Paula: Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals. I’m Paula Thomas, the Founder and CEO of Let’s Talk Loyalty. Today’s episode is hosted by Charlie Hills, Managing Director of Mando-Connect, a UK based agency that uses smart data to create brilliant partnerships and rewards that really work.
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Charlie: Hello, and welcome to Let’s Talk Loyalty. I’m Charlie Hills, the Chief Strategy Officer for Mando-Connect. WPP’s Loyalty Specialist Partnerships and Rewards agency. We have created a white paper in partnership with YouGov that explores loyalty, membership appeal, and impact across 24 European markets.
And I’m delighted to be hosting a series of podcasts featuring European loyalty experts to help listeners better understand loyalty across the region. Today I’m delighted to welcome Dean Harris, the Head of Membership Commercial at the Co-op. He’s a retail marketing leader with 15 years experience across retail media, loyalty, CRM, trade planning, advertising, and customer strategy.
He began his career in advertising working on McCann Erickson’s B2B client portfolio before moving to the Co-op, where he spent more than a decade driving the growth of Co-op’s, food and life services businesses across a variety of functions. In his current role, he manages Co-op’s suite of member rewards, including personalised, offers gamification and exclusive deals, oversees the retail media proposition, and is also responsible for ensuring Co-op members best interests are considered whenever their data is moved, shared, or used.
Today we’ll be learning about Dean’s favorite loyalty programs, the trends he’s watching closely, and of course, what membership looks like at the Co-op. I hope you enjoy our conversation today.
So hello and welcome to Let’s Talk Loyalty. We’re absolutely thrilled to have you on the podcast today. Welcome to the show.
Dean: Hi, Charlie. Yeah, looking forward to talking all things loyalty. Thanks for having me.
Charlie: Oh, brilliant. It’s gonna be a good one today. I can feel it. So let’s get straight into it. Let’s start with Paula’s favourite question. We ask all of our guests on the podcast this question, it’s a great opener. Please tell us what is your favourite loyalty program and why?
Dean: I, I’ll be cheeky and I’ll do two, one because I use it loads and one ’cause I, I just love the idea of it. So the first one, I’m a coffee fiend. So Costa just the simplicity of it. I’m a bit into my behavioural science. So the, you know, the collection mechanic, they’ve got dead, straight, simple, and straightforward. I also like that they’ve adapted it for Costa living and they’re doing more immediate rewards with their treat drops and stuff like that. So I find it’s evolving all the time. Dead easy. And yeah, like I say I probably go through about three or four coffees a day. Not all Costa, otherwise it’d be raining beans. But yeah.
Charlie: Nice.
Dean: And then, yeah, and then the one I like which is Hungry Jacks in Australia, so that, Burger King. But when Burger King went to Australia, someone had already stolen Burger King. They must have been livid and Hungry Jack’s it is. And they have this shake wind thing where if you a Hungry Jack’s burger place. You go in the app, shake it, and then you find out if you’ve won an offer or a free thing. But the catch is you’ve got 20 minutes to go and get it.
Charlie: Oh, nice.
Dean: So I just love the fact that they’re tapping into that, you know, that quick service spontaneousness of like, no one ever. I don’t know. I don’t mean to insult you. If you do plans to go to McDonald’s a month in advance, like you would do a restaurant, it’s usually the same day. So it, it taps into the fun of the brand and all that, but I just love that idea. I thought it’s just differentiating over there. So those are my two.
Charlie: Oh, those are two great examples. As a fellow coffee addict, I’m completely with you on those those coffee loyalty programs with those brilliant kind of milestone mechanics, what’s your favorite bit that cost you have changed recently? I think for me it’s the treat drop. I thought that was a really smart addition.
Dean: Yeah, I like that. And you can tell they’re exploring a bit with it. Like, I don’t know how clever it is, but I had like a 40% off treat jump and I didn’t manage to redeem it and then I got a 50% one. So I think they’re in a test and learn with it, but I think they, they probably acknowledge that this sort of delayed gratification that you get with, and especially when they went from eight to 10 beans to get you free drink.
People want that immediate discount now, don’t they? So having that hybrid program like you say is really interesting and it was savvy of them to do, but I like it because there’s a delight element as well, isn’t there? So, yeah. I dunno what my is. Yeah I got 50% off a cake, so you can’t. Can’t go wrong.
Charlie: No, that’s pretty good. I got my birthday reward from them recently as well, which was obviously my free slice of cake. So I thought that was great. It’s a really nice really nice little program. We’ve used it quite a lot when we’re talking about sustainability and loyalty as well. And how programs need to think about baking sustainability into their program and that they were one of the first to do, you know, the reward for sustainable behavior. You know, half the beans get to your free coffee. So, yeah, a really interesting program.
And the Hungry Jack’s thing’s cool too. Gamification is a trend we’re seeing. Everywhere. Interesting that it’s been driven that much by QSR because I always thought SubSquad was really clever from Subway, you know, the kind of the mechanic they’ve got with all the mates.
That’s a really good one. And then KFC Rewards arcade, you know, coming in, in a, as a real positive disruptor, you know, a purely kind of gamified play-to-get type mechanic. It’s cool to see.
