem as well.

Paula: Incredible.

Paula: Yeah.

Paula: And I don’t know if you’re paying attention to this part of the world as well, but just as a normal resident here, I suppose we’ve got the Careem app, which is now owned by Uber.

Paula: So sounds like you’re familiar with that one.

Paula: And so again, it started as a single proposition for them in terms of, you know, literally the transport.

Paula: And now absolutely we’ve got banking, we’ve got home services and all sorts.

Paula: So it is a big play and certainly very exciting.

Paula: So let’s catch up first of all, István, in terms of what’s been going on in the two years since we spoke to you last time.

Paula: So for anyone who didn’t, of course, hear that interview, we’ll make sure to link that in the show notes.

Paula: But you were certainly at a very early stage in your loyalty and digital transformation journey.

Paula: And two years on, you’ve made incredible progress.

Paula: So would you just catch us up in terms of what’s been delivered in that two year period?

István: Yes, I always come at it from the broader business context.

István: So Consumer Services is basically a few retailer at the core.

István: And Consumer Services in MOL is present in ten countries now.

István: Big changes that we have entered Poland, very exciting change for us since we spoke.

Paula: Yeah.

István: And also we have expanded our gastro concept and brand, which is called Fresh Corner.

István: We are now selling more than 110 million cups of coffee and hot dogs combined.

István: So it’s really a big part of the business.

István: And it’s very much helped by loyalty as well, as we’ll talk about it later.

István: And in terms of our loyalty program, we have introduced the program now in eight countries.

István: Before, when we spoke, I believe that we were in three countries, so that’s plus five.

István: And we have also almost quadrupled our number of app users, because now we have five million users across these eight countries and we were at, I think, 1.3 when we talked the last time.

István: So we have really experienced an exponential growth.

István: And as a business, more broadly, we are, the vision is actually transforming this once analog few retailer to a digitally driven consumer goods retailer and an integrated mobility service provider.

István: And I believe we are well on our way.

István: We started this in 2017, so we have had ample time to make progress.

Paula: You have had ample time and you have made extraordinary, as you said, exponential growth.

Paula: So again, congratulations on all of those big numbers.

Paula: Five million members is extraordinary, eight countries.

Paula: And I know you told me in preparation for today, you’ve managed to deliver a consistent program across those eight countries.

Paula: But I know you said, of course, it’s commercially flexible in terms of how it’s executed.

Paula: So I’d love to just hear that sounds like quite a complicated thing to bring to market.

István: How it works is that we have a technology backbone, which is the same for every country.

István: Yeah, it’s being developed and it’s being managed from Hungary, where the headquarters is.

István: That’s where my team is.

István: But retail is local.

István: So actually, it’s the local retail teams that are running the programs.

István: And obviously, we have different market situations country by country.

István: In some countries, we are market leaders.

István: In other countries, we are challengers.

István: Obviously, different currencies, different languages.

István: So these will need to be actually considered.

István: And therefore, what we did is we built a group template.

István: And then the countries and the markets, they have their flexibility to work within that template.

István: So the program can have a local flavor, but it works very, very similar in all the markets.

István: And that’s how we can actually make sure that we have economies of scale.

István: And it’s very, very different to have a 5 million customer base that you serve and then do all the developments.

István: And you need to spread all the development costs to 5 million members or to 500,000 or to a million.

István: It’s obvious mathematics behind it.

István: And that gives us a lot of advantage that we rely on.

István: And what we are working towards now is actually making that advantage even bigger, also from a customer experience point of view.

István: Because from this summer, actually our programs are also working cross country.

István: So meaning that if you have an account in Hungary, and you travel across the region, and if you buy fuel or hot dog or coffee there, you can also get points in that other country.

István: And we are working on other developments to make your kind of regional experience better too.

Paula: Yeah, absolutely incredible.

Paula: And you’ve reminded me of another brilliant brand.

Paula: We did an interview with McDonald’s.

Paula: I don’t know if you heard that one, about a year or two ago.

Paula: Actually, it was about a year ago.

Paula: And they had that same approach.

Paula: So I think everybody kind of listening and watching today is probably, you know, learning a lot from you, that idea of freedom within a framework really is, I think, just best in best in class in terms of, as you said, supporting something centrally, having all of the automations.

