Paula: Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals.
Paula: I’m your host, Paula Thomas, and if you work in loyalty marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
Paula: So I would like to welcome everybody to season two of Let’s Talk Loyalty.
Paula: And I have to say, it’s a fantastic way to start the new year.
Paula: 2020 is kicking off with certainly a huge amount of energy and excitement from my perspective.
Paula: There seems to be a lot of new projects coming in on the horizon.
Paula: Lots of new trends and insights coming through from various different people.
Paula: So I have already done 16 episodes.
Paula: I can’t believe I was looking back.
Paula: So season one in 2019 really got off to a fantastic start.
Paula: So I’m really happy now today to be talking to a colleague of mine who is based down in a country I’ve already interviewed in the past, in fact, and that’s down in South Africa.
Paula: So I’m going to be talking today to Deon Olivier.
Paula: And Deon is somebody that I share a couple of things with in terms of, I suppose, professional credentials, in terms of, first of all, we are both members of the Customer Strategy Network.
Paula: We both also hold the qualification as a customer loyalty marketing professional.
Paula: And above and beyond that, Deon has some extraordinary experience.
Paula: So in total, he has over 20 years dedicated within loyalty.
Paula: And actually that includes all angles that you can imagine.
Paula: So everything from the client side through to the agency side, and even including the investor side.
Paula: So today we’re going to get into a very exciting discussion around three key areas.
Paula: But before we get into that, can I first of all welcome Deon Olivier to Let’s Talk Loyalty?
Deon: Hello, Paula, thank you.
Paula: Great to have you on the show.
Paula: First one of 2020.
Paula: Great, okay.
Paula: So I think the best way to start is always Deon, as you know, in terms of educating ourselves and I suppose really having sound bites about what’s going on in the loyalty industry.
Paula: I always like to kick off with what is your favorite loyalty statistic?
Deon: Thank you, Paula.
Deon: And I think the focus on engagement, which is something that’s very topical in the industry at the moment, and it comes up in every white paper, it comes up in every publication that’s featured across a range of resources that are out in the market, is definitely an area where I’m spending a lot of my time.
Deon: And it’s not necessarily engagement at any particular point in time, it’s engagement over the passage of time.
Deon: And as you know, there are a whole range of metrics.
Deon: And I guess for me, the two standout metrics and statistics that work best, if I may, and answer with two is firstly, in the retail space, it’s typically the loyalty turnover over the passage of time and the trend that gets demonstrated through that.
Deon: So we have a great retail offering in South Africa in the health and beauty sector that has close to an 80% penetration of loyalty transactions across any spend at any point in time and consistently so.
Deon: So that’s a key line in their business.
Deon: And then secondly, which as you know, is also very prominent in a multi-product solution or a multi-partner solution.
Deon: For me, the key statistic is the penetration across all product types within a value proposition.
Deon: So if that’s a retail bank that has a range of products from investment to savings to insurance products, it’s how well has the loyalty program succeeded in shifting that penetration of product holding across the consumer spread within their database.
Deon: Because clearly that’s an indicator of stickiness.
Deon: And how is that tracked and how’s that performing over the passage of time.
Paula: And do you see that, Deon?
Paula: I mean, I know, for example, you’ve got experience in mobile telcos, you’ve got experience in retail loyalty, and then obviously financial services, hospitality and leisure.
Paula: So you’ve pretty much seen, I suppose, every possible sector.
Paula: And I suppose, what is your view on that type of idea of shifting penetration?
Paula: I think that’s a key KPI.
Deon: Yeah, our market has grown quite significantly.
Deon: I was fortunate enough, as you mentioned, to join this industry in the early days.
Deon: South Africa really took its lead off with the frequent flyer programs that developed in the US and in other developed markets.
Deon: And loyalty really took off, loyalty and rewards really started to take off in South Africa in the mid to late 1990s.
Deon: And it’s fair to say that since then, it’s become quite a sophisticated offering.
Deon: And fundamentally, what we see in this market is a very specific focus around driving particular behaviors and then aligning compliance against those specific objectives.
Deon: So there are wonderful examples, which I’m sure we can get into a little later, of companies and businesses that operate programs in our market that have developed significant metrics for driving very specific behaviors.
Deon: And these feature quite prominently in their analyst presentations, in their annual reports, in the integrated statements, and in a lot of instances, for the very successful programs that operate in our market, they’ve become almost like that golden thread that weaves through the business, that is used as the primary driver of customer retention, customer acquisition, and penetration if there’s a multi-product solution offered within the business.
Deon: So we definitely see a lot of that.
Deon: And it’s good to know.
Deon: I always say that the hard work starts when the program is launched.
Deon: And that hard work is not necessarily all the good marketing stuff, but it’s adherence to the well-crafted, well-defined business case and financial plan that had very specific levers that had to be moved over the passage of time.
Paula: Amazing.
Paula: And I love that actually, Deon, because I do think when loyalty performance makes it into an analyst report, that really does show C-suite buy-in.
Paula: And I think that that’s the holy grail for all of us, is to actually see that people are buying into the overall concept and that it is driving levers for the business.
Deon: Yeah, I think loyalty has certainly come of age, and that’s what I find so fascinating about this industry.
Deon: So on the one hand, I’m a consumer.
Deon: I guess we’re all consumers.
Deon: And I probably have, if not the most, but certainly almost the most number of loyalty cards in my wallet, probably more than 40.
Deon: And that’s not just because I work in the industry, but I think there’s always good value if you seek it.
Deon: And if you make the effort to do what’s required as defined by the program.
Deon: But on the flip side, you know, I fully appreciate that it’s like any other investment that a business makes.
Deon: And as you know, some of the investments that are made are hugely significant in terms of annual commitment, whether it’s in the currency and all the operations that go with it.
Deon: There are significant commitments made, and there are significant line items on the income statement and the balance sheet.
Deon: So it’s refreshing to know that this is more than just a marketing idea, that it’s a strategic driver of behavior.
Deon: And certainly the successful programs that operate in our markets have embraced that aggressively.
