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: Rob Burgess is the founder and editor of a website called HeadforPoints.
Paula: And HeadforPoints is actually the UK’s biggest frequent flyer and business travel website with 1.5 million monthly page views.
Paula: So Rob Burgess, you founded this business in 2011.
Paula: I know it’s hugely influential.
Paula: You’re probably one of the most vocal commentators I know in the world of loyalty in the UK.
Paula: So first and foremost, welcome to Let’s Talk Loyalty.
Paula: Great stuff.
Paula: And there’s a number of accolades, I suppose, that caught my attention, Rob, when I was reading your profile.
Paula: I know, for example, you’ve won Editor of the Year at the Business Travel Journalism Awards.
Paula: So you sit in a very interesting space.
Paula: We were talking together before we came on air.
Paula: I think you started, I suppose, what really might have been originally a passion project, and you really have grown into a force to be reckoned with in terms of the overall airline and hotel travel loyalty business.
Paula: So first and foremost, before we get into the whole history, tell us your favorite loyalty statistic.
Rob: I’m always slightly fixated on the fact that there are five million people in the UK who have a British Airways Avios account.
Rob: That five million number kind of sits over me because in theory, if you’ve got an Avios account, you will get some value from reading my website and what I write.
Rob: And we have about 50,000 hardcore readers, I would say, who read the majority of the articles we put out.
Rob: Obviously, our reach is a lot bigger than that, but it’s 50,000 who follow most of it.
Rob: And obviously, there’s a massive gap between those 50,000 and the five million UK Avios account holders.
Rob: And in the back of my mind all the time is the idea of how far can we go?
Rob: How can we create a product which reaches more of those five million than we’re currently reaching?
Rob: What whilst understanding that actually for most people, they actually don’t have that great interest in the scheme and really don’t want to read anything about it.
Rob: Yeah, I mean, I have many, many laughty cards.
Rob: I wouldn’t actually want to read a website that dealt with Costa coffee or Starbucks or whatever.
Rob: But clearly there’s a big gap between 50,000 and five million and you’ve got to think about how you can fill that space whilst still writing stuff that’s quite focused and quite in-depth and quite relevant to what’s going on in the market.
Paula: Well, you really have built an extraordinary business, Rob, and I suppose because I’m now in the world of podcasting and dare I say a thought leadership, it is incredibly impressive to see somebody coming from a place of just earning and burning loyalty points.
Paula: I think you told me that you have over 6 million across various programs yourself, including I think 1 million Avios and I think 1 million Virgin Points.
Paula: And to go from that place, I suppose with a very financial background in terms of your career to date, to transferring that into being able to advise frequent flyers on how to get the best value.
Paula: Was that the insight you were trying to get to when you built HeadforPoints?
Rob: Fundamentally, I’ve been traveling a lot in my banking career.
Rob: I’ve been in banking for 20 years, left in 2011 after the financial crisis when basically what I used to do disappeared.
Rob: I spent 20 years doing a job which involved lots of financial analysis, lots of tearing apart company accounts and spreadsheets trying to pull out simple ideas and key points from very complex sets of numbers.
Rob: People who do that sort of job and have that sort of mindset to do that sort of job tend to gravitate towards frequent flyer schemes and loyalty because they like the idea of trying to beat the system, trying to find the best redemptions in a particular program, best flights from where to where, how to get the best value for the points when they’re redeeming, how to earn as cheaply as possible.
Rob: I joined Flyer Talk back in 2004, as an example.
Rob: That was seven years before I left banking.
Rob: So there had been an increase in crossover and fundamentally the frequent flyer scene had become my main hobby by that point, I think.
Rob: I didn’t intend to turn it into a serious job.
Rob: I was very lucky when I left my banking job.
Rob: I’d been very well paid for a number of years.
Rob: We weren’t sitting on a big mortgage.
Rob: There was no pressure to get another big job.
Rob: We just had a second child.
Rob: So I was quite looking forward to spending more time at home, taking the kids to school.
Rob: I started, so HeadforPoints, I thought would be a bit of a fun project.
Rob: I thought if it just makes enough money to pay some of the bills, then I’m happy.
Rob: And it’s a bit of a change after 20 years of sitting in a bank, a banking building.
Rob: And then there was nothing else at the time in the UK market.
Rob: And it just went very, very well.
Rob: I mean, not massively quickly.
Rob: I mean, it’s taken us seven, eight years to get to one and a half million monthly page views.
Rob: But I’m now back in an office, unfortunately, for better or worse.
Rob: I’ve got free staff, for better or worse.
