Behavioral Science, AI & Innovation in Loyalty — A Collinson Perspective (#751)

Paula: Hello, and welcome to Let’s Talk Loyalty and Loyalty TV, a show for loyalty marketing professionals.

Paula: I’m Paula Thomas, the founder and CEO of Let’s Talk Loyalty and Loyalty TV, where we feature insightful conversations with loyalty professionals from the world’s leading brands.

Paula: Today’s episode is hosted by Charlie Hills, Chief Strategy Officer of Mando, a UK based agency that uses smart data to create brilliant partnerships and rewards that really work.

Paula: Enjoy.

Peter: Hello, and welcome to this episode of Let’s Talk Loyalty.

Peter: As Paula mentioned, I’m Charlie Hills, the Chief Strategy Officer for Mando Connect.

Peter: In this episode, I’m delighted to interview Peter Gerstle.

Peter: He’s the Loyalty Consulting Director at Collinson, responsible for shaping and delivering the strategy and management of Collinson’s loyalty products and driving loyalty innovation in travel, financial services, retail and other industries globally.

Peter: Peter joined Collinson in 2013 to add his expertise from a 25-year international career in e-commerce product and loyalty management across a wide range of travel companies, including InterContinental Hotels Group and easyJet, for which he launched several significant revenue streams, such as Speedy Boarding and the first ever airline paid loyalty program, easyJet Plus.

Peter: He advises clients globally on designing and optimizing their loyalty programs and is a leading thinker on paid for loyalty strategies.

Peter: In this episode, Peter shares his insights on the loyalty industry, how behavioral science and AI are changing things at Collinson and in the industry too, and innovations and new ideas that loyalty marketers everywhere should be thinking about.

Peter: I really hope you enjoy our conversation today.

Peter: So, hello, and welcome to the podcast, Peter.

Peter: We’re absolutely delighted to have you on today.

Peter: It should be a really, really good episode.

Charlie: Thanks, Charlie.

Charlie: I’m really thrilled to be here.

Peter: Well, it’s a really, really great kind of opportunity here to talk about loyalty, behavioral science and everything that you bring from all those years of experience in the industry.

Peter: But before we get into the detail of the interview, I’m going to open up with our same sort of usual question.

Peter: So, Peter, please tell us about your favorite book about life, loyalty or leadership or anything else.

Charlie: Okay.

Charlie: Well, let’s stick to life, loyalty and leadership.

Charlie: And starting with loyalty, especially behavioral science, you can’t go without having read Thinking Fast and Slow from Danny Kahneman.

Charlie: It’s kind of popular science, but it’s really a kind of scientific background and kind of it’s the foundation to a lot of the thinking that goes on in loyalty at the moment.

Charlie: At the same time, there’s also a book called Atomic Habits by James Clear.

Charlie: And what he does is really it kind of, it teaches how to turn kind of intent into repeatable routines, which is clearly what kind of loyalty is all about, these repeatable routines.

Charlie: We’ll get to that in a bit in a minute.

Charlie: So that’s kind of loyalty too I can recommend.

Charlie: In terms of leadership, there’s a great book called The Hard Things About Hard Things from Ben Horowitz, I think.

Charlie: And it’s just, you know, life’s full of trade-offs.

Charlie: It’s really hard.

Charlie: Decisions are hard, accountability is hard.

Charlie: And he writes a great book about how to deal with that and how to confront it and how to actually not agonize over it too much either.

Charlie: So that’s a good one.

Charlie: And then loyalty properly.

Charlie: So the first one was behavioral science, but loyalty properly.

Charlie: There’s, you know, Fred Reichelt is kind of a guru in that, The Loyalty Effect, which is a good book that I can recommend.

Charlie: Big geeky, all of that.

Peter: Most of my guests.

Charlie: No John Grisham’s on my list.

Peter: You should, absolutely.

Peter: If it’s holiday season, it’d probably be very different if we were recording this in the summer.

Peter: There’s a huge difference, isn’t there, between what we read at work and what we read on the sun lounger.

Peter: That’s really lovely.

Peter: Four recommendations.

Peter: Thank you very much.

Peter: Most of my guests only manage one.

Peter: So you’ve done really well.

Peter: Although my my gold star still goes to one of my earlier episodes where we actually had poetry kind of quoted at us.

Peter: And one guest who confessed that they didn’t read at all and they really only listened to podcasts, which was also sort of topically relevant.

Peter: So it’s a really nice way to start the interview.

Peter: So thank you very much.

Peter: What about your favorite programs?

Peter: I mean, you obviously worked in the industry for a long time.

Peter: I mean, you’ve got lots of experience in travel.

Peter: But what are your favorite loyalty programs?

Peter: What do you think are listeners?

Peter: Who should they go and check out?

Charlie: So there’s not a single favorite program.

Charlie: And again, being kind of in the loyalty space, I look at programs quite analytically and kind of look at features within those programs that I like.

Charlie: So let’s start with the coffee side of things.

Charlie: Starbucks rewards.

Charlie: Actually, I kind of like what they’ve done originally.

Charlie: It’s all about habit, it’s about salience, it’s about progress and all that.

