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Paula: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.
Paula: I’m your host, Paula Thomas, and if you work in Loyalty Marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
Paula: So Mike Capizzi is the founding partner of Marketing Strategists LLC, which is a U.S.-based loyalty consulting firm.
Paula: His body of work reflects a global practice with over 200 clients served, and he has actually designed, launched, operated, analyzed, or unbelievably shut down over 80 individual loyalty programs across all vertical markets.
Paula: Mike serves as the Dean of the Loyalty Academy, and he is a partner in The Wise Marketer Group and also the Customer Strategy Network.
Paula: Mike has over 45 years experience as a veteran in the marketing services industry, so he has incredibly deep knowledge of the loyalty marketing space.
Paula: In addition to that, he’s a globally recognized speaker and author in the loyalty arena, and he is also a certified loyalty marketing professional, which we call CLMP.
Paula: Mike has taught loyalty and marketing courses to more than a thousand professionals and students at five US universities and among practitioners in over 15 different countries.
Paula: He previously served as the US faculty leader for the three-day MBA program in loyalty marketing and was an original faculty member for the Templeton College, Oxford University, UK.
Paula: Loyalty Marketing Workshop for Executives.
Paula: He holds a BBA in Marketing from the University of Cincinnati and an MA in Media from New York University.
Paula: He’s also a noted advisor to private equity and investment analysts in investigating, understanding and profiling marketing services firms who represent potential investment opportunities.
Paula: Now, today is a particularly exciting day for all of us actually in the loyalty industry, because the main reason that Mike is coming on the show today is because hot off the presses, he has just released a fantastic report, which really gives us a great understanding on some critical issues for our industry.
Paula: So the report is called The Delphi Report, and the subject that we’re going to discuss today is exactly why do loyalty programs fail.
Paula: So first and foremost, I’d like to welcome Mike Capizzi to Let’s Talk Loyalty.
Mike: Hi, Paul.
Paula: Great to talk to you, Mike.
Paula: How are you today?
Mike: That was a very long introduction, so it means that I am really old.
Paula: I know.
Paula: I’m sorry about that.
Paula: But I mean, so much credentials, Mike.
Paula: I mean, we couldn’t miss out on any of that amazing detail.
Paula: Yeah, so I’m super delighted to be able to talk to you.
Paula: And first of all, I’m sure you’re very relieved that that you’ve managed to get the the Delphi Report out.
Paula: So tell us exactly what you’ve been working on over the last few months.
Mike: Well, Paul, as I think you know, we put together a panel of experts for different regions of the world.
Mike: Last year was the first year we had the panel collectively come up with an interpretation of what the future of loyalty marketing might look like.
Mike: And we published that report a year ago and we got a tremendous response from all over.
Mike: So we thought we would do it again.
Mike: And when we started looking at subjects, we honed in on a saying from a British essayist, a guy by the name of Max Beerbomb.
Mike: Max used to say that there is much to be said for failure.
Mike: It is more interesting than success.
Mike: And we thought that was kind of his ironic way of letting us know that if we looked at some of the potential reasons for failure in loyalty marketing programs, and we could assign importance to those reasons in some kind of weighted rank order, then we could conceivably help other people with the topic.
Mike: So we reconvened The Delphi Panel.
Mike: This is a very old research technique where a bunch of individuals who are experts in their field, I’ll talk about that in a second, are all given the same task.
Mike: They score things or talk about things or define things in a specific manner, and then they share it with everybody else on the panel.
Mike: And the topic gets vetted, it gets debated until some kind of consensus is reached.
Mike: So what we have published is the 2019 Delphi Report on why programs fail.
Mike: And we took the word failure in a broad context.
Mike: It means not just outright failure of loyalty programs, but also ineffectiveness that would cause redesign or some other start-stop.
Mike: The scorecard was developed in the fall and summer of 2019, just released in November.
Mike: And 34 global loyalty experts from UK, Canada, Australia, New Zealand, Germany, South Africa, India, Singapore, Brazil, Russia, Malaysia, the US, and of course, the UAE.
Mike: Most of these people have got 25 years of experience.
Mike: They look at things from both a consumer and a B2B loyalty perspective.
Mike: But all 34 are CLMPs and they serve as panelists.
Mike: So that’s the rundown.
Mike: The technique is quite proven.
Mike: It is a very good predictive technique.
Mike: And the panel went after the task of trying to predict the things that will cause failure for programs in the future.
Paula: Well, I mean, that’s super impressive, Mike.
Paula: I think first of all, no one could accuse you of not searching the length and breadth of the globe to get a realistic view of what’s going on in every single market.