Deon: And that’s evident from either the enhancements that they make every year to fine tune specific behaviors, or alternatively for the simple fact that they continue to offer a solution into the market.
Deon: I’m guessing that if programs are not working, they’ll either be abandoned, withdrawn, or exited from the market.
Deon: So it’s refreshing to see that a lot of programs that have been around in our market are still here 20, 25 years later, for the very reason that I think statistically and from a financial metrics perspective, they’re being well managed by the financial team in each of these large corporations and businesses.
Paula: Absolutely.
Paula: And we’re going to talk about a number of different sectors today, Deon.
Paula: Again, I just love the variety of experience that you’ve had over the last 20 years.
Paula: But also just to pick up, I think it’s fantastic that you do describe yourself, even on your LinkedIn profile, as a loyalty junkie.
Paula: And it’s probably the best piece of advice, actually, for anyone maybe thinking about kind of moving into the loyalty industry.
Paula: It’s really, you know, practice being a consumer, as you said, and go ahead and stuff the wallet with anything and everything that’s available in your country.
Paula: So I know for me, actually, some of the frustrations is I see great propositions and they’re only available to UK residents or US residents.
Paula: So absolutely, we have to at least consume what’s available in our own markets.
Paula: So talking about long term programs, Deon, in the past, you and I have talked a lot about what I’m going to say is probably my favorite loyalty program in the world.
Paula: And it’s just one that I think takes a lot of boxes in terms of value for all stakeholders.
Paula: And that’s a program in the health insurance sector, which is called Vitality by a company called Discovery.
Paula: Now, I know you haven’t, as far as I know, worked on that program directly, but have studied it and followed it for that entire, I suppose, your whole career.
Paula: So I’d love you to talk us through the consumer proposition for Vitality and why you think it’s so compelling from a global perspective.
Deon: Okay, wonderful.
Deon: Wonderful.
Deon: Now, Discovery and Vitality in particular is a wonderful case study.
Deon: And I would urge anyone in the industry, in any market, to have a look at what they’ve done.
Deon: It’s well published.
Deon: They’re wonderful videos on YouTube.
Deon: The CEO and founder of the business is very vocal around the strategic intent and where the business is going and how it’s evolved over the last 22 years, I think it is, that they’ve been in market.
Deon: So just to take a step back and paint the picture in the South African context, Discovery launched in the mid to late 1990s.
Deon: At that stage, as with any of the other industries in our market, competition was fierce.
Deon: Discovery entered the market as a health platform.
Deon: South African consumers do have access to public health care, but private health care is a very well-developed sector in our market.
Deon: And as with any competitive offering in a particular market segment, the focus is often not just on the core product, but the way in which the core product can differentiate itself over the competitors.
Deon: So Discovery was really, from the get-go, very focused on developing with their health offering additional solutions that underpin good, healthy behavior from their target market.
Deon: And they initially launched with a great benefit, which was subsidized or heavily discounted gym membership.
Deon: And that’s really where it started.
Deon: And I guess the fundamental behind that is someone who’s healthy, who proactively manages their health by taking constructive steps to exercise more frequently and achieves very specific exercise goals will be certainly over the passage of time less of a financial burden on a health care provider.
Deon: A healthy person has a lower claims ratio, has the potential to continue making premium payments for so much longer.
Deon: And I think, and you’re right, I haven’t done any work specifically, but I’ve been a customer of Discovery for many, many years, and I’ve followed the evolution very closely.
Deon: I think that fundamental of driving a business-specific behavior, which in this case is to drive healthier health care members, having a direct impact on the business’ bottom line through rewarding those customers at the same time, is an incredibly powerful way to build a proposition.
Deon: And in the 20 years since the launch of Discovery Health, they’ve evolved their business into a whole lot more than just a health platform.
Deon: And I’ll pick up on some of the detail in terms of the current focus, where they’re at from a rewarding perspective for their health offering and some of the other offerings.
Deon: Probably five to seven years later, maybe even longer, Discovery launched extended their solution set beyond just a health offering into the insurance space in terms of life insurance and investments.
Deon: And more recently, in the last 12 to 18 months, they announced the launch of Discovery Bank, which again they’ve positioned as a behavioral bank, as with anything else they do.
Deon: It’s underpinned by very specific behavioral drivers.
Deon: And in between launching the life insurance business and the investment business, they also launched a short-term insurance business, which they’ve neatly woven their vitality proposition into as well.
Deon: So they’ve managed to evolve the business significantly.
Deon: And over the last 10 to 15 years, have also entered other markets globally and have very successful partnerships in more than a dozen markets globally.
Deon: And they’ve defined a vision, which you may or may not have seen, Paula, and others may have seen, and it’s almost like a commitment that they’ve made.
Deon: So as a global commitment, they’ve put it out there that they wish to increase the activity levels of more than a hundred million people by at least 20% in the next five years.
Deon: So it’s an incredibly powerful sound bite that features on a lot of their advertisements, which is kind of their global mantra of positively impacting the activity levels of more than a hundred million people, which is a significant, significant goal.
Deon: And I’d love to say that they’re going to achieve that.
Deon: And I’m sure they’re on track in terms of all the plans to get there.
Paula: And you’re right, Deon.
Paula: I’ll pick up on a couple of things that you said.
Paula: Firstly, it’s definitely a very well-published and publicized loyalty program.
Paula: And I know, for example, Harvard Business Review have done a case study on it.
Paula: So I’ll put a link to that in the show notes.
Paula: And separately, I also know now that’s obviously something you pay.
Paula: I think it’s a couple of dollars for.
Paula: But separately, I know Apple themselves actually, as a technology partner of the program, also issued a press release around the efficacy of the tracking and behavior change that was being monitored.
Paula: And, you know, recognized and rewarded.
Paula: So I think we all know that that Apple doesn’t likely go into partnership with anyone, and also doesn’t advocate any particular partnership that I’ve seen.
Paula: So there’s some very powerful statements of the effectiveness of that program.
Paula: And I love that figure of, you know, impacting 100 million people.
