Best of the Back Catalogue: The Truth About Customer Loyalty with KPMG (#762)

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: Today is episode 15 of Let’s Talk Loyalty, and I’m delighted to be sitting face to face with the guest for only the second time in my recording career.

PAULA: So Selim Tanfous is an Associate Director with KPMG for the Lower Gulf region.

PAULA: So delighted to be in Dubai chatting about actually a fantastic report which KPMG have just released, which is entitled The Truth About Customer Loyalty.

PAULA: Now, when Selim and I started chatting, it’s really apparent that KPMG have a phenomenal amount of focus on customer experience and how that drives customer loyalty.

PAULA: And in fact, the company has been doing a massive amount of work over in fact nearly 12 years in terms of various different reports, which give us as consultants and I suppose as retail brands, insights into actually what customers are saying around the world.

PAULA: So before I get into anything about the report, I just first of all want to welcome Selim Tanfous to Let’s Talk Loyalty.

SELIM TANFOUS : Good morning Paula.

SELIM TANFOUS : Good morning everyone.

PAULA: Great.

PAULA: So great to be sitting down face to face as I said.

PAULA: I think first and foremost, I’d love to get some background on your career.

PAULA: I’ve mentioned customer experience.

PAULA: I also know you have a very strong background in technology, which I think is very unusual to come from the tech side into the commercial side and the strategy.

PAULA: So it’s a very useful background, I guess, in terms of the client work that you do.

PAULA: So tell us about your career and how you got to where you are.

SELIM TANFOUS : Thank you, Paula.

SELIM TANFOUS : So indeed, I started as a telecommunication engineer and I worked with a system integrator for the first six years of my career as a solution architect.

SELIM TANFOUS : So that gave me a very good understanding of how technology works, how you can build networks for companies, how you can drive value through technology basically.

SELIM TANFOUS : And with that background, I jumped into consulting with a boutique consulting firm and worked for four years in the telco space, mainly on the marketing and customer side.

SELIM TANFOUS : So basically, I helped a few telecom providers in the region, especially in the MIA region in redesigning their product portfolio, which is the core business of a telco.

SELIM TANFOUS : And then through that, with the company, we started really working on some loyalty topics, where we designed three loyalty programs in the region for two telecom operators basically.

SELIM TANFOUS : And this is how it started.

SELIM TANFOUS : I got passionate about loyalty, about consumer, customer experience, and really started going from project to project around that.

SELIM TANFOUS : So designing loyalty and implementing them, launching them, customer experience design, and customer experience transformation for public sector and private companies, and also complaint management.

SELIM TANFOUS : So the whole life cycle basically of consumer.

SELIM TANFOUS : And so since five years, I’m in Dubai and three years with KPMG, and working on the customer topic basically.

SELIM TANFOUS : So I’m part of the customer practice locally, focusing on developing service design, customer experience practice with public sector mainly, and some entities in the private sector as well.

PAULA: Wonderful.

PAULA: Well, you sound like a very busy man.

PAULA: Yeah.

PAULA: And I’m excited that this report has just come out, because I know KPMG has surveyed over 18,000 customers for this particular report from over 20 countries.

PAULA: And I think I said to you when we were chatting about this, for me, I really want to have global voices of loyalty and insights from all around the world.

PAULA: So the fact that you’re looking at EMEA and globally and giving us comparisons across countries is super interesting.

PAULA: And I know we’re going to talk about localization, but there are some really big trends.

PAULA: But before we get into all the detailed areas, I always do like to start, I suppose, with a favorite statistic about loyalty.

PAULA: And there’s loads in this report, which is obviously available for listeners of the show.

PAULA: And we’ll talk through how people access that report.

PAULA: But just before we start then, given that this is hot off the presses, Selim, what is your favorite statistic about customer loyalty?

SELIM TANFOUS : My favorite one is the ones that confirm that loyalty actually is not dying.

PAULA: Okay, great.

SELIM TANFOUS : There was a lot of debate around, do we still need loyalty programs or not?

SELIM TANFOUS : And is that really helping companies drive revenues or retain their customers?

SELIM TANFOUS : And what we saw through the report is that it still drives purchase behavior.

SELIM TANFOUS : We see that more than 44% of Generation X, for example, buys products tied to loyalty programs, basically.

SELIM TANFOUS : And same for the other generations as well, millennials and baby boomers.

SELIM TANFOUS : And this is basically tell us that if you have really a good loyalty program that is relevant to your customer, that is simple, that drives value for money for them, and also there are probably the emotional connection with it, it does impact your consumers and make sure that they’re still with you and still connected to your brand.

SELIM TANFOUS : What we see as well through the report is that there is a big shift in terms of how customers from generation to another receive loyalty and how they purchase or what drives their consumer behavior basically.

SELIM TANFOUS : We saw that millennials, which is the new consumer and the new generation of consumer is mainly driven by social media, reviews on products, what their friends tell them, what influencers say about products.

SELIM TANFOUS : And that varies from country to country.

SELIM TANFOUS : So overall, 71% of millennials are likely to provide reviews on products if they like them, which tell us how much is important to have social media analytics in place, a social media strategy in place, to make sure that the visibility on your brand on social media is managed.

SELIM TANFOUS : And in China, for example, where the technology and adoption of technology is very high, Chinese are much more influenced in their precious behavior by influencers or local influencers than others.

