#114 - Does Your Loyalty Programme Need a Reality Check?

PAULA: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.

PAULA: I’m your host, Paula Thomas.

PAULA: And if you work in Loyalty Marketing, join me every week to learn the latest ideas from Loyalty Specialists around the world.

MIKE: Thank you.

PAULA: This episode is brought to you by Epsilon and their award-winning People Cloud Loyalty Solution.

PAULA: Today, I’m delighted to announce that I’m taking part in Epsilon’s Persona Live event this June.

PAULA: Persona Live is a series of online events designed to inspire marketeers with thought leadership, best practices, as well as interactive discussions around identity and personalizing our customers’ experiences.

PAULA: If you’d like to register for this free event and hear from Epsilon clients such as Marriott, Inspire Brands, GM Financial, and FedEx, just go ahead and visit epsilon.com forward slash Let’s Talk Loyalty.

PAULA: Hello and welcome to episode 114 of Let’s Talk Loyalty.

PAULA: Today, I’m delighted to welcome back Mike Atkin, an independent loyalty expert based in the UK who has advised some of the world’s biggest loyalty programs on both their strategy and also on their technology.

PAULA: Now, Mike is only my second ever guest so far to be invited back on the show.

PAULA: And the reason I reached out to him to come back on this particular time is because I’m hearing from so many loyalty professionals that they’re starting to really wonder and worry whether their loyalty programs are working.

PAULA: So, for people in a particular situation who want an independent, expert, external perspective, Mike has developed and in fact been delivering an extraordinary solution for exactly this type of situation within any company.

PAULA: So, without further ado, I’d like to welcome back Mike Atkin to Let’s Talk Loyalty.

PAULA: So, Mr.

PAULA: Mike Atkin, the loyalty guru, please do tell me, what is your favorite loyalty statistic?

MIKE: I would have to say that the redemption performance of the payback program in Germany is the one that stands out to me.

MIKE: It’s regularly been in excess of 85, 90 percent.

MIKE: So, it shows they make as much effort into encouraging people to redeem points and get the value proposition strong.

MIKE: And the other benefit, I think, is really down to German law as much as anything else, at any points that are unredeemed outside of their liability period are made as a donation to charity.

MIKE: And I think the members are allowed to choose what charity they donate to.

MIKE: So, I think that’s an excellent performance and should be a benchmark for any loyalty program operator for me.

PAULA: Totally, totally.

PAULA: And thank you for listening to that show.

PAULA: I was just looking back, Mike, it was episode number 94.

PAULA: So, yes, we’re already flying through a lot more.

PAULA: But I remember being blown away, obviously, as well.

PAULA: Payback is a program that I knew by reputation.

PAULA: I obviously knew that you had worked on as well, Mike, when it went through, obviously, a change of ownership to American Express.

PAULA: And I like the fact that the law is on, I suppose, I’m going to say both sides, actually, because I think it’s fair both to the consumer, use it or lose it, I think, is the message that’s coming through, and to the business that doesn’t have to carry a long term liability, I guess, for people not redeeming their points.

MIKE: Exactly.

MIKE: I mean, that is a problem for many companies that don’t prepare for that liability.

MIKE: Many companies have got millions of unredeemed liability on their books, and the accountants don’t like that.

MIKE: So I think it works that way.

MIKE: And I think it also reflected in the fact that the partners of the original program are still very much involved with it.

MIKE: So it’s obviously working for the coalition partners, as well as the consumer.

MIKE: So yeah, that’s a good comment.

MIKE: I think they’ve got it right.

MIKE: And it’s a good benchmark for me.

PAULA: Absolutely.

PAULA: It’s probably one of the best solutions I’ve heard.

PAULA: I’m sure you have plenty more.

PAULA: And I’ll certainly be asking you about them as we go through today.

PAULA: But just as a slightly amusing slash concerning aside, I did speak to an African airline sometime last year, which of course will remain nameless.

PAULA: But they did tell me that they just didn’t have a liability on the balance sheet for the loyalty program.

PAULA: And I was kind of, oh, my God.

PAULA: Anyway, it’s a thing.

PAULA: Oh, my goodness.

PAULA: Well, so clearly there are lots of things that can go extremely well for loyalty programs, but lots of things that don’t go so well.

PAULA: So I suppose what we’re here to talk about today, Mike, is a really nice solution that you have created, which I think is said to you has been sitting here on my desktop for a while, and I’ve been dying to talk to you about it.

PAULA: And in true marketing fashion, you’ve made up the name for the product, which I think is also very important.

PAULA: So I think you called it a suitably cheesy name called the Loyality Check.

PAULA: So we’re here today to talk all about that, and definitely the kind of thing I wish I’d had access to when I was running my own loyalty programs for clients.

PAULA: So first and foremost, tell our listeners what is a Loyality Check?

MIKE: Well, I suppose in a simple word, it’s a reality check on a loyalty program.

MIKE: It’s a dive into the details of how the program is working, how it’s performing, the value proposition, the strategy, the policy, data management, the reward options, the full gambit, the soup to nuts, as the Americans say, in terms of what’s going on.

MIKE: And in many cases, is it working?

MIKE: And often they don’t know, they don’t know what it costs to run the program.

MIKE: I was always taught at marketing college that you need to know what it costs to open the door in the morning, and many of them don’t.

MIKE: Often loyalty programs are siloed into different departments for have access and work with other areas.

MIKE: So it’s very difficult.

MIKE: And all the ones that I’ve done over the years, I’ve often found that there’s a sort of a distinct difference between operations and finance and marketing, and few of them actually come together, which is why when we do these loyalty checks, we really need access at a senior board level.