Charlie: They’ve done a really good job in that.

Charlie: However, I have to caveat that the recent changes of reintroducing tiers and the way they’ve done it and changed the economics makes this a bit of a dog’s breakfast.

Charlie: So in principle, Starbucks, what they’ve done right now, mm, thumbs down.

Charlie: I can’t go without mentioning Amazon Prime.

Charlie: And for me, it’s spiritual predecessor, EasyJet Plus, because one thing I have to my CV is I’ve launched EasyJet Plus, which effectively is the paid loyalty program of EasyJet.

Charlie: And it’s tremendously successful.

Charlie: And Amazon Prime is kind of the same thing for Amazon.

Charlie: So it’s about reducing friction and bundling value to make it your default choice.

Charlie: And that, again, that default choice thing is your theme in loyalty and kind of in behavioral science as well.

Charlie: And once you’ve paid, your mental model changes towards the brand.

Charlie: And that’s really important in loyalty.

Charlie: So I’m a big believer in paid loyalty.

Charlie: People will know that I speak about that quite a bit, sometimes too much.

Charlie: So Amazon Prime.

Charlie: And thirdly, I want to actually mention Priority Pass, which may seem a bit strange.

Charlie: So Collinson, one of our brands, is Priority Pass, the airport lounge program, the world’s biggest, largest, best, I would say.

Charlie: But they’re kind of loyalty as an experience utility.

Charlie: Again, it’s about removing friction.

Charlie: It’s about reducing kind of moments of stress in the travel journey and delivering that in a digital way, in the right way, right timing and all that sort of stuff.

Charlie: So that’s kind of, although people might not think of it as a loyal program, I think actually it kind of acts in the same way that loyalty programs act.

Charlie: Now you may say, hmm, you haven’t mentioned airline programs at all.

Charlie: And A, I’m on the fence of airline programs a lot.

Charlie: There’s some airline brands in this country that I really start to have a very critical stance towards.

Charlie: Let’s put it that way.

Charlie: There’s good and bad in many, but I think what airline programs are starting to do is to stratify too much.

Charlie: They really go for the top, top, top cross.

Charlie: You know, the one top 1% chase the money and leave a lot of long tail behind.

Charlie: And to a point where they become irrelevant for the what their core business is all about, it’s about driving travel, driving flights, let’s say.

Charlie: Obviously, is a good example, in a way, on the one they’re doing loyalty quite well, because they’re really making it loyalty generic, but it has nothing to do with flying anymore.

Charlie: And you could argue, you know, is that a good or bad thing?

Charlie: I would say from an airline perspective, it’s probably a bad thing.

Peter: I think that’s really interesting.

Peter: And there are some big themes within those examples as well.

Peter: I think that kind of hints to your sort of broad background in loyalty and marketing as well.

Peter: Because if we had done this sort of podcast three years ago, I think one of the big challenges we would have had is, well, is paid for loyalty, even loyalty, but it really feels like that conversation has moved on.

Peter: So that’s great that you started it in EasyJet Plus.

Peter: I didn’t realize.

Peter: And then, yeah, prime, I think most households, certainly in Great Britain, are very kind of reliant on prime and very loyal to Amazon as a consequence of that.

Peter: Certainly in my own household, I can’t imagine the up for if I could even considered getting rid of prime.

Peter: So now we’ve talked about everybody else’s programs and what’s good in the industry.

Peter: It’d be great to learn a little bit more about your background, actually, and what you’ve enjoyed about working in loyalty marketing across a sort of fairly broad and very interesting kind of career path.

Charlie: So at core, I’m a loyalty strategy and program design person at first.

Charlie: So commercial outcomes, but through human behavior.

Charlie: That’s kind of how I think about my job today.

Charlie: I have a deep, deep background in travel.

Charlie: So really kind of everything that I know and execute in loyalty is steeped or informed by how travel has defined loyalty.

Charlie: And I think to most industries outside of travel, they still look at travel as the granddaddy of loyalty.

Charlie: This is where it all started to happen.

Charlie: This is kind of where the big money lies and how they do it and all that sort of stuff.

Charlie: So a lot of the mechanics within travel loyalty are applicable to other sectors.

Charlie: And in my job, I kind of use that in retail, in FMCG, in FS, et cetera.

Charlie: A lot of that actually still harks back to travel.

Charlie: I love the discipline because it’s kind of that unique thing of, and you’ll know this of course, of coming together psychology, economics, product design, operations as well.

Charlie: Let’s not forget about execution.

Charlie: You can have the best design in the world.

Charlie: I can do the best mechanical blueprint, but then if the operations fail, doesn’t work.

Charlie: And kind of, if, you know, my kind of an aphorism that I like to use is people did something differently because we designed it that way.

Charlie: If I can say that, then I know I’ve done my job, that there is a behavioral response because of a design and strategy thing that I’ve done.

Peter: Nice.

Peter: I think I really enjoy that part of loyalty as well.

Peter: And then the emotional impact as well.

Peter: I really like it.

Peter: You know, we talked about me.

Peter: I can’t live without Amazon Prime in my house.

