Audio Transcript

Welcome to “Let’s Talk Loyalty”, an industry podcast for loyalty marketing professionals. I’m your host, Paula Thomas. And if you work in loyalty marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
25s
1

This episode is brought to you by Collinson. The pandemic has introduced major disruption to our lives and spending habits, and these shifts are having a distinct impact on customer’s loyalty to your brand. As experts in customer engagement and loyalty Collinson can help you to harness your data for deeper customer understanding and adapt your customer strategy to successfully navigate uncertainty so that your loyalty program will continue to drive engagement and deliver new revenue streams. Make every interaction counts. Visit Collinson group.com to learn.
1m 8s
0

Hello.
1m 8s
1

Hello and welcome to episode 96 of let’s talk loyalty. And my guest today is a man. I would describe as a true believer in the power of loyalty programs to drive commercial results. Adam Daniels is the chief executive officer at IAG loyalty limited a company that operates loyalty programs for the five airlines in the international airlines group. In today’s episode, we talk about the origins and history of IAG loyalty and some exciting growth areas of the business that have really grown impressively. Despite the pandemic, we also talked through some innovative partnerships they’ve done in recent months in financial services, way beyond the typical credit card propositions we are also familiar with.
1m 58s
0

So Adam, welcome to let’s talk loyalty. Thank you very much for having me.
2m 3s
1

Oh, it’s great to talk to you. And I know we share a common air former company. In fact, as I was just looking through your background 26 years with British airways out of my goodness, don’t tell anybody. Oh, I know, I know. I shouldn’t say a thing. Listen, em, I love the work you’re doing with IAG loyalty. So really keen to understand all of the history of the company and all of the stuff you’re doing now, particularly in the pandemic world, we’re all dealing with, eh, but before we get into your story, tell me, what is your favorite loyalty statistic?
2m 34s
2

Yes, I will. I’ve been thinking about that question and what I should use. And I’ve gone with a stats which shows the power of loyalty and the scale of our business that many of your listeners might not know. So in any given year, our members spend about 40 billion pounds a year. So that’s split about $55 billion earning our bills. Oh my goodness. That’s from credit cards, bank accounts, hotels, Carhartt, but it’s a huge number.
3m 13s
1

It is a huge number out and wow, well, it certainly has the wow factor. And as you said, we do, and we have plenty of listeners who may not even know the obvious brand, for example, may not know the IAG loyalty brand as yet, but you’ll have an extraordinary history that goes back many years. I think in fact, my research says nearly 30 years. So I’d love if you would tell us all about the company and at the businesses you operate.
3m 38s
2

Yes, absolutely. I, I think that, you know, many people don’t know, we have a pretty rich heritage and loyalty and miles was formed in, in 1988 by Keith Mills, which some of your listeners may know founded nectar the business. That’s now owned by Sainsbury’s. And you know, that at the time was pretty groundbreaking in the loyalty space, certainly in travel. And then just to confuse matters in 2000 BA miles was launched, which was a separate currency. Oh yeah, it’s, it’s a separate co currency, but with a specific focus on the airline itself.
4m 25s
2

So not a general customer base, but specifically frequent flyers. And so we had two currencies running in parallel if you like, until RVO started in 2012 with the formation of the obvious travel group. And then most recently we changed our name again, just to confuse everybody one more time. And we’re now called IgE loyalty. And that’s because we’re more than just a currency. And we’re looking at being an, being a loyalty provider across the airlines and beyond.
4m 58s
1

Okay. Okay. And it’s five airlines. I know that you operate loyalty programs for Adams. So British airways, obviously the original with Iberia and then my own favorite of course is air tubs. So, so five airlines and on how many kinds of members are we talking about a call star group?
5m 17s
2

Yes. Well Lara about approximately 35 million members across the group. And you know, that’s obviously British ours, as you say, is the biggest of the Allied’s, but there’s still a lot of members in our club. There’s a lot of members in the welling club as well. So lots of different members and quite a few of our members are actually in the States. So we have strong, strong membership in UK, Spain, Ireland, down the S
5m 47s
1

That’s amazing. Yes. And I remember vividly actually just when you use the name air miles and because I did a fair bit of work and out of Gatwick with BA holidays, and I do remember air miles was actually headquartered together. And with BA holidays again, back in the late nineties, dare I say it. So there’s immense power and value in that name. So in terms of just that, that, that major rebrand to the obvious currency, because I know that’s something that you’ve made huge progress with and bought us as we all know, changing a brand that’s been around for 20 years does take a lot of time. So, so tell us a bit about that. Was that due to the, I suppose, a combination of those five airlines coming together under one group.
6m 30s
2