SELIM TANFOUS : So it’s very important to know also your local customers what drives them.

SELIM TANFOUS : And that’s why we also wanted to publish this report.

PAULA: Wonderful.

PAULA: And there’s so much in this report.

PAULA: I think it’s 12 very detailed pages of analytics and graphs.

PAULA: So again, we’ll make sure everybody has access to that.

PAULA: Some of the things I liked was loyalty program use by country.

PAULA: I was actually surprised by the lowest country that came through in your research.

PAULA: And so France came in at very low adoption at about 30 percent.

PAULA: And the UK, for example, came in lovely percentage, 45 percent.

PAULA: US at 42 percent.

PAULA: And the highest Australia at 61 percent.

PAULA: So huge amounts of variations.

PAULA: And I guess they define loyalty program use as percentage of customers who make purchases that earn rewards and benefits at least several times a week.

PAULA: So anyone who is interested in global markets can really get some great understandings from looking at this report that you’ve produced.

PAULA: So lots of different areas to talk about.

PAULA: I think the favorite statistic that I pulled out was that only 37 percent of the points and rewards will secure their loyalty.

PAULA: So I love this point.

PAULA: It absolutely can drive behavior.

PAULA: We know it will never compensate for any other gaps in the customer experience.

PAULA: So that’s super important.

PAULA: And also, something even more important, actually, is corporate transparency.

PAULA: So were you surprised by that, Selim, to see how much brand reputation and corporate honesty came through as driving customer loyalty?

SELIM TANFOUS : Actually, that’s a very good point you mentioned, Paula.

SELIM TANFOUS : We published a report two years ago about customer experience excellence.

SELIM TANFOUS : And this report is, it’s a global report.

SELIM TANFOUS : We interviewed more than 55,000 customers in 2017 across 14 countries.

SELIM TANFOUS : And across the globe, there was one big theme, which was that integrity basically drives advocacy, so basically corporate honesty.

SELIM TANFOUS : So we define customer experience excellence through a proprietary framework that we have.

SELIM TANFOUS : We call it the six pillars of customer experience.

SELIM TANFOUS : And we saw that if you work on these pillars and make sure that you deliver consistently across these pillars, you’re most likely to drive advocacy and loyalty.

SELIM TANFOUS : And these pillars are very briefly integrity, so how trustworthy and transparent your company is.

SELIM TANFOUS : Your ability to manage expectations and exceed them.

SELIM TANFOUS : Time and effort, so how effortless is the experience you have for any transaction that consumer can have with your brand?

SELIM TANFOUS : The fourth one is resolution, so your ability basically as an organization to turn a bad experience into a great one.

SELIM TANFOUS : And that creates that memorable moment that customers can also remember and relate to.

SELIM TANFOUS : The last two are the most important ones, which are personalization and empathy.

SELIM TANFOUS : So basically personalization is your ability to listen and to know your customer and to customize as much as possible the experience.

SELIM TANFOUS : And the empathy is how empathic are your employees towards your customers, of being able to put themselves in their shoes, put themselves into the context and be able to absorb either that anger or have the conversation to personalize the experience.

SELIM TANFOUS : So, as I said, integrity, one of the most important pillars, came across globally as the main theme.

SELIM TANFOUS : And what it tells us is that today trust is a currency that we need to leverage and invest on.

SELIM TANFOUS : So corporate transparency is a very important element to drive loyalty, especially with all the data issues that we’ve seen lately across the globe.

SELIM TANFOUS : Because consumers are more aware about that and they try really to make sure that their data is used correctly and not abused basically.

PAULA: Yeah.

PAULA: And certainly for me, the whole GDPR, I mean, it’s been such a big topic for so many years.

PAULA: And we’ve all been so focused on making sure that we’re delivering best practice, you know, from a corporate perspective.

PAULA: And I think now it’s coming through in terms of what’s the customer’s response to that?

PAULA: You know, how do they perceive how well have we done?

PAULA: And are we just ticking the box from a legal perspective?

PAULA: Or are we going above and beyond that to earn their trust?

PAULA: So I think it’s a lovely point.

PAULA: And it’s only coming through now, I think, in terms of exactly how is trust going to be evaluated?

PAULA: And I want to come back to personalization.

PAULA: Actually, there’s so much in what you’ve just said.

PAULA: There is a paradox around personalization, you know?

PAULA: Yeah.

PAULA: And that comes through in the report.

PAULA: We all want personalization.

PAULA: I think there’s a funny comment in there that sometimes that’s considered emailing directly, Dear Selim, clearly that’s not personalization.

PAULA: Sometimes we think segmentation is achieving personalization, but also that’s not.

PAULA: So I think it seems very few that genuinely have an understanding of what matters to me.

PAULA: So is that your experience in terms of how brands are dealing with personalization?

PAULA: How well are they doing it in your view?

SELIM TANFOUS : So it’s still a long shot, I believe, in my experience working in the Middle East, especially.

SELIM TANFOUS : We don’t see really companies yet equipped for that.

SELIM TANFOUS : I can give a very simple example that happened to myself.

SELIM TANFOUS : Every three months, I get a call from one of the local telcos asking me, if I want to purchase a product to reduce my bill.

SELIM TANFOUS : And basically, I said yes, I would love to.