Paula: I mean, I can’t imagine, you know, the sheer savings, I suppose, just to be, you know, I suppose a hard-nosed businesswoman about it, to the business, but also I sense a higher purpose, you know, that the CEO very much seems to believe in, you know, I want my customers to be healthy and live longer.
Paula: You know, that’s a really nice thing to have as a shared objective.
Paula: So I love what he’s created.
Paula: And I think for me, you know, as somebody who tries to have a positive perspective, the reason it’s my favorite loyalty program in the world is it’s because the customer benefits equally personally as much as the company does.
Deon: You will see frequent reference to a statement that Discovery use in a lot of their strategic content that is published either through the mouth of Adrian Gore, the CEO and founder, or as you referenced in the Apple review that was done at the beginning of last year.
Deon: And it’s the concept of shared value.
Deon: And the principle behind it is incredibly simple.
Deon: That if I benefit as a business, and it’s directly as a result of what you’ve done as a consumer, then we should share in the upside and share in the value, which I think from a corporate governance perspective, from a higher purpose perspective, is an incredibly noble way to put forward a proposition.
Deon: And I think it’s more than just a statement.
Deon: It’s more than just stuff that you read as a sound bite or that a senior manager of a business talks.
Deon: It follows through in everything that they do.
Deon: So not only do Discovery make this commitment, but they also provide their customers with wonderful tools to achieve those goals.
Deon: So you’re not left out in the cold.
Deon: It’s not a statement that appears in a mission or vision statement upfront.
Deon: They’ve put all the tools in place to enable customers to achieve those goals.
Deon: So whether it’s health goals, whether it’s banking goals, responsible banking goals, or whether it’s driving goals on their insurance project, their short-term insurance project, their mission has always been incredibly simple.
Deon: And that is to equip customers with the tools that are required in order to achieve what they have to achieve.
Deon: And give them, whether it’s through an app or a dashboard on a website, it’s to give them the necessary insights and the necessary skills to achieve what they have to achieve.
Paula: Absolutely.
Paula: And again, from what you’ve shown me in the past, Deon, I know what they also do is they give their members and customers a really clear evaluation of their own health performance.
Paula: And they show progress over time as well.
Paula: So as well as giving them the tools such as discounts at the gym, there’s obviously the performance metrics over time.
Paula: So you can kind of see how am I shaping up and am I living my most healthy lifestyle?
Paula: And as you said, that’s across my driving behavior, my banking behavior, which I think is extraordinary, as well as my own physical health.
Paula: So really, I suppose a lot of integrity, as you said, coming through in absolutely everything that they do.
Deon: So Active Rewards is a key feature of the Discovery proposition.
Deon: And as we talked about a little earlier, the focus has extended beyond just the health side of Discovery’s business into the banking side and also into their short-term insurance and specifically with regards to the way in which customers drive the vehicles that are insured by Discovery.
Deon: So Active Rewards encourages customers to get healthy, to exercise, to drive well, and to, as they put it, to spend responsibly.
Deon: And if customers then tick those three boxes around healthcare, driving, and responsible spending, they get rewarded.
Deon: And I think you’ve referenced that already, Paula.
Deon: So the reward mechanism is the Discovery Mile.
Deon: It’s a redeemable currency.
Deon: They have a range of partners where Discovery Miles can be spent.
Deon: It’s no different from any other mile, buck, bean, etc.
Deon: And these Discovery Miles are earned by the customer if they hit a particular goal for that week.
Deon: The important point to point out about Active Rewards is that it’s run on a weekly basis.
Deon: So customers have a very specific personalized target, a weekly driving goal, a weekly money goal, and a personalized weekly exercise goal that changes over time.
Deon: And if they achieve any one of those three goals, they are rewarded with Discovery Miles.
Deon: And it’s actually incredibly straightforward.
Deon: So to use an example, when it comes to vehicle driving behavior, the customer drives 100 kilometers, call it 60 miles, that are so-called event free, which is all positive behaviors around driving.
Deon: So no harsh acceleration, no harsh braking, no harsh cornering, no exceeding the speed limit.
Deon: They will receive a number of Discovery Miles for that week.
Deon: If they bank responsibly, in other words, they achieve certain specific goals around defining and understanding more around managing debt, exposure to unexpected expenses, et cetera, et cetera, and they use the tools that Discovery has made available, like budgeting tools and specific money goals, then they receive that reward as well.
Deon: And the great thing is it’s all embodied inside of an app, which has a really neat little dashboard dial, which at any point in time, you can go in and check how you’re progressing.
Deon: Typically, it runs from a Saturday morning to a Friday evening.
Deon: That’s the seven-day period.
Deon: And the reward is made available the following Wednesday.
Deon: And certainly as a family, my wife and I are very strict in terms of managing our goals.
Deon: And it’s a wonderful reward that you receive.
Deon: And it’s almost instantaneous feedback, not just in terms of your progress, but receiving that benefit on the following Wednesday, which by the way, I don’t know if they’ve trademarked, but they use the term rewards Wednesday.
Deon: So they’ve built a lot of naming conventions into what they do.
Deon: And that’s an incredibly powerful way, I think, of creating a buzz around what they do.
Paula: Wonderful.
Paula: And I love naming conventions actually.
Paula: And I do think they’re underutilized, Deon.
Paula: I remember I worked on a program, again, in Telcos, which was renamed to Priority Moments.
Paula: But before that, the O2 program in Ireland was called O2 Treats.
Paula: And I was really keen to launch a proposition called Treats Tuesdays, or Treats Thursdays, or anything.
Paula: But again, I love the simplicity of going, here’s something you can look forward to on a weekly basis.
Paula: Because again, we’re all busy people at the end of the day.
Paula: So how do we get that cut through on the communications piece?
Paula: So certainly Rewards Wednesday sounds like they’ve done exactly that.
Deon: Yeah, I think they’ve done it very well.
Deon: And I think to an extent, a lot of it is similar to what we see in retail.
Deon: So traditional retail, whether that’s quick service restaurants, a lot of it follows a very specific structure.
Deon: These are tried and tested and established retail marketing concepts.