Yes. That was part of it. And also a currency that brought the two parts of the business together was also important. And, you know, we know, you know, where we’re honest enough to know that some people still call it BA miles or some people still call it, you know, so we understand that, but it’s about bringing the businesses together, bring the currency together. And actually now it’s got a pretty good recognition across our different customers and across our different airlines.
7m 5s
1

Absolutely. Yeah. Yeah. And, and I do love it actually because, you know, short, snappy names like that, that actually become memorable, I do think are very powerful. So again, I know how difficult it is to come up with something, to replace a legacy brand, but great work. And I know you’re, you’re still operating, for example, the British airways executive club executive club, pardon me, as well as Iberia club plus and all of those loyalty programs.
7m 29s
2

Yes, absolutely doing something specific for those customers, but also trying to get an infrastructure in place where we can move and put things in place for customers in the different programs going forward.
7m 41s
1

Indeed. And I was looking at some of your stats as well, Adam, 279 destinations pre pandemic and carrying approximately 118 million passengers a year. And as you said, has spending over 40 billion pounds to earn Avi also just an extraordinary business.
8m 0s
2

It’s a huge business. And I’ve got to be honest. I thought I knew a lot about it when I Cayman joined this business a few years back and I joined as CEO just over a year ago. Interesting timing. But you know, it is a huge business. And as I say, the power of loyalty that potentially people don’t understand or who are not used to it, not close to it, just how important that is and what he could do for your business. You know, it can really help drive the bottom line and can really, you know, get customers more sticky if you like with the brands that you’re associated with.
8m 42s
2

So, you know, it’s, it’s been a really interesting year for me as CEO with all of everything that’s going on with the pandemic. But what it’s also shown me in that time is that customers have remained very loyal to us. And, you know, the currency has shown through in those last 12 months. Yeah.
8m 60s
1

Yeah. And in terms of your background, Adam, what I really did like is your previous role and the most recent role you had before you left British airways was chief commercial officer. And one of the things we often talk about on this show is, you know, loyalty programs are often kind of hidden under, you know, the marketing team and they don’t get the visibility and to your point, they don’t always get to shine through. So I think it takes somebody that has your commercial credentials, I think, to kind of, you know, take something like IAG loyalty and really demonstrate the power.
9m 33s
2

Well, I, you know, I think that’s what I was the CCO of BA probably the loyalty lever was the most powerful lever I had in terms of driving that revenue. Everybody can use price changes, but in reality, the best lever was the loyalty business. Cause lots of customers, you know, wanted to, you know, whether they wanted to fly, were able to fly, you know, using that loyalty if it was very, very effective. And I know that’s the case in lots of other businesses, but often forgotten
10m 6s
1

Indeed. Yeah. I, my own favorite career highlights, I will definitely say was also using loyalty way before I was in the business. But when we were looking at within Emirates to, to change channels for bookings, so again, you will be very familiar with it, the travel agency community, and we literally had the loyalty program. Skywards where we could literally say, okay, let’s, you know, incentivize our loyal customers to book directly with emirates.com. So yes, I think for me, that’s when I kind of went, wow, this is the most powerful tool in my marketing toolkits.
10m 38s
2

Yeah. And we spent an awful lot of money as airlines trying to obtain new customers, you know, and also spend a lot of our time with our existing customers looking to get more of that business. And we sometimes forget that
10m 52s
1

We sure do. Absolutely. Yeah. And that’s another favorite term of mine actually out, I’m a sheriff Wallace. So I know there’s lots of loyalty professionals really looking at that now because at the end of the day, you know, people are only giving you half their business, then there’s still work to be done. So definitely work. So, so that’s fantastic. And you mentioned the timing of the pandemic and coming in as a particularly, let’s call it interesting time in the, the loyalty and airline business, particularly I’d love to hear how you guys have been responding to the pandemic and given that the vast majority of your members were being triggered, as we said, mainly by their flights and their, their willingness to travel, which hasn’t been the case to the same extent for the last 12 months.
11m 35s
1

