Paula: 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.
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Hello and welcome to today’s episode of Let’s Talk Loyalty, featuring some industry personalities who have worked on loyalty propositions and marketing for some of the most famous loyalty firms and travel and hospitality brands, particularly in the US market. Guy Cierzan and Andrew Kelly have recently joined forces to offer loyalty advisory services for brands called Hydrate Loyalty.
And they join us today to share some of their insights on the latest trends in loyalty marketing. I hope you enjoy our conversation.
So, Andrew Kelly, Guy Cierzan, welcome to Let’s Talk Loyalty.
Guy: Great to be here, Paula.
Andrew: Thank you.
Paula: Great. Stuff. Fantastic. Well, listen, I know we have an extraordinary, amount of knowledge earned over the years. I think hard won from some fantastic brands that you guys have both worked with and doing some really exciting work now as we go forward into late 2023 and, you know, getting into Hydrate Loyalty in this new business consulting firm and advisory work that you guys are, are starting to bring forward.
So, very excited to hear your thoughts on where the industry is at and what we can learn from your expertise. But before we get into all of that, as you know, we always start this conversation trying to get an understanding what our guests actually respect and recommend in terms of loyalty programs as a consumer. So Guy, I think you are actually the Founder of the company, so I’m gonna defer to you first and foremost Guy, what is your favorite loyalty program?
Guy: Thanks Paula. Appreciate it. There certainly are a lot of loyalty programs as a practitioner that I admire and inspire me as a consumer. I think my favorite right now is Best Buy. Their Best Buy Total program to me is the epitome of a program in the retail space that really brings the entire experience and brand forward to me as a customer, and draws me in and really motivates me to consolidate more of my electronics, smart home, computing types of purchases all with Best Buy.
They’re interesting because they do it in a paid construct, today. So you have a certain level of commitment, I think, when you make that, that fee payment on an annual basis, but the value that they extend to you, it, it’s not so much about the points and getting kind of a do this, get that proposition. It’s more about Best Buy coming in and helping consult and advise on your unique needs. In my case, I really appreciate the extra services that they provide, where they’ll actually come into your home and be more consultative.
Paula: Nice. I like that. But also, I liked a word that you used, Guy. I think I’m, I mentioned off, off air that, I do love words and you used the word consolidate. And I think that’s something as a principle that consumers are really starting to, to really think long and hard about who am I a member of a loyalty program with? And if so, why? Because I think they’ve finally got it, that consolidation gives them the ultimate win.
And I know we’ve all seen the industry statistics where, you know, I think in the US the average currently is something like being a member of 18 loyalty programs, but active only in half. So sounds like consolidation is a key principle. Do you believe in?
Guy: It absolutely is. You know, Best Buy was in a unique position over the years with Amazon and others encroaching in a very assertive way. There was almost that showrooming concept where I think people would walk into a retail store. Identify what they want and then go buy it online.
One of the ways I think, again, that Best Buy has approached that from a loyalty perspective is to draw their services and their value proposition all the way into your home if you so desire. And they, they can just give a different level of consultative value which for me has been a motivating factor to kind of consolidate again, my purchases with them.
Paula: Amazing. And do you have a sense of the, the level of investment guy for that actual payment? Just, I’m super envious. I’m here in Dubai and I’m in need of some electronic advisory services, and I’m just wondering like what, what kind of price point, I’m sure you don’t know the exact number. I’m putting you on the spot now, but what is the level of investment required to become a paying member of the Best Buy program?
Guy: So today I think they have two to three different levels. Their most premium level is 179 US annual cost.
Paula: Okay. Super affordable. Yeah.
Guy: Somewhat, somewhat comparable to Amazon Prime, I would argue. But, they really pack a lot of value and services into what you can get out of the program. And then I think on the low end they might have a $49 more entry level price point.
Paula: Makes sense. Makes sense. Thank you so much for that. And yeah, definitely again, we’ll put that on our wishlist. If anyone from Best Buy is listening, we would love to have them on the show. That’s, my hidden agenda, of course, with asking that question. Yep. Fantastic.
So Andrew, coming to you again, a wonderful career in loyalty already. So tell us, as a consumer, what is your current favorite loyalty program?