Deon: And for me, it’s really nice when a financial services provider, and I say that with a pause in my voice, because traditionally financial services providers can be a little bit boring, whether it’s a bank or an insurance company, it’s wonderful that they’ve embraced the whole retail side of it and brought everything that is successful in retail into an offering that is traditionally perhaps a little bit more staid.
Paula: Absolutely.
Paula: Yeah.
Paula: And we’ll move on now to some other sectors, Deon, but just to finish up on Discovery, I think the key things I’m hearing from you are, first of all, they’re really educating their consumers around what healthy behavior looks like.
Paula: They’re clearly tracking that in a very visible way.
Paula: And then I love the kind of virtual path on the back that you mentioned in terms of acknowledging that behavior on a weekly basis and rewarding it so quickly.
Paula: So I think there’s a lot of lessons there that any loyalty program manager can kind of go, well, actually, am I performing like that?
Paula: Is my program delivering on those kind of key metrics?
Paula: Because the other thing I love actually about Discovery is I know the CEO himself, you mentioned Adrian Gore, he is also an actuary, which for anyone who’s not familiar with the insurance industry, I think they’re probably the cleverest people on the planet, probably close to astronauts in my limited understanding.
Paula: But again, there’s nothing that’s being done in that business that’s not statistically valid.
Paula: And again, I love the word you used earlier as well, Deon, the word noble.
Paula: So I think the zeitgeist is around how can companies earn trust, and I think there’s a lot of lessons there from Discovery on how we can do that.
Deon: Yeah, I think if I can just add before we step off and talk about some of the other industries perhaps, what has been great about what Discovery has done is that they’ve created this benchmark, which others have successfully followed.
Deon: And, you know, Discovery is not the only health care, excuse me, or insurance provider in the marketplace.
Deon: We have three or four or five others that have, to a very similar extent, emulated what Discovery have done.
Deon: It’s created wonderful competition in the markets.
Deon: There are a number of other propositions from the likes of Momentum and SunLum and Old Mutual, et cetera, that have done equally powerful or developed and deployed equally powerful propositions.
Deon: I guess the big differentiator is, and it’s something I often debate, is whether having a first mover advantage is something that can potentially set you apart for the full extent of your business.
Deon: So being first to market and then taking that lead and constantly evolving with repeated enthusiasm and improvement on an annual basis, it creates an incredibly dynamic market.
Deon: And at the end of the day, the consumer is wonderfully spoiled.
Deon: And that we’ve seen not just in the insurance sector, but we’ve also seen that very successfully deployed in the retail banking sector, which is an area that I spent four to five years in my early days of loyalty working in when I worked for a business called EVACS, which is a rewards proposition offered by First National Bank, one of the five or six large banks in the South African market.
Paula: And even EVACS actually, and again, I’d be certainly excited to talk about that.
Paula: As you said, Deon, banking isn’t always the sector that’s considered the most exciting or sexiest industry in the world.
Paula: But even e-books, I think, from the tone of what that program is doing, sounds like it is something that’s actually quite accessible.
Paula: So I’d love to talk about what’s happening in the retail banking sector in South Africa.
Deon: Okay, so let’s dive in there.
Deon: So originally, if I rewind the clock into the mid to late 1990s, we did have a couple of bank offerings that were in the market.
Deon: These were the days prior to the explosion of internet banking and obviously what followed in the last five to eight years with mobile app banking.
Deon: And a couple of the propositions that were in the market were closely aligned, as you would know, with frequent flyer programs.
Deon: So with the evolution of frequent flyer programs globally, which initially rewarded business travelers for their flights, which then slowly over the passage of time extended into other hospitality verticals like hotels and restaurants, and then where the connection was made with obviously payments attached to flights, the focus being on capturing as much as possible of the frequent business travelers’ spend and what better way to do it than through rewarding them for their credit card usage or debit card usage.
Deon: So, in the early to mid 1990s, South Africa had frequent flyer partnerships in the retail banking sector.
Deon: And it wasn’t until the late 1990s, early 2000s, that First National Bank launched eBucks.
Deon: And as the name implies, it was very much in the dot-com boom.
Deon: I remember so well those early days of eBucks, knocking on doors at prospective partners and working on the marketing side with the team that was there, and really having some resistance from the market, because it was this whole dot-com thing, and this whole e-commerce thing, which no one really understood.
Deon: There was a lot of business jargon around it.
Deon: But I’m happy to say that 20 years later, eBucks have managed to really been successful, not just here, but in other markets, and well-respected on a global stage, by evolving their proposition.
Deon: I guess a lot like what others have done.
Deon: We’ve talked quite extensively about Discovery.
Deon: The eBucks proposition has grown significantly over time, and we can talk a little bit around the value proposition that they offer to market as well.
Deon: And again, they’re in a very fortunate position, as are the other retail banks, in that they have a range of products that they can sell to market.
Deon: We don’t always see that benefit in the retail space.
Deon: So if you’re a grocery retailer, you have a limited array of products that you can sell, whereas in banking and insurance, and when you combine the two, it starts becoming incredibly powerful.
Deon: So having that foundation of a broad product set and the ability to reward for multiple product usage within a particular vertical or for your particular brand puts you in a very strong position to command respect in the market and to evolve your proposition nicely.
Paula: And I think in my experience anyway, Deon, most of the retail banking loyalty propositions originate, for example, on credit card spend, which again, as you said, aligns with the frequent flyers and their direct needs.
Paula: So is that true in the case of e-books?
Deon: You know, the interesting insight, Pauline, to the South African market is that we don’t have, as developed, a card issuing, standalone card issuing vertical as other markets do.
Deon: So traditionally and certainly today, credit card reward offerings are very tightly integrated into the broad retail banking offering because credit cards are typically issued in the main to retail banking clients.
Deon: So we don’t have as many co-branded cards as you would see perhaps in the market in which you operate in the Middle East, certainly based on the size of our market relative to what you would see in the US, where you would have a Macy’s or a Nordstrom or a Marriott branded Visa card.
Deon: So credit card offerings as a standalone are not that significant, although they obviously are a small number.