Paula: I know you’re very proud of the automation in terms of making sure that you have ongoing CRM activity, of course, going through.

Paula: But then, as you said, different market conditions, so people can customize and tweak.

Paula: And I guess it gives them a sense of ownership as well, István, that they’re able to, I guess, respond to what competitors are doing in each of their own countries.

István: That’s correct.

István: And I honestly believe in the human element of loyalty.

Paula: Yeah.

István: If you…

István: It’s actually really visible now that I have the chance to track eight countries.

István: It’s actually very, very visible to see where the local team is super engaged.

István: They love what they do.

István: They love the program.

István: It’s coming across the results as well.

István: It’s because actually it’s them who need to sell it.

István: A loyalty program, you need to sell it to your front line employees.

István: You need to sell it to a management.

István: You need to sell it to your peers, to your colleagues, but most importantly to your customers.

István: And how professionally, obviously, but how emotionally is the local team motivated actually comes across the results.

István: So you would never be able to properly manage a program from a remote location.

István: It’s loyalty is different.

István: The technology is different.

István: Technology is as global as it gets, the better because of economic skill.

Paula: Yeah.

István: But the program itself, that has to have a heart.

Paula: Yeah.

Paula: Yeah.

Paula: Very well said.

Paula: No, we always say, you know, from the very first program I was ever responsible for managing István, I could always have this idea that the intentions of the business were actually felt by the members.

Paula: In a way, I could never fully articulate, but it was very clear and I was lucky.

Paula: I was working in a program run by O2.

Paula: It’s still a very popular program in the UK market, and they really wanted customers to feel special and feel like a priority.

Paula: So everything from the naming convention of the program, through to how every single campaign was built, was built with, you know, let’s see how we can make the member love it, but also, of course, those people in the stores who do have to deliver it.

Paula: And ultimately, we’re reliant on them for our success.

István: Yes.

Paula: Amazing.

István: I fully agree.

Paula: And I do remember you were quite a small team, actually, István.

Paula: I remember, I think you mentioned a visionary boss.

Paula: So there was obviously a big idea in MOL Group in terms of the power, not only of digital transformation, but I suppose the role of loyalty in terms of leading the digital transformation.

Paula: So talk to us about your team now.

Paula: It sounds like you must have a lot more people involved within the lab.

Paula: So, you know, what scale are you at?

István: First of all, the visionary boss is still there.

Paula: And I think that helps.

István: That helps.

István: And also the consistency.

István: So that you can start something in 2017 and then follow it through for like, you know, seven years and then hopefully a decade or 15 years.

István: That makes a huge difference that people are not changing very quickly.

István: But when it comes to our team as well, we have the majority of the key people on board and we are trying to build our team around them.

István: And now we have a team of 80 colleagues.

István: We are trying to work as much as possible in an agile way, where it makes sense.

István: And that also means that we have chapters.

István: And the three chapters that we have is, first of all, we have data analytics, who are obviously supporting the data capability building in loyalty, including AI, but they are also working on other tools that support the business transformation, which are not related to loyalty, so operational category management and the likes.

István: And we have a, we call them product management and design, that is very specific to loyalty and actually building the ecosystem.

István: That’s the next phase for them.

István: And then the third chapter is engineering, is where our engineering team is.

István: And how we are working is that we put together squads from each of these chapters.

István: So it’s always cross-functional, and it’s always, squads are always working towards a goal, a specific mission.

István: We are trying to make sure that it’s not, the mission is not just a feature, but rather an outcome and the results that the feature brings to the organization and to customers.

Paula: Incredible.

Paula: Wow.

Paula: 80 people, and you’re right, there’s obviously a huge amount of work being done, and great to see the results coming through.

Paula: In terms of the program itself, István, again, just for people who maybe didn’t hear our last conversation, can you just maybe talk us through the structure?

Paula: Is it a points-based program and tiers?

Paula: I know there’s an element of gamification, so what mechanics are you using in order to drive the loyalty with your customers?

István: Yes, I would say that we have four elements of our program.

István: Number one is the tier system.

István: How it works is that you collect points, and as you collect points, you can reach higher and higher tiers.