Dean: Yeah, it’s leading into your brand, isn’t it? If your brand’s like a fun brand and it’s you know, a bit playful, then make that an element of your loyalty program as well, so a little bit when that happens.
Charlie: Yeah, it’s really nice isn’t it, when you see the brand DNA come through true. So come through, so truly in the experience of the Programme, it’d be interesting to see how you’ve done that at Co-op as well. ‘Cause I think there’s a lot of your brand DNA in your programme as well.
But before we get into that, our listeners always want to hear about, you know, the background of our guests. You know, what does your career look like and how have you ended up in this really cool role?
Dean: Yeah. So I’ve I think last year I got asked to do a squiggly careers presentation at Co-op because I’ve been, I’m on my ninth role in 10 years at Co-op. But before that, my career started out in advertising agency land.
So I was at McCann Erickson for three and a half years on B2B clients. So my client base was Lafarge Cement, Marshall’s Construction and UPS. So that was how I got into, so if you can get excited about advertising with cement, I knew anything else would’ve been amazing.
And then I moved at client-side, started working at Manchester Metropolitan University looking at student acquisition. I obviously couldn’t let go of my student days too far into my career.
And then over to Co-op, where I started on CRM. Moved into brand and comms planning. So I used to brief our agencies on the Christmas TV campaign, moved into commercial working with the buyers and our promotional plans, making sure we didn’t just have random assortments of cheese and toilet roll and orange juice. They actually made sense to the shopper. And then yeah, moved over to membership originally on rewards. Then I picked up member data as a remit. Now I’ve also got our retail media business under my back. So yeah, all over the shop. But I’ve had, you know, marketing at the heart of everything and that sort of behavioral science, consumer psychologies has always been a big part of anything we do.
Charlie: Yeah, those squiggly career things are so interesting, aren’t they? And as you said, always with that thread of kind of behavioral science and consumer behavior running through it, mine’s very similar as well. My common thread is definitely like smart use of data and kind of, you know, driving collaboration to get results.
I think that’s it’s one of the best. Things about working in loyalty marketing. People come to it from such interesting routes. We’ve had guests on the recent podcast, you know, that have come into loyalty roles from a finance background, and they look at everything through that lens or from a marketing or an advertising. As you say, it’d be interesting to see how you’ve got advertising cement into the loyalty program. I’m looking forward to to seeing what the insight was there as it translates.
What do you enjoy about it? I mean, I know you love your role and you love the program and actually that, you know, that really interesting addition of retail media is something we’re gonna dig into, but what do you enjoy most about it?
Dean: Well, I, it links into my career, which is I’d rather have breadth of knowledge than depth, but I’d rather move into a role, have a little bit of imposter syndrome, be on a steep learning curve cause that’s what excites me. And when you ask that questions, when you’re on a learning it, you sometimes get really powerful responses, you know, challenging the status quo.
So I think loyalty is one of those where you can actually stay in it and it forces you to broaden. I mean, think about data, think about technology, behavioural science, the fact that gamification is like off the shelf now, and it used to be, you know, something really hard to find a few years ago. Constant newness in our career and train trends, adapting to consumers, you know, all that sort of stuff means you can just stay energized in the loyalty industry. That’s what I like.
And you know, like I said, the retail media aspect and that bridge with loyalty just opened up a whole new world as well. So, yeah that for me personally, I always like it when I’m in a role that learns. I’d rather go from 50 percent knowledge to 75 and tweaking a 90 to 95%. That’s what excites me and motivates me. And I get that impression from anyone in the loyalty business as well. You stand still, you can’t get comfortable. You constantly provoke to learn new things. Part a challenge as well, but it makes it fun.
Charlie: Yeah. You can’t sort of sit on your laurels, can you, in this industry? No. I think that’s a really nice way of thinking about it. You know, we’ve seen so much change in the last five to 10 years, and when you start looking out everything that’s coming from you, the consumer, the market, the tech, even as you say, you know, I remember when it was Im or nearly impossible to do a gamified promotion, and now actually there’s so many brilliant technical providers out there where it’s almost becoming, you know, pick and choose what’s the next big innovation, what’s the next big thing. So yeah, I love that too. Hence why I’m doing the podcast ’cause then I get the chance to ask staff questions of my own, of all our brilliant guests.
So whilst I know the program really well, I’m sure we’ve got loads of listeners for who are thinking, Ooh,Co-op loyalty, what does that look like? So could you please give us the, you know, the 101 of your brilliant program, you know what it is? Yeah. How it works, what people get. And it’ll be really interesting as part of that to hear how retail media kind of compliments that as well.
Dean: Yeah. So the first bit about Co-op is it’s, we have this sort of strange loyalty meets ownership model. So I think Co-op dates back to 1844, I should know this, and that was the day the first product was sold as the day our loyalty program started in essence. So everyone had to pay a pound to get a share, and then the more you shop, the more you got back in terms of a dividend. That went on for, you know, near a century until we introduced this, you know, paper stamps and things like that. And we still paid out dividends.