MIKE: It’s normally a director who says, like, let’s do this, a CEO or whatever, because that’s the only way.

MIKE: And because the customer strike, when network are independent, the client is normally quite happy that he’s not got somebody there who’s trying to sell them a platform or a solution as such.

PAULA: Yes.

MIKE: That’s where it came from, really.

MIKE: It was as a result of a UK fuel operator got in touch with me and said, look, we’d like you to come and look at our program.

MIKE: It’s not working.

MIKE: Or as he put it to me, I think it’s not working.

PAULA: Which is worse.

MIKE: Which is worrying.

MIKE: But I mean, the good thing about that was he admitted it.

MIKE: Fortunately, he wasn’t the guy who designed it, because that’s always a challenge.

PAULA: Yeah.

MIKE: If you’re doing an evaluation of the guy who designed it, then that could be awkward.

MIKE: But they were very honest.

MIKE: I think it frightened them, the results.

PAULA: Really?

MIKE: But we did show them a million pound saving on the rewards alone.

MIKE: So it was not insignificant.

MIKE: It was costing them five pound fifty to send out a five pound voucher.

MIKE: And there was all manner of fraud at the point of sale, people giving extra points to their friends and this itself.

MIKE: So it paid for itself very quickly.

MIKE: And that’s been similar for the ones that we’ve done.

MIKE: It’s always been a good investment.

PAULA: Okay, yeah.

PAULA: And I was going to pick up on that point, Mike, because I think one of the immediate benefits, I think, to listeners is the fact that it is an independent, external expert.

PAULA: Because I think with the best will in the world, we all have our own subjective views as to what is working or not.

PAULA: So whether it’s our own programs or somebody senior who identifies the need to really understand what’s going on, I think it’s extraordinary to have this capability to say, look, let’s just get somebody else to take a fresh look at things and see if it’s working or not.

MIKE: Yeah, exactly.

MIKE: And I applaud the people who have done it, because it often has been, you know, one comment I remember from the accountant saying that it was profit neutral, and I didn’t really know what that means.

MIKE: But he really didn’t know, and it wasn’t until we…

MIKE: Yeah.

MIKE: Actually, they didn’t really know what was going on until we started asking the questions.

MIKE: It’s a well-proven and well-used phrase, that they didn’t know what they didn’t know.

MIKE: And that was it.

MIKE: And because many programs were really invented in other people’s boardroom, they copied someone else’s then.

MIKE: Often, the strategy was at fault, and when you dug a bit deeper then, it hadn’t really been designed, and it sort of just limped along, and eventually got into a situation where it certainly wasn’t driving incremental growth.

PAULA: For sure, obviously, yeah.

PAULA: So lots of different, I suppose, mindsets, as you said, kind of brave executives at usually senior level, sometimes with just no idea whether it’s working.

PAULA: Sometimes, I think you mentioned, it might be somebody who’s inherited a loyalty program, and again, just needs to understand maybe some of the decisions that were made along the way, maybe an executive’s under pressure from their board to improve results, and I think there’s the whole technology piece, which we will get into as well.

PAULA: So I think it’s applicable for lots of the audience listening.

PAULA: So what kind of questions and answers are you looking to address with this loyalty product?

MIKE: Well, as I said earlier, it is a modular sort of process.

MIKE: So effectively, probably the strategy would be the first thing we’d look at.

MIKE: What are you trying to achieve?

MIKE: And of course, through all of this, we need to speak as many decision makers and decision influences that are involved in the program.

MIKE: So that’s normally part of the contract where we say, look, we need access to these people so they can give us their own opinions.

MIKE: So we would look at the program strategy.

MIKE: We’d look at the customer value proposition, which at the end of the day is what it’s all about.

MIKE: Is it valuable enough?

MIKE: Is it competitive?

MIKE: Is it just a vanilla offer?

MIKE: Many often programs will only offer points per spend.

MIKE: There’s no targeted offering, et cetera.

MIKE: Data analytics gets towards the top of the list, and with GDPR being evident now, the last couple that I’ve done have been very much around that.

MIKE: Are we conforming?

MIKE: We think we’re conforming, but we’re not sure.

MIKE: Really?

MIKE: We need to talk to…

MIKE: We’ve got a couple of experts within CSN who understand that.

MIKE: Yes.

MIKE: We would also look at the rewards and fulfillment process.

MIKE: The value proposition is obviously the reward as well.

PAULA: Yeah.

MIKE: And we’re finding now that companies are looking to outsource rewards and outsource rewards that have a higher perceived value.

MIKE: Moving away from vouchers, moving away from cash back, looking at the rewards, and how they fulfill those.

MIKE: How simple is it?

MIKE: We sometimes sit in call centers and listen to call centers, talk to call center staff about what they’re doing.

MIKE: Obviously, the financials come into it.

MIKE: Are there some KPIs?

MIKE: Is there a return on investment?

MIKE: And often, a couple of days are normally spent just looking at where all the costs come from and how they’re apportioned.

MIKE: Sometimes in the loyalty program, if they have a call center, that call center will provide call center service to loyalty program members, but it isn’t necessarily costed within that.

MIKE: So it’s those sort of things that you pick up on.

MIKE: Market research, are they doing any market research?

MIKE: Are they got any focus groups that are talking to the consumer?

MIKE: What’s the consumer’s opinion?

MIKE: The communications process, in terms of how they’re communicating with customers, use of social networking.

MIKE: And probably now, again, getting towards the top list is the customer care.

MIKE: That aspect of it now is often key, and it’s the service you get when you go into.

MIKE: The points are important.

MIKE: People buy into that, but they do expect a bit of customer care, and often that’s a weak link within some of these programs.

MIKE: And sometimes that’s born out of communication.