Deon: So rewards at a credit card level quickly evolved into rewards at a total relationship banking level, which looked full suite of services that the customer used and evolved on that basis.
Deon: So I think the focus is more than just card spend.
Deon: The focus is also around creating that stickiness that comes with holding five or six or seven products that makes it more difficult and more challenging for the consumer to leave.
Deon: If they have a mortgage bond, an investment product, a savings product, a transactional product, etc.
Deon: Just the barriers to exit that come with holding multiple products.
Deon: And I think we’ve done quite well in South Africa developing overarching total relationship banking propositions that reward for the full relationship and not just hard usage.
Paula: And I love that actually.
Paula: And I don’t know if you have a direct answer for this, Deon, so forgive me if you don’t.
Paula: But do you think there’s a sweet spot where if the customer holds, let’s say, three products, and I’m just picking numbers out of the air, but have you any sense of where that stickiness really kicks in from a banking perspective?
Paula: I know it’s a tough one.
Deon: Not at the top of my head, but if I look at the way in which the likes of FNB, E-Bikes, Standard Bank with their proposition, which is called You Can’t, Absa Bank, which is an ex-affiliate of Barclays, with their Absa Rewards proposition, et cetera.
Deon: If I look at the way in which they’ve structured their business proposition, their rewards proposition, which definitely talks to that broad array of product holding, I’m absolutely certain.
Deon: Well, of course, they monitor that very closely and they track the other way.
Deon: But I’m absolutely certain that that’s the way it is.
Deon: I think the challenge is always to do what you need to do to get that, whether it’s three or five or seven product holding and stickiness, is to balance that with this notion of simplicity.
Deon: Because the reality of both the insurance propositions in our markets and the retail banking propositions is that they’re incredibly complicated in terms of the way in which customers need to understand the reward level at which they operate and how to move up tier levels and award levels and then what the benefits are relative to that.
Deon: And I think, as you know, consumers are incredibly busy and don’t always have the time to get to the nitty-gritty detail.
Deon: Sometimes there’s just too much there.
Deon: So I think therein lies the challenge, but if fundamentally the positioning is such, the promise made to the customer is sufficiently broad.
Deon: So something that says, the more products you hold with us and the better you manage them and the longer you have them with us, the more we’ll reward you.
Deon: I know it’s a simplification, but that could be a way of driving the overall intent so that the message to the customer is clear that it’s not just about, in this example, credit card usage, but it’s around everything from setting up your will, your retirement funding and retirement planning, through to the way in which you manage your account, the way in which you grant access to direct marketing communication and permissions, how frequently you validate your contactability, et cetera, et cetera.
Deon: So it becomes much broader than just one specific.
Paula: And again, to the point that we talked about earlier, Deon, once a brand has earned a consumer’s trust and permission to market to them, what clever opportunity it is to leverage that across multiple products.
Paula: So I know, for example, some companies I’ve worked for, accessing a platform that has visibility of the complete relationship with the customer has sometimes been a challenge.
Paula: But, you know, if the banks have been doing that in South Africa, you know, way back to the 90s, it sounds like they’ve had that very clear vision, maybe before other sectors have had.
Paula: So they seem to be doing a pretty good job of it.
Deon: Yeah, yeah, absolutely.
Deon: You know, I think there’s a significant amount of work and large teams of smart people.
Deon: You talked earlier about actuaries, the entire business science and data science underpinning of where rewards and loyalty propositions are going requires businesses to invest heavily from a resource perspective in those skills.
Deon: And if not internally available, to outsource those to external professionals that can render that level of service and that independent insight to take these massive investments forward.
Deon: I think just one other point, which I also really liked you mentioning, was creating that openness and transparency to the customer.
Deon: And it doesn’t come easily.
Deon: It requires a very clear focus around the marketing message and also this entire focus around innovation and constantly refreshing the offering.
Deon: I’m sure you see it in other markets and certainly in terms of the other podcasts that you’ve done and that I’ve listened to.
Deon: The innovation sits at the cornerstone of what these evolving propositions have to offer in order to sustain people’s interests.
Deon: There’s always something new.
Deon: There’s always a new app or a new idea on the markets, whether it’s the StoCard proposition, which digitally stores all membership cards or whether it’s a card linkage proposition, whether it’s new partnerships and new multi-partner coalitions that are coming to market that are all vying for the same consumer attention.
Deon: It requires that consistent, trust-earning communication.
Deon: If the customer gets it, and if the customer doesn’t get it based on research and surveys, to fine-tune the communication side so that the customer does get it.
Deon: And I think that’s…
Deon: I talked a little earlier around the hard work starting when a program launches.
Deon: And certainly that’s the case with regards to managing the business case.
Deon: But I think also the hard work starts in terms of listening to what customers have to say around what they like and don’t like about the proposition.
Deon: And then balancing that back to what the resource capabilities are of the proposition or the provider.
Deon: So matching what the customer is demanding against what the business can afford.
Deon: And then wonderfully in terms of our new digitally enabled market that we all operate in now globally, using those sophisticated mobile-based solutions to drive pinpointed personal type communication to the customer.
Paula: Lovely, lovely.
Paula: I’ve often admired the loyalty market in South Africa before Deon, and the more I hear, the more I admire it.
Paula: So sounds like some great work happening there.
Paula: The third and I suppose final sector that I’d love to talk to you about, Deon, and again mainly because of recent evolution and innovation, and it’s obviously a sector very close to my heart, but I know there’s been a lot of progress in the last year or so in fuel and convenience retail.
Paula: So what can you tell us about what’s happening in that sector there?
Deon: That’s an unbelievably positive sector at the moment.
Deon: We’ve seen a lot of activity, as you mentioned, and certainly with your vast experience in convenience retail and your relationship with Liquid Barcodes and their focus, it’s certainly been an area of growth in our marketplace.
Deon: And interestingly, the concept of fuel rewards is not necessarily very new in this market.
Deon: We’ve had a fuel rewards proposition in the market for probably eight to ten years.
Deon: But in the last two to three years, we’ve seen significant growth.
Deon: Most recently, interestingly, Schultz Service Stations launched their own proposition called Value Plus, which was launched, the Value Card, which was launched in early December.