Paula: And having looked just at the preview myself now over the last day or two, I think probably what scared me first of all is between this panel, we have over 500 years of loyalty experience, which makes us all feel a bit old, I think, Mike.
Paula: But I suppose gives us the depth of expertise we need to have in order to comment.
Mike: I believe so.
Mike: And we certainly wanted spread on the geographical perspective.
Mike: You’ll see a couple of things in the report where, depending upon what part of the world the Delphi panelists sat in, the response was a little bit different.
Paula: Absolutely.
Paula: So we’re going to get into the details now, obviously, of why do loyalty programs fail.
Paula: And I suppose the key thing for people listening to the show is we’re not going to cover absolutely every detail because that would just make the show too long.
Paula: But the key is we’ll give out the highlights.
Paula: We’ll certainly talk through the top reasons why loyalty programs fail.
Paula: So immediately, obviously, all the listeners can start thinking about that.
Paula: And then most importantly, we’ll make sure that everybody knows where to get a copy of the full report.
Paula: Because I think any of us who are invested in this industry and in being our best selves in terms of loyalty professionals will definitely want to be able to come and download the full report.
Paula: And as I said, it’s hot off the presses.
Paula: So as this goes out on air in the middle of November, it’s something that’s brand new for people to read through.
Paula: Great.
Paula: So, Mike Capizzi, you’ve done all of the work.
Paula: It’s been, as you said, a number of months.
Paula: You know, great expertise.
Paula: And I know there’s 10 reasons in total that were waited and assessed.
Paula: What I loved in terms of your terminology and writing, even the preview, was there was definitely consensus with the top five reasons on why loyalty programs fail.
Paula: So, I suppose we should just start at the beginning.
Paula: What’s the number one reason that loyalty programs fail?
Mike: We’re not going to have a drum roll.
Paula: That was my best drum roll verbally.
Mike: The number one reason, according to the panelists, is poor use of data.
Mike: This was scored by 93.5% of all panelists.
Mike: So, they gave it some weight.
Mike: It was the number one answer from over half of the panelists.
Mike: All told, it came in with the highest weighted score and the highest average score.
Mike: What the panel was talking about is that we’ve got these programs that spin off an awful lot of data about the customer.
Mike: We don’t use the data that is at our disposal.
Mike: They were specifically concerned about inadequate segmentation.
Mike: If you’ve got a data stream from hundreds of B2B or thousands upon thousands of consumers, and you don’t sort and segment that database on the variables that are included, then you’re asking for trouble.
Mike: What ends up happening, Paula, is inadequate segmentation leads to a lack of versioning.
Mike: That means that both the value proposition to the loyalty program member and or the communications that go out to the loyalty program member end up being one size fits all.
Mike: And the inability to use specific KPIs or key performance indicators or predictive models that are tied to say potential spend or upsell, cross-sell, churn, or maybe social advocacy.
Mike: These things can all be derived.
Mike: They’re all data driven.
Mike: And the absence of the KPIs was especially troublesome to the panel because the loyalty program should have key performance indicators.
Mike: We shouldn’t have to look out a year from now and say, oh, is the program working or not working?
Mike: We shouldn’t have to do that.
Mike: We should have set a standard, a variety of standards on a bunch of key metrics and track our performance against those metrics.
Mike: You’ll see that coming up again later on in our talk.
Mike: So overall, the panel has said that if you’ve got inadequate measurement and you lack the use of advanced data analytics, it will be the number one reason why your program becomes ineffective, if not outright failure.
Paula: Yeah, and great to get a consistent view.
Paula: And I’m sure you’re relieved to see that coming through, Mike, because it’s probably harder to learn from something if there isn’t consensus.
Paula: And even from reading your preview report, what I also picked up even on the poor use of data was sometimes asking too much data, because obviously, you know, when you’re building loyalty strategies, you do want the best, you know, quantity of data as well as quality of data.
Paula: So I think there is in many industries a temptation to be greedy, perhaps.
Paula: And that causes its own problems.
Paula: And that is one of the things that I kind of picked up is a poor use of data, as well as you’ve articulated there, having the data and then not absolutely using it in the way that it could be used.
Paula: So it sounds like there’s a number of reasons driving that concern.
Paula: Were there any particular reasons that you picked up on?
Mike: Well, the old rule that not everyone follows is don’t ask for it if you’re not going to use it.
Paula: Yeah.
Mike: It’s very popular in many consumer loyalty programs to ask for their birthday, for example.
Mike: And then my birthday comes and passes and nobody did anything.
Paula: Yeah.
Mike: So don’t collect it unless you’re going to use it.
Mike: And in today’s world, most regions of the world, speed at the point of enrollment, ease and no friction, which you’ll see down the list here in a bit, are all very, very, very important.