MIKE: No one, certain people down the line don’t necessarily know what they’re trying to do or what the objectives are.

MIKE: We hear stories of going into a store.

MIKE: We do some mystery shoppers and go into stores and talk to the staff, and they don’t really know about the program.

MIKE: Some of it is fairly obvious, but it’s just no one has really bothered to look at it.

MIKE: So there’s a myriad of things, and normally it involves a one-day course, a way day, ideally, with directors to talk about things and almost get the warts and all out in the scenario, and then come back and say, right, this is the area that I think we need to approach, and then go on and talk to the various departments and see the journey.

MIKE: As I said before, the word audit probably is what it is.

MIKE: It’s the sort of thing that if accountants were going to take over a company, they’d come in and look at it in detail and find out and say, well, look, is this viable?

MIKE: And I have to say probably three out of ten are probably not viable.

MIKE: I’ve had to say to people, you might just as well not bother.

MIKE: You know, it’s not doing anything.

PAULA: Yeah, that’s an extraordinary percentage.

PAULA: 30% not viable, huh?

MIKE: Yeah.

PAULA: Wow.

PAULA: Well, I mean, you said it, Mike, I think you have more experience running programs than anyone else I know.

PAULA: And of course, you do market yourself as the loyalty guru.

PAULA: So clearly, that’s exactly what’s coming through there.

MIKE: I was able to get the Twitter name loyalty guru, so it’s a bit cheeky, really.

PAULA: Totally fine.

PAULA: Well, I love it.

PAULA: You know, I’ve said before on the show, I regularly buy domain names if I have an idea that amuses me.

PAULA: I don’t know if I’ll ever use it for anything, but I’ll buy it just and hold it.

PAULA: So I think you snapped it up right.

PAULA: So yeah, so good positioning.

PAULA: Why not?

MIKE: Thank you.

MIKE: Yes.

PAULA: And just because you’ve mentioned CSN a few times, Mike, we’re both members of the Customer Strategy Network, but you’ve been involved even a lot longer than me.

PAULA: I’d love you just to explain, just even to go back a step to the holistic group of consultants that form the Customer Strategy Network, because we all work together, I suppose, in different ways around the world, independently as well as collaboratively.

PAULA: But just because you were there in the beginning, would you maybe just explain CSN for anybody not familiar with us?

MIKE: Yeah, I mean, it was a brainchild, for want of a better word, of myself and a guy called Bill Hanifin, who now runs The Wise Marketer.

MIKE: Yeah.

MIKE: And we were actually working in London.

MIKE: I was working with what is now Loyalty One.

MIKE: It was frequency marketing that were called in those days.

MIKE: And we’d had a fairly uncomfortable meeting, should we say, with Visa in their offices in Paddington, and we’re drowning our sorrows in a pub around the corner.

MIKE: And I thought, well, there must be a better way.

MIKE: We need somebody who can go in and talk to these companies without any hidden agenda.

MIKE: And that’s where we formed the idea, and we expanded on that and started talking to various other colleagues that we knew around the world and involving them.

MIKE: And so we pulled it together.

MIKE: It probably must be 15 years ago now, the first ones, Bill and myself were founder members and a few other guys, a guy from Nigeria, who’s no longer sort of working with us, but was a valuable member at the beginning, Praful from India, Praful Misra, who now works in a different division of Net Carrots, and that helped form the business, and it developed over the years.

MIKE: And obviously Nick Chambers now is running it.

MIKE: It took over about three years ago.

MIKE: It was owned by Wise Marketer, and I bought it back from the Wise Marketer.

MIKE: We now run it as Independence, and as you know, we’re now expanding the membership, and we’re looking for experts in their field because obviously it’s not just loyalty experts we need.

MIKE: We need GDPR, we need people who understand the legalities, we need people who understand customer behavioural things.

MIKE: So it’s expanding, and that’s how it’s gone over the years.

MIKE: I’m very pleased at the moment.

MIKE: It’s coming together as a nice group, and we’re gaining awareness around the world, which is good to know.

PAULA: Yes, people are pitching to join us.

PAULA: It’s super exciting.

MIKE: I know, it’s nice, isn’t it?

PAULA: Yeah.

PAULA: So, yeah, so that’s brilliant.

PAULA: Thank you very much, Mike, and you’re absolutely right.

PAULA: I think what is very reassuring for all of us is to have access to the kind of brain power, because I think we all have our own field of expertise within loyalty, but we don’t, nobody has all the answers, I guess.

PAULA: So what I like, actually, and we will give Nick a proper plug there for doing some great work, Nick and Mobile Loyalty Technologies for really driving the customer strategy network and keeping us all well behaved and engaging on high tech platforms like Slack to communicate with each other.

MIKE: Exactly right.

MIKE: Mostly of the work I’ve done in these loyalty checks, it’s been normally a team effort.

MIKE: It isn’t just me because we do have, as you said, experts in different fields.

MIKE: So Nick’s certainly on the technology and the mobile side of it.

MIKE: And there’s a guy called Richard Dutton who understands GDPR.

MIKE: So we involve different people, and that’s the beauty of what they’re getting.

MIKE: They’re getting access to global awareness of what’s going on.

MIKE: So often we see them every day, don’t we?

MIKE: People are asking us, does anyone know anything about loyalty programs in the airline sector?

MIKE: And we’ve got a wealth of knowledge between us, which we’re very happy to share.

PAULA: Yes, absolutely.

PAULA: Yeah.

PAULA: And the other point, just before we move back to the loyalty check, you just mentioned a couple of trends, I suppose, and one that I know you’ve got a lot of experience with from your work with Tesco, which is obviously extremely well respected there in the UK.