Andrew: Thanks, Paula. That’s a great question. I think mine’s a little bit more straightforward simply because, you know, the last half decade of my experience living in London, traveling back and forth to the US as much as I did, I’ve always been an avid sort of Delta fan.
I’ve always been, I’ve had a SkyMiles account since I was a kid. Thanks to my father going to Disney world, you know, back in the day. But, but I would say that the Delta SkyMiles, program is probably my most beholden, loyalty program simply because of the experience, not so much because of the, the way you sort of achieve status and continue through that journey.
It’s more about once you have a certain status, the experience that comes along with it across, you know, a variety of different ways. And when you’re traveling abroad and you’re, you know, on a flight for 12 hours or you have a layover in, you know, Paris or Amsterdam, the last thing you want is friction and, and confusion and the sense of, discombobulation.
And I think one thing that Delta’s always done for me, having achieved a certain, you know, premium status is I’ve always felt taken care of. And I think that’s really important when you know, you’re a business traveler, you’re planning on working over, you know, on the plane. You’re in the lounge. You’re using all these amenities, which are top notch. But you get the sense that they’ve kind of got you back. And if you have a question, you have a concern, you have some need, they can usually and almost always accommodate you. And just having that reassurance has over the last several years of my traveling life and, and, and living abroad has undoubtedly, that’s sort of why I think it’s probably my favorite.
And, you know, I was an avid shopper back in the day, many retail locations, but I think this is a different type of loyalty for me because it falls on the strings of my emotional loyalty, which I think we’re gonna get into a little bit more because of the fact that they’ve sort of extended that experiential sort of sense of reassurance to me, which to this day, I, there’s this, there’s, you know, my nectar car doesn’t gimme that. You know what I mean?
Paula: Yes. Yeah, no, it is. And actually Andrew, like for me, there is something, you know, again, very insightful coming through there, which is this idea that, you know, the intention of the program owner and operator is actually felt by the members. And I always feel that that’s something very difficult to articulate when dealing, let’s say with non loyalty industry people.
You know, when you’re speaking perhaps with a CFO or a CEO, and if they’re not by default, you know, engaged with the idea that loyalty is extremely important, then actually it’s just something that can feel very much transactional, like a box ticking exercise. But it sounds like Delta very much makes you feel like they really do want to take care of you.
Andrew: So that’s exactly right, Paula, and just to further that, you know, instances of recognition go a very long way. You know, and you may not be expecting it at all. For example, you’re sitting up in first class and the steward, you know, stewardess comes along and they offer you something. Mr. Kelly, thank you for being a, you know, Diamond Platinum member. Thank you for your loyalty. No one’s expecting it. Sometimes it’s a placard on a seat, before you arrive.
It’s these little touches that are unnecessary and it’s incumbent upon the individual person or the crew or, or that, you know, flight crew per say that really makes that small difference, which goes a long way, no pun intended.
Paula: Indeed. Indeed. Actually, I was on a flight yesterday myself, and I’m lucky enough to have a gold card actually at the moment on Emirates. So I tend to get, you know, a bit of the recognition even on board. But yesterday they had, actually not too many passengers. It wasn’t packed. So I got an extra glass of wine before anybody got their meal. I was very excited. So there you go. You’re absolutely right. A little goes a long way.
So I think that leads me nicely, Andrew, into, I think you are the wordsmith, that came up with the, the actual insight, I suppose, and obviously guy’s gonna tell us some of the origin story, but this idea that brands obsessed with their customers create customers obsessed with their brand. Tell me a bit about that insight.
Andrew: I won’t take credit for the, the idea as much as maybe I move some words around. But I think where that comes from is the sense that brands, that are customer obsessed, consumer obsessed, really finding those core sort of values that they bring. What is the, the proposition that the particular brand has? What are the three perhaps things that they double down on to differentiate they themselves in the market.
When they become obsessed with those differentiators or obsessed with what the customer experience looks like and feels like from the lens of those three core values or whatever you wanna call them, it creates a reciprocity of customer obsession, which then becomes brand obsession by the customer. So I think if brands do this really, really well, what happens is it fosters and garners a reciprocity of that.