Rob: And I’m doing a job which takes me probably more hours per week for my old banking job used to take up for better or worse.
Paula: Wow.
Rob: But it’s good fun.
Rob: I’m sort of in control.
Rob: I mean, as you know, these things, when you’ve got a publishing schedule, the schedule is always the boss, actually.
Rob: I’m not.
Rob: But I’m my own job, I’m my own boss.
Rob: I get to fly around the world, trying out new businesses, first-class products.
Rob: I stay in nicer hotels.
Rob: I make a decent amount of money.
Rob: I get to meet some interesting people.
Rob: Yeah, travel people are nicer than banking people, in general.
Rob: You know, people do travel because they love it.
Rob: And because they just get on with the people and they like the environment.
Rob: And you know, it’s a far nicer world to inhabit than banking and financial lawyers and management consultants in my old life.
Rob: So anyway, it was never meant to go like this, I think.
Rob: I would have bubbled away just doing it myself around, taking the kids to school and stuff.
Rob: But yeah, if you’re doing online stuff and it takes off, it’s very hard to control where it ends up.
Paula: Absolutely.
Paula: Well, first of all, I’m gonna go home and repeat exactly what you’ve said, Rob, because clearly I’m from a travel background, but my fiance is from the banking background.
Paula: So I’m gonna tell him that you’ve said, we’re nicer people.
Paula: So that’s super nice.
Rob: Definitely nicer people.
Paula: But what I love about what you do, Rob, and I think it’s personally inspiring, and I do think a lot of people even listening, are in corporate jobs, like what you’ve come from in terms of your banking career, but to have built something of your own, Rob, and created, and really obviously tapped into a niche, because the reason I know of your work, for example, to go back to our original conversation, was because I was working in the UK frequent flyer market.
Paula: And I know that a number of the industry people that I used to work with were very nervous about what you would write about any new campaign or any new loyalty initiative that we would have been launching.
Paula: So I think one of the reasons I wanted you on the show, as you’ve picked up on is, how should people who are running loyalty programs really connect with thought leaders like you?
Paula: And you’ve talked about the fact that you sit somewhere between a blogger who’s just writing for fun and a professional journalist, for example.
Paula: So you’re definitely in that middle space of somebody who is very opinionated, dare I say it, but extremely well-informed.
Paula: So if I was running, you mentioned, for example, British Airways or Virgin, any of these big airline loyalty programs or travel loyalty programs, how should we be working with thought leaders like you?
Rob: I think that I carry out at the start by saying that you don’t want the tail to wag the dog.
Rob: People who read my site are probably, if you’re an airline or a hotel company, they’re your best customers in terms of night spent and money spent.
Rob: So from that point of view, yes, what they think and what appeals to them is important.
Rob: But at the end of the day, you’re dealing with a relatively small subset of people.
Rob: And, you know, obviously, it’s slightly with me because of my banking background, I’m very commercial.
Rob: So I understand the commercial realities of running loyalty programs.
Rob: So you won’t see me write an article saying, why doesn’t British Airways open up all of its seats to Australia to wait for Christmas for free for Redemptions?
Rob: I know why that doesn’t happen.
Rob: I understand the dynamics of it.
Rob: So I think we try and we try and match realism with a desire for fairness on both sides.
Rob: But it is key.
Rob: It’s very obvious in the UK market that some people simply have no interest in talking to people like myself.
Rob: I find it slightly odd.
Rob: There are some people we have great relationships with, you know, Virgin Atlantic, fantastic, Qatar Airways, we do quite a lot with, places where literally I know the entire team from the top downwards.
Rob: And then there are other people, big, big household name, travel all over the UK, where I have never met the person who runs it.
Rob: And it’s slightly, people who don’t even send me an advance note as to what they’re doing and that’s like bizarre.
Rob: I mean, whether or not people actually like what I write or find it valuable, the sheer fact that we’re doing one and a half million page views a month to some of the UK’s most high-value travelers means that you should be keeping us in the loop on what you’re doing.
Rob: Now, whether or not you think you should be going to any trouble to get people like me to write nice things about your program is slightly different.
Rob: But simply in terms of having an open line of communication, you’re crazy not to have that.
Rob: It’s simply just purely just to keep us in the loop so we know what’s coming up, we know what to write about, we can allocate editorial space to you, we can come to you with questions about promotions or small prints, which need clarifying.
Rob: Not to have that dialogue is crazy.
Rob: Not to have someone in your senior team have lunch with me and perhaps with my team once a year is just, as far as I’m concerned, just common sense.