Tech allowed us to introduce points to when you spent money, the more money the more points you accumulated, the profits of the business were shared with the members cause they were the owners essentially. No one person can have more of a share than another. So in a PLC, you can obviously buy the majority of the business, then you have control of it. But at cooperative, every member has the same rights as every other, and as of today, we’ve got 5 million of them.
So that’s the first, that’s the first key part about Co-op’s loyalty program, and we’re trying to even avoid the term loyalty and talk membership. So that’s why we say membership program. But obviously when we’re in our industry, I need to make sure people understand that. I mean, I’m in the business of loyalty, so yeah we often use it like that.
But and it has three aspects to it, really. You’ve got that ownership model, which is vastly hidden because it’s very hard to land that with the typical shopper that’s coming in for milk, eggs, and bread that you’re now buying a share in the corp and you can vote at the AGM. So that’s not really what we’re famous for. It might change over time as we try and draw that out more. But the rewards element is obviously where everyone goes to, and that resonates and that’s structured around our food business predominantly. But we have an insurance business, a legal services business, an online rapid delivery business.Legal funeral care, insurance, food online.
Charlie: A lot of sectors.
Dean: So you can manage across all those businesses. And that’s a challenge to make it work for different so you get a benefit as a member in all of them, but the food business makes up most, so that’s an 8 billion pound business for us. And that’s where you get your in-store member rewards. So that’s on-off promotions not too dissimilar from club card prices in the fact that you get half price Ben & Jerry’s for three weeks. Then it’s a suite of other offers. And as you move around, you’ll see all these chunky discounts. We also have long-term lower prices as well.
So not a bit like how, you know, using an NUS card gets you like 10% off across the board. A membership card gets you a decent discount across the board on hundreds of products, and they’re not start and stop. They’re always on. So milk, eggs, bread I think there’s some you know, pizza lines in there. You sort of everyday essentials that and that gives you this sort of sea of blue around the shop. So you’ve got the strong promos and the better value prices as well, which are market leading in convenience for a member as well. And then we’ve got our app where we have personalized offers.
So that looks at your trading behavior and tries to give you offers on things you buy often so that you’d obviously come back into the shop for, and then we’re trialing some gamification. So we’ve, I think it’s live now. There’s like a Santa game in the app at the minute. I dunno when this goes out. So obviously, it might have some sales.
Charlie: It will have sales by the time this is recorded. But our listeners all understand that it’s a podcast that we record in advance, so that’s great. Hopefully they kind of checked it out.
Dean: Yeah. So you move left and right as a little Santa and you’ve gotta avoid the coal and catch the presents. And if you get five presents, you get money off.
So I, unfortunately, I should I should get looked after better in the program. Got 25 P off my next shot. But there are five pound offs. They’re free chocolates. Matchmakers, which is a confectionary snack in the UK. So things like that. So yeah, so we’ve got, they’re always on prices. The cross BU aspect and the personalization of offers and then that surprise and delight, gamification more recently and very exciting.
We’ve also Co-op are, I’ve got the naming rights to a brand new music and entertainment venue in Manchester. So it’ll be called Co-op Live. I think Harry Styles has got a third of the share in it.
Charlie: Wow.
Dean: So I think he’s had to play a large part in how it’s built and stuff. Yeah, it’s really exciting for Co-op, you know, a grocer on the, on, on the corner to be involved in something like that.
But our members get pre-sales. So like now on Wednesday, the Killers went live for members at half past nine. You got 48 hours before anyone else buys the tickets. Before anyone else could buy those tickets. So that’s just for members. So, you know.
Charlie: That’s amazing.
Dean: It’s an amazing thing to give. Yeah. We’ve had all sorts, Barry Manilow, Simply Red, The Killers, all sorts.
Charlie: Oh, that’s gonna be great when you can see the data as well, and you can see what your members are actually fans of. That’s what I love with those kind of things. And then you’ll be able to understand and adapt, you know, actually, are you a Barry Manilow base or are you a Killers base or Harry Styles? I wonder who they like best.
Dean: Yeah, well it just gives you a chance to reward members outside of a shop, you know, in their everyday life, like what they’re interested in. So a lot of our businesses are built around need that thing rather than want that thing. Whereas it’s nice to mix, need, and want. So yeah, it’s an, it is exciting the way the proposition is shaping up at the minute.
Charlie: Yeah, that is really cool. And you know, that addition, as you say, of things that people really want and get really excited about, on top of that every day is a big trend that we’ve seen in the industry, particularly with the cost of living crisis, actually loyalty program’s, ability to do both of those things seems to be pretty tantamount to, you know, the future success of the program.
Because you’ve gotta help with the everyday and it’s brilliant that you are doing that as you’ve outlined. But then also actually those treats are really important that perhaps people haven’t been able to stretch to themselves. So being able to offer that and you know, particularly early access to tickets. How cool. And also how nice that it reflects the brand that it’s Manchester as well. It’s not, you know, a central sort of London proposition that’s really nice to see it kind of across the country as well.
Dean: We get to use it for some of our own events as well.