SELIM TANFOUS : And the call center agents start asking me, okay, do you call more international or local?

SELIM TANFOUS : So despite having all the data, I can tell them what kind of things I want or I need.

SELIM TANFOUS : The mechanisms are not yet there.

SELIM TANFOUS : So more mature markets are definitely having a lot of them.

SELIM TANFOUS : But they are running into a different issue where data privacy becomes more concern.

SELIM TANFOUS : So they’re sitting on a lot of data, but a lot of also regulatory constraints are there to let them really use it correctly.

SELIM TANFOUS : So what we see here is that there is a lot on CRM to be done.

SELIM TANFOUS : There is a lot on personalization still to be done.

SELIM TANFOUS : The ability to listen and configure and customize.

SELIM TANFOUS : So you don’t really need each time to go and ask the customer.

SELIM TANFOUS : If sometimes you just make sure that it’s presented and prepared as the customer wanted.

SELIM TANFOUS : The biggest examples for me are the hospitality sector.

SELIM TANFOUS : So if you spend a lot of time in a hotel, if the personal is trained really to be customer centric and customer focused, they will start noticing the details and they will start preparing your room or your amenities or greeting you everywhere by your name.

SELIM TANFOUS : So this is where recognition comes into the picture.

SELIM TANFOUS : And that’s, I think, how we translate really customization really to the individual points.

PAULA: Absolutely.

SELIM TANFOUS : We’re still doing micro-segmentation.

SELIM TANFOUS : We’re still not at the one-to-one marketing yet, in my opinion.

PAULA: If you work in loyalty, you already know exchange matters.

PAULA: What many programs are still figuring out is this.

PAULA: The opportunity isn’t just to offer it, it’s to run it well.

PAULA: When exchange is actively managed, it can become a real growth lever, driving stronger card engagement for financial institutions, meaningful accrual revenue for travel programs and more flexibility for members.

PAULA: That’s the thinking behind points, a Plusgrade company’s exchange solution.

PAULA: They help loyalty programs move beyond passive connectivity with a managed fraud-secure approach built to improve performance.

PAULA: If that’s something you’re exploring, you can learn more in the full article linked in the episode notes.

PAULA: I think you’re absolutely right, Selim, and I think we all talk about it and have talked about it for a long time, but there’s still a lot of work to be done.

PAULA: And I think on the data piece as well, it was a big alarm bell, I guess, for me to learn that in the United States, I think it said 10% of United States customers are less willing to share their home address.

PAULA: So that’s a really big drop, you know.

PAULA: So the US is less regulated, as we know, than Europe, for example.

PAULA: So every market is completely different, but definitely I think the impact is coming through in terms of people losing trust in so many brands.

PAULA: So yes, they may provide their data, and we want it for personalization, but actually we need to do a lot of groundwork still, I think is what we’re learning.

PAULA: Absolutely.

PAULA: Yeah, I think the point about simplicity, also you mentioned as well in passing, I think really what came through, and again, what I love about this report is it has all demographics in there, so very much focused on millennials as the upcoming generation.

PAULA: But apparently they do find loyalty programs difficult to join.

PAULA: So that’s something that I think we’re hearing coming through, like, why do we make life so complicated?

SELIM TANFOUS : Indeed, it’s something that I came across in my career quite often, where it’s not very easy to join a loyalty program.

SELIM TANFOUS : And I would like to step back a little bit and talk about another report we launched, also the second edition was launched in 2018.

SELIM TANFOUS : It’s called Me, My Life, My Wallet, and basically talks about the multi-dimensional customers.

SELIM TANFOUS : And we wanted through the study to understand the new generation of consumers.

SELIM TANFOUS : And how are their consumer behavior driven?

SELIM TANFOUS : What are the drivers for their purchase behavior?

SELIM TANFOUS : And what really matters to them?

SELIM TANFOUS : And the idea was to understand if companies are really ready for this new generation of consumers, so millennials and Gen Z, because the purchase power in the future years will be with them.

SELIM TANFOUS : And what we saw is that the companies are still designing their value proposition, their business model for the old generation.

SELIM TANFOUS : So silent generation, baby boomers and Generation X, right?

SELIM TANFOUS : They’re not harvesting the data.

SELIM TANFOUS : They’re not investing in digitalized.

SELIM TANFOUS : They might as much as they need.

SELIM TANFOUS : And basically, this is applicable as well to loyalty programs.

SELIM TANFOUS : So as you said, a lot of loyalty are still point based.

SELIM TANFOUS : You don’t know how much you are consuming, how much does it really worth to join.

SELIM TANFOUS : You need still sometimes to fill papers, you need to carry cards, even though that a lot of programs are shifting to that.

SELIM TANFOUS : So to redeem your points is sometimes very complicated.

SELIM TANFOUS : I can think about the airline industry where it’s quite a hassle sometime to get your redemption.

SELIM TANFOUS : So today, the most important thing is that less is more.

SELIM TANFOUS : So less complicated drives a better behavior, more loyalty.

SELIM TANFOUS : And also more trust.

SELIM TANFOUS : So people would really connect more to your brand if it’s very simple.

SELIM TANFOUS : In the past few years, I used to fill a big form to join a loyalty program.

SELIM TANFOUS : I think today is something that is much simpler for the big trending program, I would say.