So I’d love to hear what’s been going on for, for that time.
11m 38s
2

Yes. I think the, you know, the pandemic has obviously caused, you know, a major change for all of us and you know, more, no more so than the airline space. And really our response was doing some of the things you would expect almost, you know, taking care of our customers, extending vouchers, looking with confidence, flexibility, that’s the right thing to do. And frankly, it’s what customers would expect from us. Yeah. I think we’ve also tried to maintain the interest and that’s, I think been quite effective in terms of promoting products and brands that customers could spend on or are interested in.
12m 22s
2

And that’s where our, our online shopping portal, our e-store has come in very effectively. So Ari store in the last job as habits, best Walmart it’s ever had in its history with customers coming in and saying, well, if I can’t earn miles through some of the ways I would normally do, I’ll learn it this way. So yes, I’ll, I’ll e-store has been remarkably successful in the last 12 months. And we’ve also tried to focus on things that, you know, came up through that, through the pandemic that customers wanted to do. And we got a lot of feedback and I know this has been a subject on some of your previous podcasts about wanting to do something with the currency.
13m 8s
2

And so we decided to do a promotion both in Spain, Ireland, but particularly in the UK around donating points for the NHS and to allow, you know, NHS teams to be able to go on a break. So we teamed up with the, the NHS in the UK and we weren’t sure if I’m honest, whether that would work or not. Yeah. Would our customers want to do that where they want to use their points in this way, but the answer was a resounding yes, we had, Oh, just under a hundred million points donated by over 9,000 members.
13m 55s
2

And we’ve managed to award, you know, trips across to Europe to over 5,000 NHS workers. So, you know, that’s great, you know, with something we’re proud of, but it’s also shows that customers, you know, wanted to interact with us and wanted to use the currency for, for, for things other than for them, which I think is great and something we need to think about going forward.
14m 20s
1

Yeah. And it comes, I suppose very much within the topic. Again, we talk about a lot on this show and it’s the balance between transactional loyalty. And I do want to explore the store a bit more with you and then the emotional loyalty, which is coming through then very much so like 5,000 NHS workers going on holidays, literally, you know, as guests of, of RVOs or IAG loyalty, I think that’s, that’s a lovely message. And I had seen the call to donate because I’m not obviously in, in the UK or I can easily earn also I didn’t have the opportunity to earn or donate, but I hadn’t realized that it had produced such extraordinary results.
14m 60s
2

Yeah. And I think we were surprised if I’m honest, we had some outline of what we thought the numbers would look like, but you know, we got an, I got a lot of emails. I don’t, I get, as a CEO, I get a lot of emails, some of the positives, some of the less so, but I got a lot of emails back from customers saying, this is exactly what we want you to do. It’s exactly the sorts of thing that we want you to, to engage in. I’ve also had some great emails from, from NHS staff themselves saying, brilliant. I wasn’t able to go away to go home. Now I can. So, so that’s been a real success and you know, we’re thinking about that as we go forward. But as you say, emotional loyalty, it’s very powerful if you’ve got it right.
15m 43s
1

It sure is. So with that, a short term tactical, one item that you’re considering for the future, is that how it was designed? Yes.
15m 51s
2

So it was dying specifically with this situation in mind and we managed to get it life pretty quickly. To be honest, we are thinking about how we, how we explore that space going forward, because it doesn’t exist for us today. There’s not an option for the customers today to donate in that way. So we are looking at what we might do going forward. So that’s an active conversation with them.
16m 14s
1

Lovely, lovely. But it definitely, it sounds like you just kinda nailed the zeitgeists because, you know, customers or members don’t obviously email, unless there’s something either very good or very bad with their loyalty program. So the fact that they’re reaching out and it is also, I think is much greater than, you know, the CSR programs that we’ve all done in the past and which are well-intentioned. But sometimes in the form of, you know, it’s a check or whatever, and we’re sending people to travel, which is the beauty obviously of the airline business. I just think it’s a gorgeous one. So I’m sure your social media team will have a field day with all the content coming in from that one. So just take me back a bit then to the, the East store as well.
16m 57s
1

And I know when we talked the last time, you, and you literally described it as an undiscovered gem. So how, how long has it been around actually is the first question I wanted to ask you. And then just again, for maybe people who are not familiar with an e-store and, and maybe the revenue model around that and why it can be so powerful for loyalty program, because again, thinking about this audience, there’s lots of people with lots of loyalty points and earn and burn propositions, but mightn’t have gone down the e-store route. So just would love if you wouldn’t mind explaining that piece for me.
17m 31s
2