István: We have four tiers, and obviously the higher your tier, the higher your benefits.

István: I would say it is status points, so most people are familiar obviously with the airline programs.

István: We don’t have points that you can burn.

István: We have points that are basically tracking your status.

István: So in that sense, we are closest to, when we started, we were closest to H&M’s program, which is very similar like this, that you’re reaching a status, and then you have it for a year, and then it gets reviewed.

István: So that’s the core of the program, and obviously, what you can get is benefits for your fuel purchase, for your gastro purchase purchases, which are very popular.

István: And what’s, I think it’s slightly funny, but from a business sense, it’s not fun at all, is that if you’re a loyalty member, you are eligible to use our toilets for free.

Paula: Oh.

István: We have a lot of payable toilets, which are maintained at a very high quality.

István: And obviously, if you are like a customer, you have to pay for that quality.

István: But if you’re a loyalty member, you don’t have to pay for it.

István: And you just need to use your loyalty card and then you enter.

István: And obviously, customers love this.

István: And this is a huge hook.

István: So that’s why from a business aspect, it’s not fun at all.

István: This is like super important for our business.

István: When I talk about it, it’s always a little bit, it’s a fun conversation.

Paula: Oh, I can totally imagine.

Paula: Yeah.

István: So that’s about the tier system.

István: But then equally important, obviously, is the campaigns.

István: So how to look at this is obviously when you, when you consider to join a loyalty program, you see what kind of benefits the program offers, and that’s the tiers for us.

István: But then equally important in driving the results, are what kind of campaigns, promotions you can run.

István: So we have a lot of those, automated as well, which are enriching your experience, and obviously trying to drive goals of increasing frequency and increasing basket size in our business.

István: The third element is gamification.

István: That was there from the beginning.

István: In some way, the tier system itself is a gamification too, but what we have paid a lot of attention to make the user experience more fun than you would expect generally from a few retailer.

István: So we introduced logics like digital scratch cards, so that you don’t just get a voucher simply, but you need to scratch your phone like you would do with a paper.

István: We have a logic that we call challenges, where you can collect stamps, and then after you have collected your stamps, then you get an additional award or reward.

István: We have prize winning games, which are now it’s when we run a prize winning game across the group, it’s like two million, almost two million people playing.

István: So it’s really big.

István: And these kind of games are fully run on the platform and in the app.

István: And in many cases, these are kind of tied to some conditions.

István: Obviously, the main condition is that you need to buy something.

István: But if you are running, for example, a coffee campaign, then you need to buy a coffee.

István: But then in the end, you can get huge prizes.

István: And huge prizes includes cars, or it can include dream trips to some exotic places, or just simply money on your fuel card, which is also very appreciated by customers.

István: So that’s a big feature, and that’s kind of a central to gamification.

István: But we also introduced badges.

István: We are trying to learn in this from Duolingo.

István: So there might be more coming.

István: I love Duolingo and I love what they do.

István: And we are trying to copy, to be honest, what we can from them.

István: And these badges, how they work is that obviously, the more coffee or the more hot dog you buy, the higher you are in your badge level.

István: And the goal is that you become a coffee king or a hot dog king, and you get a lot of rewards on that journey.

Paula: Yeah.

Paula: Wow.

Paula: Is that all of them covered then?

Paula: So you talked about your tier status, you talked about your badges, you talked about games overall, and I know we’re going to talk a little bit about that.

Paula: And so a pretty…

István: Yes, and now there is a fourth one, which is payments.

Paula: Payments.

Paula: Okay.

Paula: I thought we were missing one.

Paula: Go on, tell me about payments.

István: So payments.

István: So we introduced bank card payment for fuel within the app.

István: So basically how it works is that you enter our service station, you scan a QR code with your app, and then you basically you just start fueling and then you pay in the end.

István: But it’s very much, it’s basically done in your app, yeah?

István: So you don’t need to, if you are in a rush, you don’t need to go into the service station, you can pay for a fuel outside and then leave.

István: Or otherwise, if you’re not in a rush and you actually want to spend time in our fresh corners, which is what we want generally, you can just fuel, pay at the pump, and then park your car and then spend as much time as you want within the shop.