SELIM TANFOUS : So, in a nutshell, it has to be very neat and simple for customers really to understand the value proposition, to see how relevant it is for them, and to give them enough options to earn and spend their money when they accumulate points.

SELIM TANFOUS : And also it has to be consistent across the channels.

SELIM TANFOUS : Sorry, one of the statistics I would mention as well is that.

SELIM TANFOUS : 69% of the millennials agree that most of the schemes are too hard to join or earn rewards.

SELIM TANFOUS : So basically, we’re still designing loyalty programs for a different generation, and we really still don’t understand the customers very well, especially this new generation that is coming.

SELIM TANFOUS : So it’s going digital, investing on different and innovative schemes.

SELIM TANFOUS : What we know for millennials, for example, is that they really are loyal to brands that have a purpose.

SELIM TANFOUS : So one of the statistics that came through the report is that millennials are more willing to exchange their points for a charity, for example, or donate them.

SELIM TANFOUS : Which is a very important.

PAULA: And quite surprising because we tend to give them a bad rap.

PAULA: Everyone says they’re a bit entitled and whatever is a lot of negativity around that demographic.

PAULA: But actually, your research is saying, no, they want to be able to do things that mean more, a bit more of a higher purpose.

PAULA: So I think that’s a really, really good learning.

PAULA: I also think actually, and you mentioned a couple of things.

PAULA: So digital has, I suppose, in the past been considered a threat and something particularly retailers are worried about.

PAULA: But again, what consumers are telling KPMG is that digital is the opportunity.

PAULA: So if you make it simple, use all the digital channels they want to use, then absolutely, it’s a big opportunity.

PAULA: So hopefully, we’ve moved beyond the point where we’re all scared of the big online retailers.

SELIM TANFOUS : Yeah, and then we’re coming to a generation as well that is the Gen Z, for example, they are digitally native.

SELIM TANFOUS : So they want convenience and they want simplicity.

SELIM TANFOUS : So they’re most likely to join your loyalty program if it’s really convenient to use and to join.

SELIM TANFOUS : So digital, it’s transforming and using and going through digital transformation is not an option today.

SELIM TANFOUS : As we’ve seen across the business, we have multiple reports that confirms it.

SELIM TANFOUS : And it has to be applicable on all the products that a brand or company is providing to its consumers.

PAULA: Yeah.

PAULA: Another one that you mentioned, Selim, which I really love, and I don’t think I’ve seen a lot of companies focusing on, is this whole point about particularly, again, millennials will do a lot of research online.

PAULA: So the ability for a company to listen is absolutely critical.

PAULA: And I think it’s a big opportunity for a lot of brands really to maybe incentivize that kind of behavior.

PAULA: So if somebody is going online to find out about my brand, what focus have I put on that?

PAULA: So I think a lot of brands, again, well-intentioned, working hard or they have a social media strategy, but maybe not a listening strategy and maybe not a behavior change strategy.

PAULA: So what’s your experience in terms of recognizing, measuring, and rewarding, let’s say, online reviews, for example?

SELIM TANFOUS : In mature markets, we’ve seen that it’s happening.

SELIM TANFOUS : A lot of brands are innovating in terms of the social media strategy and making sure that in the social media space they are present and they try to be in control as much as possible.

PAULA: Well, yeah, that’s a bit of a contradiction, I guess, but we all know we try.

SELIM TANFOUS : The social media is a wild space where really the consumer is in control.

SELIM TANFOUS : We are in the age of customer today, so they’re more empowered.

SELIM TANFOUS : They share reviews, they listen to reviews, they recommend to each other.

SELIM TANFOUS : And there is this influential and influencers, basically, trend there that influence as well, customers.

SELIM TANFOUS : So some of the brands have done this.

SELIM TANFOUS : They put some schemes in place where they reward advocates.

SELIM TANFOUS : They reward people as well that they share or write good reviews.

SELIM TANFOUS : But we don’t see it as much as we should across the globe, and especially in the EMEA region as well.

SELIM TANFOUS : For sure.

SELIM TANFOUS : It is knowing the customer and listening to them across all the channels and sending that back to the organization so everyone improves the internal processes and then closes the loop with the customer.

SELIM TANFOUS : It’s not something that is systematically happening at the moment.

SELIM TANFOUS : Leading brands are doing it, yes.

SELIM TANFOUS : However, others are still lagging behind.

PAULA: Still catching up.

SELIM TANFOUS : So in my opinion, if you are not on social media today, if you don’t have a proper strategy to talk to your customers, to listen, to resolve their problems, to reward the loyalty, to identify your advocates through a dedicated advocacy program and really take care of them and pamper them, it’s something that will differentiate basically the leaders from the laggards, I would say.

PAULA: Love it.

PAULA: Yeah.

PAULA: So a key action, I think, for me, just in terms of recommendation is, you know, really make sure you are nurturing those advocates because again, everything else you’ve said, I think everybody is doing the basics, but I think that’s the piece that I see missing in a lot of social media strategies.

PAULA: Again, maybe in this region, but yeah, it’s definitely a big opportunity for people.

SELIM TANFOUS : Yeah.

SELIM TANFOUS : Especially with the upcoming generation, I think, there is no doubt that they will expect it.

SELIM TANFOUS : And companies have to be ready for that.