PAULA: And it’s this very clever model that I know they have that you’re a big fan of, which is around, you know, really, I suppose, multiplying the value of the rewards.

PAULA: I think you said by essentially outsourcing maybe the reward strategy.

PAULA: So I’d love you just to explain that piece as well in case anybody’s not familiar with that, because I know it’s something you’ve done a lot of work with.

MIKE: Yes, yes.

MIKE: It was born out of the work I did several years ago where suddenly a sort of a light went on in the in the mines of Tesco and suddenly thought, we’re giving away 1%, it was actually 2% at the time, but we’re giving away this percentage.

MIKE: And all that’s happening is the customers are coming back in the store and buying stuff they would have bought anyway.

MIKE: But instead of using cash, they’re using points.

MIKE: And this came to fruition at Christmas time when people were going in and using their points to buy the Christmas booze.

MIKE: And so I said, well, hang on a minute, we really want them to be using their money when they come into the store.

MIKE: So let’s get them to start using their points to buy other things.

MIKE: And that’s when we started looking out to markets and looking out to potential partners that had higher value proposition, had higher margins to play with.

MIKE: So they could afford to make the value proposition attractive.

MIKE: Because Tesco could say, hey, we’ve got, at this time, 11 million active members, we can drive them into your hotel, your restaurant, your pizza express or whatever.

MIKE: Then the negotiation was quite easy.

MIKE: They were quite happy to say, yeah, we’ll do that.

MIKE: And now if you go to their club card site, I think the average is probably three times the face value.

MIKE: So if you have a five pound voucher with Tesco, it’s worth 15 pounds in Chef and Brewer.

MIKE: It’s worth 15 pounds in some cinemas.

MIKE: I think they even have an agreement with Royal Caribbean where they’re worth three times their face value towards a cruise.

MIKE: And it’s a seamless operation.

MIKE: You go online, you put your club card details in, they tell you what vouchers you’ve got, what points you’ve got.

MIKE: You convert them into another voucher and present that voucher to the supermarket or to the partner.

MIKE: And you don’t even have to sort of book.

MIKE: There’s no blackout days like there are on the airlines.

MIKE: You just use it as currency.

MIKE: You hand your voucher over when you come to sell it.

MIKE: So to me, that’s making that value proposition more attractive.

MIKE: An accountant friend to me used to say, buy 100, get one free is not a very good offer.

MIKE: And I think that probably making it worth more.

MIKE: It’s also interesting to see they’ve started promoting that.

MIKE: They have now started putting a bit more effort into advising people, encouraging people to redeem rather than just keep spending.

MIKE: Because obviously it’s safe, you know, that they’ve got a liability issue.

MIKE: And if points aren’t being redeemed, members aren’t redeeming, for me, they’re not engaged.

PAULA: Totally.

PAULA: It’s a fundamental.

PAULA: Absolutely.

PAULA: That’s the moment of truth.

PAULA: So definitely that’s extremely critical.

PAULA: So yeah, so I love that piece.

PAULA: And what I was thinking, as you were saying it, Mike, is I think for the partner as well, who’s enjoying that, I’m going to call it actually free marketing.

PAULA: Because if you manage to become a partner of the Tesco Clubcard program, as you said, it’s 11 million or whatever number of millions of customers are being actively, you know, recommended go to, I don’t know whether it’s London Zoo or as you said, Pizza Express, there’s plenty of brands and options there.

PAULA: But it’s almost like for those brands, it’s like an acquisition channel that they’re finding access to people, which I guess, you know, they take the one off acquisition cost in terms of multiplying the voucher value, as we said, but it’s there in the margin and it just makes sense for everybody.

MIKE: Yeah, I mean, I think, you know, I cite my daughter as an example.

MIKE: I mean, not because her dad’s in the business, but as she spends everything with Tesco over the month, she can take my grandchildren to the cinema and have a pizza once a month.

MIKE: Not recently, there’s a big build up at the moment, so they’ve got pizzas for the next few weeks.

MIKE: But certainly that is the concept.

MIKE: I think the key to it is, though, what I would point out is it needs to be exclusive.

MIKE: Because I think the problem that the airlines have, I can use any of my air miles to redeem against any hotel chain, to be against any car hire company.

MIKE: So what is the point of them promoting my brand?

MIKE: So I think then Tesco can say, look, Mr.

MIKE: Chef and Brewer will give you exclusivity, but we want you to promote this in your restaurants and in your own websites and what have you.

MIKE: So that does make a difference.

MIKE: Otherwise, the partner doesn’t get behind it and the staff don’t know about it.

MIKE: When a customer goes in there, then the whole thing falls flat.

PAULA: Yeah, you’re absolutely right.

PAULA: Actually, I used to spend a lot of time, as you know, Mike, negotiating partnerships for O2 in Ireland.

PAULA: And again, the communication on the partner side was always my biggest challenge to make sure that they were excited about it as we were.

PAULA: So we can do the digital communication, but the point of sale again, back to the moment of truth.

PAULA: So you really have to have, I suppose, actually, we almost had disloyalty at one stage where people were being embarrassed, you know, if they were trying to claim something.

PAULA: And, you know, it was then embarrassing for us and for me as the person who set up that partnership.

PAULA: So, yeah, we paid a lot of attention once it went wrong a few times just to make sure it was seamless from end to end.

MIKE: Yeah, yes.

MIKE: Well, O2 is a good example.

MIKE: I mean, that is one of the successful ones as well.

MIKE: A customer gets it.

MIKE: They do get points, mean prizes, but they won’t jump through too many hoops and they’ll soon get fed up.

MIKE: And of course, they’ll tell loads of other people as well.

MIKE: So it needs to be thought through and watertight before you announce it.