Peter: And that really is a blend of behavioral need, but also emotional need, I think, and connection to it.

Peter: And certainly ease and fun and lots of things as well as value play a role.

Peter: So yeah, that’s a really, really nice answer.

Peter: It’d be great to learn a little bit more about Collinson as well.

Peter: I’d be surprised if we can find any listener that doesn’t know who Collinson are.

Peter: But it would be great to understand a little bit more about Collinson because it just keeps getting bigger and bigger.

Peter: And what sort of sets you apart from the rest?

Charlie: Collinson, fundamentally, is probably one of the biggest companies that most people on the street will not have heard of.

Charlie: You know, we’re a $3 billion company.

Charlie: The majority of our activity, of course, lies in the airport lounge service with the Halo brand PartyPass.

Charlie: But that’s kind of a loyalty business, as I outlined earlier on, in its heart.

Charlie: And everything else that Collinson does also is connected to loyalty.

Charlie: We have a lot of content.

Charlie: We have what’s called a loyalty commerce brand called Value Dynamics.

Charlie: And it’s all about feeding loyalty programs with relevant content on the earn side, but also on the redemption side.

Charlie: And you’ll know this, of course, from your Mando connection, that content is king in loyalty because it creates relevance, utility.

Charlie: It allows you to write time and write message to the customer with the right stuff.

Charlie: So that’s Collinson.

Charlie: But also clearly, you know, what I’m working on is the strategy side of things, designing programs.

Charlie: And fundamentally, again, the red thread of Collinson is incrementality.

Charlie: We strongly believe that if there’s one word, I would say Collinson loyalty is about incrementality.

Charlie: Because that loyalty does not work if it doesn’t generate incrementality.

Charlie: And incrementality fundamentally comes from behavior change.

Charlie: So again, that’s probably a nice thread and segue in kind of what we want to talk about today.

Peter: Definitely.

Peter: And what are some practical examples of that sort of incrementality in action?

Charlie: Well, again, our rule is if nobody changes behavior, you’ve built a discounting machine.

Charlie: So I think that’s kind of a kind of a nice headline.

Charlie: I’m not going to give you client examples because a sometimes it’s a bit confidentiality and sometimes actually it’s a bit of secret saucy kind of thing that you don’t want this behavioral side of loyalty to become too obvious because then it kind of has a whiff of manipulativeness.

Charlie: And so I’m not going to give you that.

Charlie: But I’m going to tell you about the approach, how we actually go about thinking about loyalty and behavioral side.

Charlie: So we do always start with the behavior itself.

Charlie: It’s what is the customer, how does the customer behave, what’s their frequency, what’s their basket growth, what’s the channel shift that needs to be achieved, what is cross category adoption.

Charlie: All these things are important.

Charlie: You just look at kind of what’s out there.

Charlie: But then you say, well, what can be improved and what do you want to improve?

Charlie: And also if things aren’t kind of going in the right way, why?

Charlie: So the why is really important.

Charlie: You know, where is there friction in the journey?

Charlie: Where is there low confidence in the exchange between the customer and the brand?

Charlie: Where is there low, that famous word, salience?

Charlie: Kind of relevance if you want, or kind of meaningful relevance.

Charlie: Where is motivation not really in the right place?

Charlie: Where is the timing poor?

Charlie: Or where is the perceived value, value exchange not really kind of adequate?

Charlie: And once you got so, you got the behavioral, you got the why, and then from those two things, you kind of design an incentive matrix effectively.

Charlie: And this is all around what I call habit architecture.

Charlie: So small, frequent reinforcements, nudges if you want, in that famous behavioral psychology word.

Charlie: Plus occasional, again, sorry, this sounds a bit geeky, but high salience moments.

Charlie: So moments where you can really grab the customer in a way, because they’re in a state that really needs support, or they are kind of open to nudges more than in other times.

Charlie: And again, there’s a lot of science behind that.

Charlie: And ultimately, you want to actually create what you mentioned earlier about Amazon, that emotional footprint, that emotional memory stamp.

Charlie: And that’s kind of how you get there.

Charlie: And that basically, once you’ve done these three steps, you end up with a program that kind of is, again, it’s all about incrementality.

Charlie: It’s not about discounting, which a lot of programs today, if you’ll analyze them, they kind of give you stuff for stuff you would normally do anyway.

Charlie: So they’re basically throwing away money, leaving money on the table.

Peter: Interesting.

Peter: And do you take that approach to incrementality and build it over time?

Peter: Or do you sort of start big and then stay big?

Peter: I think one of the big debates at the moment, actually, about what’s the best practice in that area?

Charlie: I’m a believer of, well, no pun here, but incrementality in your design as well.

Charlie: And we’ll talk about AI, I suspect, in the course of this conversation.

Charlie: It’s unavoidable, too.

Charlie: You don’t start tiny, but if you’re a certain brand, you need to have a certain footprint.

Charlie: So you have a statement of a program with its habit, architecture, et cetera.

Charlie: You want to make sure that you have road map to grow incrementally along the needs of the customer, along the needs of the business, and take into consideration the wider context of where the business lives in or where the customer lives in.