Charlie: Fantastic.
Dean: So fantastic. It’s an amazing venue. So the colleagues are absolutely, you know, real, you know, loving the fact that this is on its way. I think it’s, it gets built in April or May, so I think that’s when the first act could still be there.
Charlie: Wow. That’s gonna be so cool. I mean that’s, you know, I think you’ve already highlighted a lot of things that sort of stand out and are different about your program. You know, that ownership bit is really interesting. The breadth of rewards, the everyday, the breadth of the businesses and the sectors that you cover.
What else sort of sets it apart do you think, from the other programs? Cause you know, in your sector you’ve got some pretty big competition. You’ve already, you know, you’ve mentioned Tesco’s, but you’ve got Nectar, you’ve got Lidl Plus, you know, you’ve got ALDI’s, big promotions that they’re doing. What sort of what sets you apart?
Dean: Yeah, so the other strands was, is like what we call Social Value. So community. So, our membership exists to reward our members for their trade. So that’s the sort of economic side of things. Listen to them on what’s important and have their say in how our businesses run and where we prioritize our efforts.
And then also how we do good. So our members decide at the minute they can choose a local cause to support. And also we’ve got a charity partner at the minute is Barnardo’s and they can dictate as members what could we do in local communities and at scale. So that’s, I think that’s three model is, I think it’s unique globally.
The fact that you can own a business, dictate how it’s run, you are rewarded for trade with that business. And you can tell that business how it, how it does good and it impacts your immediate local area. So you see it, it’s it’s, I’m not aware of anything that does that. It creates challenges in communication because distilling that into a, like a single-minded reason is really hard.
So you have to have a very sophisticated, almost journey. A cross-membership where you might talk about the fact that you can buy food for cheaper. Then you introduce the app. Then you introduce the local community, the other businesses, then the shareholder aspects of it. But each of them is really powerful in its own way. So I think that’s quite unique and that’s what we really start tapping into in the near future.
Charlie: Yeah. And I think that presents a huge opportunity. But as you say that complexity is a thing that a lot of programs wrestle with, isn’t it? ’cause it’s not just awareness, actually, there’s quite a lot of explanation and understanding you need there to land all those messages. And that takes time. But luckily, I suppose that’s one of the advantages of loyalty. You’ve got that, you know, breadth and depth of relationship as well as the length of it to start to communicate those messages.
Do you find people join the program because they’re attracted to different bits of it? Like what draws people into the membership?
Dean: I think part of it is you have to, there’s an inconvenient truth when you work in loyalty, especially at Cutlock, is that when you are in it, you think that every shopper or consumer is obsessed with your brand. If they’re part of your loyalty program.
Charlie: Yes.
Dean: And you occupy their everyday thought. They’re up in their breakfast and toast and they’re thinking. What will Co-op offer me today as a member and you occupy a minimal amount of their thoughts? Their attention, mostly subconscious to be honest. And and even asking for extra attention is got to be really compelling.
And sometimes it’s not great to communicate upwards within the organization, but it’s a reality that our members just a shopper with a card. And once you think about that, you actually get. It makes your marketing task easier. Because you’re dealing with the truth rather than, you know, a luxury that doesn’t yet exist. So I think yeah, that, that’s, that, that’s quite key, I think.
Charlie: Yeah, and I think you’ve, you really have that. Perhaps even more so than some other sectors in convenience because it’s actually people wanna get in, get what they need and get out. Quite quickly as well. Do you find that, you know, that must affect the loyalty engagement and how much time you have with people to communicate those messages too?
Dean: Yeah. Like you’ve got Tesco obviously that’s the market leader in grocery at the minute. They’ve got huge supermarkets and you’re pushing a trolley around for 30 to 45 minutes. And you’re just constantly seeing loyalty offer, loyalty offer, loyalty offer, loyalty offer, loyalty offer. You can push the trolley whilst being on your phone.
In the other hand, you know, you, you’re not too bothered. If you’re queuing, you pause besides the til to join ’cause you’ve already been the shop for 45 minutes. You compare that to convenience, where you’re nipping in for a bottle of water. You go into a self-service tool and you are out. And that might be actually in seconds, not minutes.
How do you convey loyalty value in that situation? Massively challenging, and it’s why loyalty penetration. So the percentage of pounds that are spent through a till a grocer in convenience is much lower than the big supermarkets. But Co-ops now is highest ever loyalty or membership. Penetration were around thirty-five percent of all, so thirty-five p in every pound spent.
Comes from a member, and that, that’s when you factor in the fact that obviously we, we sell things like tobacco lottery tickets, scratch cards, you know, where you literally can’t offer a loyalty benefits and all of those things, and then you go, well, having that 35% is massive and acquiring another million members, which in 2023 we have done. It’s an amazing achievement to, to find value in seconds for a very low volume of spend. So I think an average basket value, and I think a large supermarket is above 50 quid. In Co-op, it’s 10 to 15 quid, so it’s so hard. But yeah we, I think we’re cracking it as we evolve.
Charlie: Yeah, I mean that’s a huge achievement, particularly as you hear sometimes you’ve got seconds, let alone minutes to kind of land those messages as it goes through.