Paula: Amazing.

Paula: Yeah, that’s a card-linking proposition then, if I’m correct.

Paula: Is it, István?

István: Yes, that’s correct.

István: And when we talk about ecosystems, obviously a major function of ecosystems is payments.

István: So payments is going to be a core for that proposition.

István: And we are planning to build actually a lot of additional services on this payment capability.

Paula: I’m sure.

Paula: And just because sometimes it can be restricted, I think, in some countries.

Paula: Are you able to facilitate debit cards and credit cards for your members?

István: Yes.

Paula: Okay.

Paula: Super cool.

Paula: Yeah.

Paula: And just a few bits, because you’ve talked about so much there, my goodness, in terms of the propositions.

Paula: First of all, just a couple of the basic things, I think, are really big lessons for everybody again, who’s listening to the show.

Paula: Your core product is something you’re obviously extremely proud of.

Paula: And I think historically, you know, fuel stations would not have had maybe a reputation for having particularly good quality food in the past.

Paula: So the fact that you’re positioning your basic product and, as you said, the coffee and the hot dogs as gastro is already something I think is going to build loyalty for anyone.

Paula: Secondly, the piece around the toilets, as you said, it’s probably not the most fun conversation in terms of, you know, how to communicate either internally or externally.

Paula: But let’s be honest, we’re all humans, and that’s often why we do stop at the station.

Paula: And we all want to have a beautiful, really clean and pleasant experience.

Paula: So I totally love the idea that that’s what, you know, essentially you’re investing in and allowing the loyalty members to enjoy.

Paula: And then the other piece was just around Duolingo.

Paula: I’m actually learning French on Duolingo.

Paula: So I’m going to send you, I don’t know, did you see their TED Talk István that they did about from the founder of Duolingo?

István: No, I didn’t.

István: I listened to several podcast interviews from Luis Fanon, but I haven’t heard his TED Talk.

Paula: So OK, well, I will share that with you, of course.

Paula: And we’ll make sure to put it in the show notes for anybody who does want to watch that as well.

Paula: The thing that struck me about, I thought he was an amazing visionary, actually, to use a very big word.

Paula: But what amuses me and I didn’t quite, I suppose, initially understand how important this was to their strategy.

Paula: But the tone of voice that they use in their communications, he described it as passive aggressive.

Paula: And it totally is.

Paula: And it totally works.

Paula: You know, if I miss my French lesson, it’s like, you know, it gets angry with me.

Paula: So I think that’s genius.

Paula: And I think sometimes the tone of voice is something we don’t realize is also driving loyalty.

István: Oh, very much.

István: I mean, I’m at 266 days in German, so I can fully support what you are saying.

István: I feel bad if I’m planning to not do my lesson, I feel bad about it, which is what they want.

István: Which is what they want.

Paula: Totally.

Paula: I’m at 623 days in French, István.

István: Wow, awesome.

Paula: Very proud.

István: Congratulations.

Paula: Thank you.

Paula: Thank you.

Paula: I really need to get to fluency.

Paula: Actually, my husband’s parents do not speak English and my French is still not good enough.

Paula: So it’s personally important, as you can imagine.

István: Extra motivation.

Paula: Extra motivation.

Paula: Exactly.

Paula: So listen, I mean, there’s so much going on.

Paula: But I’d love to just again for the audience just to, I suppose, focus in on three things that you said to me when we were planning today’s conversation.

Paula: And that was really to get a sense of, I suppose, what you’re most proud of across all of these incredible innovations and developments.

Paula: There was three particular things.

Paula: And I think if all of us could run our loyalty programs and expect these kinds of outcomes, then for sure it would be a great achievement and certainly a career high.

Paula: So we did talk a little bit already about your team.

Paula: You’ve talked about 80 people, cross-functional expertise, and really delivering on all of the complex, I suppose, back office support that you need, whether it’s data analytics or anything else.

Paula: Obviously, managing the platform and building all of those systems.

Paula: The second piece I’d love to just, if you would talk to our audience about, is the performance for the business.

Paula: Because I will honestly say, like one of the main reasons I started the podcast was I really struggled with proving the incrementality of the programs that I was building.