Rob: We’re key because, as you say, fundamentally more…
Rob: There’s a large group of people in the UK who will take a news of a new program or promotion and will then sit there and think, oh, I wonder what HeadforPoints says about this.
Rob: And we’ll then go off and have a look at our view of whether something’s worth doing or not.
Rob: And then act on the back of it.
Rob: It’s sheer volume to some extent.
Rob: I don’t like using it as power.
Rob: I don’t see it as power.
Rob: I’ve never in my life gone out and demanded free status of anyone or free hotel stays or something in return for writing something nice.
Rob: But it’s just pure professional courtesy.
Rob: In the same way that people who compete with me in the UK, we’re all friends.
Rob: We all see each other on regular basis at events.
Rob: We’re all chatty.
Rob: Yeah.
Rob: People who you might think are competitors, actually, we all get on very, very well together.
Rob: In the same way, I’d like to think that even people who didn’t always get an easy ride for the quality of their promotions or offers or program from us would still want to have an open dialogue.
Rob: And if they were smart, I think they’d want to do more than that.
Rob: I mean, if you’re opening a new luxury hotel in London for your brand, then why not have us come along, do a stay, have a look at it?
Rob: You know, our stuff generally ranks first page on Google when we review a property.
Rob: It gets some buzz out to a group of early adopter types who generally have quite a lot of sway inside their own organizations or with friends and family who want to travel.
Rob: I think, you know, we’re not selling good content for, we’re not selling space for advertising revenue.
Rob: We’re not demanding money to go on press trips.
Rob: We just want, we’d like to be part of a conversation.
Rob: Well, we are part of a conversation whether people want it or not.
Rob: And so it’s sort of rumbling a bit, Paul, but you can cut this down a bit later on.
Paula: Yeah, I will add to what you’re saying, Rob, just because, for example, I like the way that you framed it as, you know, it is a professional courtesy because, and you described as well the idea of having a social media journalism liaison, I suppose a bit like a PR department, but to recognize thought leaders in purely digital space in a way that perhaps some of the UK players are not.
Paula: So I definitely think it’s professional respect.
Paula: I think your sheer audience volume commands that level of respect.
Paula: But also I do think people, particularly, as you said, the people who are highly invested in these loyalty programs and highly educated on them because they find them fascinating and very rewarding, they genuinely do want that independent view.
Paula: And I think it’s important that that’s what journalists bring to the table, is that independent view.
Paula: And there was an article I was looking at your website today, Rob, where you were talking about some changes to terms and conditions the British Airways had made.
Paula: And again, I just loved the perspective because you took what was fairly generically worded, I would say, change in terms of, for example, if somebody’s speaking on social media about the brand, and you really clarified, I suppose, the potential power that the change in that terms and conditions have.
Paula: And I think your headline was, you can be thrown out now of the British Airways Executive Club for making the airline look bad.
Paula: And that’s absolutely true.
Paula: And I think anybody running loyalty programs now in any sector, even though you specifically focus on travel, should probably be thinking about that and how their members represent them or make their brand look.
Paula: So maybe just tell us about exactly the story that you wrote on that particular side of things.
Rob: Yeah, I think I know where this came from, actually.
Rob: This is, readers, this is outside the UK, why not know, but British Airways has currently been through a protracted dispute with its cabin crew recently over changes to terms and conditions in order to try and get the cabin crew cost base down due to obviously coronavirus and people simply not flying and the fact that British Airways has historically one of the highest paid cabin crew groups in world aviation.
Rob: Obviously, this didn’t go down well with a lot of people who were looking at taking, having to take pay cuts in order to keep their jobs and there was a lot of vitriol poured out towards the airline by ex and current cabin crew including one person who had their staff travel privileges taken away.
Rob: And then BBA got some bad press on social media for taking someone’s staff travel privileges away.
Rob: Actually, when you look at what this person posted, they were comparing British Airways leadership team with Nazi war criminals and frankly losing your staff travel privileges for that is probably the least of your worries.
Rob: I think we’ve focused our mind a bit on what they want to on giving themselves a slightly more power to deal with people who thought one of the better words, trolled a business on social media.
Rob: The wording they brought in for executive club members is unfortunately a bit too tight.
Rob: Fundamentally, what it says is, and this is actually what it says if you go through it with a legal mindset, if you say anything bad about us, even if it’s true, we can throw you out of the executive club.
Rob: The bit about even if it’s true is, I think, one of the causes would be more for most people.
Rob: I don’t think anyone would complain about someone who deliberately spreads misleading information about their experiences with the airline being thrown out of what is it in the dates, it is BAs club and BAs rules.