You know, obvious example would be something like, you know, Amazon Prime or even Starbucks, where they’re always there, they’re sort of, always customer focused. I mean, prime obviously example is you can get anything anywhere at any time. But Starbucks is, you can order on your mobile app and there’s so many things that are involved. And what happens is the customer then becomes sort of obsessed with only going to Starbucks for their particular drink that they like.
It becomes ingrained in their behavior and I think that’s what’s really valuable. And so at Hydrate, I think we’re trying to replicate that sense. Not replicate it, but deliver that idea. And communicate that to our clients in helping them sort of reach that phase in their brand experience through to the customer experience, if that makes sense.
Paula: Amazing. No, absolutely does. And Guy, I know you are responsible, I suppose, for I think the brand name itself, and I suppose the origin. So tell us exactly, like why did you feel like you wanted to create this, this consulting, firm?
Guy: Yeah, I think, a lot of it does pivot off of that foundational belief in being customer obsessed and, and translating that through the lens of a larger brand loyalty, kind of approach.
From our standpoint, we do fundamentally believe that loyalty is foundational to organizational success and to growth. And so as we were thinking about growth and how a lot of the work that we naturally do is meant to drive improved performance with whether it be a loyalty program, a broader loyalty or experiential strategy, we thought the notion of Hydrate or hydration. You know, really connects well to that notion of growth and driving performance.
So it was a way for us to, really take a word and you know, a definition that is probably broadly known. Bring it into our loyalty space and connect it back to growth and, and driving performance.
Paula: Love it. Love it. And again, you’ve both worked with incredible brands, Guy, and particularly I liked the description of future forward innovations that have, you know, been things I suppose that you’ve been proud of in your career to date. So Pre Hydrate, tell us a bit about some of the brands you’ve worked on and some of the work you’re most proud of.
Guy: Yeah, I think, thank you Paula. For, for me, you know, a lot of the opportunity to work with large brands. Travel hospitality is, is a space that I have worked quite frequently in. Very proud of my past work with Amtrak, where I over the course of, many years, we drove a lot of loyalty and cultivated and fostered loyalty in the industry that’s not necessarily known, always for innovation rail travel.
Amtrak as an example, was arguably one of the very first in the transportation side of life to orient the program around driving value based on customer spend. Not necessarily distance traveled, which was more of the construct that the airlines oftentimes did.
Over the years, we then took that and actually modeled that back into even the way we rewarded and built the value proposition for Amtrak customers. So, I think over time there were a lot of opportunities to continue to reimagine and refresh how loyalty comes to life for the Amtrak customers.
Likewise, you know, we had the privilege to do a lot of work with Hilton Honors. As they were coming up on their 100 million member milestone, and now they’re well beyond that. But if you think of, extending the loyalty experience beyond just the stay itself and really bringing more utility and value then, kind of that quid pro quo of stay and get we’re certainly proud of that.
And then the final one I would mention is, you know, even in industries where loyalty’s not as traditional, thinking about how you can drive it, budget rental car as an example, we drove loyalty through their channel with travel agents. So it’s not always just a consumer play, but innovating to say, how do those loyalty principles sometimes apply in the channel or in a B2B way. And so I think you know, innovating beyond just that mental state of loyalty as a consumer proposition and saying, how do we take it and drive the strategy, even above and beyond the consumer play.
Paula: Amazing. Yes. Actually, you know, you’re taking me back to my own, early career Guy, back in British Airways. I joined British Airways in 1996, which definitely is aging me. But we did have a beautiful travel agency focused loyalty program that absolutely worked in parallel with the executive club program and drove incredible engagement.
And again, particularly where I live in this part of the world, you know, salaries perhaps weren’t, you know, ideal, weren’t great. So to have an opportunity for this entire critical community of advisors who could really direct people to fly with us was incredibly powerful. So again, a global proposition at the time. Not sure if it’s still in existence, but I do think travel, I suppose any of us that have been lucky enough to work in that sector, it really is the, the sexiest space I often think. And I do, I do miss it a lot. So great to hear that incredible work you’ve been doing.
Guy: Thank you, Paula.
Paula: Sure. And Andrew, tell us a bit about your background and career history. Just, you know, bring us up to date.
Andrew: Yeah, thanks, Paula. well I don’t have as tenured or as, sort of I guess esteem sort of background as Guy per say. But I’ve been sort of in the loyalty space for about just over 10 years now, and I’ve been under Guy’s helm for a majority of that. But I came from more of a traditional background in and from there a lot of sales and marketing.