SELIM TANFOUS : And that’s why in the Five Mile Report, we’re saying that organizations are still designing their business model and their go-to-market strategy or their channel strategy to really baby boomers and Generation X, which are not the consumer of the future, basically.

PAULA: Absolutely.

PAULA: And just you mentioned that report from last year, Selim.

PAULA: So again, we’ll make sure that both the 2018 report and the 2019 report are available.

PAULA: And the report last year was called Me, My Life and My Wallet.

PAULA: So I think that’s going to be super interesting because again, it’s only 12 months old.

PAULA: And then as we said, The Truth about Customer Loyalty 2019.

PAULA: And even before that, I think you said there was 10 years of customer experience research feeding into and advising all of those.

PAULA: Originally, I think you said in mature markets, the US and UK, but now it’s much more global.

SELIM TANFOUS : Correct.

SELIM TANFOUS : So the customer experience report or customer experience excellence report, sorry, was a yearly edition driven by KPMG Nunwood in the UK.

SELIM TANFOUS : And it was mainly focusing on the UK and the US.

SELIM TANFOUS : And since 2017, we expanded that globally.

SELIM TANFOUS : So the first edition was 2017 with 14 countries, 55,000 customers interviewed.

SELIM TANFOUS : And basically identifying what the leading brands and customer experience are doing, mainly across the six pillars framework.

SELIM TANFOUS : And it gives a lot of insights on what Amazon is doing, for example, or what hospitality, leading hospitality brands are doing.

SELIM TANFOUS : And it’s a very good report that tells organization where they stand and what they should improve on to be able to bridge the gap basically with the leading brands.

SELIM TANFOUS : In the 2017 edition, we touched a lot also on employee experience and how it’s that really the main bridge between your experience or front office experience, let’s say, and back office experience.

SELIM TANFOUS : So if you don’t focus on having a good experience in your organization for your employees, it’s most likely to impact your customers.

SELIM TANFOUS : And that’s definitely going to impact your customer loyalty as well.

PAULA: Of course.

PAULA: Yeah.

PAULA: Excuse me.

PAULA: And I’m glad you mentioned Amazon and there’s a great statistic.

PAULA: I hadn’t caught up with the Amazon Prime membership program revenues.

PAULA: So for anyone who hasn’t seen the figures, net sales of nearly $14.2 billion in 2018.

PAULA: So I know some people dispute whether Amazon Prime is a loyalty program.

PAULA: It is clearly a subscription membership program, but $14 billion doesn’t matter what you call it.

SELIM TANFOUS : I mean, loyalty doesn’t need to be really a free membership based program.

SELIM TANFOUS : You have a lot of programs across the world that are paid and driving a lot of loyalty.

SELIM TANFOUS : If you make them exclusive for your top revenue generator customers, so whatever you’re putting in as benefits in that program, so sometimes it’s also worth it to pay for it.

SELIM TANFOUS : Absolutely.

SELIM TANFOUS : Can I name some?

PAULA: Please, absolutely, I’d love to.

SELIM TANFOUS : So the one I remember came across my research a few years ago was the Parnas program from Orange in France.

SELIM TANFOUS : And that was paid program for the top 1% of Orange customers.

SELIM TANFOUS : And it was a concierge-based program.

SELIM TANFOUS : So if organization invest in these kind of programs and they use third parties to run these programs, and they are very exclusive, so they make sure that not everybody can join.

SELIM TANFOUS : And to maintain these benefits, so it’s sometimes normal to pay for them.

SELIM TANFOUS : And that program had a lot of traction at that time.

SELIM TANFOUS : So you had a lot of CEOs of top companies part of it.

SELIM TANFOUS : So Amazon Prime to me is definitely loyalty program, even if it’s membership based, but it gives advantages to a lot of customers that joins it.

SELIM TANFOUS : It makes it relevant.

SELIM TANFOUS : There is a lot of value coming from it.

SELIM TANFOUS : And the most important point for me is that Amazon delivers on its promises.

SELIM TANFOUS : So whatever you are promised in that program, they deliver on that.

SELIM TANFOUS : So they manage and exceed probably expectations of customers.

SELIM TANFOUS : And that’s why it’s driving a lot of revenues and people are attached to it.

PAULA: Yeah.

PAULA: And you talked as well at the start, Selim, before we came on air about how Amazon is localizing itself.

PAULA: And again, we know that if anyone is doing one-to-one, we all know that Amazon for years has said, here’s one book you like, here’s maybe another one you should consider.

PAULA: So they’re probably delivering better than anyone on the one-to-one piece.

PAULA: But also, I suppose, on the local market requirements.

PAULA: So just that whole point about accepting, for example, cash on delivery, I think is a testament to Amazon not being arrogant about their scale and the opportunity to just be Amazon, but recognizing that in this part of the world, you need to be able to accept cash on delivery.

SELIM TANFOUS : It’s something that we’ve seen through the global customer research we’ve done.

SELIM TANFOUS : And we call it going global.

SELIM TANFOUS : So global brands definitely need to better understand the local nuances, let’s say, and adapt to them.

SELIM TANFOUS : At the end, each consumer market is different.

SELIM TANFOUS : There are cultural aspects that needs to be taken into consideration, and that’s why we think organizations today need to be ready for the multi-dimensional customer.

SELIM TANFOUS : It’s not anymore just a few segments, just understanding a little bit of needs, behavior, and value.