Mike: So it would keep asking for more and more pieces of information.
Mike: I think that that could be a negative.
Mike: But the real issue with the panel, Paula, was the fact that we don’t look at our transactional sequences the way that we should.
Mike: We don’t lay those against other variables that we know about the about the member predictability.
Mike: We say all of this is too hard or all of this is too expensive.
Mike: There are some great quotes in the actual report from panelists around the world.
Mike: And everyone just says, look, we’ve got the ability to clearly understand what the membership is doing and how that impacts us as a brand in a financial way.
Mike: And we’ve got that ability because we have the information.
Mike: How come we’re not doing something with it?
Mike: And that is that was the number one reason for why the panelists felt the program could be ineffective.
Paula: Absolutely.
Paula: And again, because it’s the number one, I suppose, you know, we should give it a bit of extra time.
Paula: What I also did pick up and you’ve referred to it there, Mike, is maybe some companies are not giving sufficient resources to to allow the marketing team or the loyalty marketing team to go and do all of the versioning and variations that are possible with the data that they’re holding.
Paula: So I often experience under resourcing, you know, at different stages in the lifecycle of the of the overall loyalty program.
Paula: And then you end up, as one of the quotes says, I think around, you know, it ends up being a machine gun approach because the loyalty manager is like, I just got to get something out.
Paula: I don’t have time to do 20 variations.
Mike: I think that that’s accurate, Paula.
Mike: That’s unfortunate.
Mike: But I believe that’s the way that it is.
Mike: And we can all can all scream about resources.
Mike: All of us in this industry are probably under resourced or under budgeted.
Mike: But it isn’t the cost of the resource and the analytics themselves.
Mike: It’s the return that will come to the program because of the analysis.
Mike: And if we look at it from a yield perspective instead of a cost perspective, we’ll be much better off.
Paula: Absolutely.
Paula: And that’s certainly something I learned doing my CLMP with you, Mike, was very much around, you know, put the business case together in terms of what behavior shift is expected.
Paula: And again, I suppose once we’re all educated in terms of what the expectations are, then the rationale for increased resources is just an easier conversation to have with the senior management team.
Mike: Which is going to lead us to reason number two, Paula.
Paula: Go for it.
Mike: And you’ll find throughout the report that these reasons are all very much linked to each other.
Mike: Which is one of the reasons why it took the panel so long to sort everything out.
Mike: Because one thing is kind of like driving another thing.
Mike: But reason number two for why programs fail, according to the panel, was the inability to prove program performance.
Mike: This was mentioned 93.5% of the times.
Mike: That’s almost unanimous among the 34 people.
Mike: It received the highest score four or five times.
Mike: It received either the first, second or third highest score the majority of the times.
Mike: And it was near unanimous.
Mike: What the panel was talking about here is kind of a build on what we just discussed.
Mike: If you do not set up some kind of measurement plan with very specific performance indicators in it prior to the launch of the program, how will you know if the program is performing well or not well?
Mike: And I hear this all the time, Paul.
Mike: It’s like the senior level people think the program costs too much.
Mike: They’re constantly cutting my budget.
Mike: My budget is always under pressure.
Mike: The CFO wants more breakage.
Mike: He says the more breakage, the better.
Mike: And then my favorite one is we would have gotten those sales.
Mike: We would have gotten those margins.
Mike: We would have gotten that advocacy anyway.
Mike: We don’t really need the program.
Mike: We would have had all of it anyway.
Mike: What all of these things are saying, and you’ve heard them too, Paul.
Mike: You hear them every day.
Mike: What these things are really saying is by what measure do we think that we would have gotten it anyway?
Mike: So if there was a pre-period or if there was a control group or if there was any kind of sense of we are at this spot today, 1.6 transactions per member per month, that’s in a certain segment.
Mike: That’s where I’m at.
Mike: And it suddenly moves to 1.9 transactions in that segment per member per month.
Mike: And our KPI was 1.9, then we’ve achieved program performance.
Mike: It’s not as simple as that.
Mike: It could be a variety of those type of metrics.
Mike: But without them, how do we know whether or not the thing is working?
Mike: And then we’re subjected to this kind of dialogue, especially at the most senior level of the organization.
Paula: Yeah.
Paula: And my sense is I think we’re getting better, Mike, and I could be wrong.
Paula: Maybe I’m just talking to better people.
Paula: But do you think we’re getting better at the analytics?
Paula: Because I know you’ve referred to again, just even in the preview report, that we’ve all come from marketing over many years where it’s been impossible to quantify, whether it’s PR or it’s a TV campaign.