And so one of the things that caused me to sort of make the pivot to loyalty in the loyalty space about 10 years ago or so, was the fact that there was, this continues to be, a large shift towards the more of the data-driven, the more analytical, sort of driven marketing activities that, are super important these days.
In fact, they’re paramount to any experience that you have across the board. So moving from that sort of top of the line, mass audience, you know, one to many type of experience and moving more into the one-to-one and one to several and just sort of, you know, we’re gonna get into what, what does data mean for brands these days shortly, I’m sure.
But that shift is, was something I saw coming and I wanted to make that leap from, you know, let’s get out of the more higher end sort of production, sort of top level marketing into some of the, the more granular sort of customer experience focused ones. And I think that decision has paid off and I’ve been more than, more than a privilege to, to be working with Guy for as long as I have and see his expertise kind of come to life in so many ways.
Paula: Amazing. So you might as well answer that question then, Andrew, since you raised it. What does data-driven personalization loyalty look like in 2023? Where are we at?
Andrew: Well, I’ll start off, and I think Guy has his another, will have his own great POV on this. But I think the, the data is such a fundamental and foundational part of any marketing platform, experience, campaign tracked strategy, you name it.
Because without data, you’re sort of left in the dark. Right. And, and this is becoming more and more apparent as the reality of cookie deprecation actually happens next year. It’s been postponed a few times. The fact is that brands, and we’ve seen this in Europe with GDPR, were very suddenly struggling to figure out who are their customers, how do we keep our customers, and also how do we get new customers.
Now I remember having been living in London in, in May of 2018. The, what felt like an absolute scramble with brands to connect with me via email or any other form that they had in, you know, data on me for whatever channel to retain me as a customer because at a certain date things would go dark and they, they couldn’t just pop me back into their sort of their segmentation, right?
So I think that fast forward to where we’re with cookie deprecation, and the fact that data is, is so much a part of impartial of what we do as marketers. It is now more than just an informed strategy. It’s a critical and vital part of, of any marketer’s sort of, you know. Arrow in their quiver, so to speak.
Paula: Totally, totally. And just for anyone who hasn’t heard the term cookie deprecation, Andrew, I think most of the audience will have. But just because, you know, as you said, it’s been postponed a few times. I don’t know if it’ll actually happen next year. I don’t know if that’s been, you know, fully guaranteed or whether they’ll just shift, shift the go post again, but, would you mind just explaining that term? Because, it is an important context for anyone, perhaps newer in loyalty, who doesn’t realize how pivotal our roles are gonna become even more as this, as this issue emerges.
Andrew: I’ll certainly do my best, and I’m sure for viewers watching this, they’re gonna listen to my answer and they go, he doesn’t know what he’s talking about because he is not a digital marketer. But, that said, I’m, you know, self-deprecating myself.
Cookie apocalypse is another way to describe it. And that doesn’t mean that chocolate chip cookies are gonna go off the face, the face of the Earth. What it means is Google, which has a proprietary sort of, if you will, monopoly on third party cookies, which aren’t optional on Chrome. You can choose to turn them off, but most people don’t.
And that has been what has been informing a lot of, digital marketers throughout the last decade or more in terms of being able to track people’s activity online. And those third party cookies, are gonna go away. And so without that, a lot of brands, a lot of retailers, a lot of big, you know, you name it, are gonna have an issue with how do go after people that they can either assume are interested in what they’re doing because of their activity, or we can, you know, layer on third party data from other providers and things like that.
Which is why you have, yeah, a rush to things like acquiring first and zero party data. You have a rush to, big retailers who are smart creating a media network for others to sort of leverage in terms of, oh, we have the data of the customers that you’re looking for. Give us a segment of your customer base and we can, you know, create a lookalike model and we can, you know, scale it up or whatever. So data basically, long story short, being able to track people anonymously on the web is no longer gonna be a thing in 2024.
Paula: Got it. Cool. Thank you for that. Guy, I know it’s something you feel very passionate about. So tell us about Cookie deprecation in terms of, I suppose, what clients are saying to you. Are they aware of it? Are they concerned about it, or are we just lucky to be in the industry where we’ve kind of already kind of realized that that customer relationship is amazing. What are you hearing in the market?