Yeah, sure. We’ve had the, the online shopping portal to each store for, for some time, for the last few years, two or three years that we’ve had it. And we have it specific to the individual airlines cause that’s quite important. So you don’t go onto one, you go onto the British e-store or the welling e-store or the air Lingus e-store and we try and tailor some of the content to that. So you might just be, that’s a bit more relevant, let’s say to the Spanish market in, in, in the Iberia still, but it’s the ability to shop, do your everyday online shopping, but yet currency on the back of it.
18m 14s
2

And we do that in association with Collinson called us and provide a lot of the retailers that we use. And, you know, we talked to them and we talked to the retailers, we do a lot of the, the tech as it were at the front end. And now what we found is that once customers really see it and understand it, they, they stay with it and they really use it very effectively. So you can go and buy a, an iPad through that sites with Apple, through another retailer that you can go and book tickets. You can also use some of the high street stores that you would understand in the UK and in Spain, whether that’s elk holding glass or John Lewis in the UK.
19m 0s
2

And we do see lots of people use that. And I increasingly once they understand that once they can see it, we see them stay with the channel as they go forward. Using promotions, I think is very useful. And we do that a lot. Black Friday for instance, is a big, big part of our e-store network. But certainly as a product, if you think about loyalty as a whole, it is something that, you know, we invested in, we thought we could work. And we’re very pleased with the results we’ve had thus far
19m 31s
1

Super exciting because yeah, I think always one of the pieces of feedback that we hear from members of loyalty programs is they want to earn more quickly. So it obviously proves the, the power of models, like coalition programs and all of those. So, and to be able to translate or offer all of the online shopping opportunities to earn obvious, as you said, with airline specific and stores, that that sounds like just a very, I won’t say a quick win because nothing’s a quick win, but sounds like something that was almost waiting to be discovered.
20m 4s
2

Yeah. You know, we have quite a bit of feedback from customers saying, you know, I didn’t know about this now. I love it. So we have a piece of work still to do I think about making sure that visibility is there for everyone. You know, we have seen a lot and we talked about the pandemic, probably the biggest surprise for me. Yes. I pads and Apple products have flown off the shelves, but the, we were able to see some of the transactional history. So we see, for instance, fitness again, air has gone through the roof in the last 12 months. So you get some interesting data from it as well.
20m 39s
1

Yes, absolutely. And again, listeners of the show will know that we had Rakuten rewards in the U S again as a similar model. So again, I think the world is waking up to it. I’m not even aware in this part of the world where I am, where we really have something as compelling as an e-store, where I can get maybe, you know, IVs or, or whatever. So I must go in to explore that some more. And the other thing I wanted to ask you about Adam was, and the whole idea of employee loyalty. Cause I know that’s something that you’re very positive and, and interested in, in developing. So I’d love to talk through what you’re doing in that space.
21m 15s
2

So we’ve thought about that and we’ve seen our customers respond, you know, asking you can you, can you, can we gain access to the currency? Can we, can we earn in different ways? And we think employee loyalty is something that’s could work. Whether that’s, you know, if somebody has done something great in a company, they can be awarded with RBS because we know people like, like to get that, or whether it’s through a certain type of activity, we launched internally something called get active with RVOs, which gave people obviously if they did certain amount of exercise and we did it for a couple of weeks, not expecting if I’m honest, too many do it.
21m 60s
2

And we, we had a huge number of people take it up so much so that my CFO who was looking at the numbers slightly worried, said that we had to stop it on time and not extend it, but was sense that if, if you get it right and you can reward people, there is something there. So w we’re going to explore that. We’ve done also some work in with a couple of other companies looking at that, and also looking at how we could use our technology to help in certain different ways with RVs and the currency.
22m 42s
2

So, you know, we think that’s got potential and something we’re exploring at the moment.
22m 47s
1

Okay. And I know it was only done on a, you know, a short term basis, but I think first of all, the simplicity of get active with , I think, you know, that cuts through immediately. I can totally imagine human resources directors all over the world going, yay. That’s what we need. Just on the, on the, an operational perspective. Is that something that could be connected in with employee profiles or devices, or how did it work on a day-to-day basis?
23m 13s
2

So I think for the trial, what we did was we made it, you know, we, we did integrate it at a top level, but we didn’t do too much work to make sure that, you know, it’s, you know, we, we thought there was something there for us, but certainly something we’re thinking about, whether we can integrate it in some of the bigger platforms in this space. So that’s something that I know we’re thinking about as part of our loyalty products and services, you know, we’re looking to expand out of just focusing around frequent flyer programs to think about providing quality products and services to the wider market. And that’s, you know, that’s, that’s the first step in that space.
23m 54s
1