Paula: Those types of marketing couldn’t be proven.
Paula: And I do think you are right.
Paula: You commented that loyalty marketing is almost held to a higher standard because of the level of accountability.
Paula: So do you think we’re getting better at the overall discipline of loyalty marketing?
Mike: Yeah, I think we are.
Mike: I think that many of the people in our industry today are in their second generation of loyalty, if you will.
Mike: They might have learned it 20 years ago.
Mike: They learned it with another brand.
Mike: They learned it in a time that was not as disruptive as today’s technological and demographic environment is.
Mike: So it’s kind of like second generation.
Mike: Phil Rubin calls it Loyalty 2.0.
Mike: He’s one of the guys on our board and was a member of this panel.
Mike: And I think that with that maturation, the disciplines associated with measuring and performance and all things analytical have definitely improved.
Mike: The second thing, Paula, is that we’ve got more data than we ever had before.
Paula: Sure.
Mike: And third is we’ve got better technologies than we ever had before.
Mike: Yeah, I think it’s getting better.
Mike: But the absence of clear performance measures leads us to the road of failure.
Mike: Because I don’t want somebody to wake up six months from now and say, we’re spending all this money on this program, is it working?
Mike: You never have to ask that question.
Paula: Good point.
Mike: It is working on a transactional basis, but it is not working on a referral or advocacy basis because we had a standard.
Mike: We wanted this in the way of social behavior or some kind of advocacy or referral.
Mike: We expected this many people from this segment to do these things, and they haven’t done them.
Mike: That also gives the Loyalty Program operators a chance to say, this quarter, this is what we’re going to work on because our other KPIs are looking pretty good, team, but we’re not picking up on this.
Mike: So what can we do?
Mike: What can we try?
Mike: How should we move the needle?
Mike: Good performance starts with clear goals.
Mike: If you don’t have clear goals, then you’re going to struggle with the question of proving the Loyalty Program’s performance.
Paula: Fantastic, fantastic.
Paula: I think it deserves second place there, Mike.
Paula: So absolutely, crystal clear.
Paula: And I like the way you say, yes, we have certain KPIs that have been set and are performing, but it gives us the opportunity of all of the goals are set at the beginning to then realize, okay, which areas do we need to focus on?
Paula: And I do think social advocacy is one that it’s a fascinating concept and one we might do a separate discussion on another time, but there’s so much power in referrals and we all know about digital, but let’s say KPIs around that area that mightn’t have been traditionally done, it might have just been around transactions in the past.
Paula: So really good point to really have the performance across all metrics before you start.
Paula: Cool.
Paula: And the next one is one of my favorites.
Paula: So reason number three, why loyalty programs fail.
Paula: You’ve summarized as inadequate communications and dialogue.
Paula: So tell us about that one.
Mike: Well, I knew it would be your favorite, Paul.
Paula: I like communicating.
Paula: What can I tell you?
Mike: Well, I’ve heard you talk about this before.
Mike: This was mentioned by 87% of the panel.
Mike: It fell into the third position.
Mike: And it got a lot of votes in the top five.
Mike: That’s why it was ranked so high.
Mike: And people were talking about the inadequacy associated with loyalty marketing communications.
Mike: Some of the characteristics of inadequacy, according to the panel, the absence of some kind of preference driven approach across multiple communication channels.
Mike: Instead, it was messaging just taken on one channel.
Mike: Preferences basically ignored or sometimes bypassed.
Mike: And not using all the available communication channels that exist.
Mike: This is especially challenging in today’s environment.
Mike: But they also talked about characteristics like the absence of surveys, the absence of auctions or dialogue programs or any kind of feedback channels coming from the membership.
Mike: And they also talked about overall very poor member care.
Mike: Member care is expensive.
Mike: And many people want to turn it over to a chatbot and be done with it.
Mike: And you might not learn a whole lot.
Mike: Some people say you can learn an awful lot.
Mike: But if you don’t have a way to elicit response from the loyalty program membership, then you’ll not be able to learn from that response and change the program.
Mike: And then the issue here with inadequate communications, we’ve already talked about the lack of versioning.
Mike: The panelists felt that programs were having trouble looking at communications effect.
Mike: So the focus became communications costs.
Mike: And when somebody saw that line item in the budget, they said, well, that’s an awful lot of money to spend.
Mike: Why do we version?
Mike: Why do we run a survey?
Mike: Let’s just use an automated system on member care.
Mike: And all these things appeared to be decisions that were cost driven.
Mike: They really should have been decisions that were based on the effect that those communications produced.
Mike: So overall, the panel was quite concerned.