Guy: Paula I think the awareness is, pretty strong, but because of that, as you said, goalpost moving. That’s occurred the last few years. You know, I feel like there’s still a little bit of uncertainty around, okay, is it really happening in 2024?
Having said that, we’ve certainly had enough warning that this is coming. That, you know, preparation to Andrew’s point around how are you really collecting and making sure that you’re doing the proper hygiene and you know, optimizing what you do vis-a-vis first party data, zero party data, and even brokering relationships with other partners where you might have a second party data kind of construct where it’s the partner’s first party data that because of your agreement with them, you may have permission to, to use in certain ways.
I think data is always been important. I feel like the consumers are more aware than ever before, that their data is actually being used by marketers. And so the other fundamental belief that Andrew and I have in the work that we’re doing with clients is, try to use data for purposes of good for advancing the customer’s experience, for advancing the relationship with the customer.
If you, if you use the right intentions, and can bring value through your use of customer’s data back to the customer, then again, it gets back to that fundamental ocean we have around being customer obsessed. And that translating to customers being obsessed about your brand. So we think responsible use of data and using it for purposes of good and advancing that customer proposition in its entirety. That is critically important.
Paula: Because I do sometimes think Guy, that there’s equally an issue with too much data that’s not proving insightful as well as too little data, which therefore means of course, no insights. So yeah, I definitely feel that there is a massive confusion, in the context of knowing that everybody does want to have those relationships in place.
But I don’t think a lot of people you know, a lot of brands, even the biggest ones, have the expertise in terms of understanding how to capture useful data that they will then put into practice and develop solutions around? Like, like is, am I wrong? Like are like, because I think everyone listening to this show is very well intentioned, again, capturing data, but again, I mean, it’s not always making their jobs, their lives, or their customer’s experience any better?
Guy: I think you’re spot on. I was just gonna interject that we, in the work that we’re doing, a lot of it focused more on strategy. We inevitably are doing a lot of stakeholder interviews within the client and brand organizations we’re working with.
And I would say across the board, there’s a candid and very honest perspective that yes, we typically have a lot of data at our hands and fingertips. We’re not really optimizing the way in which we’re using it.
You know, when you think of a couple years back when big data was kind of the term that was in vogue. You know, part of the perspective was, are we even leveraging the data properly that we already have, let alone the idea that we should keep collecting more and more data from more and more sources. So, I think there’s actually a healthy awareness that in most organizations, the way in which they’re leveraging the data is a bit suboptimal.
This gives an opportunity, for practitioners like Andrew and I to come in and try to help say, even with the data you have today? What are some new ways in which you can better use it? Again, hopefully advancing that relationship, that experience, with customers.
Paula: Yeah.Because actually I do think, you know, and Andrew already alluded to GDP or, and you know, the data legislation in Europe that we’re also terrified of, and rightly so. But I also think, as you said, you know, as consumers we’re very aware that we’re being marketed to and to the point that sometimes it’s just extremely uncomfortable.
Because you start to see things that actually you didn’t realize were being tracked. So I think there’s more happening and as we are paying more attention to it. For me, for example, I’m very, convinced that, you know, the words I use in, you know, phone calls or conversations, I’m pretty sure that they’re being tracked in some way, even though I thought I had turned off all audio tracking.
But I can see some marketing coming through that’s you know, only being advised I think by things I have said verbally and not in writing. So, I think there is, a level of disloyalty that can happen if I see a brand that’s certainly starting to do stuff like that. So, again, I think that’s where your expertise is, is absolutely invaluable to a brand to come in and say, where will this be welcome, where will it be useful and where will it actually drive the growth that you’re referring to.
Andrew, I think you had a comment on that piece as well. I mean, do you think, how do you feel what marketers are doing in terms of their data strategy at the moment?
Andrew: Thanks, Paula. I was just gonna, I was just basically, you know, just piggyback off some of the stuff that Guy said, but I think, you know, to make it short, really essentially, I think a lot of brands either, either suffer from having a data surplus or a data deficit, but many times we see that many brands.