MIKE: And then make sure you deliver it obviously.

PAULA: Absolutely.

PAULA: Yeah.

PAULA: So sorry for taking you off topic, Mike, but there’s just so much in there.

PAULA: So back to Loyalty Check.

PAULA: you said it usually comes in at a senior level, which I think is extremely important.

PAULA: And you mentioned a one day workshop, and that’s normally at the beginning of the process.

PAULA: Is that what you’re saying?

PAULA: Just as a kickoff session?

MIKE: We normally get ideally the board members in there and certainly the main sponsor, which is the CEO or the CMO or the CFO.

MIKE: To say, look, these guys are here.

MIKE: They’re going to do everything.

MIKE: They’re going to find out about Loyalty Program.

MIKE: We want you to open up and tell them everything, warts and all, so that you know that you’re not going to get any sort of barriers when you go in and sit down with these people.

MIKE: And then we normally talk through what the process would be, what sort of things we’d be looking at and allow them to make their opinions and understand their attitudes, because we need to handle that through the process.

MIKE: And sometimes that attitude reflects in the program.

MIKE: You get the sort of body language that tells you these people don’t buy into it or the CFO thinks it’s a waste of time.

MIKE: So these challenges need to be managed.

MIKE: But that’s normally the process.

MIKE: And that also enables them to come back with a more detailed proposal as to what needs to be done.

MIKE: And then you can get down to pricing it rather than speculating and charging so much your module, because it depends on what information is available and what information they want to look at.

PAULA: And you mentioned Modular Mike.

PAULA: I’m guessing the sense that Loyalty overall is all modules.

PAULA: So as you said, it’s an end-to-end solution.

PAULA: So it’s looking at absolutely every step.

PAULA: So just talk us through all of those modules, so we understand everything that you’re going to be looking at when you’re going into a company.

MIKE: Okay.

MIKE: Well, I think, as I mentioned, program strategy would be me, for number one, would be to look at.

MIKE: So that’s where you’re talking to CEO.

MIKE: Why are you doing this in the first place?

MIKE: And often that comes up before I have six different opinions and feedbacks from the audience, which often can be embarrassing, but it highlights the issue.

MIKE: The customer value proposition, both on the earn and burn side, data analytics, the capabilities, the deliverables on that.

MIKE: Often that’s an asset of the company.

MIKE: You mentioned about Tesco’s having that valuable 11 million customers that they know a lot about that they can drive into retail partners.

MIKE: So understanding that and perhaps even making it worth valuable to them.

MIKE: Often they don’t realize the value of the data.

MIKE: But also now with GDPR coming in, then there’s rules and regulations around how you can manage that.

MIKE: The financials, the return on investment, the program performance.

MIKE: Do you know how the program is performing?

MIKE: And often that involves some analysis, some data analysis, decile analysis.

MIKE: I recall one where we identified that something like 5% of their customer base were bringing in 80% of their turnover.

MIKE: 5% of the collectors were bringing in 80% of the points that were being awarded.

MIKE: And that’s what we identified.

MIKE: Lots of fraud, but it was very much down to high mileage drivers were doing it.

MIKE: So it gives you an idea.

MIKE: It was obviously in the pure retailer sector.

MIKE: Rewards and fulfillment.

MIKE: We’ve just talked about that with Tesco.

MIKE: So what is your value proposition?

MIKE: Can we do anything to improve that?

MIKE: Because as well as analyzing it, we also come back with a recommendation as to what you could be doing.

MIKE: It’s not just saying this is rubbish, you need to do this.

MIKE: Then we can often come back and suggest as we go through the process, because we will identify perhaps relationships they have within the marketplace or industries that they align with that could be useful partners.

MIKE: And as we’re moving a lot towards some form of coalition, whether it’s the Nectar type coalition or whether it’s a coalition similar to Tesco’s where they’re the main brand, but they have partners, then often that seems to be the business model you develop to.

MIKE: Marketing and communications, how you talk to your customers, is it up to date, is it what the customers want?

MIKE: Is the customer page, their website page accessible?

MIKE: Are you using mobile apps?

MIKE: How valuable that is?

MIKE: Is your customer profile suitable for that type of customer?

MIKE: We look at the customer care process, as I said, the customer journey to see if there’s any hiccups there, not only from when they start joining, but once they’ve started joining and are the frequently asked questions covered?

MIKE: Is that easy access?

MIKE: Do the staff and all the decision makers, the people that are in communication, the front line aware of what we’re trying to do here and how it works?

MIKE: The team itself, I suppose you’re looking at the capabilities of the people who are running it.

MIKE: I always like to see certainly a loyalty manager idea, a loyalty director, someone who has some authority and empowered, so they’re trained, they’re up to date with what’s going on, but they’re aware of what’s going on, so they’re looking at the wise marketer every week, they’re reading articles about it, they’re keeping themselves up to date.

MIKE: That capability can so often be important.

MIKE: And again, from experience, we find that often these programs are launched with a big band.

MIKE: Everyone talks about it, they promote it.

MIKE: Six months later, some poor little girl sits in an office trying to make it interesting.

PAULA: That’s exactly what I’ve seen.

MIKE: It’s such a shame.

MIKE: So that customer care and training is important.

MIKE: And you’ve mentioned it already, it probably comes higher in certain areas, is technology.

MIKE: Often these programs are launched using internal technology, which of course is often out of date.

MIKE: So even benchmarking the technology, enable them to identify what technology is available to improve performance of the program, because that’s changed dramatically over recent years with cloud technology and the cost of these platforms coming down.

MIKE: So there’s normally a deep dive there as well, looking at how it works within operations.

MIKE: And I suppose that sums it up.

MIKE: Market research can sometimes come into it.