Mike: They urged Loyalty Program operators to be relevant in their communications and have that relevancy based on personal attributes or lifestyle attributes, or certainly where they are in terms of their relationship with the brand.
Mike: Excuse me.
Paula: That’s perfectly OK, Mike.
Paula: I should have explained to our listeners that you are suffering with a bit of a cold today.
Paula: So you take your time and I know it’s never easy to talk when you’re suffering a little bit.
Paula: So don’t worry about that.
Paula: I know also on the communications point, and we’re still on number three, and relevancy is absolutely critical.
Paula: We do all, I think, talk about that and work towards it.
Paula: But one thing I often feel that’s missed when big companies are getting into planning their communications, and it came up in some of your comments in the report, was to really understand the difference between sending out like sales communications versus loyalty benefit driven communications.
Paula: So I think that there’s something that’s often missed in that some communications are welcome and some are less welcome.
Paula: So is that something that you experience as well?
Mike: Yeah, I have a database, proprietary database that I keep in my consulting practice.
Mike: It measures open rate, response rate, click through rate, return on investment associated with mostly email, Paula, but it’s email only in the context of a loyalty marketing program.
Mike: You read email standards and you can get them many parts of the world.
Mike: Someone will put out a report and say the standard open rate is 3.7%, etc.
Mike: Look at those metrics.
Mike: They’re generally less than 10, certainly less than 15 and almost every issue.
Mike: In loyalty program communications, it’s double.
Paula: Wow.
Mike: And that’s the reason that you just mentioned.
Mike: People want to communicate with their loyalty program.
Mike: What are my benefits?
Mike: What is my status?
Mike: Are my benefits being taken away?
Mike: Are they going up?
Mike: How can I redeem?
Mike: Who should I talk to?
Mike: Can I tell my friends about this?
Mike: Is there an easy way to do it?
Mike: These are things that people want to do.
Mike: Now, they might not do it every single time.
Mike: We’re all busy.
Mike: Sometimes we get our communications at work.
Mike: Sometimes we get that at home.
Mike: And there could be a lag, but we want to talk to these programs.
Mike: And it looks like, according to the Delphi panelists, that the programs don’t want to talk back.
Paula: And I love that actually, Mike, because again, it just shows your expertise and how well you know our industry.
Paula: So there’s very few people can comfortably quote a statistic like that, that literally a loyalty communication typically has double what any other form of communication would have that has a different intention.
Paula: So thank you for that insight.
Paula: And it’s one I’ll be using, I know now, in meetings going forward to make sure I get my communication support when I’m building programs.
Mike: That number moves around a little bit based on channel as well.
Mike: Like I said, my examples are email.
Mike: In the established markets, it is still the most used channel for loyalty communications.
Mike: But I’ll go into other markets, Caribbean, Latin America, certain places in Asia where mobile is the most frequently used channel.
Mike: The communication changes to text.
Mike: Here’s a really good example.
Mike: I love text communications, but in certain markets, they carry a cost.
Mike: The cost sometimes is borne by the person receiving the text.
Mike: Now I am charging my loyalty program members to listen to me send them irrelevant information.
Mike: And you wonder why your opt-in rate for text drops off.
Mike: My second favorite, the client spoke to their advertising agency.
Mike: Very respected, good firm, solid communicators, right?
Mike: Well, you know, they write all that fluff.
Mike: In most markets, there’s a 150-character limit on text.
Paula: Yeah.
Mike: You can’t write much fluff call with 150 characters.
Paula: Well, especially, you know, I mean, we’ve got GDPR, we’ve all the opt-out requirements, and yeah, there’s a lot to fit into a very short space, so I completely agree with you.
Paula: So I think brevity is the guiding principle in that particular instance.
Mike: What the panel was saying here is that because of inadequacies, deficiencies, if you will, in communications, we walk around and we say we have weak engagement, we wish our engagement levels were higher, and that’s one of the reasons.
Mike: I always viewed this, Paula, in a relationship context.
Mike: Many people still call it relationship marketing in the early days.
Mike: Regis McKenna, I think, was the first guy to talk about that and had the privilege of working with him when I lived out in California.
Mike: And Regis called it relationship marketing, and he used to say, think of it in a larger relationship context.
Mike: I mean, now the relationship is between the customer and the brand.
Paula: Yeah.
Mike: But think of the relationship between, say, a spouse or another.
Mike: If you don’t talk to each other, you’re headed for trouble.
Mike: If one person does all the talking, you’re headed for trouble.
Mike: If the other person never listens or provides any kind of feedback, you’re headed for trouble.
Mike: And the biggest one of all is when one person yells and shouts at the other.
Paula: Oh.
Paula: Yeah.
Mike: These things lead to break bounds.