In either of those two said scenarios, don’t know how to sort of action the data that they either have or don’t have. And I think that’s something that we’re hopefully helping, you know, clients do along the course of our relationships too, to sort of better their data strategy, to get it to a point where it becomes a little bit less cumbersome and muddled, I suppose. Because data can be a very muddled space at times.
Paula: Definitely not my forte. So again, absolutely love to talk to the experts on that side. So tell us a bit about what else is going on the industry guys? You know, we love to talk about, you know, educating our listeners and inspiring them and any new innovations that are coming up.
So I think, Guy, you already mentioned partnerships just very briefly in passing there, but that is my background and my, I suppose, passion in terms of what’s possible for loyalty programs when you partner with the right brand. So tell us a bit about that. Is that something that you’re seeing more of?
Guy: We are, but I think Paula, the emphasis has shifted a bit. I feel like I spent the first half of my loyalty career at Carlson Marketing before it became Amia. And, when we worked partnerships, a lot of times it was just trying to get a whole large number of partners for our client or for our brand.
And thinking that, you know, by having a large reach and an expansive set of partners, you were really bringing a lot of potential value to the customers and this would engender loyalty. I feel like the shift that’s occurred in the last several years has been more over the quality of the partnership and trying to elevate it into a bit more of a strategic partnership.
So if you think of Andrew’s example of Delta Airlines, you know, we could all say, well, Delta probably has, you know, dozens and dozens of partners. But at the end of the day, what they’re doing with Starbucks, what they’re doing with Lyft, what they’re dealing with Hilton Hotels, there’s a certain elevated nature of how they’re working with very specific partners.
Two, in some cases bring even a extended experience, which in travel, let’s face it, your experience does not begin and end as you step onto or off of a plane. Your experience is much broader than that. And so if they can through strategic partnerships with the Starbucks of the world, the Lyfts, the Hilton hotels, you can see where that can extend quite naturally and broaden and enrich that travel experience. And I think that strategic element is the shift I’ve seen that’s most interesting and arguably more innovative.
Paula: I agree. And, and more valued then by the members. And to go back to your point about consolidation, I think then consumers are starting to understand that they can operate within an ecosystem that they probably understand a lot better than those huge ones where, as you said, you know, there was literally like, you know, trying to partner with absolutely everyone. But, yeah, no, I do like the Delta Starbucks, example and yes, certainly when we’re getting on and off planes, there’s very often a Starbucks at either end. So, so that’s a, that’s a great one to see. Andrew, what are you seeing in terms of trends in, in loyalty right now?
Andrew: Thanks, Paula. I think the partnership one is very interesting and it kind of hits on some of the trends that I’m seeing, which is loosely sort of going after the bid segment or the infrequent traveler, the infrequent purchase or whatever you wanna call it.
That’s happening a lot with, you know, with, with travel right now in other ways. And, you know, subscription membership is also something that sort of, is sort of part and parcel of this.
But essentially you have things like, you know, Expedia Group’s One Key program, which is consolidating, there’s that word again, consolidating the experience across, you know, Hotels.com, Expedia, and Vrbo in a way that it was never able to do before. So you can mix and match and mesh your experience. You can literally go from a business travel experience to a leisure one if you’re staying within that ecosystem and earn in redeem points, or one key cache as they call it.
And I think that is interesting because of, you know, coming out of the pandemic, coming out of, you know, business travel, having been sort of paused as much as it was, you know, how do we as a travel brand, go after, acquire, and also retain the customers that may not be, you know, the ones waiting at the beginning of the front of the line at every, you know, boarding of every flight, but also, actually provide a lot of value and can become very long-term, you know, lifetime members of something like the One Key, you know, program.
I haven’t used it, myself, personally, but I think it’s an interesting play because it unites the three different brands under the Expedia Group umbrella. In the way that is sort of tailored to whatever that customer or traveler’s sort of looking for at their leisure, no pun intended.
And I think the other one that’s interesting, going after the mid segment, but also tying in the membership, example is, was it Ennismoore the Hoxton, which actually has Accor Hotels actually has a controlling stake in. But what they rolled out a couple of months ago was this idea of, it’s actually called Dis-loyalty as the name of the program, and it’s a yearly subscription. And Ennismoore is a luxury sort of boutique hotel brand, and they have locations all over the world.