It is something that we have seen across the whole British market as well. You know, we’ve talked about membership but you know, it’s hitting 90% now of British adults and members of at least one program. And, you know, it’s never looked like that. It’s always been around the 76, 77 percent.
And you know, the theory is that initiatives that programs like yours have brought in, like member pricing and actually really hitting those value messages that. Just the right time in a cost of living crisis is really making people kind of sit up and take notice. It’s an exciting time to work in loyalty.
Dean: Yeah, I think there’s probably three contributing factors to, to that increase. I think there’s the demand. So consumers in cost and living are more open to loyalty programs ’cause they’re trying to seek opportunities to save money. So there’s that demand.
The supply, the, you know, loyalty programs are more sophisticated, the loyalty the personalization, the platform, the data is better. So you can better service those needs and you can better adapt to your loyalty program around your brand, around your consumer, around the way you’re shop.
And then the third factor is loyalty is starting to become a core aspect of a company’s strategic direction. So rather than a bolt-on to a core proposition, you look at Tesco. Now, Clubcard is their pro their business proposition. It’s not, we’ve got core reason to shop with us and we’ve got, and a little bit extra for those really high value people. It’s like, this is why you should choose us. And that central pivotal means that now loyalty messages are really surfaced in above the line advertising.
So Co-op this year, all advertising has a member message in it. It’s everything. That’s different from the past where we’d be talking about, for instance, grocery missions and then membership separately. Now, we might have a, there’s a meal for tonight, and if you’re a member, you’ll get it for cheaper.
But those are bolted in. So I think that the awareness and the demand and the supply have created this situation. You know, everyone wins essentially. And then the retail media aspect just creates a multiplier PET for a retailer as well.
Charlie: I think that’s a really interesting way of thinking about it actually. And what a very interesting retail perspective on loyalty as well to think about it as supply and demand. Yeah, that’s a really cool perspective on it. That makes me think, I wonder what else, because actually we’ve seen across the sectors actually a rea rise in loyalty programs getting above the line membership.
I think if we’d recorded this podcast in Great Britain five or six years ago, actually, we’d have struggled to find a single advert and a maybe O2 priority, a push, maybe a bit of below the line for Clubcard. And actually now there’s some really chunky adverts out there just for the loyalty programs, you know, in, in other sectors as well. Sky, you know, their big push that they’ve been doing with Idris as well for their program. Interesting.
What are the other kind of big trends and stuff that you’re seeing in the British market? We are kind of held up globally as one of the sort of more innovative loyalty markets, which is great. But you’ve already talked about Australia as well, also a very cool market for loyalty. But what other trends are you seeing coming through?
Dean: I think with this, I think combining gamification with personalized reward is the, is gonna be a big step change. So those have predominantly been separate. So you’ve been able to say, I’ll give this person this one offer because of their traded behavior, and I can give everyone a cool game or a challenge that they do like Costa’s.
But personalizing, gamification ’cause the amount of variables is really hard. So you look at like ASDA, the missions, so another big UK grocer in their app, they have missions and they are anything from shop five times in the next month and get four quid back on your card. Spend 10 pounds on fruit and veg in the next two weeks and get three pounds on your card. Buy three bars of Cadbury’s chocolate. Each of those variables is personalized, so the actual mission is personalized.
Then within that mission, the product’s personalized. The target’s personalized. The reward’s personalized. Now that’s impossible to manage as human beings. You need like the AI and the algorithms to say we’ve got all these missions, got all these targets, we’ll give Dean ’cause he shops three times a month, a target of four. We’ll give Charlie a target of six ’cause she shops five times. Dean’s more elastic in his rewards than Charlie. So we’ll give him a better reward. We don’t need to give it, and then it learns automatically. So the idea of personalized gamification, I think is a massive yeah direction that the industry is gonna go in.
You see it from Eagle Eye, which is a big technology provider for loyalty. They acquired a company called Untie Nots, which is a French platform that, that does AI, algorithm driven gamification. So you can see how even the platforms are trying to prepare for this coming trend. And I know that there’s, that the people that are using that are just getting used to the new and shiny toy that they’ll use. But yeah I think that aspect of personalized reward and gamification, bridging those together are very powerful.
Charlie: Yeah, and I think what’s lovely to see there is that real sort of focus on the whole experience. I think when loyalty sort of started out, it was very much about the value and actually the user journey was important, but secondary to actually what you’ve got and what the transactions in the business case was. But that is a lovely example of there of programs saying actually the experience of the thing matters as much as what it is. And actually bringing those two together is really cool.
And as a nerd I’m like, oh, this is awesome. I love thinking about all the different combinations and how you personalize it, what you personalise it on. And the ASDA example is a really good one. I think there’s a lot of programs we are seeing in the British market with that as well. So check out a lot of the gamification that’s happening. Everyone, it’s a really interesting kind of thing in the market.
Dean: And if you think about from a, like a consumer packaged goods brand that doesn’t sell things directly. And it’s quite hard for them to have loyalty programs in essence ’cause they’re not getting that transactional contact information. With something like that, that advanced gamification a, a brand can have a loyalty program within another loyalty program.