SELIM TANFOUS : It’s much more complicated than that.

SELIM TANFOUS : And that’s why in The Five Mies, we talk about so the motivation, my motivation, basically, and what drives really my consumer behavior.

SELIM TANFOUS : We talk about my attention, so your ability to really grasp my attention and this overload of information.

SELIM TANFOUS : The third one is my watch.

SELIM TANFOUS : So we have less and less time to look at the information, to really read or understand the details of the product.

SELIM TANFOUS : So how are you able to know at what time you need to contact me or through which channel.

SELIM TANFOUS : The other one is my wallet.

SELIM TANFOUS : So what is driving my spend.

SELIM TANFOUS : And the last one, my connection, basically.

SELIM TANFOUS : What am I using to connect and get the data, basically?

SELIM TANFOUS : So am I using my phone or watch or am I mainly on consumer?

SELIM TANFOUS : One interesting statistic or fact that came to the report is that Chinese customers are most likely to lose their wallet instead of their phone.

PAULA: Wow.

SELIM TANFOUS : Compared to other consumers across the globe.

SELIM TANFOUS : Because everything is done through WeChat.

PAULA: Of course.

PAULA: And never going to lose your phone.

SELIM TANFOUS : Basically, they can’t afford to lose their phone.

SELIM TANFOUS : So it was a very interesting fact that came through the report.

PAULA: Absolutely.

PAULA: And one of my favorite things, actually, because we share a bit of a background in Telcos, and I remember really finally understanding where the brand name O2 came from.

PAULA: And I don’t know if you studied O2 yourself, but just for listeners in general, O2 is obviously the chemical symbol for oxygen.

PAULA: And really the insight, and I don’t know how long ago they came up with that brand name.

PAULA: But really to have the understanding back, maybe I don’t know, 30 years ago, that your phone was essential as oxygen, for me was like, oh my god, that’s actually genius because I hadn’t got a mobile phone at that stage.

PAULA: Do you know what I mean?

PAULA: And again, plenty of people listening can’t imagine a life without mobile phones.

PAULA: But you’re absolutely right, it is that essential.

PAULA: And we’ve seen that in all markets and China.

PAULA: That’s amazing.

PAULA: You might lose your wallet.

PAULA: Never your phone.

PAULA: I suppose the last big topic area I wanted to talk about, Selim, is I suppose innovation.

PAULA: And there’s a statistic here in, again, The Truth about Customer Loyalty, the 2019 report, the new one, which says 96% say companies should find new ways to reward loyal customers.

PAULA: And I think what came through for me was, you know, points as a currency has a real role to play, but there is a value around innovation.

PAULA: And I think, you know, millennials particularly, they want to be excited, they want to be inspired.

PAULA: And it didn’t get into obviously solutions, you know, whether it’s gamification or instant gratification.

PAULA: But what is your view on finding new ways to reward customers?

SELIM TANFOUS : So, as you said, points have very importance.

SELIM TANFOUS : You always need a currency in loyalty program, especially, I think, retail ones that are mainly driven by transactions.

SELIM TANFOUS : And we definitely need to be more innovative today.

SELIM TANFOUS : When I say innovation, it’s not only about how great is the app you’re using, or how great is the digital solution you are adopting for driving your loyalty or providing your loyalty program, let’s say.

SELIM TANFOUS : Innovation comes as well from the value proposition on the loyalty program itself.

SELIM TANFOUS : So you mentioned that in the UK, a new loyalty program that allow you to donate your points to charity.

PAULA: Exactly.

SELIM TANFOUS : So that’s definitely an innovation.

SELIM TANFOUS : And one important thing I would say is, and see it very important in the future of loyalty, your ability really to understand what are your consumer needs today.

SELIM TANFOUS : And for example, the new generation doesn’t really want to own a car or own things in general.

SELIM TANFOUS : So we are in the sharing economy.

SELIM TANFOUS : So how will your loyalty program help driving that?

SELIM TANFOUS : We’re seeing it today with Careem and Uber, for example, where they are allowing to redeem points for delivery or free rides.

SELIM TANFOUS : So if you get in a loyalty program that really enables your lifestyle, and that’s the trend we’re seeing right now, I think it would be very impactful for loyalty programs.

SELIM TANFOUS : So we always need to think about the basics.

SELIM TANFOUS : And I always like to come back to the Don Peppers and Matarodzis framework about customer experience, which is the IDIC.

SELIM TANFOUS : So your ability to identify customers, differentiate them, interact with them, and customize the experience at the end.

SELIM TANFOUS : So that framework will allow you to be innovative as much as possible, and really make it relevant, identify the value proposition that you need to design, to get your customers really to consume your loyalty.

SELIM TANFOUS : And this is what the report says as well.

SELIM TANFOUS : So the evolution today is towards real lifestyle program, where you bring multiple brands together, and not only using points, but innovating around the products that they provide to consumers.

SELIM TANFOUS : So locally, we are seeing a lot of conglomerates bringing all the brands together.

PAULA: And forming coalition-type programs, exactly.

SELIM TANFOUS : So it’s really beyond that coalition, I think.

SELIM TANFOUS : It’s really connecting the right brands together.

SELIM TANFOUS : So making sure that a customer today in the UAE, for example, or that would be applicable, I think, to any market.