Paula: And I still think that a lot of our audience struggle with their justifying the investment.

Paula: But it seems that MOL Group has nailed it, and that you have evidence, and that you believe that it’s working.

Paula: So I’d love if you could just talk through, you know, how do you prove it?

Paula: How do you measure it?

Paula: And what kind of results?

Paula: Whatever you can disclose.

Paula: I know you obviously can’t tell us too much, but what can you talk about in terms of how it’s driving your business performance?

István: Yes, how we approached it is for the whole digital transformation.

István: We have set return targets.

István: So it’s not just it’s not loyalty in itself, and it’s not simply the loyalty program.

István: It’s the whole digital transformation, all the analytics tools, all the capabilities that loyalty brings.

István: Loyalty for us is not loyalty in the narrow sense, it’s loyalty in the broader sense.

István: We have a CRM behind it, obviously marketing automation, we have our mobile app, these didn’t exist before.

Paula: Yeah.

István: So the return target is for all these investments.

István: And how we set up the digital factory is that, is that it acted as a kind of shadow P&L, meaning that the result of the analytics tools and loyalty is obviously showing up in the business.

István: What we are measuring those results, measuring those benefits, and then obviously comparing that to the cost that we are putting into the program.

István: How we measure the benefit of loyalty specifically, the overall benefit is very, very hard to measure, obviously, because not 100% of your business is loyalty.

István: It’s never gonna be as a retailer.

István: For us, when it comes to transactions, it’s approximately 1 4th of our business now.

István: And in terms of sales, it’s much more than that.

István: But it’s obviously not close to 100%.

István: So, in this kind of environment, what you can do is that we obviously had loyalty programs before as well.

István: Those were simple loyalty programs.

István: And what we did was we analyzed each and every customer who participated in both.

István: And then we compared the behavior of our customers in the current program and customers in the previous program.

István: And there’s a huge uplift.

István: And then the uplift is so big that it’s kind of unbelievable.

István: So obviously, you have to apply a lot of adjustments.

István: So for example, the network itself grows.

István: Your brand grows anyway, so you have your market share hopefully improving even without loyalty.

István: So there’s a lot of additional factors which you have to basically factor in.

István: But even when you basically take those factors out, you still need to see an uplift in your customer behavior, which we do.

István: And we’re trying to compare how our loyalty program evolves versus how our non-loyalty transactions and non-loyalty sales and margin evolves, trying to compare the two.

István: And these kind of methodologies, the two methodologies together, those are kind of adding up to one number.

István: You need to have ultimately one number, one number which you earn per loyalty customer.

István: And then, we are using this logic of unit economics.

István: So you take the cost down to a customer level, including all costs, yeah?

István: So let it be Apex, so the investment into the IT systems, let it be Opex, the people that need to maintain it, or the license costs, the cost of rewards.

István: That’s the cost per customer.

István: And then you have the benefit per customer.

István: And obviously, where you want to be is that the benefit per customer is multiple times the cost per customer.

István: And for us, it’s, currently, it’s approximately three times higher.

Paula: Wow.

Paula: Oh, my goodness.

István: As our skill grows, and that’s where the skill is really important, because as your skill grows, then obviously this difference just grows.

István: Yeah, because your cost is not going to grow.

István: We are targeting 10 million customers.

István: Our cost is not going to go up twice.

István: Yeah, but the benefit, if you can keep the benefit per customer at approximately the level where it is, that also means that you earn twice as much money.

Paula: Incredible.

Paula: Wow.

Paula: I think you must be very popular in the business there, István, with those kind of metrics.

Paula: That’s amazing.

István: Popularity, I think, is a complex question.

István: Popular in the sense that, I mean, more movies popular, not necessarily me.

István: More movies popular because it’s, it brought a lot of, I believe, a lot of fresh energies into the company.

István: It’s a lot of fun to introduce, it’s a lot of work, but also a lot of fun to introduce it.

István: A lot of people love it, both customers, and there are a lot of great anecdotes about how much customers are using it and love it.

István: And also, I’d like to believe that many of our colleagues love it too.

István: But it’s also a lot of work on the other side.

István: So it’s not coming for free.

István: Even if you are taking care of the technology centrally, you have to work tremendously hard to make it successful.