So that Cadbury’s example by Cadbury’s five times at ASDA and gets three pounds up. You’ve got your own loyalty program in there, and you can work with ASDA or Co-op in the future to start refining that. You know, every, everyone’s almost got their own mini Costa at a retailer. It’s like the options are endless.
Charlie: Yeah, it’s really interesting how it is kind of not democratizing it, but it is giving, you know, brands new and interesting ways to talk to people and get in front of them and get noticed beyond the old kind of, you know, shelf wobblers that we remember coming from retail media. We’ve talked a lot about how great the program is and how important it is.
You know, it’s great that you said that all advertising has featured the program, but it’s becoming a core part of the Co-op strategy and obviously has been since 1844. But how important is it seems like a daft question for me to ask at this point, ’cause obviously very but kind of what ways does the business demonstrate that importance and then how does it show up?
Dean: Well, structurally, if you keep going up from me, my boss and their boss you get to members. So ultimately members of the boss. So that makes it really important, to focus on them. And make sure they get the value right.
And then strategically this year, we made the big call to say, let’s make everything about membership. So you’ve got to, putting membership at the heart is now everyone’s job at the Co-op, and that’s whether you’re working in a shop, you’re in the technology team, the data team, my team, the advertising team, a buyer membership and trying to find ways to give members more value is everyone’s job. So that was the CEO’s direction at start of the year and that’s gonna done.
Only not only gives the, obviously the pivotal teams that are responsible for it, like my team and the advertising team, a big role to play. But you get all those incremental gains from anything from buyers making sure that brands are investing in membership promotions as much as non-member promotions, that you get more of that shift of member value. So that’s key. So you’ve got a cultural shift, a structural obviously existence, the way that’s there.
Then it, there’s a of back to our what, where membership lost its way at Co-op was when you shopped and got points and those, you paid dividends back. If you’re not making any profit, that a dividend is zero. And obviously when we went through the banking crisis and you know, everyone was final Co-op at the Co-operative bank, which we’ve since sold, for instance, that we basically put us for the first time in a year where we weren’t making profit and we’re very much in a really positive financial position now.
We have to find another way to give value. And we ended up in a quite a tactical space. There’s a bit of, now we’re in that finals health, how do we go back to our roots? And remember that first model in 1844 of is the members are at the heart of the business. They own the bit of our business. When they buy stuff, we need to reward them with a thank you.
So there’s a bit of a back to our roots. And then the other thing is when, if you look around the world, the best loyalty programs or the most effective loyalty programs tend to be in high frequency markets. So it’s really hard to have a loyalty program for say, I don’t know, insurance when you’re making one decision a year.
Whereas Co-op is such a high frequency, you know, convenience, groceries, a high frequency, lots of decisions, you know, a day, a week. So when you go after a convenience a frequency, a trip. So visiting at one of our shops as your key objective, which we have decided it is. Rather than say basket value, you immediately turn to, well, hang on, loyalty and everything about repeat decision choice is fundamental to achieving that goal.
So yeah, there’s a combination of all things and this cocktail that just says almost like a penny drop moment, why this should have been what you were doing years ago, Co-op. But like I say, that, that financial crisis shook us up a bit. And we’re getting back to our roots now.
Charlie: And is that the most important lesson that you’ve learned or are there other lessons as well to kind of share? Because I think that’s a big thing that impact of the external context on the program is huge.
Dean: I think you have to create a program that has flexibility, so there’s no more, and I think that’s why you see even programs like Costa that just have one really simple mechanic, need hybrid ways to re reward members. Cause you need to flex around consumer trends and protect yourself and being able to give different elements of reward.
And that’s why you need that. You know, that sort of reward recognition experience, the emotive value. ’cause you never know when one needs to be dialed up around the consumer. So if you are fixed program and you get a shock like we did, and you have no other way to reward your members, you’re in a pickle. So that, I think the flexibility and agility within your program, ’cause it’s this, there’s a, there is a fight when you run a loyalty program between complexity and flexibility, you know, the sort of, the more flexibility in agile you are ultimately you’ve got more mechanics to manage, you know, more data to manage, budget management, all those sort of things. But I think, yeah, I think anything like the cost of living in past years has said you need something that allows you to dial up and down with consumer trends.
Charlie: Yeah. And keep that complexity behind the scenes so that what you’re offering the consumers feels really simple to them, is really key. And actually, I think that’s one of the biggest challenges that we all face. It’s like, how do you manage that? You know what’s under the tip of the iceberg? You can see. So the consumer sees the easy engaging bit and then actually behind it is a big engine delivering a brilliant experience to everyone every time.
Dean: And another one that’s come to mind is, in loyalty, we’re really nosy and curious about what our rivals are doing, and your rivals are ultimately in the same market, cause they either sell the similar services to the same products. So grocery for instance, everyone in essence sells the same thing. And there’s a big risk of following the herd, so following what everyone else does because you see it working for them. And you need to remember that what’s right for them might not be right for you.