SELIM TANFOUS : Yeah.

SELIM TANFOUS : We’ll go to the cinema, we’ll need the grocery, we’ll need the clothing, healthcare, transportation.

SELIM TANFOUS : So we’re seeing a lot of conglomerates that having all these brands together, connecting these brands and making sure that it’s a holistic value proposition.

SELIM TANFOUS : Yeah.

SELIM TANFOUS : And the innovation will come through each brand and how much they are able to combine the needs across multiple brands and be able really to provide that value proposition to consumers.

PAULA: Excellent.

PAULA: Yeah, I love that.

PAULA: And there is a very useful, I suppose, summary of how loyalty programs are evolving.

PAULA: So again, for listeners to say, okay, there are actually five phases of evolution.

PAULA: And really, I think for any loyalty manager to sit down and go, well, what phase am I at?

PAULA: And what’s the next phase for my loyalty program?

PAULA: So again, I think that’s very useful from a strategic perspective to go, okay, well, I might have a points based program or a multi-brand tier based loyalty program, for example, as two of the phases.

PAULA: So what is the next opportunity for my company?

PAULA: So again, super useful to have these kind of very actionable insights with all of the benefits and challenges.

PAULA: Clearly articulated, because nothing’s perfect, eh?

SELIM TANFOUS : Absolutely, absolutely.

SELIM TANFOUS : The funny thing is that before the invention of loyalty program, if you think about it, when you went to, used to go to, or our parents or grandparents used to go to the local grocery shop, you know, the owner will know them by name, so we have the history, the life products.

PAULA: They’ll know what they need, absolutely.

SELIM TANFOUS : So it was more like a one-to-one loyalty, right?

PAULA: Way back when.

SELIM TANFOUS : And the innovation that they used to make, to do was how to make sure that these products are ready, they get delivered, easy installments.

PAULA: Super simple.

SELIM TANFOUS : Super simple.

SELIM TANFOUS : And we’re getting back slowly to that.

PAULA: Same values at scale.

SELIM TANFOUS : Exactly.

SELIM TANFOUS : And what’s allowing us to do that is data.

SELIM TANFOUS : So the more you invest into predictive analytics today, you’ll be able to customize that experience and make it, in my opinion, the future of loyalty will be a seamless loyalty where everything is ready for you before you ask.

SELIM TANFOUS : So, but the challenge will be for the brands to make customers aware about it.

SELIM TANFOUS : Yeah.

SELIM TANFOUS : And that’s, I think, where we’re heading to.

SELIM TANFOUS : So these lifestyles program that are coming together, the next level will be really to make it completely seamless.

PAULA: Yeah.

PAULA: But I think we should also just again emphasize the point we started with, Selim, where in order to get the data that you need to do the personalization and create that seamless experience, you first have to have the integrity and the trust.

PAULA: Otherwise, they simply won’t give you the data.

PAULA: So I think there’s a real watch out there for brands just to make sure that it’s not overly focused on, data analytics is the answer and the solution when customers are going the opposite direction, getting more nervous and less willing to share.

PAULA: So really, I think your six pillars approach covers that to say, yeah, I need to earn the trust in order to earn the data.

PAULA: I think that’s a new way of thinking for a lot of companies.

SELIM TANFOUS : Absolutely.

SELIM TANFOUS : To add on top of that, what we’ve seen as well through this report and what inspires loyalty is really consistency in delivering on your value proposition.

SELIM TANFOUS : So what matters to consumers, for example, is product quality.

SELIM TANFOUS : So 74% of consumers said that they would be loyal to a brand if the product quality is always there.

PAULA: Absolutely.

SELIM TANFOUS : And it’s interesting in us enough, the least important point was pricing.

PAULA: Yes.

PAULA: Yeah, that was a really good one, wasn’t it?

PAULA: Yeah.

SELIM TANFOUS : So it shows that really customers know what they want.

PAULA: They are.

SELIM TANFOUS : And if they find consistently the quality that they’re looking for with the brand they like, and they have an emotional connection with, they will most likely stay with it and be loyal to that brand.

SELIM TANFOUS : So and it’s very interesting today in a very commoditized market, where banks are offering the same product, telcos are offering the same product.

SELIM TANFOUS : So it’s around then really what matters is the quality of that product that you’re delivering.

SELIM TANFOUS : Of course, what comes around it is also important.

SELIM TANFOUS : We see that the second more most important is the value for money, the consistency, as I said, and a good customer service.

SELIM TANFOUS : So that would these are the five, the top four elements that really drive loyalty, inspires loyalty for customers.

PAULA: Yeah.

PAULA: And just to finish on the point about innovation, because the other word that was used in the report is novelty.

PAULA: And actually, I think innovation can often be associated in my mind with innovating on the core product, whereas novelty within a loyalty program, I think, was what I really picked up, was important for all of the demographics, and particularly the point about surprise and delight.

PAULA: And again, you know, I’ve had lots of kind of projects where we’ve worked on surprise and delight, and it’s probably the hardest piece to deliver because how do you communicate something that by nature is sporadic?

PAULA: So, but it still does matter.

PAULA: So I think there’s a key learning for me from this report around, yes, get the basics right, but then beyond the basics, how can we do the surprise and delight piece in a way that does kind of have that novelty piece that customers are looking for.