Rob: But the idea that you can simply post things they don’t like on social media and be kicked out of the club is tricky.
Rob: Hands on the table, we have a comment section on our website, and there are some people who we have blocked from commenting on our website because their constant contributions are just purely negative towards my team and other posters.
Rob: My view has always been my club, my rules, but we’re not actually banning them from what we can.
Rob: We’re not trying to ban them from accessing the site.
Rob: We’re suddenly causing offence to others.
Rob: So I skim the game on both sides, but I think BA’s wording slightly overstepped the mark.
Rob: On the other hand, they haven’t actually told anyone about this change.
Rob: It was just slotted into the terms and conditions.
Rob: They haven’t actually emailed everyone to say, you know, by the way, you better keep your mouth shut on Facebook now, because if you do, we’re going to come for you.
Rob: And I’m pretty sure they went.
Rob: It’s just, yeah, to be fair, if you read the whole terms and conditions of any loyalty program, you’ll see there’s hundreds of hundreds of thousands of things in there.
Rob: They could come for you for.
Paula: Of course not.
Paula: Tell me then, Rob, what do you think is changing in the in the loyalty industry?
Paula: And, you know, the subject of COVID is sometimes interesting.
Paula: Sometimes we get a bit jaded, I guess, six months in.
Paula: But you do monitor again, as we know, particularly loyalty travel.
Paula: But I know you’re also, for example, you’ve talked about Tesco being a very powerful program in the past.
Paula: So what do you think are the big changes that are happening for loyalty programs in the UK market?
Rob: I think in the short term, what people need to be focusing on is, I mean, this is putting it very simply, you know, not annoying their members while they can’t travel.
Rob: I mean, this is focusing on the travel sector at the moment.
Rob: We’ve seen people offering, often reluctantly, states extensions or reduced thresholds, or letting people roll over bookings or get refunds, and I think at the moment, really, the best you can hope for is that you can manage your base and manage your expectations of your members so that when things do get back to some sort of level of normality, which you’re looking at May, June next year, looking at current vaccination progress and the like, then your members are still there and they still have the same opinion of you as they had back in January 2019.
Rob: And for a lot of people who’ve been struggling with refunds or getting their plans changed or getting their status carried forward, that won’t be the case.
Rob: I think a lot of people haven’t been fully focused on that.
Rob: I mean, for most loyalty programs, financially, this has not been a bad time.
Rob: You know, people aren’t traveling, so they’re not redeeming miles.
Rob: They’re still spending on their co-band credit cards and the like, so the money’s still coming into the program.
Rob: So from a cash point of view, I think most programs aren’t in a bad position.
Rob: But are they necessarily sort of dealing with the current concerns of their members?
Rob: And are they positioning themselves so that they’re ace for when things are coming back to normal?
Rob: Once you get outside the travel sector, I think it’s slightly different.
Rob: It’s very much, I think, business as usual.
Rob: I’ve not seen much movement from supermarkets in terms of changes.
Rob: What we have seen, I think, is some people, if you look at, say, Nectar, which is a sort of coalition shopping program in the UK, they’ve continued to lose partners, but before and during COVID, people are looking at the cost of being in that coalition program and deciding that actually it’s not worth the money they’re spending on it, but it’s not delivering them the extra benefits.
Rob: And when costs are getting tight, they see it as something they can give up.
Rob: But if you look at Lidl, which is a discount supermarket chain in the UK, they’ve just launched a brand new loss program after saying for years we never would.
Rob: Again, they think they’re missing out on something which is tying people into the brand and trying to keep people loyal.
Rob: So you can see from both sides, fundamentally, there are a lot of people who are losing their jobs, a lot of people with less money to spend.
Rob: And companies are turning to their loyalty managers or hiring a loyalty manager to say, look, it’s getting tough out there for our customer base and we have to do what we can to keep them loyal and keep them coming to us.
Rob: And for some people, it’s using loyalty as a lever to do that.
Rob: For other companies, it’s a way of jettisoning their loyalty efforts because they’re simply not delivering in terms of profitability.
Rob: And the company isn’t in a position to keep that going.
Rob: You know, this is a travel issue as well.
Rob: I mean, for every person in the UK who’s lost their job due to COVID, there’s somebody else who’s been working from home on full salary, is saving a huge amount of money by not buying clothes, not buying train tickets every day, not buying expensive lunches every day, and actually has more money in the bank than ever before.
Rob: And is actually just desperately keen for things to relax so they can go out there and spend and start doing stuff.
Paula: So I’m delighted you picked up on Coalition programs, Rob, and I was looking at some Nectar News recently, and I did see that they actually added in Argus particularly as a new retailer.