And it’s actually a paid membership. And what it actually incentivizes, to do is to explore, and actually be, not be loyal to a specific location or spot or whatever, you know, whatever you have. And what’s interesting about that is, there’s a lot of immediate perks. So it isn’t about accruing or going through sort of a process or a journey that gets you to a specific tier with certain, you know, perks attached to those.
But what it actually does is it sort of gets you to come in on a regular basis or even explore with your friends or your family. So, for example, one thing that they’re doing that’s interesting is, you know, if you live, for example, where our headquarters is in the West Loop of Chicago, you can go by, I think it’s the Emily Hotel or others, and I maybe got the name wrong, but you can get a free coffee for every day for as long as you’re member and you can actually hang out and experience the beautiful hotel as it is.
But what the actual at its core is interesting that it’s trying to do this program Dis-loyalty is it’s actually trying to foster a sense of community. And I think with travel, that’s very interesting. Because again, the pandemic caused a lot of things to pause in our lives, right? So how do you take something that is as disparate seeming as a luxury boutique hotel experience and talk on a sense of lifestyle community to it. And I think that’s what’s very, very interesting, with this Dis-loyalty program. So I think that’s something that I’m, that I think we’re seeing, in, in this space as well.
Paula: Absolutely. And paid loyalty Guy is something I’ve, I’ve heard you mention as well as something that you’re hearing from clients that they are exploring. And of course everyone wants to be the next Amazon Prime. So tell us what’s the, what’s the landscape looking like for paid loyalty, programs.
Guy: Well, Paula, I think first and foremost, certainly, you know, paid loyalty is not always gonna be the answer. So it’s not necessarily a fit for every brand. But for the brands that that we see successfully kind of going into the more paid loyalty type of model, yes, there’s a little bit of a desire to be the next Amazon or to emulate some of the things that Amazon has done with Prime.
But I think there’s also a recognition to Andrew’s point of how can you bring forward some more everyday benefits and value. And, yet have it monetarily or economically, you know, work out and, and oftentimes you almost need that paid tier to kind of justify it or make it economically viable.
What it does for the consumer is it definitely gives more of a commitment and, and a bit more of a stickiness factor. And so like any good subscription, I think it makes a promise the consumer opts in. They know that they’ve given a commitment in the form of, of a paid fee, whether that’s monthly or annual. And then they’re more likely to try to derive the benefits and, and to get the value.
And one of the ways they do that is usually by experiencing or or doing business with, you know, whether it’s a travel company or a retailer certainly in retail I mentioned the Best Buy example. I think it’s worked pretty well for them. They continue to fine tune and and optimize it, I think. But again, I would say it’s not for everybody, but for those that are looking to give some everyday value that kind of economically need to build in a structure that can work.
You can’t always do that through a free program. You sometimes do need some of that paid element, and I think as long as you have the proper value in there, to motivate and and give the proper incentives, it can work quite well.
Paula: Yeah, yeah, no, as you were saying that, I was thinking exactly my own expectations when I do decide to invest are clearly heightened and I pay more attention. And my objective of course, then is almost to beat the system, you know, to get more value than I’ve, than I’ve paid upfront. So that, I suppose psychology about the sunk cost definitely means my behavior immediately changes. Which I do think, again, it’s not the caveat, you know, or the panacea, pardon me, is the word I was looking for. It’s not the panacea for every loyalty program, but when it does work, it definitely means that I have a different relationship.
And I remember writing about this before, again, you know, I suppose in the early days of when Prime was really exploding, I think when they crossed. I think they announced a hundred million members and everybody suddenly went, what? Because I think they’d actually been quite discreet about it until then, but all of a sudden the revenue was off the charts and we were all doing the mathematics. But I remember writing about it as the ultimate loyalty, you know, because it’s one thing to say. Yep. I’m gonna, you know, advocate for this brand. I certainly plan to fly with this particular airline, but when I put my money down upfront, there is a different relationship that, as you said, then the brand has to work harder.
So, to go back to your piece about the brand being obsessed with the customer, you know, if they build this, you know, paid program, they really know they’ve got to earn it in order to keep them.
Guy: Yeah, and I think Amazon is not the only example. You could also make an argument that the credit card space, has long been a pioneer in more of that paid loyalty construct. And really that annual fee, oftentimes that comes with our favorite, credit cards, in genders, a top of wallet and share of wallet dynamic. That again, I think you’re trying to say, okay, how do I get the best value out of the fee I just paid?