So that Hungry Jack’s example. That’s leverages their brand, the way their shops. I’m sure there’s restaurants that sell burgers, but the two things shouldn’t have the same loyalty program ’cause they’re very different models. So what we’ve learned is, you know, looking at what the big trolley shopping grocers do, whether it’s a once a week decision and a hundred pound spend isn’t the right type of loyalty program for a three times a week, 10 to 15 pound spend.
So this risk of following where the, your particular market goes. You need to watch yourself and make sure it’s still the right thing for your brand and the way you shopped. You’ll see more, I think, loyalty program differentiation as people go to, but what’s our proposition in the market? We need to keep loyalty as close as that to possible. Cause that’s why we’re winning as a retailer as well. So that’s another lesson I think is don’t just look what the market leader’s doing in loyalty, ’cause that ultimately if you only ever copy them, it won’t be right for your brand, it won’t be right for your proposition.
Charlie: And what does that sort of, how does that translate into KPIs at Co-op and what sort of success messages are you looking at? You’ve talked about the number of members, the value that you are giving back. What kind of, you know, areas or priorities for you for this sort of new year coming up?
Dean: Yeah, so it’s more members choosing us more often for our businesses. So that’s ultimately what we’ve had. So acquisition’s a big one because we knew we had lots of headroom with penetration.
I think we started the about in pounds came from members. Now it’s over one in three, just in the space of I think 10 months. And that’s huge in, you know, an 8 billion plus business. Yeah. So that, yeah, so it’s the acquisition and retention. So we’ve acquired a million members, but I think we’ve probably lost about 200,000. So you’re not, your net figure isn’t always your recruitment figure.
Charlie: Always the leaky bucket.
Dean: Yeah. Well, that with us people move, house people change jobs. So if your office was next to a Co-op and you went and got your lunchtime meal deal from there every day or your pizza after work and you’ve moved to a job where it isn’t a Co-op there. There’s some tangible factors that are quite hard to escape from. But we have done a great job, and RCR has done a great job of reducing that um, through lapsing programs and noticing them, their behavior shift before it becomes, you know finalized and things like that. So, yeah. Acquisition, retention, and then that influence of trading decisions. Primarily frequency and choice. Not necessarily spend.
Because there’s only so much you can put in a basket or carry with your hands in a convenience shop. And I think there was a stat that was that more than one or two people come to our stores on foot. So, you haven’t got a car. So even if you’ve got the best deals in the whole of the place, it’s still what you can carry with your hands. So you’re always limited, but if you can get choice and frequency of choice up there, that’s how we think we’ll win in loyalty.
Charlie: No, I remember that very well when my kids were younger with the buggy, going to the Co-op, hanging everything off it. And then suddenly when you lose the buggy, you can’t carry as much as well, you know, and that’s my case study of one. Like, can the kids carry it or do I have to carry the kids? Was a major influence on what I could or couldn’t buy, you know? I remember it well.
What about those the kind of internal, you know, obviously the community, the stakeholders, your colleagues are a huge part of the Co-op business. How do you communicate internally about what you’re doing with the program or, you know, you’ve said it’s everybody’s job, so actually how does everybody know what’s going on and what the priorities are?
Dean: It’s not a requirement to be a member if you are a colleague at the Co-op, but we have ninety-five percent of colleagues are members. And that 5% is basically down to, you know, people have only just started so they haven’t had a chance to, or, you know, some temporary colleagues. So it’s knocking on if you’re a colleague and you can be a member, you are a member.
See they’re getting everything that a member would see and get an experience and feel. And if you think about the ambassadors and endorsers you have when those colleagues are all living it and seeing it, and then we obviously have. Membership’s part of an integral part of our strategy.
Now, any leadership announcements, any reports on how we’re doing, include membership KPIs, anything on plans that are coming up whether they’re commercial plans for how we’ll grow our businesses include membership. It’s in everyone’s job. So our entire, we have like a colleague remuneration package and membership KPIs are in that.
So it directly impacts people’s remuneration on whether membership performs well or not. That’s every single leader at the Co-op, whether irrelevant of your business, irrelevant of your team, you need membership to perform well, to be better remunerated. So those aspects all really lend itself to having all our colleagues being ambassadors.
And when you, when it’s actually, when you speak to the store colleagues and it’s 50,000 store colleagues, they absolutely love it because the local impact of it is more visible for them. So when you are in the head office or at home, you’re almost one step removed from seeing it on the ground, you know, talking to the people as they come in the shop, seeing them surprised when the, their shoppings, they’ve saved five quid and they didn’t expect it because we’ve introduced a lot of this stuff.
Finding out that there’s all these offers on the app that they didn’t know about. You know, a game that involves Santa moving around, catching gifts. So the colleagues have something really compelling to talk about. At a business that was largely associated by being a bit expensive, because convenience is a lot harder to run. You know, getting a truck to a small shop is harder than a big shop. So the cost is add up so that, they love having that those talking points that are unique.