Paula: So what did you make of that development?
Rob: Argus is owned by Sainsbury’s now, so that’s not entirely surprising.
Rob: Sainsbury’s bought the Nectar program off AMIA a couple of years ago, and fundamentally it’s always becoming a Sainsbury’s supermarkets group program, rather a general coalition program.
Rob: Nectar’s lost BP, Homebase, Debenhams, Oxfam, Expedia, lots of really good people over the last four or five years in the UK.
Paula: Yeah, and it’s a subject of great debate, actually, Rob.
Paula: And I know you in fact also, you do some consulting work into the loyalty industry.
Paula: Is that something you still do on a regular basis?
Rob: I do little bits for people.
Rob: I prefer to do it with people who are developing projects for the travel market, which we can get involved in later on.
Rob: My sort of preferred way of doing things is people come to us and say, look, we’re going to start working with Avios or a club card or whatever.
Rob: And can you just help us with an earning rate or with a way of structuring this to make it attractive and it will make people want to get engaged?
Rob: And that works well for me, not just because I’ll get paid for a bit of work, but because if we can develop a project which is actually attractive, I can then take it back to my readers and I can hopefully get paid twice by getting a commission from readers who sign up.
Rob: Also because it’s also helping the general ecosystem grow.
Rob: I’m not desperately keen on doing standard consultancy on things which don’t really help the business long-term.
Rob: Partly because at the end of the day, we’re writing 21 articles a week for publication.
Rob: If a day is spent on consultancy, the day I can’t spend writing other stuff.
Rob: And at the end of the day, the site is the key driver behind everything and you’ve got to keep at least one and a half eyes on that.
Rob: It’s also using a little bit of time to try and grow other things around the side.
Paula: Wonderful.
Paula: And just one other major development in the UK market recently, Rob, I’d really welcome your opinion on.
Paula: And again, as I said to you before we came on air, most of our listeners are actually probably in the US and actually they are all over the world.
Paula: So, but it is also good.
Paula: I think the UK is perhaps the most mature loyalty market in the world.
Paula: And I was really fascinated with the work that Pret A Monge has released, which I’m calling, actually by association, I’m calling Extreme Loyalty.
Paula: And it’s this idea of a subscription model where you pay what I think is actually a very affordable monthly price point of 20 pounds and you get up to five cups of barista crafted coffee every day for up to 30 days.
Paula: So like 150 cups of coffee.
Paula: So I know it’s not in your normal kind of space of frequent flyers and luxury hotels, but tell me.
Rob: Here’s the thing, I used to spend pre-COVID at least 50 pounds a week in Pret A Manger.
Paula: Oh my goodness.
Rob: Because I would usually have breakfast in there after dropping my kids at school and lunch as well most days.
Rob: So I have a lot of skin in the game there.
Rob: It’s very, very aggressive what they’re doing.
Rob: I mean, Pret charges over two pounds for a cup of coffee.
Rob: So you get your 20 pounds a month back with 10 cups of coffee.
Rob: Beyond that, you’re in profit.
Rob: But on the other hand, this has a lot of the, a lot of these sort of nuances we find in travel programs.
Rob: A cup of coffee has fundamentally zero marginal cost.
Paula: Yeah.
Rob: Really, realistically.
Rob: Perhaps 10% of the selling price.
Rob: Beans, milk, cup.
Rob: So even if you do have 150 coffees for your 20 pounds, Pret’s not making a real loss on that, if you wouldn’t have bought them in the first place.
Rob: They hope that it’s no different to a hotel giving away a free hotel room at the only cost they incur being the cleaning, or an airline giving away a seat it knows it won’t sell at the only cost incurred is going to be cost of your food, effectively.
Rob: So that is quite smart in that they’re not giving away things that cost them real money, like third party products they’ve bought in.
Rob: They’re obviously hoping that people will buy other stuff every time they go in, which makes sense.
Rob: And more importantly, and they’re very open about this, the company is in serious trouble.
Rob: It’s the dominant, I’m calling it a sandwich and coffee chain is a bit underplaying it, but it’s the dominant sandwich and coffee chain in the UK.
Rob: There are literally hundreds of these stores in central London.
Rob: There were probably five within three minutes walk of my old office.
Rob: Those shops are all now pretty dead because people are working from home.
Rob: They’ve never really focused on operating outside big cities because they have a very high cost base of all the food made on the premises.
Rob: So it seems to make sense to operate in places where we only get a couple hundred customers a day.
Rob: And now they’re in real trouble.
Rob: And a lot of their shops have seen 70, 80% falls in custom.