Mike: Or the human condition.
Mike: So I know that that might seem ridiculous to some.
Mike: But if we put that context around the relationship between a brand and a customer in a loyalty marketing program and adopt some of the same characteristics that the relationship elsewhere would suggest we adopt, we’d be a lot better off.
Mike: So know what they want to hear, when they want to hear it, how they want to hear it.
Mike: Allow them to listen to you.
Mike: Allow them to ask questions.
Mike: Allow them to provide feedback so that you can modify dialogue.
Mike: And if you do that successfully, even if you don’t do it with everybody in the program, do it successfully.
Mike: You’ll learn a lot more and the membership will be quite happy.
Paula: Absolutely.
Paula: And I think it is a useful lens, Mike.
Paula: And you’re right to say that some people might find it ridiculous.
Paula: But in my experience, something that everyone can relate to in terms of everyday life and apply a principle into business that they already understand, it then does at least end.
Paula: They remember it, you know.
Paula: So they might want to use that language in the next board meeting.
Paula: But if they treat their customers as if they’re a member of the family, then absolutely I think those members feel that intention.
Paula: And there is just a much more respectful style of communication.
Paula: And even to your point earlier, the technology facilitates all of this now.
Paula: So there’s absolutely no reason not to be listening as well as talking.
Mike: Agreed.
Paula: Cool.
Paula: I think that takes us nicely on then, Mike, to the next reason that loyalty programs fail.
Paula: And I’m looking at your report here, and I’m seeing that inadequate C-level support is what the panel came in at at number four.
Mike: Again, this was a topic that was already brushed on with reasons number one and two.
Paula: Sure.
Mike: They didn’t pick on any particular C-level officer, but I have a little quote directly from one of the panelists.
Mike: As you know, Paul, in the full report, they throw in the quotes of the people who are on the panel, to get a sense of what they were thinking.
Mike: I love this one right here.
Mike: The quote is, If the top folks do not care or are not 100% behind the program, it will fail.
Mike: All the items listed by the panel are effective programs.
Mike: If the top people are engaged, then all can be fixed or adjusted.
Mike: I think this is at least half the battle, but I could argue it is the whole thing.
Mike: 83.9% of the panel assigned weight on this for a reason.
Mike: When it was on the scorecard, some people lifted off and gave it a zero.
Mike: But for people who scored it, it had the second highest weighted average.
Mike: It is a concern that people dive into these loyalty programs.
Mike: We got to have one.
Mike: Competition has one.
Mike: My wife said I need one.
Mike: Excuse me.
Mike: All kinds of reasons.
Mike: And then they back away their support because they think they have many more pressing priorities at enterprise level.
Mike: And the program goes on.
Mike: It needs more resources.
Mike: There’s not enough money.
Mike: The funding rate gets cut.
Mike: A number of points or miles of redemption go up.
Mike: All these funny things start to happen that are a response to, it’s costing us too much.
Mike: So if they don’t have the support of the C-level officers, and again, it’s probably because I’m not using my data and I can’t prove performance and I’m not talking to my customers.
Mike: And if all those things start to happen, no wonder they don’t have support.
Mike: And it’s a wonder why we face these issues and programs become ineffective.
Mike: The inability to give this level the information they need, the performance indicators they need, the proof that they need, and then complain about it.
Mike: But if we can’t give it to them, no wonder they’re not going to be too late for us.
Mike: This is a critical finding.
Mike: Some of the panel felt it was getting much better, but some of them felt that it’s still an issue as the quote indicates.
Paula: And as we’ve talked about earlier, Mike, there are a total of 10 reasons in this report.
Paula: We’ve covered four of them, and I would like to cover off the fifth, and then we might just briefly mention the others and then obviously tell people where they can get access to the full report.
Paula: So we’re going to talk about item number five.
Paula: And again, I wasn’t involved with the report last year and delighted to be involved this year.
Paula: But last year, it seemed that the prediction was for a frictionless future.
Paula: So that’s what the experts were expecting.
Paula: But it seems like we haven’t quite achieved that because the fifth reason that loyalty programs fail came in as there’s still too much friction.
Mike: 83%, almost 84% of the panelists weighted this factor on their scorecard.
Mike: It ranked fifth, as you mentioned.
Mike: And yes, last year’s report, we were trying to predict the future of loyalty marketing.
Mike: And in the predictions, we said someday there’s going to be no friction.
Mike: That someday isn’t here yet.
Paula: Yeah.
Paula: And I guess in both our experience, not enough changes in 12 months.
Paula: With the best will in the world, something like friction comes in so many aspects of business, not just loyalty.
Paula: So I wouldn’t have expected it to be eliminated in the 12 months since your last report.