István: So the cooperation between a digital factory and the business, or real business, who are in the front line, that’s very important.

Paula: Yeah, yeah.

Paula: And you’re very humble, István, because I know at the beginning of the project, as you said, a couple of core people with that core belief that this could be transformational.

Paula: But it does take, I suppose, as you said, a lot of hard work.

Paula: And the evidence, which you’ve just talked us through, it sounds incredibly robust, I will say.

Paula: Again, I’ve always needed to rely on external expertise to come in and measure that kind of incrementality, because for me, it always just felt too complex.

Paula: I’m much more suited to the design side of the communications piece rather than the P&L.

Paula: But I love the fact you mentioned the word a shadow P&L.

Paula: I think that’s extraordinary that you have that measurement, that the incrementality is being proven, that the business is continuing to believe in it.

Paula: And you literally said that it’s exciting and energizing the business, which to be honest, I don’t hear very often on the show.

Paula: So is that something that has been happening gradually over time?

Paula: Was there any like tipping point where you feel like they actually just went, no, we all love this?

Paula: Or how did that actually happen?

István: It’s very gradual.

István: You are…

István: In the beginning, when we started to put this together, it was clear that we are trying to leapfrog.

István: So the capability, also on the people’s side, the capability is what we have in MOL Group.

István: None of this existed before.

István: So talking about personalization at the level of Starbucks, was kind of like a pipe dream.

István: But when it started to materialize, I think that’s when people started to gradually believe in it.

István: We needed a couple of years to get there.

István: So we were strategizing a lot in 2019, started to implement the first country in 2020.

István: And I would say the tipping point was 2022.

István: When we had the program in three countries, when we talked basically, and we introduced it in our home country, that always obviously helps a lot.

István: And that went really well.

István: And I think that was the point where people started to get that this is something that’s going to differentiate us as a company.

István: And then we were really fast in getting the program out to as many countries where it makes sense financially.

Paula: Absolutely.

Paula: And the other amazing thing you told me in preparation for today was that you guys went and bought a football team, not just sponsored a football team, but tell us about, I suppose, the decision to get involved in football as a business owner, because that in itself is going to drive a totally different kind of loyalty.

István: Yes.

István: Obviously, it was not my decision.

István: But what I can say about that decision, which we are saying openly, is that we have been sponsoring football clubs for quite a long time, actually.

István: And we had a football club in Hungary, which wore the name of MOL as well, MOL on their shirt and all that.

István: But then the top management decided that instead of pouring money into a football club, why don’t we pour money and also own that football club?

István: And then through that ownership, actually apply the, I would say, by now very professional management capabilities that the company has.

István: And also the technology capabilities and the whole approach, what we have to managing an organization.

István: And that’s when this decision was made.

István: The company bought a football club, one of the most popular in Hungary.

István: So I think that helps.

István: And obviously, as part of this kind of transformation, we are already working on implementing their loyalty program as well.

István: Obviously, in their mobile app, they don’t have any of these, but they’re really looking forward to it.

István: And what we do is we tailor our MOA Move program and platform to their needs.

István: But what’s really exciting is that the whole tier logic and how loyalty works is very, very applicable to football as well.

István: So when we sat down with the marketing manager and the merchandising manager of the club, we started to talk about how MOA Move works, and immediately they have a hundred ideas that how this could be used and how the different fan personas align with our retail personas and how it fits the program.

István: So the program logic will actually be really, really similar to what we have in retail.

Paula: Amazing.

Paula: Yeah.

Paula: And in fact, we’ve only done one football club, actually, no, two football clubs, actually.

Paula: So again, I’ll make sure to link to those in the show notes for today.

Paula: István, even if even it might be interesting for you.

Paula: One was AC Roma and the second one was Arsenal Football Club, obviously, a Premier League.

Paula: And I learned so much from both of those.

Paula: So I think it’s a very exciting space.

Paula: And I always feel like sports is an area I wish I could have worked in.

Paula: Like, it’s just so fun.

Paula: So I’ve no doubt.

Paula: Yeah.

István: It’s so energizing to our team as well.

István: You can imagine how much my team loves this.

István: It’s extremely engaging.