Paula: Amazing. So I think we’ve touched on a lot. We’ve talked about strategic partnerships. We’ve talked about focusing perhaps on mid segments. We’ve talked about cookie deprecation, so definitely an exciting time in our industry. And clearly you guys are poised for growth. Tell us a bit about what are your plans, what are you working on, and what can we look forward to from you guys?
Guy: Yeah, absolutely. I think, I’ll start and Andrew can, add some additional commentary. You know, from our perspective, one of the things we’re most excited about is really being able to bring forward more of that consultative advisory, kind of expertise to brands and to clients.
We’ve intentionally today brought our value proposition forward without a in-house technology component to it. And, again, that’s very intentional. We wanna be able to help advise and consult and, you know, work with clients on how to optimize the technology they’ve already invested in.
We wanna be able to help them identify technologies that could be the right fit, should they have gaps. And we always lead with, you really need to land that strategy first and use your technology as an enablement aspect to what you’re doing.
And so, you know, we really think, you know, focusing in more on the strategy and bringing our expertise forward without having to be, you know, so siloed in thinking about a technology that we own as the right solution, when quite frankly, oftentimes it might not be.
So think of what Andrew and I and the Hydrate team are doing as being more of an objectivey you know, extending and bringing in expertise that can help again, map the right strategy with the enablement of the right technology.
Paula: And I do remember as well, Guy, I liked you said previously that you do also help, I suppose, assess and evaluate, you know, what’s currently working. Because I think a lot of people listening to this show, again, really believe in what they’re doing perhaps, but might need help to prove that it either is working or that there’s a better way.
But sometimes as an internal person, you might not have that independent perspective that an external advisor can come and say, yep, you guys are rocking it with this particular piece. But you’ve got gaps in your strategy there. Like I think the external advisory piece is very useful to everyone listening to this show.
Guy: Absolutely.
Paula: Fantastic. And Andrew, what can we expect? What are you excited about?
Andrew: Well, I think just to, you know, double down on some of what guy was just talking about the idea that, you know, helping brands sort of extend their loyalty experience into the larger brand experience.
Because very often, and whether it’s, you know, inside out perspective or what have you, a lot of the departmental sort of realities of being stuck in this, you know, loyalty space. But brands that are most successful, we’ve touched on this, do extend their loyalty experiences across the entire ecosystem of what customers are interacting, how they’re interacting, and what that brand experience looks like.
And what’s unique about Hydrate is that we come with not just this loyalty expertise, but we’re part of a larger network and ecosystem, that can sort of encompass all the different various sort of external, you know, brand experiences that can then augment and enhance the loyalty experience of you know, brand X or Y or Z, right?
So I think what’s interesting for us coming down the pike is just really just taking that to the next level and really just sort of turbocharging, our clients’ loyalty experiences and making sure that they do extend to the larger brand experience. Because that we, we believe is how you actually create customers who are obsessed with your brand.
Paula: Amazing. Well I couldn’t have said it better myself. I think that’s all the questions from my side. Guy, have you any closing words of wisdom, anything you wanted to mention before we wrap up?
Guy: I think we’ve covered, a great, great amount of the space today, Paula. And, Andrew and I obviously appreciate the opportunity to talk loyalty. I think your podcast is doing a tremendous service to the space and, and for practitioners to be able to, you know, bring out our passion and, and the energy about what we’re seeing and what we’re, working towards. I think it’s fantastic. So appreciate, first and foremost, just this form. Because I think you’re doing a phenomenal job and, it, it’s very useful for all of us that are passionate about loyalty.
Paula: Fantastic. That’s great. And Andrew, any final words from your side?
Andrew: No, I’ll just second that Paula. You’re doing a phenomenal job, and this, podcast is something that we tune into frequently and we’re, we’re excited and grateful to be a part of it. So thank you again.
Paula: Amazing. Well, as you know, that’s what we’re here for. So thank you both for being part of it. So, Guy Cierzan , Founder of Hydrate and Andrew Kelly, Co-founder of Hydrate Loyalty. Thank you so much from everyone at Let’s Talk Loyalty.
Guy: Thank you.
Andrew: Thank you.
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