Rob: So for them, this is actually, it’s almost a case of, you know, we have nothing to lose anymore.
Rob: Yeah, if it doesn’t work, it doesn’t work.
Rob: If it works, we can start cropping whatever market is left out there to get.
Rob: The biggest problem for them almost is that they are so big.
Rob: And their existing share of the kind of sandwich and coffee market is so huge in London.
Rob: But even if they might increase their market share by a little bit through this program, it still won’t help them.
Paula: Yeah.
Rob: In terms of what they need to do.
Rob: It’s a great idea.
Rob: It’s gone down very, very well.
Rob: But they’re marketing it really hard if you go in the stores.
Rob: I’ve been getting advertising popping up on my site for it.
Rob: So they clearly put your money into advertising spend as well.
Rob: Let’s see.
Rob: People will sign up because we never know.
Rob: It’s very hard not to drink 10 coffees a day if you’re working in, so 10 coffees a month to get your money back if you’re in central London every day.
Rob: Long-term, will it drive incremental spend?
Rob: I don’t know.
Rob: Let’s see.
Rob: But it’s ballsy and there’s a lot of pressure on Starbucks and Costrum, the other big UK coffee chains too, using very similar, frankly.
Paula: Absolutely.
Paula: As I said, we’ve been using the term extreme loyalty because at the end of the day, a loyalty program, yes, it’s great when people give you provision to market to them, and it’s great if they’re invested in terms of actually giving you a share of wallet, but actually to commit to giving a full contribution in financial terms, especially at a time like this, for me is just, you’re right, it is kind of ballsy, but I think it is absolutely essential.
Paula: And I’ve written a lot about it in the US, for example, and the amount of companies that are exploring this idea of subscription for physical products.
Paula: We’re well used to it with Amazon Prime, obviously, and with Netflix and all of those kind of models, but it’s very new in the coffee space.
Paula: So yeah, I’m delighted to hear it’s going down well in the UK.
Rob: There is one thing I would add.
Rob: Pret was always one of those companies, I’ll use it as an example, of people who didn’t need loyalty program.
Rob: Yeah, but the reason why Four Seasons Hotels or Mandarai Rental or Pret in the food space didn’t have programs, that’s because they didn’t need one.
Rob: That their product was so good, you didn’t need to have gimmicks, you didn’t need to give, buy 10 coffees, get one free.
Rob: People would go there and pay a premium price because the product was so good.
Rob: And they’ve gone on, they’ve started 15 years without any sort of program.
Rob: I’m not sure, subscription loyalty, I see a slight difference to emotional loyalty.
Rob: Because fundamentally what Pret’s doing is giving you a massive discount on your coffee, if you buy a lot of it.
Rob: To what extent that breeds loyalty as a psychological loyalty, loyalty sort of from the heart, as opposed to boxed under financial loyalty, in terms of if I sign up for this card, I’ll save 10 pounds a month for my coffee bill.
Rob: But that’s what interests me.
Rob: I’m not, I know a lot of people like, Collinson and the like have been pushing subscription loyalty products to people in this industry over the last 12 to 18 months.
Rob: But is it loyalty or is it just, I’m not sure if subscriptions equal loyalty or not.
Rob: I don’t know.
Rob: Or is it just a financial transaction?
Rob: But then perhaps all loyalties are paid at the end of the day.
Rob: If you’re very cynical, a loyalty scheme is a way of getting someone to consume your product where they probably wouldn’t have done it anyway.
Rob: Yeah.
Rob: Getting someone to drive past a cheaper or better or newer hotel to your hotel because they want your points to get a free room for their family in the future on this business trip.
Rob: Yeah, that’s, you know.
Rob: Yeah, it’s the Holy Grail, but it’s not is it loyalty versus just, you know, trying to get, trying to persuade someone to do something which is not totally in their best interest is a difficult one.
Rob: Travel loyalty has an extra niche to it, the other sectors don’t, by the way, we should all forget.
Rob: With travel loyalty, the person who takes the reward is usually not the person who’s paying the bill.
Rob: And this creates a totally different dynamic to other forms of loyalty, where effectively you’re rebating the person who’s actually paying.
Rob: I mean, in my banking days, I would, we had an office in Paris, and I would go over there quite a bit.
Rob: I would often fly a business class from London to Paris, because my contractor and I would fly business class, rather than take Eurostar.
Rob: Eurostar was the obvious thing to do, because I would get 80 rich, always tier points.
Rob: And if I, you know, I would keep my BA lounge access if I got 600 tier points a year.