István: And it’s just very different and very refreshing, even compared to, I think, a very exciting industry of convenience retail.

István: Sports is obviously is a different place.

Paula: It’s a whole other level.

Paula: Absolutely.

Paula: So my last question, then, István, today is around the topic of AI.

Paula: And I think it would be remiss of me, given that you run a digital factory.

Paula: But again, I know you’ve done a lot of work with AI already, both in terms of personalization, and I think you used the term micro-personalization.

Paula: So just as we come to the end of our conversation, I’d love if you could share anything that you’ve learned from the use of AI.

Paula: Maybe what’s working, where you think our audience should be looking to AI in terms of optimizing their programs.

István: Yes, we are using AI to improve our personalization methods and framework.

István: How we think about AI in loyalties is by taking, I’m sure you’re familiar with the concept of this personalization pyramid.

István: So you are starting from the bottom, that’s your general campaigns.

István: Campaigns that you are sending to everybody.

István: It’s the same message, same offer, everybody gets it.

István: It has their purpose.

István: So if you are introducing a new product, or if you want to push your trade a lot, then these kind of messages, they have a great purpose.

István: But then, what we have introduced on our Tag Platform is this, we call them segmentation or segmented campaign.

István: So we have analyzed all our transactional and customer data, obviously tens of millions of data points, and then we landed on a strategic segmentation framework around the key business goals, so increasing frequency and increasing basket size.

István: And then what we did was we activated these segments, activated them on our MarkTag Platform, and also actually built a measurement framework around this in our data platform.

István: How to imagine this is, for example, what’s a strategic segment is medium frequency customers.

István: For us, that’s a frequency level of 2 to 4 visits per month.

István: Then in terms of the basket, the question is when our customers are with us, then in what percentage of their visits they are buying our hero products, so coffee, hot dog or premium fuel.

István: And for example, if you’re a medium coffee buyer in MOL, that means that approximately in one-third of your transactions, you are buying a coffee.

István: And what this segmentation framework does is that we are trying to make sure that the customers are going one level up in the certain segmentation.

István: And that’s how we tailor our offers.

István: That’s a segmentation level and it’s pretty strategic.

István: But then when you start to apply AI, it gets to a whole other level.

István: So when we look at a segment, for example, customers that don’t buy premium fuel, what we did in the past and what we are still doing to a large extent is that those customers get the same offer automatically.

István: If they move away from that segment, they get another offer.

István: But every one of the customers in that segment gets the same offer.

István: What AI does for us and for other organizations as well is that it can personalize both the offer, so what the customer gets and also how the message is sent, what kind of message is sent, and also the timing of the message.

István: And we start to apply AI for all, so we apply predictive AI to differentiate the offer for these customers, not every customer needs to get the same level of discount, and it allows us to give a really high level of discount to some customers and lower level of discount to other customers, thereby increasing the effectiveness of the program.

István: Another one is using generative AI to tailor the message that we are telling to customers, basically based on a lot of features that we analyze.

István: That’s a really exciting area.

István: We have not scaled that yet, but I’m very focused on scaling it and sending tens of thousands of different messages that are personalized.

István: And the third is what is called send time optimization, which is basically looking at the open rates at the individual level and optimizing the time of sending an email or a push to when the customer opens an email or a push.

István: So that’s how we use AI, and that’s how we want to get to this kind of hyper personalization level.

István: And again, the whole thing goes back to unit economics and scale economies.

István: If you can do this for 5 million customers, you will only be able to do it better for more customers, right?

István: And if you have more customers, you are more effective.

István: If you’re more effective, you earn more.

István: You have more to invest, and well, that it’s like a virtuous cycle.

István: And that’s what we are building now.

Paula: Incredible.

Paula: Wow.

Paula: And AI is still, I feel, so new.

Paula: I think it’s less than two years since I first heard about it.

Paula: So the fact that you’re doing so much at this very early stage is absolutely phenomenal.

Paula: So I hope it’s not another two years before we manage to catch up again, István.

Paula: You did also mention to me actually, AuFair, that you guys are doing essentially, I suppose, digital or loyalty consulting, both internally and sometimes externally.