MIKE: We have done a couple where we’ve actually contracted market research companies to do some analysis of customers, interview customers, different customer groups, do a SWOT or TALS analysis on customers’ opinions.

MIKE: Because often these companies, I sometimes wonder when they sit down and decide on a value proposition, whether they look at it in the eyes of the consumer, whether they think to themselves, well, would I bother doing that for this?

MIKE: And so often you see that it isn’t really worth the customer’s effort.

MIKE: And again, you have to be honest about that and say, look, it’s not going to motivate people.

PAULA: You’re right.

PAULA: And you know, I don’t think anybody ever intentionally, Mike sits down to design obviously a value proposition that isn’t compelling.

PAULA: Obviously, we’re all here to be successful.

PAULA: But in my experience, what happens along the way is you start with the strong value proposition and it gets watered down either for financial reasons or legal reasons or communications or there’s lots of there’s so many stakeholders involved with who have a view that I often find it just by the time it actually gets onto a poster or onto TV, it just isn’t what the loyalty team originally set out to do.

PAULA: So I genuinely think that that’s one of the real issues.

MIKE: Yeah, I think you’re right.

MIKE: But also, I mean, I think the reason that I hope the reason these people do run these loyalty programs is to identify best customers and look after best customers.

MIKE: So if you know who your top 20 percent are, your Purito’s Law customers, then those are the people you need to look at.

MIKE: Those are the people you need to motivate and influence the behavior of.

MIKE: And if you’re not analyzing that and looking at how well they’re performing and doing a regular decile analysis and looking at perhaps the people who are just got married, started having children, spending a bit more, whatever it may be, then you’ve got to use the currency in a far more flexible way.

MIKE: So you can easily reduce the cost of your point.

MIKE: But it’s always wise to have capabilities to still offer a better value proposition to different customers rather than the vanilla approach where, you know, whether you spend a ten pound or a hundred pound, you get one percent target customers.

MIKE: Again, this is where technology comes in because it used to be technology was fairly flat, you know, and it was just points per pound or whatever it was.

MIKE: Now, of course, it can be so more sophisticated by date and time, by payment type, by product, by product group, by SKU.

PAULA: Yeah.

MIKE: So, that aspect of it.

MIKE: And again, you know, touching on the point side of it, I’m seeing lots of custom companies now who are looking to their suppliers to fund the points as well.

PAULA: Oh, really?

MIKE: Yeah.

MIKE: I mean, certainly, I believe I’m right in saying that the Tesco’s and Sainsbury’s almost have a panel that sits every month to see whose chocolate we’re going to promote this month.

MIKE: I mean, Mr.

MIKE: Cadbury or Mr.

MIKE: Nestle, and Mr.

MIKE: Cadbury would wire the Tesco’s gay double points on a bar of chocolate, then knock 10 pence off it.

MIKE: And so they’re happy to fund those points, which helps fund the program.

MIKE: And there’s normally some trade-off that they get access to, to data in terms of performance.

MIKE: So there’s lots of little tricks, really.

MIKE: They’re fairly common knowledge, but often you are surprised because loyalty isn’t seen as important for some of these companies.

MIKE: And they don’t, no one has really looked at it and said, well, hang on a minute, why aren’t we doing this?

MIKE: So often there’s some, when we sit down and present at the end as to what we found in the analysis, there’s often some raised eyebrows that thought, well, I didn’t realize it was possible to do that, you know, which makes you feel better as well.

PAULA: Well, totally.

PAULA: Yeah.

PAULA: And I think you’re right, Mike.

PAULA: I think it’s the grocery sector that really has figured out this concept of, I think it’s called politely, other people’s money.

PAULA: And it is fantastic because again, the brands and the products want to have the visibility and building their brands through these databases because they don’t have obviously the direct customer relationship.

PAULA: So I’m definitely a big fan of that.

PAULA: I was talking to somebody in Australia recently and he said exactly the same, an increasing awareness both of the media value overall as well as literally the access to the brand money perhaps.

PAULA: So we all know that FMCG brands spend massive money, whether it’s sponsoring the Olympics or I don’t know what kind of marketing activity, but I increasingly feel that that’s starting to be siphoned off into the whole area of loyalty to fund direct activity at the point where it can really make a difference.

MIKE: Exactly.

MIKE: And I think with technology nowadays, that’s measurable.

MIKE: Technology enables to track who issued that point, whether it was redeemed.

MIKE: So the FMCG guys realize now that they can actually track and identify that the value proposition they’re offering, the double points, triple points, whatever it is, is having an impact.

MIKE: And the practitioners need to have that technology in place to do that.

MIKE: It’s an easy sell because you can measure it.

MIKE: We can always argue that advertising works for some or it doesn’t work.

MIKE: But with this, you can measure and say, OK, well, as a result of doing double points on Kit Kat last month, we sold five times as many.

MIKE: It’s a no brainer from that point of view.

MIKE: And again, technology will enable you to do that.

PAULA: Well, I definitely want to ask you about that next now, Mike.

PAULA: But I suppose again, just to draw the parallels, because I think the reason digital became such an explosive marketing opportunity for so many of us, I’m going to say 20 years ago when it originally started, was because it was measurable.

PAULA: So it almost seems crazy that it’s only now.

PAULA: And perhaps, as you said, it is the legacy systems that we had in place operating lots of these loyalty programs that we didn’t have the same degree of measuring the impact.

PAULA: But if the technology now can prove that level of incrementality, I mean, just, you know, again, I’ve often used the term, I see myself as a commercial marketeer.

PAULA: And why would you not consider implementing a solution like that?

MIKE: Yeah, exactly.

MIKE: And as I said, it’s not as expensive as it was.