Rob: So doing three or four business class flights to Paris, rather than taking the train, which is more convenient, was something I did.
Rob: And my employer was ambivalent about it, because, yeah.
Paula: They were happy as long as you were happy, Rob.
Paula: That’s what I’m hearing.
Rob: Exactly.
Rob: But it wasn’t convenient for me, and it wasn’t the most sensible thing to do necessarily.
Rob: And trade would probably have been cheaper as well.
Rob: But you make small decisions with other people’s money so that you can benefit yourself at other times.
Rob: And that makes travel schemes, at least the business travelers, work differently to other sorts of reward schemes, where effectively you’re paying people back money they’ve already given you.
Rob: And it’s different dynamic because those people might actually prefer to have given you less money in the first place.
Paula: And just as you mentioned emotional loyalty, Rob, do you have any examples?
Paula: And I’ll finish up with this question, but do you think anybody in the UK is doing a good job on that side in terms of maybe building their brand?
Paula: And you made the point earlier, I suppose, that people’s behaviour has changed unintentionally and certainly not by choice.
Paula: So who would you say is doing a good job of building that emotional loyalty in the UK?
Rob: In terms of a program or just in terms of the culture of their business?
Paula: Well, actually either, because I was going to comment when you said that some brands don’t need a loyalty program, I would often say the same about Apple, for example.
Paula: I’m an Apple user.
Paula: And for Apple, for me, it’s all about the customer experience and the product is exceptional.
Paula: So yeah, I mean, I don’t mind whether you want to talk about it from a cultural perspective or a product perspective or a program perspective, because this program, this show is called Let’s Talk Loyalty.
Paula: And I do feel we have liberty, therefore, to talk about people who, you know, just happen to feel like, oh my God, I love this product.
Rob: Yeah, I mean, obviously in the UK, there’s a department store chain called John Lewis, which is owned by its staff and has about 50, it’s a big business, about 50 stores across the UK.
Rob: And that has a very high level of loyalty from what you might tend to call sort of middle class, middle England types of which I would include myself.
Rob: And if you were in the UK, you probably include yourself as well.
Rob: It has a kind of emotional, people have an emotional loyalty towards the John Lewis business.
Rob: Partly because they employ a different sort of member of staff to most stores.
Rob: They don’t pay staff commission on what they sell.
Rob: Staff get a share of the profits, so they’re generally more inclined to do things which support the overall business rather than their own little corner or their own little department.
Rob: They do very sort of soft loyalty.
Rob: If you download their app, then they will give you a free cup of coffee and a cake voucher in the phone app every month or so.
Rob: Again, this stuff which has marginal cost to them are very, very little, but gets you in the store and might be sweet, spend something.
Rob: But that business has grown over years on the back of excellent customer service.
Rob: If you have any problems, you take stuff back to them, years after you bought it, they still fix it.
Rob: If you do refit that question, it’s a very, it’s a model.
Rob: Some people might put the same money into a loyalty scheme, but they’ve always spent a lot of money on customer service and staff training and the like.
Rob: That’s delivered a culture which, I mean, fundamentally, it’s now the last department store chain standing in the UK effectively.
Rob: We’ve housed Fraser & Debenhams on the verge of bankruptcy.
Rob: In terms of programs, it’s, well, I think what’s interesting, this is my COVID loyalty story.
Rob: There’s a coffee chain called Joe & the Juice.
Rob: Which, it’s Danish, actually.
Rob: It’s global now.
Rob: And I’d always ignored it, but there’s one near where I live and I’d never been in there.
Rob: It’s aimed at people 30 years younger than me.
Rob: They sell coffee, but they focus on healthy, made-to-order juices.
Rob: But it was the only place, during the start of the lockdown in the UK, which any place is actually open for coffee.
Rob: It was just far enough from my house that it counts as the exercise to walk there and back again.
Rob: So every day, I would go down to Joe & the Juice and get a couple of cups of coffee and come back.
Rob: And because you had to order on the app during lockdown to avoid anyone handing you cash, I ended up in their loyalty program.
Rob: And it was very…
Rob: To join a program from scratch, literally from scratch, I’m now sort of almost top tier.
Rob: I have 60,000 points in my loyalty scheme, which you couldn’t have having bought 200 cups of coffee in there since March.
Paula: Well done, you.
Rob: It’s been…
Rob: I don’t know why my heart agrees, but it was very interesting to me how that scheme worked.
Rob: Once you signed, for a start, just signing up, I give you a free juice, which is worth about four or five pounds, which is a very interesting sign up bonus.
Rob: Then there are quite a few little milestones you get.