Paula: So anything you want to say in terms of that, just as we wrap up, if people want to reach out, is that something that you’re open to talking to people about?

István: Yes, of course.

István: And thank you for the question.

István: We obviously, as a priority, we apply our knowledge or try to apply our knowledge internally in MOL Group.

István: We actually have a lot of businesses that are using similar technologies and have similar priorities to the consumer business.

István: So we are trying to spread this capability and knowledge internally in MOL.

István: And we are also open and actually started to work externally as consultants, but not consultants, not in the sense of like, okay, MOL Group is a loyalty consultant, but more about the kind of the proposition is that if a company wants to go through a similar journey, as we did, and even more broadly, like a digital transformation journey, we could be there to help.

István: Yeah, so from basically from starting to write the strategy paper to operating either a massive loyalty program or the systems behind it, we are there to support.

István: So that’s the plan.

István: And basically, the rationale behind it is that a lot of the learnings that we have is very, very cross industry.

István: Loyalty is cross industry anyway, but digital transformation is also cross industry.

István: And we have a team that has, well, on average, even on average years of experience in this.

István: And we would love to keep this team together and actually grow it further.

István: And we can do that.

István: That’s my kind of vision, that we can do it very effectively if we give the opportunity for these people to work in other industries, get new experiences and bring those new experiences into MOL Group and improving our own program and improving our own capabilities further.

Paula: Amazing.

Paula: Yeah.

Paula: Well, I know you’ve already won many awards, including international loyalty awards in your region, István, and again, some awards in the software sector as well for your use of AI.

Paula: So all I see is a very bright future for you.

Paula: So of course, we’ll make sure to link to your LinkedIn profile in the show notes in case anybody does want to connect with you.

Paula: Is there anything else you wanted to mention before we wrap up today?

István: Maybe is this ecosystem play.

Paula: Please do.

Paula: Sorry.

István: Yes.

István: I’m very excited about that.

István: For us, loyalty is the core of our customer relationship management.

István: But once you have a loyalty platform where you have so many people and you have a business like few retail or grocery retail, where you have a lot of interactions with your customers, it’s only natural that you start to expand what a loyalty program can mean or what an application can mean for your business and for your customers.

István: And what we have found is that our customers are really open to new things in MOL.

István: And so we started partnerships as well with insurance companies, with financial services companies, and with e-commerce companies, where we give extra benefits to our customers through the program, but also a big priority going forward is introducing services into our loyalty app.

István: So that’s, you know, going back to your Karim example, that’s a very similar journey that we want to go through.

István: And we have basically laid out this customer journey, where you, as a customer, if you have a car, basically at some point you should be able to do everything that is related to it from your MOL Move app.

István: And what I think is special in this is that what brings all this together is loyalty.

István: So even if you, in the future, you might be paying for your parking in the app, or you might be using our car fleet management services, even MOL Group even has that, then for every interaction you will get a loyalty point.

István: So that’s how it all comes together, and we are excited about it, and we really want to build this in the next couple of years.

Paula: Yeah, well, I think that’s already the topic that we’re going to talk about the next time, István, because it makes perfect sense.

Paula: And as I think about it from a business perspective, of course, customer acquisition is always a difficult thing for any business.

Paula: So once you’ve built the trust, built the brand, and again, you’ve got access to communicate with this incredible 5 million members already.

Paula: And I know the ambition, as you said, is to double that to 10 million, and no doubt far beyond.

Paula: It makes perfect sense for you to build that ecosystem, partner with people again who want to tap into the inherent behavior that you’re able to drive for them.

Paula: So, incredibly exciting times.

Paula: I’m conscious we’re running out of time.

Paula: So, I’m sad that we have to wrap up the conversation.

Paula: But as I said, I really hope we’re going to stay in touch.

Paula: And I hope it’s not so long before we catch up again.

Paula: So, István Mag, head of the Digital Factory at MOL Group.

Paula: Thank you so much from Let’s Talk Loyalty and Loyalty TV.

István: Thank you very much.

István: Thank you for the opportunity.

Paula: Thank you.

Paula: This show is sponsored by Wise Marketer Group, publisher of The Wise Marketer, the premier digital customer loyalty marketing resource for industry relevant news, insights and research.

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