Deon: Interestingly, they had had a relationship with a health and beauty provider, which is the CLEX program.
Deon: And CLEX ClubCard had terminated that relationship after a two-year period and joined forces with one of the other fuel retailers.
Deon: And Shell came to market with something different.
Deon: So they’ve launched their own standalone proposition, which, as you know, because you’ve featured it in some of your content recently, is where Shell is going in global markets with the Shell Go Plus proposition.
Deon: It’s interesting to see what’s happening there.
Deon: So that’s the most recent.
Deon: And as I mentioned with CLEX ClubCard, CLEX have aligned themselves with South Africa’s biggest fuel retailer, which is Engen.
Deon: It has the largest footprint of fuel forecourts and convenience stores in the market, and also no stranger to partnerships.
Deon: They have a range of partnerships, not just in the loyalty space, but also in their convenience store and quick service restaurant environment with leading retail brands like Woolworths, which is a lot like Marks & Spencer in the UK, for those who don’t know Woolworths.
Deon: And Engen also have a partnership with one of the leading fashion retailers in the form of Edcon.
Deon: So I think in summary, there are plenty of propositions in the fuel retail sector.
Deon: There’s not a single one of the six fuel retail brands that are in our market that don’t have a partnership.
Deon: And Mini Shell is the only one that has a standalone proposition right now.
Deon: The other five all have partnerships either with a retail bank.
Deon: So E-Bikes has a partnership with Engen.
Deon: Standard Bank has a partnership with Caltex, which is the equivalent of Chevron in our market space.
Deon: BP has a partnership with Discovery in terms of their short-term insurance vehicle proposition.
Deon: Total has a relationship with Diners Club.
Deon: And Sasol has a relationship with Absinth Rewards.
Deon: So certainly a lot of overlap between retail banking and fuel retail rewards, not just retail banking.
Deon: Also extending beyond that, as I mentioned, into Health and Beauty with Clicks Clubcard and also with one of the other health and beauty providers, Dischem, that has a relationship with Total.
Deon: Dischem benefits proposition.
Deon: So it’s an incredibly busy space, obviously a lot of sharing of insights and driving of shared customers to do specific things and pump up with fuel at that specific brand.
Deon: And I think we’re going to see a whole lot more evolving in the fuel retail space.
Deon: Interestingly, not as much activity in the C-store as we see in other markets.
Deon: The domain pretty much dominated by fuel rewards for liters pumped at the forecourt.
Deon: And I think slowly we will start to see a whole lot more at the C-store and at the quick service restaurants and at the car wash, as that conversion is driven between pumping fuel and visiting the C-store, driving that cross holding up.
Paula: Yeah, and actually it’s very similar as you were talking earlier, Deon, about the whole banking relationship and the focus on the broadness of that communications message.
Paula: It certainly sounds like there is a big opportunity within fuel retail to broaden that across, why not wash your car and why not shop in our store?
Paula: So yeah, it definitely sounds like there is a lot of work to be done.
Deon: I think what we also see, Paula, in the fuel retail space is, and it was a webinar that I attended and listened to a couple of weeks back, run by the Loyalty Academy with Mike Capizzi, was the convergence of payments and loyalty, the convergence of mobile payments in particular and using a mobile app in addition to whether it’s a QR code based payment mechanism that is aligned with the payment card that sits behind the QR code that has been set up on the user profile.
Deon: But I think, you know, pretty much like what BP has done with BP.me in other markets and what Shell has done and what other big fuel retail brands are starting to do, whether it’s ExxonMobil or other brands across other developed markets, I think we’re going to see significant change and enhancements around rewarding and taking that friction out of the customer experience in store and on the forecourt in terms of quick and easy mobile payments that then also get rewarded.
Deon: And then using that as an additional way to gather insights in terms of customer behavior and where else the mobile payment mechanism is being used in other retail segments, et cetera, et cetera.
Deon: So I think this whole, you know, we’ve heard this phrase, data is the new oil, and that’s perhaps very true in the retail fuel space as well.
Deon: So oil and oil and data and oil are becoming the new focus area.
Deon: And it’s fascinating to see what can be done and what will be done in terms of enhancing propositions and enhancing the customer experience in that space.
Deon: I suspect that the fuel retailers will lead this space quite aggressively in terms of this integration and crossover between mobile payments and rewards.
Deon: Obviously, the other sector is grocery retail, which is the catch-all in terms of driving mobile payments and other forms of inclusive payments.
Paula: Yeah, and I’ve often said as well, Deon, payment-linked loyalty is, I suppose, the generic term I’ve heard used for that convergence of payments and loyalty.
Paula: To me, that is absolutely the single biggest opportunity, actually, in terms of really simplifying the customer’s experience, certainly in a C store.
Paula: So you’re absolutely right.
Paula: Taking friction out of the journey, if you can do that.
Paula: I mean, it just benefits everybody, and it seems like an obvious one, but it seems to be only in 2020 that we’re getting around to doing that.
Deon: Yeah, I think the uniqueness of the South African market as well is that we have multiple pockets of consumers that are on the journey to, let’s call it, that ultimate path of mobile payments, if that’s the journey we’re focusing on.
Deon: Not everybody is there yet, and perhaps a discussion for another day is what’s happening in grocery retail and what South African grocery retailers have done, and how, quite specifically, they’ve focused on accommodating the varying needs of consumers in terms of where they’re at in their state of readiness.
Deon: Almost every conversation that I get into talks around the need for and encourages a debate around the need for a plastic loyalty card as a membership identifier.
Deon: And often the question that’s asked by the prospective program sponsor is can we not just immediately dive to mobile and away with a piece of plastic as an identifier?
Deon: And interestingly, and I know this is not the case in some of the advanced markets that we see operating, but certainly in South Africa we have a lot of consumers still using cash as a payment mechanism.
Deon: So that makes it interesting because it forces us as program designers and operators and strategists and implementers to think much broader than just a single fit solution, to look beyond that and to say, well, how do we cater for that person who’s still uncomfortable moving to mobile, or even hard for that matter as a payment mechanism, and still cater for their cash spend?