Charlie: So I would say, not statement big and stay there, but reasonably big, but grow incrementally.

Peter: Yeah.

Peter: Great.

Peter: We share that belief as well.

Peter: I always think that’s really important to add to the pot over time rather than ever try and take anything away, which brings us nicely into some of those behavioral science principles that we were talking about with you and your colleagues like Fiona and Loss Aversion being one of the ones I think that we play quite strongly to when we’re thinking about designing programs and reward and benefit architectures.

Peter: But I’m sure our audience would love your point of view on it.

Peter: It would be great to hear it from an expert.

Peter: So it would be great to hear about what some of those big behavioral science principles are and how you’ve integrated that into solutions for loyalty programs either you’ve developed or that you’ve seen in the market, obviously without giving away any of that secret source you were just talking about.

Charlie: Yeah.

Charlie: And so the thing about these, I’ll probably enumerate a number of these behavioral principles.

Charlie: And the thing is, because we’re all humans, we’ll recognize those even reluctantly sometimes.

Charlie: So, you mentioned loss aversion, for example.

Charlie: Losses loom larger than gains.

Charlie: That’s just, we’re designed, humans are designed to function that way, in a way.

Charlie: And yes, do we make use of that principle in designing loyalty mechanics?

Charlie: Yes, of course we do, because ultimately, it’s about achieving an objective, it’s about nudging a behavior.

Charlie: So absolutely.

Charlie: So status loss, expiry, missing out, the missing out messaging is part of kind of how we tap into loss aversion.

Charlie: I think it’s important to say, this is all about motivation, not manipulation.

Charlie: Very, very important, because I know loyalty often gets accused of trying to be manipulative, and that’s not what this is about.

Charlie: It’s about using human response mechanisms to motivate the customer to do something, but also to reward.

Charlie: So even in loss aversion, there’s reward, the notion of reward.

Charlie: The second principle is called endowed progress.

Charlie: So once you’ve invested in something, once there’s a head start, once you’ve been given a head start, you’re kind of more likely to stick with it because you’ve already invested, you’ve endowed yourself into something already.

Charlie: I don’t know, it’s about, you’ve walked a mile to the high road and you’ve, oh, I forgot something, but you know what, I’ll crack on, I don’t really need that or I’ll sort myself out.

Charlie: Maybe not the best example, but you get my idea.

Charlie: So endowed progress.

Peter: A kind of two stamps on the coffee card, isn’t it, that you start your membership off with and once they’ve got to, they’re so much more excited to get to, well, depending which market you’re in and where you are in the world, sometimes six, sometimes eight, sometimes ten.

Charlie: But of course, it doesn’t really matter, but you know, there’s already something there.

Charlie: You’re getting a head start.

Charlie: So even if you earn it even better, but if you’ve given it, that works just as well as you’ve given a great example there, Charlie.

Charlie: Now, salience, again, that word again, to make the value obvious at the moment of choice.

Charlie: So that’s really important.

Charlie: So whenever there’s a choice to be made for a customer, whatever the loyalty program kind of brings you needs to be salient.

Charlie: And that kind of is a great nudge because it reinforces the value that the program brings at the moment of choice, meaning that you make the right choice.

Charlie: I mentioned friction removal quite a bit there.

Charlie: Now, it’s not necessarily a behavioral psychology thing, but it’s this thing about loyalty, what loyalty can do to a brand.

Charlie: Because you know the customer, you know the customer journey a bit better, you know their likes and dislikes, you know their friction points, and they’re unique sometimes to people.

Charlie: So yes, they’re generic friction points, but they can be quite unique ones.

Charlie: Friction removal is kind of make the right thing easy and almost kind of, therefore, kind of get them to, you know, open the right door for them, basically.

Peter: Yeah, definitely.

Peter: Are there any good examples of that one in action?

Peter: Because I always think the coffee sector is really good at that.

Peter: You talked about Starbucks, and you know, that was the first sector to really integrate payment, I thought was quite clever into their loyalty programs.

Peter: And also, you know, my favorite drink is ready when I arrive.

Peter: But are there lots of good examples in travel?

Peter: I’m trying to think of other ones.

Charlie: Well, again, there, you could argue there are in in in in, let’s take the airline programs.

Charlie: But again, they’re, they’re getting accessible only to the kind of elite funeral these days.

Charlie: But things about when things go wrong, a lot of programs are, can be great at kind of service recovery.

Charlie: And airlines have actually done a good job for, you know, for the top, top, top tiers to, to proactively rebook, for example, or to, to, you know, just be, get a human being on the phone when you call a number.

Charlie: Those things are really important within loyalty.

Charlie: Now, again, scalability of those are sometimes quite hard.

Charlie: And I think the airlines have probably gone too far into making that to, you know, the exclusive kind of service level for the top, top, top tiers.

Charlie: I don’t really think that that’s, that’s good.

Charlie: But friction removal, even for Party Pass, for example, the Collinson airline airport lounge product is really important.

Charlie: You know, friction removal could actually be, you know, well, I really just, I just wanted a quick drink or so.

Charlie: And you know what, I’m not going to go into a lounge, but actually there’s this opportunity to get a credit on a, on a beer in a bar that, you know, seems to suit my needs.