MIKE: You’re not talking about a lot of money.

MIKE: I mean, there were the days, I remember, when we were looking at the American Express platform and its suitability to run coalitions.

MIKE: And I think that had cost them something in excess of $3 million to develop over many, many years.

MIKE: And I’ve recently done an evaluation, a platform for a company, and it’s going to probably cost less than $150,000 for new technology with all the bells and whistles that you would need to run a sophisticated program.

MIKE: So the price has come down, and it’s really a no-brainer.

MIKE: If you don’t get that right, then you can’t really develop.

MIKE: And often, I see RFPs go out, and they’re not necessarily future-proofed.

MIKE: No one is thinking two, three years hence.

MIKE: That’s something we always try and look at.

MIKE: You might not want to do this today, but make sure that when you do an RFP, it’s suitable for the future.

MIKE: Otherwise, in three years’ time, and you want to be a bit more clever, you’ve got to get your checkbook out again.

PAULA: Yeah, and sometimes I feel like it mightn’t be even something that’s even within the current capabilities of a particular platform, but it’s almost like that they see that they’re open to having a roadmap, that their clients can have some input, or they’re the type of company that wants to be innovative.

PAULA: So I really think the visibility of their approach to what goes on the wishlist for new features certainly to me tends to impress me anyway if I’m told, yeah, we want to hear what you want, and we’ll think about that as holistic for what all of our clients need.

PAULA: So on the technology piece, my experience has always been it’s a very scary concept to consider swapping out a platform.

PAULA: I think, as you already said, lots of companies maybe initially built them in-house.

PAULA: They’ve probably been sellotaped together with billing systems and point of sale systems and who knows what.

PAULA: And whereas the state of the art technology looks absolutely extraordinary, I think it’s the unknown.

PAULA: I think that really scares me.

PAULA: So what is it like in this day and age, let’s say, to go through that kind of whole RFP process and the transition?

PAULA: You know, like what degree of comfort do you have when you’re supporting clients with that?

MIKE: Yeah, I mean, you’re right.

MIKE: It is a bit of a minefield.

MIKE: Again, it’s probably similar to the whole loyalty check that you need to look at the value proposition, where the business is going, what its competitors are doing to see whether the technology that you need is going to have the capabilities that they will need in order to make an effective program.

MIKE: So that’s your first criteria.

MIKE: And I think the last time I looked, we have a benchmarking technology spreadsheet, which has something like 550 different capabilities on it.

MIKE: We’re running these programs in terms of what it needs to do.

MIKE: I mean, that’s the Rolls Royce.

MIKE: There are a few out there that would tick most of those boxes.

MIKE: You then look at what the customer is requiring, the client needs, and identify which of those capabilities are needed.

MIKE: And because we benchmarked very many now, we can identify certain retail, certain vendors that have those capabilities.

MIKE: And I’m finding now it is those vendors who are running effective programs that are better suited for providing technology because they understand loyalty.

MIKE: Often, with all due respect to technology people, they will do what you ask them to do, but they won’t necessarily think outside the box.

MIKE: I’m now finding there’s technology providers out there who will say, have you thought about doing this?

MIKE: Or do you realize if you do this, this will happen?

MIKE: So it shouldn’t be onerous.

MIKE: I mean, it’s a process that takes time.

MIKE: You normally got to go through due diligence, and you’ve got to look for two or three vendors and give them a chance to ask questions and do a show and tell presentation.

MIKE: But it’s certainly a worthwhile proposition.

MIKE: It isn’t as expensive.

MIKE: And when it comes to sort of working with existing technologies, again, these companies have really developed it.

MIKE: Most of them just need a transaction feed.

MIKE: They’ll take that transaction fee from a point of sale, from an ATM, from a mobile phone or whatever, and then the system will identify the member is, calculate what the reward is, and send a message back.

MIKE: So it isn’t too onerous to do it.

MIKE: You often get the body language from the IT people saying, I can do that and what have you.

MIKE: But part of the challenge is to take away the hand grenade and make them realize that it’s not, it makes life a bit easier for them.

MIKE: But it’s a useful process.

MIKE: And in many cases, you can enhance it.

MIKE: There are programs where you can add value.

MIKE: And if I’m honest, when I sit down with some of these architects who design these programs, and I will say to them, can it do this?

MIKE: And he says, well, no, not at the moment, but I can easily make it do it.

MIKE: So in many cases, it is not necessarily the poor technology that’s the problem.

MIKE: It’s the how they use that technology.

MIKE: It’s again an old watchword.

MIKE: If technology enables, imagination wins.

MIKE: And it’s that sort of aspect of it that’s often weak because people don’t realize they can do certain things with it.

MIKE: So yeah, RFPs are a minefield.

MIKE: And we do hold the customer’s hand, if you like, while we go through that process.

PAULA: Yeah, I was going to say that, Mike, because again, it’s incredible that you have benchmarked 55 at, I know, a granular level, but clearly nobody wants to go to an RFP to 55 vendors.

PAULA: So shortlisting, step one.

PAULA: So I’m sure you get lots of phone calls around that.

PAULA: So that’s just really interesting.

PAULA: So again, at the end, we’ll make sure everybody knows where to find you.

PAULA: If they are thinking, actually, I probably need to look at my technology issues and opportunities, and I definitely need an expert pair of hands.

PAULA: So I think that’s another extraordinary service that you do do, which again, certainly in my position, I would never have attempted to do something like that without support from somebody like you.

PAULA: So I guess you get a lot of business doing that kind of work as well, still, do you?

MIKE: Yeah, a lot of inquiries come through from that.

MIKE: People, certainly after the changes in the marketplace following the pandemic as a country slowly reopens or different countries reopen, they’re starting to look at these things a bit more closely.