Yes. And I did congratulate you, I think last time we spoke out of as well, I’m just getting at some of the basics in place, because I think previously, you know, again, obvious was so busy building that, you know, the website wasn’t in place and whatever, and the core proposition and for partners that I was working on in fact for, for air club and wasn’t easy to articulate, and I think there’s a lot coming through.
24m 16s
2

I agree. And I think that is something that we’re working on still. We’re not completely, but it’s, I don’t think it’s any coincidence that in the last year, when we got some of that technology in place, you know, we’ve launched probably four of the biggest partners that we’ve ever launched in our history, new partners in the middle of a pandemic. So I think, you know, it shows again the power of loyalty if you get it right. But also if you get the technical infrastructure in place, it does enable you to do, you know, some of the changes that we’re talking about, whether it be the launch of Santander in Spain, we have a big link there, Barclays in the UK.
24m 60s
2

And of course the announcement that also we made the last month or two, that we were linking up with nectar and with Sainsbury’s, and those are big changes for us, the likes of which we haven’t done for many years, but, you know, again, the technical infrastructure was there to enable us to do it. And also there was the belief in the currency going forward.
25m 21s
1

And again, just because the audience is global here, Adam, I will just explain a little more that obviously Santander and Barclays are big banking partners and nectar on St. Spree. So that’s grocery and coalition. So again, the most active sectors of any loyalty industry and you guys are plugging in, I think you said nearly one a month at this stage.
25m 41s
2

Yeah. Well, that’s what, that’s what we’re hoping to do and your rights to pick me up on the global nature of your podcast. But I do think that, you know, in both the Santander and Barclay’s examples, we’ve gone not with just not with a credit card or not just with a credit card, in one instance, we’ve also done it with a bank account. And I think that’s something that potentially in the loyalty space we haven’t done as well as we could have, could have done. We always talk about credit cards and don’t get me wrong. Credit cards are very important. They are the main parts of a lots of what we do, but bank accounts should be another area that we look at. And I think certainly the early evidence from the work we’ve been doing with Santander and Barkley says that there’s an appetite for that as well.
26m 28s
2

So something that we thought could work and thus far early, early results suggest we’re right.
26m 35s
1

Yeah. And, and that resonates for me as a consumer item as well, because I think I have regularly had underlying frustration with various banks that I’ve been with and yet I’m inherently lazy or just not sufficiently incentivized to go and look elsewhere. And yes, there are plenty of credit cards that are vying for my business, but I don’t really care about that because, you know, I’ve kind of done the research, but I think that’s a really big insight there in terms of like the whole banking relationship and then obviously the incentive, because the lifetime value of a customer for their full relationship, I think that’s a really, really big idea.
27m 11s
2

Yeah. And I think what certainly surprised the banks will be dealing with in the early data that we’re getting back is that people are prepared to move one of the big issues with bank accounts. Certainly from the evidence we see in Europe is people are very reluctant to move bank accounts. But if the, if the loyalty is in place going forward, that might change their perspective. And certainly that’s the early read that we have from the data so far.
27m 37s
1

Well, it sounds like we’ll have to stay in touch Adam, and you’ll have to come back on the show. Definitely again, to update me on all of this exciting work you’re doing. And that’s all of the questions I had from my side. Did you want to add anything else before we wrap up?
27m 51s
2

No, I don’t think so. It’s been great talking to you. Thanks very much for having me
27m 55s
1

Not at all. And I would just say thank you to our friends in Collinson who put us in touch. So am Adam Daniels, chief executive officer at IAG loyalty. Thank you so much for let’s talk loyalty.
28m 9s
0


28m 9s
0

This show is sponsored by the wise market here. The world’s most popular source of loyalty, marketing news insights and research. The wines 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. For more information, check out the wise market, tier.com and loyalty academy.org. Thanks so much for listening to this episode of let’s talk loyalty. If you’d like me to send you the latest show each week, simply sign up for the show newsletter on let’s talk loyalty.com and I’ll send you the latest episode to your inbox every Thursday, or just head to your favorite podcast platform. Find let’s talk loyalty and subscribe. Of course, I’d love your feedback and reviews. And thanks again for supporting the show.