Charlie: And suiting your needs is also a bit, I think, about friction removal again, because it’s recognizing that you are in a, in a certain state and doing something about it.

Peter: Nice.

Charlie: And then lastly, again, I mentioned habit architecture.

Charlie: Habit loops is really, really important.

Charlie: So repeatable micro actions need to be designed into a loyalty program, I think.

Charlie: And again, if repeatable micro actions means effectively repeatable right behaviors, which means leading into incrementality, incremental commercial outcomes for the customer.

Peter: Interesting.

Peter: What are some good examples of micro habits?

Peter: I’m thinking about what I’ve got, all sorts of things I do.

Peter: Swiping is a big one, I guess, isn’t it?

Peter: Swiping for a reward.

Peter: We see a lot of that in Great Britain, you know, programs like tap, tap, tap for an instant benefit, actually.

Peter: It’s been quite a big change rather than that kind of save up for the long term.

Charlie: Well, it could be that.

Charlie: So absolutely.

Charlie: So clearly identification is keen loyalty.

Charlie: The brand needs to know that you are you.

Charlie: So you need to be able to identify yourself.

Charlie: But even there, you know, technology these days helps, actually, helping a customer friction point of having to remember to tap, to scan, to…

Charlie: If that can be avoided, great.

Charlie: And technology with, you know, certainly digital mobile applications help that a bit.

Charlie: So that’s one micro action.

Charlie: But it could also be about the choice in a supermarket, for example, about which product you go for.

Charlie: But again, some supermarkets, less in the UK than more in the US, have kind of mobile apps that help you actually shop the right thing and at the right price and let you know when there’s a deal to be had.

Charlie: But that clearly, that deal is, you know, it helps the customer because they’re getting better value for something that they would have bought anyway.

Charlie: You could argue, well, that’s kind of cheap discounting.

Charlie: But no, it’s trusting, it’s creating that brand trust with the wick between consumer and the brand.

Charlie: That’s really important because ultimately, you know, trust is another thing we haven’t really talked about.

Charlie: That’s a separate interview altogether.

Paula: Yeah.

Charlie: You know, trust is the currency that everything relies on in loyalty, as in just commercial interaction and human interaction as well, of course.

Peter: Yeah, definitely.

Peter: It’s a really interesting example.

Peter: There’s a good example, actually, in Italy as well.

Peter: I can’t remember the supermarket chain now, but they reward and encourage sustainable behaviors through their loyalty app, which I think is really interesting.

Peter: So you can shop and it will always show you what the more sustainable kind of choice is, which I thought would be a really great way of building those micro habits over time.

Charlie: Absolutely.

Charlie: And again, it can be applied to something that is kind of a certain theme, like sustainability.

Charlie: It can be applied to the core commercial relationship.

Charlie: It can be applied to the emotional relationship.

Charlie: Absolutely.

Charlie: It’s across the spectrum.

Peter: Yes.

Peter: I suppose one of the old sort of tactics that you’d see in loyalty would be the double points as well, wouldn’t it?

Peter: Because that’s another way, I guess, of rewarding people in the moment to get them to do those micro habits.

Peter: So that’s really interesting.

Peter: You mentioned earlier, we’d obviously have to talk about AI.

Peter: And I know Collinson have been investing a lot in AI and we’d be remiss not to mention it.

Peter: Would you like to tell our readers a little bit about what you’re exploring in AI and sort of the things that the platforms can do?

Peter: And I suppose again, with that benefit of, you know, what impact does that have for loyalty marketeers?

Charlie: So I think the value of AI comes in the decisioning power.

Charlie: That’s the key thing.

Charlie: A lot of people put a lot of hype into kind of, oh, it’s the right content and broadening content and all that.

Charlie: But I think that’s secondary.

Charlie: I think it’s decisioning.

Charlie: AI really accelerates decisioning.

Charlie: And it optimizes at scale and at speed, you know, messaging, reward pricing, for example.

Charlie: And it helps you do better predicted incremental outcome responses than what we’ve done in the past.

Charlie: So this is AI doesn’t do anything new.

Charlie: It just helps us loyalty marketers, yourself, myself, many of our dear listeners, hopefully, to just do a better job and do a more rapid job and therefore actually prove the value of loyalty more quickly.

Charlie: Yeah, so that’s one thing.

Charlie: That’s our perspective of loyalty at sorry of AI and loyalty at Collinson.

Charlie: This learning element of AI, of course, is very important because, you know, it becomes just better over time and the more contextual habits it absorbs from a customer, from a relationship, from an interaction, the better it can predict the next one, the better it can predict the next one for somebody who looks exactly like you.

Charlie: So behavioral pattern detection is really important.

Charlie: And all these things, again, aren’t inherently new.

Charlie: They’ve just been much, much harder to execute in the past.

Charlie: And the learning element wasn’t there.

Charlie: With AI, there is a learning element.

Charlie: Not to a point where humans become irrelevant and it’s just, you know, a lot of program is let loose on an AI altogether.