MIKE: So I’ve had lots of people come on and say, I think it’s time to evaluate what I’m doing.

MIKE: Nick and I have just finished one now that we’re working on an RFP situation.

MIKE: And it’s not only me within CSN.

MIKE: I mean, we’ve got the next co-op guy over in the States who’s doing it, and any CSN member, wherever they are, can run this because we can do this remotely.

MIKE: We don’t need to physically be there.

MIKE: We can do presentations.

MIKE: We can ask them to complete surveys and answer questions, tick boxes, and what have you.

MIKE: So it’s quite easy to do remotely.

MIKE: But yeah, a lot of people look at that, and that’s when it enables you to sort of come back and say, well, if you use this technology, you’ll be able to do this, this, this, and this, which will make your value proposition stronger, more targeted, and therefore more, more effective.

PAULA: Yeah.

MIKE: I saw some technology recently, which enables a client to identify a return on investment by location in real time.

PAULA: My goodness.

MIKE: So if you’re running a promotion and you want to see how it’s going, you can imagine the CFOs love that.

PAULA: Yes.

MIKE: They sit down and they can see where the money’s going and identify that, yes, this is having an impact on the market.

MIKE: And that, again, is an ideal scenario.

MIKE: And that’s fairly common.

MIKE: There are a few that don’t enable you to evaluate that.

MIKE: In the first instance, one of the weaknesses I’m finding that very platforms don’t allow the client to evaluate the potential liability for doing a double point or triple point offer.

MIKE: Most of them now are pretty much up to date because technology has had to move with the demand from the marketeers.

PAULA: Yes, yes, always does.

PAULA: Absolutely.

PAULA: And I suppose we can’t not refer to the pandemic, Mike.

PAULA: I know in the UK, as you said, things are starting to return back to normal, certainly in Ireland yesterday.

PAULA: So today we are June the 7th, when we’re having this conversation.

PAULA: So yesterday, Ireland reopened the pubs for the first time since Christmas.

PAULA: So we’ve had, I think, actually the longest continuous lockdown of Level 5 around the world, from what I heard.

PAULA: But in terms of just, you know, what are you hearing from loyalty marketers or direct from consumers in terms of what is important to be thinking about now?

PAULA: So I love the loyalty check, as you can tell, you know, literally taking that helicopter view.

PAULA: Let’s see what on earth is going on with our programs so we can move forward into the next phase.

PAULA: But what do you think it’s important for us all to be thinking about as loyalty professionals?

MIKE: Well, I think it’s talking to your customers and looking at retention.

MIKE: Because I suppose the supermarkets have stayed open.

MIKE: Certainly in the UK, they’ve weathered the storm, if you’d like.

MIKE: But some of the smaller independents have started to benefit.

MIKE: You know, the convenience stores, people have used them a lot more.

MIKE: And I’ve said this before, the convenience stores are smaller independent retailers.

MIKE: They should be looking at having some form of loyalty program.

MIKE: Even if it starts off as something fairly basic, get some dialogue with your customers, talk to them, say thank you, make them offers.

MIKE: If they’re bothering to come into your store, then try and keep them coming in.

MIKE: You know, I think there is, it’s the supermarkets automatically get it because it’s convenience, et cetera, et cetera.

MIKE: But everyone will pop into your local co-op or whatever it may be on their way back from the office or from out and about, may pop in for some milk or something.

MIKE: These are the people that perhaps need to be looking at loyalty a bit more seriously, not just bog off offers and two for one.

MIKE: It’s a bit more than that.

MIKE: Because the good news is the customer is already a member of a program, just not necessarily yours.

MIKE: So, you know, look at those people coming in.

MIKE: There used to be a time when the shopkeeper knew all his local customers, then you need to do that again, I think.

PAULA: You’re losing your voice on me, Mike.

PAULA: You’re all right.

PAULA: You can take a sip of water.

PAULA: I think we’ve gone through anyway most of the extraordinary stuff, as I said.

PAULA: In this presentation deck that you sent me for the Loyalty Check, there’s lots of lovely visuals.

PAULA: There’s a report example.

PAULA: There’s a SWOT analysis and showing exactly how, you know, swipe rates can be compared and, you know, all of the various different modules, as you said, and what it might look like if somebody does invest in this kind of work.

PAULA: So I’m hoping and assuming that it’s okay with you if I share that deck with anybody who reaches out.

PAULA: Yeah.

PAULA: And I’ll make sure, for example, that, you know, we link to you obviously directly as well on the Let’s Talk Loyalty website and in the podcast as well.

PAULA: So yeah, as I said, I think it’s a great solution.

PAULA: I think we all need some external expert support from time to time.

PAULA: And I think it’s incredible that you can offer this kind of concept anywhere in the world.

PAULA: So that’s kind of all the kind of questions I have from my side.

PAULA: Is there anything else you wanted to mention before we wrap up?

MIKE: I don’t think so.

MIKE: No, it’s covered it.

MIKE: And thanks for the opportunity for presenting it.

MIKE: I think any loyalty practitioner should think long and hard.

MIKE: It’s a wise investment.

MIKE: It’s false economy.

MIKE: If it’s not working or you don’t think it’s working, then have a word with us.

PAULA: Yes, absolutely.

PAULA: Well, listen, Mike Atkin, the loyalty guru.

PAULA: Thank you so much from Let’s Talk Loyalty.

MIKE: I’ve enjoyed it.

PAULA: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.

PAULA: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.

PAULA: For more information, check out thewisemarketeer.com and loyaltyacademy.org.

PAULA: Thanks so much for listening to this episode of Let’s Talk Loyalty.

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