Charlie: That’s so nice to see that value from that loyalty Programme. So bedded into the culture, but also the structure of the company. And as you say, those positive talking points, I don’t think you can underestimate that actually in any sector. The opportunity to say thank you and share kind of more value and cool new news and fun, little Santa Games must be a really nice kind of addition to. Please tell me where the toothpaste is as the customer’s trying to like run in and run out the door.
Dean: Definitely.
Charlie: What about new ideas and innovations? What else have you kind of covered off? I mean, obviously gamification has been a big part of that, but is there anything you’ve seen recently or that you really are proud of or admire out there?
Dean: Is it in Co-op or in the market or Co-op?
Charlie: Both, either.
Dean: Well at Co-op, I was, I came into the team, it’s like three years ago now, and we were really ramping up our personalized office program. So if you go in the core pack every Monday, you’ll see eight offers personalized to you and you get to use them until Sunday. But the catch is you can only choose two. So a lot of other loyalty programs give you your personalized offers and you don’t have to do anything. You can just view and even if you didn’t know they were there, you can go and redeem.
I love the behavioral science meets personalization, meets loyalty rewards. So the clever bit, I think is the sunk cost. So if you think about that, you will get to choose two. You have to think about which two you’ll choose. That five seconds that you are pointing in creates a sunk cost that then motivates you to want to then redeem it. Cause otherwise you’ve just wasted time choosing them. And the other bit is a sense of ownership in choosing them as well. So selecting actually goes, this is now on your card and this is for you and these are yours.
And there’s a bias around ownership where you value things. You’ve got more than things you don’t get. And i thought little nuisances that twig that lean into consumer psychology and behavioral science underpinned by data and personalization, that was my proud thing at Co-op that we did. And it’s still performing amazingly well now, so. Yeah, in innovation-wise, that, that was what I loved, the behavioral science element, which I don’t know how much it’s used or educated or taught within other loyalty teams, but I make it a big part that, that behavioral science is common knowledge in our team.
Charlie: I think it’s a really important part of what we do in loyalty. We are very privileged to work with behavioral science team at Ogilvy quite a lot on a lot of our client work and projects. And it’s that different way of thinking that kind of, that human truism that then makes people feel like they love the programme and that actually they’ve selected it.
I think that it reciprocity and loss aversion a couple of the principles you’re talking about and it’s so interesting when you can make that psychology into the user experience of the program and just make it better and more enjoyable for people to use. But then that double whammy of that added business impact that because they’ve chosen it, they’re gonna find the item and use it, I think is it’s great. You’re like the IKEA Furniture of the loyalty world, you know? ’cause I’ve built it. I love it more.
Dean: Rory Sutherland at Ogilvy wrote the book, a book on it, didn’t he? So that I’ve read, and that’s a good one. Yeah.
Charlie: Yeah, it’s awesome. I thoroughly recommend everyone to check it out. And also, you know, Rory’s a big fan of loyalty and partnerships as well, so check out what he’s been saying and writing. There are some really interesting lessons for us all, I think.
And then as we kind of wound out to the end of our podcast, obviously we thank everybody for listening. Is there anything else you’d like to share at this point and how can people reach out to you, because I’m sure they’re gonna want to do that. What’s the best way for them to get in touch?
Dean: Yeah, so I, I was gonna close out with a few tips. So I was gonna say tip one, if you’re in the UK join Co-op membership. It’s worth it.
Charlie: That feels like a self-serving tip, but a brilliant tip nonetheless. Go for it.
Dean: Tip two that I tell my team when you’re going through any innovation is focus on effectiveness before efficiency. So keep the shopper happy, engaged, influence their behavior, and then worry about profitability later. If you go for the latter too soon, it’s a steep hill to climb the other way ’cause you’ve lost their engagement and you don’t get many rolls of the dice with consumers nowadays. And then the last one is like that leveraging consumer psychology and behavioral. So that has to be in the room, it has to be in the discussion.
And then LinkedIn usually, so Dean Harris LinkedIn. Yeah. I’m sure if you google Dean Harris Co-op member rewards it’ll crop up. But yeah, that’s great because if we connect, I can obviously see anyone else’s loyalty posts. We can have a chat and then if there’s any opportunity to have a conversation, then we can pick it up from there. But yeah. Great.
Charlie: Well that’d be great. And we’ll also put those links in the speaker’s notes for the podcast as well, so people can find you. But he does, in fact, if you Google him, come up people, so you can do that straight away. Thank you so much, Dean. That was an absolutely brilliant interview. I could ask you about a million more questions.
But I will round out now and say thank you ever so much for coming along today. That was a fascinating episode. And that’s goodbye from all of us at Let’s Talk Loyalty.
Dean: Thank you so much, Charlie. I’ve enjoyed it. It was great. Thank you.
Paula: Thank you so much for listening to this episode of Let’s Talk Loyalty. If you’d like us to send you the latest shows each week, simply sign up for the Let’s Talk Loyalty newsletter on letstalkloyalty.com, and we’ll send our best episodes straight to your inbox. And don’t forget that you can follow, Let’s Talk Loyalty on any of your favorite podcast platforms, and of course, we’d love for you to share your feedback and reviews. Thanks again for supporting the show.
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