Charlie: That’s not going to happen because don’t forget, the human element is something that AI today at least, you know, future who knows, but today at least will not really be able to execute, articulate and execute as well as a human being, a loyalty consultant like myself.

Peter: Yeah, no, I think that’s a really interesting point actually.

Peter: It sort of enables us to do the things that we used to be able to do on small programs, on large programs, at scale that much quicker, which is really exciting, but also quite scary.

Peter: And as you’re saying there, you’re sort of even limiting the parameters of what it can do.

Peter: Have you got any kind of good examples?

Peter: So obviously faster, bigger, potentially better, if it’s done within the right parameters.

Peter: What sort of other benefits is it bringing?

Peter: Or have you seen any particularly good examples in action?

Charlie: Well, so first of all, the AI requires the right platform.

Charlie: So it’s no secret that Collinson has a very strong partnership with Salesforce.

Charlie: And basically we’ll look at technology and it’s got to be the right technology to really drive these programs and make sure that AI is almost like natively embedded in its architecture.

Charlie: So it’s called, basically it’s an agentic layer as I think Salesforce call it.

Charlie: It’s called, well, it’s not just Salesforce call it that.

Charlie: But that’s really one thing that’s really important.

Charlie: And in practice, we can think of all the things that we want AI to do.

Charlie: But again, execution, you need a platform that really does it well.

Charlie: That does it natively because of speed, because of data ingestion and all that.

Charlie: And Salesforce is great at that.

Charlie: So that’s kind of one thing in our job that we look at whichever platform we end up using or consult the customer to use.

Charlie: They choose the right platform that has that capability.

Charlie: One example of a client where we used AI is actually less about the positive side of, or the commercially positive side, but it’s cost containment.

Charlie: Basically, be more efficient, less waste in your program.

Charlie: More relevance means less misguided content that goes to the customer, and therefore tied to cost control.

Charlie: So that’s really an important element, I think, as well, that is often…

Charlie: It’s not as sexy, but actually the CFO will love you for it, because really that’s demonstrable money that he believes in is real.

Charlie: Increment future revenue and profit is always a bit more obscure.

Charlie: The CFO will grill you three or four times as hard as for some quite evidence-based cost control.

Peter: Yeah.

Peter: I think that’s really…

Peter: I think it’s always important.

Peter: That’s one of my favorite things in loyalty, as well.

Peter: It’s the art and the science and them coming together, and then that power of foresight and what’s coming, but also hindsight, what’s happened.

Peter: And I completely agree.

Peter: A CFO loves cost control, and as a strategist myself, I love cost control on the condition that you can reinvest what you’ve saved into more exciting…

Charlie: That’s a whole different conversation, of course.

Charlie: But yeah.

Peter: Well, on that, I mean, one of the areas that we talked about in our pre-interview prep was about nano segmentation.

Peter: And that’s a big area for Collinson, I understand.

Peter: And it would be great again to share, because I’m such a nerd, I’m kind of very familiar with it.

Peter: But I wonder if our listeners would be interested as well.

Peter: What is it?

Peter: How does it work?

Peter: And what are you doing with it?

Peter: And what benefits could it bring?

Charlie: Well, simplistically, loyalty and segmentation go hand in hand.

Charlie: And it started out basically with broad cohorts, basically that word, you know, cohort.

Charlie: That’s a military term.

Charlie: It’s, you know, it’s like an army of something or of infantry or whatever.

Charlie: So it starts from cohorts, but it’s really going to kind of, you know, the program of one and it’s been used a lot and it’s overused, of course, but really kind of AI capability and just advanced data capability really allow us to move from those broad cohorts to individual level decisioning.

Charlie: One member, one next best action.

Charlie: That for you, Charlie, will be slightly different than for me, Peter, and yet again, different for listener A, B or C.

Charlie: Does that really mean that you’ll have a, you don’t really have a loyalty program as such that you can advertise?

Charlie: No, it doesn’t, of course.

Charlie: You still have your overarching value proposition, you have your brand elements in there, but how you speak to them, how you speak to the member, the customer, how you nudge them will be highly, highly personalized and is only deliverable now with the power, computing power that AI brings.

Charlie: So you’re really moving into, for want of a better word, a nanosegmentation.

Charlie: A good example of that is we worked on a brand called Avolta, it’s a big airport travel retailer, does a lot of the duty free, the Toblerone’s and the whiskeys, etc.

Charlie: But also the F&B.

Charlie: So they’ve got a huge portfolio of stuff that you can spend your money on and while your time away at the airport.

Charlie: There we’ve really look broad content.

Charlie: Using that super broad content rich fabric into the loyalty program is great, but it’s only great if you can really say, well, Charlie loves coffee, but she doesn’t love coffee at 11 at night.

Charlie: So it’s mixing that relevance, you love coffee, with the utility of the right timing.

Charlie: And we’ve come up with a matrix of effectively, you can call it a nanosegmentation, getting the right element of reward or incentive to the right customer at the right time, in the right way as well.

Charlie: So channel, omni-channel kind of philosophy plays into that as well.

Peter: Oh, fantastic.