Deon: But then slowly, with the use of clever marketing, pulling them into that journey and possibly rewarding them for moving up into more technology-enabled methods of engagement.
Deon: I think that’s ultimately where we would want to be, but it may take some time.
Deon: So typically, the kind of response that we give when customers or program clients are looking to do some mobile-only type solutions is to say, well, let’s go multiple.
Deon: Let’s use an omni-channel approach.
Deon: And involve customers as and when they’re ready into that fully digitally-enabled world of frictionless engagement.
Paula: The holy grail, eh?
Paula: So I suppose I just want to maybe summarize a couple of things I’ve heard there, Deon, coming through and what you said.
Paula: And then we’ll just maybe touch on a couple of final questions.
Paula: But in terms of trends in loyalty, what I’ve heard you mention, for example, is an increasing focus on partnerships, even though you yourself have been working on that for over 20 years.
Paula: So that’s certainly one thing that’s very important, I think, for all loyalty program managers to consider.
Paula: Secondly, the whole trend around removing friction, which I think is, you know, always there, but increasingly important in this very busy world.
Paula: And one that you mentioned to me, actually, when we talked previously, Deon, is around, you know, just, you know, programs starting to maybe step back a little bit to review, are their programs working?
Paula: So I’d love to just chat a bit around, you know, what is your experience with them, you know, where loyalty programs are in general in terms of the South African market from that perspective?
Deon: Okay, cool.
Deon: So I think, you know, let’s address that perhaps even in reverse order.
Deon: So with the market that’s been established and continues to grow for the last 10 to 15 to 20 years, I think what we’re starting to see, which is a phrase that I use quite often, is almost the establishment of real estate.
Deon: So it’s when, you know, when no more properties are available in a particular area and the consumer is investing to enhance their real estate by refurbishing their home.
Deon: I think we’re starting to see that as a parallel.
Deon: We’re starting to see programs that are here to stay and significant focus on making sure that they constantly engage the customer.
Deon: What we’ve also seen is, as you would have seen in other markets, with the evolution of loyalty and rewards penetration, is that typically they start off in the domain of tier one brands.
Deon: And over the passage of time, they move through into the lower tier brands that perhaps don’t operate within the limelight of the multimillion dollar marketing budget.
Deon: So we’ve started to see more brands specifically in retail moving aggressively into loyalty too.
Deon: And the primary driver, which is often a question that’s asked right up front, is the primary driver is to gather insights.
Deon: So as you know, as a retailer, often you don’t have those insights because there’s no annuity or account relationship with the end consumer.
Deon: And what the program does, obviously, is attach a whole bunch of detail on a user profile and provided the user identifies themselves every time they shop, those insights start together.
Deon: So that’s the first trend that I’ve seen emerging, is that there’s a lot of interest from smaller clients, smaller retailers, smaller brands, not just in retail, but across any market sector, wanting to get in.
Deon: And for them, it’s often a case of, let’s cut to the chase, show me what works.
Deon: I don’t have the investment capabilities of these big tier one brands.
Deon: And help me build a database, and help me gather insights so that I can move to this ability to personalize, if not the experience, but the proposition.
Deon: And in addition, not just the core proposition, in terms of my product and service offering, based on insights, but also my loyalty proposition.
Deon: So what we’ve also seen, Paula, is an emergence of, call it a post implementation review, or a strategic review, a diagnostic review of where programs are at.
Deon: I often joke and say that no one goes out of their way to design a poor program.
Paula: Sure.
Deon: In order to sign off from Exco and C-suite, we look at what’s out there, and we design to the best of our abilities based on our resource constraints, based on what our competitors expect and anticipate.
Deon: Then we launch, and sometimes it doesn’t hit the spot.
Deon: So how does one resurrect that, and how do you not lose focus in terms of the original business case?
Deon: So what I’ve seen certainly emerging in our market, and it’s something that I do get involved with, is these diagnostic reviews, which takes it back to basics around what was the intent, what was the original business case, and how are we performing against that?
Deon: And how have we enhanced the proposition of the passage of time, and how closely do we look into what customers are saying, and what is our face to market, our retail store staff component, what are they saying and not saying, and how does the mystery shopper play out in that space?
Deon: And what enhancements do we need to do?
Deon: Have we evolved the proposition such that it’s as good, it’s not better, than our competitor?
Deon: And what should we be doing to enhance it?
Deon: And then to your first point around partnerships, partnerships, as you know, are incredibly powerful.
Deon: And for me, they work on two levels.
Deon: And one, they work where the core proposition is perhaps not effective on its own as a standalone, either by virtue of the margin that’s available toward the customer or the frequency of purchase or the basket size.
Deon: So a silly example, you know, if I’m a fashion retailer, not a fashion retailer, if I’m a home retailer, customers typically only buy white goods or electronic goods from me once or twice a year at best, it’s kind of difficult to stand alone.
Deon: And that’s certainly where we see a lot of propositions partnering with others.
Deon: And whether that’s a discount type relationship, an affinity relationship, an earn and burn, redemption type relationship, we’ve certainly seen a lot of that.
Deon: And then, you know, in some instances, it does make sense for big brands to come together, especially if they’re noncompeting.
Deon: So we’ve seen that very successfully done by the retail banks and the insurance providers in the market, where they’ve brought in complementary services.
Deon: I mean, at the end of the day, nobody really wants to redeem their bank points, their bank miles and currency for banking fees.
Deon: But if they can use that to subsidize the cost of the latest Apple Watch or, you know, iPad or groceries or whatever it is, it starts becoming a lot more attractive to the consumer.
Deon: So I think partnerships play a big role there.
Deon: And certainly, if anything, we have probably close to 80 national reward propositions operating in South Africa.
Deon: So brands that operate on a national level, including brands that operate geographically or locally.
Deon: If anything, I suspect that we will see consolidation in the market over time, and that consolidation will be driven largely by powerful partnerships.
Deon: The economies of scale, the sharing of customer data, and there’s this ability to cross-sell into databases that we may not own, but we share with other brands that are under the same umbrella.