Rob: So you get one for buying three cups of coffee in a week for a few thousand points.
Rob: And then you get another one for buying five cups of coffee in a week.
Rob: Then you end up with one, which I think was like 14 cups of coffee in 21 days.
Rob: Which I realized that if I actually bought one for myself and then bought one for my wife in separate transaction, 10 minutes later, it would count as two, which is how I’d hit that.
Rob: So I was then working out ways of sort of playing with this and how you could sort of hack it and effectively to…
Rob: What’s interesting is that the rewards are utterly de minimis.
Rob: I mean, for buying the equivalent of 200 cups of coffee, they’ve given me, I have credits in my account now for 10 free items.
Rob: And a sort of nominal guarantee that whenever I order, my order now supersedes anybody else in the queue.
Rob: But even then, I got 10 free.
Rob: I was weird sort of challenged to get towards it.
Rob: And during the last few weeks, I have this sort of thing in my head that I really should…
Rob: I was sort of squeezing trips in to try and get to this 60,000 point threshold.
Rob: And even now, even now I’ve been given these 10 free items.
Rob: My mind is saying, I’ll go in and order a coffee.
Rob: I don’t use one.
Rob: At some point, I should sit down and work out how can I extract the most value from these 10 free items, which can be anything.
Rob: But it’s the way it kind of plays with your brain.
Rob: I’ve got a slightly bizarre level of involvement with the German Juice Loyalty program since lockdown in March.
Rob: And from that point of view, it’s done an exceptional job in keeping me loyal, especially because actually their coffee is noticeably more expensive than a standard coffee shop.
Rob: And once other shops started opening up again, I was actually paying a premium to go there and buy a coffee.
Rob: Compared to buying it in one Starbucks or Pret-a-Manger opened up, I was actually paying a bit more than one of those shops to go there.
Rob: So they’ve even persuaded me to spend more.
Rob: Just in my sort of totally bizarre quest to hit yellow states at 60,000 points.
Rob: But obviously I know all the tricks because it’s my job.
Rob: I know how it works and what we’re trying to do.
Rob: I still found it compelling actually.
Rob: I thought whoever set this up did a really good job.
Paula: Well done.
Paula: I’m delighted you talked about that one because I literally wrote an article about Joe & the Juice as well, Rob, recently.
Paula: I’m about to just release a podcast episode just reading that article.
Paula: I’ll make sure in the show notes.
Paula: But I love all of the things that you commented on.
Paula: It’s incredibly impressive.
Paula: Some of the things I noticed about their app, for example, is you can actually digitally tip the staff, which is I think a very thoughtful way to drive employee loyalty.
Paula: You’re right, it is a Danish company.
Paula: It’s extraordinarily successful.
Paula: I think they have over 300 stores now.
Paula: But you’re right, I think they’ve just built that competitive, compelling gamification process.
Paula: But also, I suppose, just as a closing point, what they do in terms of recruiting staff is they host auditions.
Paula: So it’s not like filling in a form for most coffee shops.
Paula: You actually have to be almost as charismatic as, you know, a performing bartender at a leading nightclub.
Paula: So it’s an extraordinary brand.
Paula: But I think it’s a great way to end this conversation again from, you know, for somebody like you.
Paula: And I’d love if you did write an article on them so we can trade.
Rob: I’m tempted to.
Rob: I’m keeping it too off topic for my readership, but I’m still tempted.
Rob: I kept the screenshots just in case.
Paula: You have creative license, Rob.
Paula: You are the founder and the editor.
Paula: So you can literally write about what you like.
Paula: Listen, it’s been a fascinating conversation, Rob, from my side.
Paula: Is there anything else you want to mention before we go?
Rob: No, no, it’s been great to talk to you, Paula.
Rob: It’s good to explore topics I can’t normally explore in my day-to-day writing, to be honest.
Paula: Wonderful, wonderful, wonderful.
Paula: OK, so listen, Rob Burgess, editor and founder of HeadforPoints, the UK’s biggest frequent flyer and business travel website.
Paula: Thank you so much from Let’s Talk Loyalty.
Paula: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.
Paula: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.
Paula: For more information, check out thewisemarketeer.com and loyaltyacademy.org.
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, find Let’s Talk Loyalty and subscribe.
Paula: Of course I’d love your feedback and reviews and thanks again for supporting the show.
Publisher’s Note:
This transcript was generated with the help of AI and podcast publishing tools such as Apple Podcast’s transcription service.
In the interests of efficiency and minimising our costs as a small business, it has not been checked by a human.
If you have any comments or concerns about the accuracy of this content, please do contact us for changes or corrections.