Peter: And if anyone wants to read up on that loyalty program, actually, we featured it in our Mando White paper, our European Understanding Loyalty in Europe paper, because it was such an interesting program to think about that travel moment through the airport in duty free, and then how you actually create kind of moments that really cut through in that.

Peter: So yeah, a really great case study and a really interesting program.

Peter: I didn’t realize you were doing nanosegmentation with them.

Peter: I can imagine that’s actually particularly appropriate for that kind of moment in that program.

Charlie: It is.

Charlie: And actually, I’ve also a good example of that journey that we spoke about earlier.

Charlie: So you start with a big ban.

Charlie: If you’re in the industry, they’re putting a lot of money into advertising, and they’ve got a big bang launch of that program.

Charlie: But actually, a lot of what I said will not have seen the light of day yet, because it’s incrementally growing to a place where you can actually deliver this.

Charlie: So I’m giving you the vision of what this is, not necessarily what it is in real life today.

Peter: I think that’s what we’re all dealing with it, with AI, isn’t it?

Peter: It’s that what can it do, what should it do, and then you have to test and make sure that it can do it.

Peter: And I think we’re certainly finding that we test, we test, and then suddenly the capability takes a huge leap forward.

Peter: And then actually, your test then has to change, because your test parameters, it can do so much more.

Peter: I’m really, really excited about it.

Peter: And I think these new innovations are really exciting to work with.

Peter: And change is a constant, you know, whether we’re doing a test or developing a new program or optimizing an existing program, or in the case of the airlines, as you say, focusing on a very small number of people at the top, rather than their kind of their broad audience.

Peter: But in all your years, what are some of the sort of most important lessons you think you’ve learned?

Peter: Because changes are constant.

Peter: And, you know, some of us find that very exciting, and some of us find it so terrifying.

Peter: But what do you want, would you like to share?

Charlie: Gosh.

Charlie: I don’t want to admit too many lessons, because that just gives away how old I am.

Charlie: But I think one headline is maybe a loyalty program is not a campaign.

Charlie: And I think a lot of operators of kind of, you know, mediocre programs look at it in a very campaign promotional sequence and cadence.

Charlie: And that’s just wrong.

Charlie: A loyalty program is first and foremost a strategy.

Charlie: And it’s not a program.

Charlie: It’s a loyalty strategy first and foremost that executes into maybe a program, maybe into a comms angle, maybe into some more branded service led.

Charlie: It needn’t be a program.

Charlie: But that’s kind of one thing.

Charlie: It’s again, don’t think of it as a campaign, because if you do, it’s just marketing basically to a kind of a ring fenced audience.

Charlie: But it’s still just marketing.

Charlie: So that’s probably one thing.

Charlie: And secondly, and this is, well, it’s a lot of been written about.

Charlie: Loyalty isn’t about points and prizes.

Charlie: And I subscribe to that.

Charlie: Points isn’t a strategy.

Charlie: So your currency in and by itself isn’t the strategy.

Charlie: The behavior changes the strategy.

Charlie: Whether you need points in order to get there depends.

Charlie: Some brands do, other brands don’t.

Charlie: Some brands want to desperately because everybody else in their industry does so.

Charlie: So it might make sense.

Charlie: Others say, you know what, we want to deliberately go different.

Charlie: That’s offline.

Charlie: But the behavior change, the outcome, the incrementality derived from behavior change is what loyalty is all about.

Charlie: And that’s the strategy.

Charlie: And that’s kind of how we approach, I approach my work.

Peter: Yeah, that’s a very different way of thinking.

Peter: I think I think lots of people go in thinking about the mechanic first, as you say, I think points in itself was a strategy for a while and then discounting was a strategy.

Peter: And now, actually, I think people are thinking more about that holistic impact on behavior.

Peter: So I’m in kind of.

Charlie: And it still is from so many.

Charlie: That’s why, you know, loyalty still gets a bad rap with CFOs that keep repeating.

Charlie: Poor CFOs.

Charlie: I’m not singling you out, guys.

Charlie: You’re doing a job.

Charlie: You’re doing an important job.

Charlie: And the challenge that CFOs bring is really important because it forces loyalty people to think in different terms, again, think away from discounting, think away from currency alone because there’s so many kind of commercial, financial red flags in that alone.

Charlie: And if you just kind of isolate them and no wonder they’re having a hard time convincing them to get more money for their efforts.

Peter: Yeah, I think that’s a really kind of key piece.

Peter: And we talked a lot about, you know, innovations and new ideas as we’ve gone through this.

Peter: We talked about AI, we talked about behavioral science, which again, you know, three years ago, we wouldn’t really have been covering in this kind of topic.

Peter: Is there anything else you’ve seen that you’re particularly proud of or that stood out to you in the market recently that you think people should be checking out?

Charlie: So, that notion of ecosystem thinking is really, has grown.

Charlie: And I think technology has helped, but also that understanding that a loyalty program, you as a brand are only ever relevant for a certain amount of time in a customer’s life, because your core product only speaks to a certain thing.

Charlie: That could be a travel, that could be shopping, that could whatever.

Charlie: You need to realize that in order to stay relevant, you need to think in ecosystem.

Charlie: You need to have a partnership network.

Charlie: Without that, it doesn’t work.