Paula: But yeah, it seems that we’ve got a lot of work to do on this area then, if nearly 84% are seeing this as a key reason for failure.
Mike: Yeah, the panelists cited three areas of particular concern, areas that program operators can isolate and attack easily.
Mike: The first was it’s too difficult for the member to enroll.
Paula: Yeah.
Mike: You need to make enrollment short, sweet, brief, and use the technologies at our disposal.
Paula: Yeah.
Mike: The second was it’s too difficult to tie the transaction to the member or the payment type.
Mike: I shouldn’t need to say, here’s my number in order for a business to be able to tie the transaction to me as a member.
Mike: I ought to be able to just instantly be able to have that ability, probably using a mobile phone, Paula, depending on what part of the world I’m in.
Mike: And if I can’t remember the number or I lost my card, that’s one of my favorites.
Mike: I lost my card.
Mike: We shouldn’t even be using cards anymore, but we still are.
Mike: And I ought to be able to say, there’s Mike, there’s Paula.
Mike: They’re members of my program.
Mike: They just did this transaction and not make anybody send in a missing transaction or a missing visit form.
Mike: I hate those.
Paula: I know.
Mike: And the third one was the panel felt it’s still too difficult to redeem, too many hoops to jump through.
Paula: Wow.
Mike: So all these things, this instruction causing things, they impact program momentum and that could weigh on performance.
Mike: So, you know, give people a bunch of hurdles.
Mike: They don’t like to jump.
Mike: They don’t want to jump, but they simply walk away.
Paula: Yeah.
Mike: And I think that’s what the panelists were talking about.
Mike: Although as it fell down the list here in the number five position, maybe we are making some progress and maybe in the future we will see frictionless programs.
Paula: Yeah.
Paula: Yeah, I hope so.
Paula: I think as consumers, it’s instinctive.
Paula: We all know how busy we are, how frustrated we are if somebody feels, you know, like they’re asking too much of us.
Paula: So it shouldn’t be that hard to translate that into exactly, you know, how we expect our programs to operate.
Paula: But anyway, it seems that friction is still an issue.
Paula: And I suppose we’ll continue to communicate that to our C-suite executives.
Paula: So then do you want to just summarize for us, Mike, then the various other reasons that appeared on the list?
Mike: The first five were very significant in terms of the percentage of the panel that mentioned them and what the weighted scores looked like.
Mike: There were between 9 and 13 on an average, and that includes some people who gave an attribute of zero.
Mike: But the next four were very closely lumped together and very little differentiation.
Mike: 75, 74, 79% of the panel mentioned them.
Mike: The scores are almost the same and considerably lower than the top five.
Mike: So I’ll just rattle those off quickly.
Mike: We were very absent in soft benefits.
Mike: Employee disengagement, number seven.
Mike: When you read the final report, you’ll see a lot of comments about this.
Mike: We can’t even get our own people interested in the program.
Mike: Inadequate funding was number eight.
Mike: And number nine was labor rewards.
Mike: One of my favorites, Paula.
Paula: Sure, yeah.
Paula: Who wants a lame reward?
Mike: Let’s have a rewards program, but not put any kind of reward in it.
Mike: Anyway, those were six, seven, eight, nine.
Mike: There were some other reasons that came up.
Mike: Allocation, single panel, single tender, which were reasons for failure, mostly mentioned by the North American panelists and not mentioned by the EMEA Latin American or Asia Pacific panelists.
Mike: That’s because you’re part of the world, Paula, they don’t have single channel programs and they don’t have single tender programs, but we still have them in the US and Canada.
Mike: Some people wrote in reasons.
Mike: They were worried about the terminology, say around inadequate C-level support.
Mike: Doesn’t that mean poor financial planning?
Mike: So they wrote that in as a reason.
Mike: And the panel vetted that and decided it was just another interpretation of a reason that we already had on the list.
Mike: But we included them verbatim comments in the final report.
Mike: And by the time this show airs, the report will be out in the public eye and will be available at the wisemarketer.com and you can download not only this year’s report, but also last year’s.
Mike: And all that you need to do is give us your name and your email.
Paula: Amazing.
Mike: Trying to go as frictionless as we possibly can go.
Paula: Of course.
Paula: Yes.
Paula: Yes.
Paula: Well, you know, preaching to the converted.
Paula: So well done for following through on that.
Paula: And I will give you a chance now as we wrap up, Mike, to maybe just tell people exactly about The Wise Marketer and Loyalty Academy, your two organizations that I’m certainly very, you know, very big fan of, as you know.
Paula: But just in case there’s anyone listening who hasn’t yet subscribed to either of those, you can obviously just give us an introduction to each of them.