Paula: Phenomenal, Deon.
Paula: Amazing insight.
Paula: So yeah, definitely a trend towards consolidation makes a lot of sense.
Paula: And just, I suppose, I could, I suppose, talk to you for hours, but hopefully we’ll be able to do this again.
Paula: But just to finish up on this particular discussion, the final question I always love to ask is around resources.
Paula: And particularly I know from working with you, you’re very good at staying up to date on loyalty reports and you’ve already mentioned the Loyalty Academy, for example.
Paula: So tell us, what are your favorite resources that you recommend people stay reading or listening to in terms of loyalty?
Deon: I absolutely thrive on white papers and opinion pieces and studies that are released.
Deon: And obviously, platforms like LinkedIn and all the common interest groups that exist inside of LinkedIn are wonderful alerts in terms of what’s happening.
Deon: So you’ve talked obviously about the Loyalty Academy.
Deon: The Wise Marketer is a great publisher of content.
Deon: The Customer Strategy Network that we’re both on, there’s a lot of sharing of insights and resources that are coming out there.
Deon: Paula, you write great content.
Deon: So I always look forward to reading your insights and everything that you produce, either independently or through your relationship with Liquid Barcodes.
Deon: But there are a whole bunch more, and I have a folder on my laptop where I store all these wonderful international insights.
Deon: And whether it’s MasterCard in collaboration with a large consulting entity, whether it’s Visa, whether it’s Accenture, you know, there are just so many.
Deon: Loyalty One out of Canada, and I know you featured them on a podcast previously.
Deon: Bond produced great loyalty content as well with their white papers.
Deon: YouGov coming out of the UK, Mando Connect, and there’s just so much content.
Deon: And for me, they just give us wonderful insights.
Deon: I think, you know, sitting down at the bottom end of Africa in an emerging market that has a range of challenges, for me, it’s always wonderful to see what others are doing and whether all of that is always relevant, you know, is entirely up to you.
Deon: But for me, it creates wonderful excitement in terms of what others are doing, because often it opens up whole new ways of thinking, or if not, it reinforces where current thinking is at.
Deon: So I’ve got a wealth of wonderful insights that I’ve gathered from others that complement what I’ve learned, A, as a consumer, and B, as a practitioner in this market.
Deon: And, you know, I absolutely love those.
Deon: I also get involved locally with research.
Deon: I team up with a business called 8020, which is a consultancy, a whole bunch of smart, actually type and business science analytical thinkers.
Deon: And we’ve also produced a couple of research insights in terms of what’s happening in the South African market, because I think if we’re not abreast of that, we can’t really be adding value when we meet with prospective clients or engage on platforms like this.
Deon: So I really love the insights and research side of what’s happening.
Deon: And I think that aligns closely with where I would urge operators to be.
Deon: Don’t be afraid to ask your consumer, your registered member, into what they’re thinking and what’s working and what’s not working.
Deon: And use that to guide whether it’s your engagement interventions, whether it’s your channels to communicate, and obviously, whether it’s the proposition and whether that proposition is hitting the spot or not.
Deon: And what barriers may exist in the customer’s mind that are perceived to be inhibiting or holding them back from getting the most out of their proposition.
Deon: Research for me is, I love research.
Deon: I’m not a researcher.
Deon: I’m not fully trained in research, but I love gathering those insights and learning more.
Paula: Yeah.
Paula: And you’re right.
Paula: You know, it shouldn’t be.
Paula: So we shouldn’t even need to discuss it, but asking customers directly, you know, how are you enjoying this program?
Paula: What’s working for you?
Paula: I know a lot of the time it’s considered an expensive or time consuming process, but really I don’t think we can perform our jobs at all effectively, unless we at least have the decency to connect with people and genuinely ask for their feedback.
Paula: So good advice there.
Paula: And actually, just even from my own perspective, we again have talked about where are these reports available, and it’s hard almost to stay up to date with all of them.
Paula: And as a goal for myself this year, within the Let’s Talk Loyalty website, I’d love to create a space to publish whatever or share what’s been published.
Paula: So I’ll certainly come back to you for any contributions as and when I get…
Paula: Again, we all need…
Paula: I think we’re both compulsive learners.
Paula: I think a lot of people listening to this exactly are listening because they want to learn.
Paula: So let’s all make sure that we have a repository.
Paula: And again, I know The Wise Marketeer has some great stuff, but I definitely want to add to that facility.
Paula: So I think that’s as much as we can go through today, Deon.
Paula: I suppose the key thing in closing is to, first of all, obviously, thank you for your time, your insights, your expertise, and really just make sure we have your contact details.
Paula: Is it LinkedIn where we should refer to you in terms of if people want to talk to you about their loyalty programs?
Paula: What’s the best place to contact you?
Deon: I think LinkedIn is a great platform.
Deon: I am active on LinkedIn.
Deon: My profile is up to date.
Deon: I’m contactable via that.
Deon: LinkedIn messaging really works well.
Deon: It would be wonderful if there were conversations to be had, if there were practitioners in other markets that want to share ideas or prospective clients.
Deon: I’d be delighted to engage in any form of discussion.
Deon: And thank you, Paulette.
Deon: Thank you very much.
Deon: I know we’ve gone way over time, and we can talk for hours.
Deon: But I really love what I do, and I want to constantly grow and understand more by sharing these types of insights with you and with others.
Paula: Fantastic.
Paula: Okay, well, listen, I’ve really enjoyed our conversation, Deon, and yeah, just once again want to say Happy New Year and thanks a million for talking to Let’s Talk Loyalty.
Deon: Thank you.
Deon: Bye bye now.
Paula: Thanks so much for listening to this episode of Let’s Talk Loyalty.
Paula: If you’d like me to send you the latest show each week, simply sign up for the show newsletter on letstalkloyalty.com, and I’ll send you the latest episode to your inbox every Thursday.
Paula: Or just head to your favorite podcast platform.
Paula: Find Let’s Talk Loyalty and subscribe.
Paula: Of course, I’d love your feedback and reviews, and thanks again for supporting the show.
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