Charlie: Now, partnerships doesn’t just mean pile them high and advertise them broadly.

Charlie: That’s pointless.

Charlie: No pun intended.

Charlie: It’s got to be done in a smart way.

Charlie: So ecosystem thinking both on the earning side, so how do you reward, how do you get people into your program, how do you make it attractive in different walks of life is important, but also on the redemption side or the reward side, how do you make sure that not everything goes back into your core product because that might not be appropriate all the time.

Charlie: That ecosystem thinking is really coming to town now.

Charlie: Again, AI helps with that right direction, that decisioning of content with that much more greater richness of content.

Charlie: That said, I diss currency as I don’t diss currency, but I’ll say currency is not the be all and end all in loyalty.

Charlie: But where there is currency, making that more fungible, making that more usable, making that more just kind of convenient, frictionalist to use, again, is a theme in loyalty these days.

Charlie: So the pay with points, online, offline, having a payment wallet, and payments and loyalty are coming together more and more and more.

Charlie: Africa, great trend at Stripe, one of the payment providers, others are available.

Charlie: James Lemmon, his name is, and we riff so much about how loyalty and payments come together.

Charlie: And I think that’s, it’s almost like the next frontier where innovation happens at loyalty.

Peter: Yep.

Charlie: Yeah.

Charlie: And then, I want to bring it back to priority pass, that thing about friction removal, that experience layer, having the right experience for the customer at the right time, is, you know, that’s the name of the game.

Peter: Yeah, I’m a big fan of the priority pass.

Peter: I’m a big fan of an airport lounge as well.

Peter: I think that’s a, it’s a great moment in the travel window.

Peter: I think it’s so funny, isn’t it, how that sort of, you know, would have been such a negative experience, has become actually quite a lot of people’s sort of favorite moment in their travel as you get through the airport and then you get to go through the doors and suddenly all this lovely food and drink appears and comfy seats and it’s really nice.

Peter: It’s a lovely moment.

Peter: Absolutely.

Charlie: You know, to a point of being very honest and a lot of people on the call will say, well, I didn’t get into a lounge last week or so.

Charlie: It’s almost a victim of its own success.

Charlie: But then again, that’s where we kind of say, well, there’s more than just lounge.

Charlie: There’s other alternatives in the airport and not everybody wants to necessarily go into a lounge.

Charlie: They might want to get a good deal on something in travel retail.

Charlie: They might want to get a drink at a bar or something or have some food in a nice themed restaurant that isn’t lounge itself.

Charlie: So again, having that wide variety of content to speak to the individual’s need and recognizing that need is what it’s all about.

Charlie: So it can probably pass.

Charlie: That’s why I mentioned that as a loyalty program.

Charlie: It’s kind of an experienced loyalty utility if you want.

Peter: Nice.

Peter: And back to your partnership network point as well and your partnership ecosystem point that actually it’s about the right thing for the right person at the right moment.

Peter: So that’s a really nice kind of segue back to link all the content up.

Peter: Well, look, Peter, it’s been brilliant interviewing you today.

Peter: It’s a really interesting proposition.

Peter: It’s really interesting kind of products and some great examples and experience that you’ve talked about.

Peter: I’m sure some of our listeners might be really keen to find out more, perhaps follow up on any of the questions.

Peter: What’s the best way for them to contact you?

Charlie: Well, there’s a website, of course, recently relaunched.

Charlie: But, you know, to contact me, of course, I’m on LinkedIn through my name.

Charlie: Search me.

Charlie: There are not that many of me with my name.

Charlie: I want to say not many of me either.

Charlie: I don’t know.

Charlie: Or email peter.gerstle.collinsongroup.com.

Charlie: But again, I said the website also of Collinson, collinsongroup.com has a way of contacting and reaching out to the loyalty team at large.

Charlie: It’s not just me, of course, at Collinson.

Charlie: I’ve got some really clever and smart colleagues who cover lots of things across loyalty.

Peter: Fantastic.

Peter: Well, we’ll make sure we pop those links in the show notes for everyone listening who wants to get in touch with Peter.

Peter: And all that’s left for me to say is thank you very much from Let’s Talk Loyalty.

Peter: It’s been really interesting interview.

Charlie: It’s been really exciting.

Charlie: You can see I can go on and on and on.

Charlie: I’m glad we got a kind of…

Charlie: Well, you say that.

Charlie: Not everybody does all the time.

Peter: But anyway, we’ll make sure we get some reader feedback for you.

Peter: But I’m sure everybody will have really enjoyed it.

Peter: Thank you ever so much.

Charlie: Charlie, thanks so much.

Peter: Cheers.

Paula: This show is sponsored by Wise Marketeer Group, operating the Wise Marketeer and Loyalty Academy.

Paula: For nearly 25 years, the Wise Marketer is the industry’s longest-serving publication and source for news, information and insights, which now includes its own branded industry research, insights and advice.

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Paula: The Loyalty Academy sets a global industry standard for loyalty education, with its Certified Loyalty Marketing Professional, or CLMP, designation, which has created a community of more than 1200 marketing executives and professionals across more than 50 countries.

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