Paula: And just before you do that, I did want to just kind of quote my favorite sentence in your overall preview report because it gave me a lot of confidence.
Paula: I suppose in terms of our overall industry and where we’re going.
Paula: And it was purely just in your conclusion section, Mike, and literally what you’ve written is that virtually every vertical market in every region of the world has adopted the strategy to foster deeper customer relationships and drive business results.
Paula: And I have to say that really landed for me just, you know, the reassurance that people realize that you can’t just be transactional anymore, expect people to do business with you.
Paula: You do have to invest in these deep customer relationships.
Paula: So I really like that kind of closing sentence in terms of its impact that we’re having, I guess, on the business world.
Mike: Paula, we believe it’s a $55 billion industry globally.
Mike: That would be US dollars.
Mike: And that doesn’t count the assignment of value to the reward.
Paula: Yeah.
Mike: That’s design, operations, analytics, technology, etc.
Mike: It’s a huge business.
Mike: And we sometimes take it for granted.
Mike: So we’ve entered the second generation, if you will.
Mike: We have the technologies at our disposal.
Mike: We have greater understanding of what causes what to happen.
Mike: And we’re trying to keep up with the customer who is in front of us and disrupting all kinds of things.
Mike: Plus, the demographics of our membership are changing.
Mike: We’re thinking rapidly depending upon what part of the world we’re in.
Mike: So all of these things mean that we need to stay on our toes.
Mike: So what the Delphi panel hopes is that this report will give you some indications of where pitfalls might lie so that you can avoid them.
Mike: As we often say, failure is not an option.
Paula: Wonderful.
Paula: So listen, just before we say goodbye then, Mike, just tell us about The Wise Marketer and The Loyalty Academy in terms of what role each of those plays for listeners.
Mike: Well, The Wise Marketer has been around for 15 years.
Mike: It is an online publication and research resource for the Loyalty CRM customer engagement communities.
Mike: Publication is free.
Mike: All you need to do is subscribe.
Mike: There is a weekly news bulletin that goes out, talks about new happenings in the world of loyalty and CRM from around the world.
Mike: And then the website itself has got a very rich archive and library of things that have happened over the years, as well as some research reports and some sponsored materials.
Mike: Wise Marketer gets no funding from the audience it serves.
Mike: It does receive funding from sponsors who are interested in maintaining a leadership position in the loyalty space.
Mike: The research services are also there.
Mike: Those are for fee.
Mike: Some people will ask The Wise Marketer to conduct research on a specific, say, vertical market.
Mike: And we will issue that report.
Mike: Those are not published.
Mike: The Loyalty Academy, a sister company, the Academy is an educational institution.
Mike: It is the only institution in the loyalty world that provides a certification program.
Mike: The initial CLMP, Certified Loyalty Marketing Professional, is one of these.
Mike: And it required all people to meet very specific standards in terms of coursework, along a variety of subjects, some of which we touched on this morning, and well as completion of a final examination.
Mike: The Board of Regents governs the issuance of the certification.
Mike: The Board is made up of six members, different parts of the world, and we operated like a university, Paula.
Mike: Courses, free programs like the CLMP, we want to run a very large conference once a year, and we provide training services.
Mike: The library at the Academy is much deeper, very, very, very extensive, and isn’t available to the public, or say, because a lot of it contains proprietary research and things that are done.
Mike: But we crack the global loyalty space, and we offer people the opportunity to improve their own skills or the skills of their team by joining the Academy’s coursework or certification program.
Mike: Both properties have their own website, LinkedIn, etc.
Mike: Both properties are owned by The Wise Marketer Group, privately held enterprise global ownership.
Paula: Wonderful.
Paula: Well, I’ll certainly make sure that I include links again to both of those properties in the show notes, Mike, as I have done previously.
Paula: And yes, you guys provide an amazing service to us as loyalty marketeers around the world.
Paula: So as we close, I just want to say first of all, thank you and congratulations on the amazing piece of work in The Delphi Report.
Paula: And yes, I just really want to say really thanks for your support and thanks from everybody at Let’s Talk Loyalty.
Mike: Thanks, Paul.
Paula: See you soon.
Paula: Thanks so much for listening to this episode of Let’s Talk Loyalty.
Paula: If you’d like me to send you the latest show each week, simply sign up for the show newsletter on letstalkloyalty.com, and I’ll send you the latest episode to your inbox every Thursday.
Paula: Or just head to your favorite podcast platform.
Paula: Find Let’s Talk Loyalty and subscribe.
Paula: Of course, I’d love your feedback and reviews, and thanks again for supporting the show.
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