SELIM TANFOUS : So you need to always balance the hard benefits to the soft benefits in every loyalty program.

SELIM TANFOUS : And these surprise and delights are really important to keep that connection and personal connection with the brand and make these moments memorable.

SELIM TANFOUS : So yeah, it’s your birthday or your anniversary with the brand.

SELIM TANFOUS : So and simple things that recognizing the customer.

SELIM TANFOUS : So in the most unexpected moment, let’s say.

SELIM TANFOUS : So one of I would relate to a personal experience of mine.

SELIM TANFOUS : So I was living in a country for four years, most of the time as a consultant alone.

SELIM TANFOUS : And what happened is that during my birthday, I was at the hotel and after a long day at work, I came back and I found a cake and a nice note from the entire management of the hotel.

SELIM TANFOUS : So that was a very, very memorable moment.

SELIM TANFOUS : And I keep telling that story to everyone.

SELIM TANFOUS : So that’s when surprise and delights really make the moment stick and the loyalty as well increases.

PAULA: Yeah.

PAULA: And I don’t know if you’re as cynical as I am, Selim, but now on my birthday every year, I check all my loyalty programs.

PAULA: Who has noticed?

SELIM TANFOUS : Absolutely.

PAULA: You took my date of birth.

PAULA: I know you did because I checked.

PAULA: So you’re right.

PAULA: Yeah.

PAULA: And I know again, we talked about the last research report we talked about with Micah Pizzi, who made the excellent point, don’t capture data unless you’re going to use it.

PAULA: So, and you commented on that.

PAULA: So I think that’s super useful for brands to, you know, make sure, yes, we’re capturing it, but we’re also using it.

SELIM TANFOUS : It’s, and that’s what we see, what I’ve seen consistently, at least on the few loyalty programs I worked on, is the brands, they, or organizations, they do loyalty programs because someone told them to do, or because they think that it’s a correct…

PAULA: It’s ticking a box.

SELIM TANFOUS : It’s ticking a box.

PAULA: Yeah.

SELIM TANFOUS : But on the backend or the back office, they don’t have the capabilities to run it, or the right mindset, or enough awareness in the organization to maintain that.

SELIM TANFOUS : And that’s what really makes customers really disconnect from these loyalty programs because they are not animated, they are not maintained.

PAULA: They’re not exciting.

SELIM TANFOUS : And they are not really the right capabilities behind it to deliver that.

SELIM TANFOUS : And as of now, it’s still being seen as a cost center rather than your marketing platform basically to drive revenue and really grow the revenue from your existing base.

PAULA: Wonderful.

PAULA: So the last, I’m just going to read actually the introductory sentence that one of your colleagues who led, I know on this report, Selim, because I think it wraps it up quite nicely in terms of, you know, why this report is super valuable for anyone who wants to read it.

PAULA: So Paul Martin is your Head of Retail for KPMG in the UK.

PAULA: And I love what he says, the key drivers of customer behavior have traditionally been value, convenience and experience.

PAULA: But looking ahead, brands and retailers need to also consider choice, purpose and privacy if they are to earn customers loyalty.

PAULA: So is there anything else that you wanted to add from your side, Selim, or does that capture it for you?

SELIM TANFOUS : I mean, that confirms what we’ve been saying, right?

SELIM TANFOUS : So you need to design your loyalty program in a different way.

SELIM TANFOUS : It’s not anymore about having just points or basing segmentations, the tiers that you traditionally have, or focus on how much you’re going to give back as a discount.

SELIM TANFOUS : So there are much more complicated matters or set of nuances that you need to take into account when designing.

SELIM TANFOUS : And the platform, let’s say, that you will base your program on will really need to be carefully selected based on these future requirements that Paul Martin has rightly mentioned.

SELIM TANFOUS : So it’s very important then to have the right solution that will accompany you basically the entire journey, have the right capabilities, and make sure that when you design the loyalty program, it’s a future-looking one, not really based on previous trends and…

PAULA: Catching up almost.

SELIM TANFOUS : Exactly.

PAULA: Wonderful.

PAULA: One final question, Selim.

PAULA: Just in general, I love to know, are there particular websites that you like to follow, any podcasts or blogs or even conferences?

PAULA: Now, I know for a company like KPMG, you probably do so much internally that you don’t need to be flying off around the world like the rest of us, but are there any other loyalty resources that you recommend?

SELIM TANFOUS : So, I personally look a lot at the Loyalty 360 to keep up with the industry trend, and obviously all the internal research that we do.

SELIM TANFOUS : So, a lot of the customer experience research and customer research in general, we do, fuels a lot into loyalty.

SELIM TANFOUS : So, that’s my prime source of information.

SELIM TANFOUS : We have, as you mentioned, a lot of knowledge sharing and knowledge management internally that we use.

SELIM TANFOUS : So, that’s really my main sources of insights.

PAULA: Wonderful.

PAULA: Great stuff.

PAULA: Is there anything else you wanted to cover, Selim, just as we wrap up?

SELIM TANFOUS : No, not really.

SELIM TANFOUS : Thank you so much for inviting me, for having me on the show.

SELIM TANFOUS : It was a great opportunity.

PAULA: Wonderful.

PAULA: Okay, Selim Tanfous, and thank you for talking to Let’s Talk Loyalty.

SELIM TANFOUS : Thank you, Paula.

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