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 and also Loyalty TV. If you work in loyalty marketing, you can watch our video interviews every Thursday on www.loyalty.tv. And of course you can listen to our podcasts every Tuesday, every Wednesday, and every Thursday to learn the latest ideas from loyalty experts around the world.
Today’s episode is part of The Wiser Loyalty Series, which is hosted by our partners, The Wise Marketer Group. The Wise Marketer Group is a media education and advisory services company providing resources for loyalty marketers through The Wise Marketer digital publication and the Loyalty Academy program that offers the certified loyalty marketing professional or CLMP designation.
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Bill: Welcome everyone. I’m Bill Hanifin, the CEO of The Wise Marketer Group and one of the two hosts of The Wiser Loyalty Series. For the past two weeks, my co host Aaron Dauphiné and I have been globetrotting a little bit. And so we’ve taken turns introducing this month’s topic, which is the foundations of loyalty. Aaron, welcome back.
Aaron: Hey, thank you so much. Nice to see you again.
Bill: We’re all back together now, and we’re going to continue our review of the most foundational elements of Loyalty Academy. Our course, where this introduction to loyalty, which happens to be number 101 appropriately named, I guess.
So, for those that aren’t familiar with the series overall or maybe tuning in for the first time. This series introduces constructs from the Loyalty Academy, the course curriculum overall, and we’re trying to pull out the features that we think are really interesting to you. Maybe the ones that need to be challenged, the ones that need to be dissected and the ones that need a particular spotlight. So we’re bringing out the pieces that we think are most compelling to you to help you in your day to day business.
And in the first segment of this month’s topic, I actually went through the 101 course and I did a virtual true false test of what I call the OG knowledge or wisdom about the business. So the originators of the business, what were they saying about loyalty? How did they define it? When did they say it would work well and not work so well? So we went through a really, I hope, interesting discussion about that.
And then last week when I was on the road, Aaron top lined a discussion about the three most traditional in quotes models that have been positioned to describe this whole business. So when you think about what we call a Proprietary Model, a Player Model, and a Coalition Model. That’s what he went deep into. So I’m going to flip it to him. Let him sort of summarize what we talked about where we left off. And then we’re going to jump in today and keep going deeper.
Aaron: Yeah, thanks so much Bill. So, last week, for those of you who did tune in, you know, it was a bit of a long winded one and that was because we were setting up like core foundational elements that have been in place for a long time. And you would have heard me also go on to talk a little bit about now, do we need to challenge how we define these?
We, you know, we outlined the, as Bill said, The Proprietary Model, The Player Model, as well as The Coalition Model. And all of those have been traditionally defined based upon some element of control. Right. Who’s in control and ownership as it was for the attributes around control that really kind of described how those business models were.
And I should actually even take a quick pause to note that the core curriculum that pulled for last week’s session was actually from our core course, business models, multi business models, part of me, 104. So we’ve been mixing and mingling a little bit with 101 and 104 over the course of this month, just for those of you keeping track of where we’re pulling this.
And so we’re at a point where we think to ourselves, well, things have evolved, things have certainly changed and what are those mindsets that we need to have?
And from my perspective, I kind of seeded some ideas to say, hey, maybe isn’t about control as being the key criterion that we need to focus on now, but maybe we need to take a walk in the member’s shoes and see what’s the relevancy for them. What’s the value proposition that’s being delivered to them? And value prop was certainly one of the elements, but it was really around who controlled that value prop. I’m talking about what’s the end benefit received by the member. Are they able as an example to earn a common currency across a multitude of brands that gets a higher earning velocity so they get faster, quicker to the reward, whether it’s travel or trinkets and merchandise redemptions or whatever or experiences. Or is it in fact a better model where they go, a program wants to go deep on a particular brand because I just am so enamored with that particular brand and I want to stay true to them and I don’t mind giving my data to them and then using it to make great interactions and experiences for me that are specific to that brand experience and the connection points that I have with it. And so that kind of gets us back into that proprietary model versus, you know, something that we call the Player Model or Coalition.
Anyway, I think I laid out my ideas. I’ll take a pause here because we’ve got Bill now and this is where we’re just going to maybe stay a little bit true to our original heritage with this series, which is to have the two of us as voices in different perspectives and multi coming together to see where we marry up and where we may where we may alter.
And the goal for today’s conversation is really just set up what we think might be the future forward in terms of how we as a community, loyalty practitioners, describe and articulate programs and business models. And then next week, what we’ll do is we’ll get into the nitty gritty and start to outline a few of these from our perspective that we think are the ones to go forward. Bill, what are your thoughts in terms of?
Bill: It’s good. Aaron, I think in any culture, any business there’s great benefit in having a common parlance, isn’t there? So you not only have a dictionary full of words, but then when people speak certain words or use them in certain combinations that you immediately get the idea of what they’re talking about.
And I think that’s one of the reasons that we’re tearing into this model. Issue right now, because if somebody says Proprietary Model, I think a lot of people would immediately think one brand, one currency, one business. So, you know, Macy’s, Delta, is Virgin, you know, somebody, it’s one brand, they have their program, they control all elements of it. And there you go. And I think what’s interesting nowadays is that when you say Proprietary more refers to, yeah, maybe own brands, but it could be lots of brands underneath an umbrella.
There’s a group called The Chaloub Group in the UAE, which owns, I think, up to 80 luxury brands, and they’ve linked them together in a program where you can they’re carefully tracking data and they can kind of help people navigate a journey between different brands. And they, so there you go. Proprietary program might mean one thing to a lot of people these days, but we have to sort of think about how it’s different these days based on what’s being executed right in front of us.
Aaron: I love the way you opened with that because what it instilled from the past is that, you know, a single currency, single ownership, that’s all that proprietary could be what you’re describing. As you said, and I know you use the term umbrella. I’ve heard that as well, too. And, you know, we’re not saying throw that away. It’s just, it’s another articulation of construct that is around, you know, multiple brands coming in the same category. Like you said, with hotels as a good example, or multiple brands in different categories of spend, but they’re owned by the same company. And there’s one common currency. Like, to me, that still feels like a proprietary program. It’s just a multi-branded set of areas where if you’re, I’m the member, that I can earn on, right?
And so, so I think about you know, I’m biased and I talk maybe a bit too much about them. The scene program up here in Canada or Loblaws program or sorry, not seen for me, the Loblaws program up here in Canada, which is owned owns a number of different retail, spending categories and you earn the one common currency, but there’s tons around the world. And this is actually not a new phenomenon when you think about it, like, Carlson Travel, it way back in the day, I’m going, I’m dating myself, you know, had goal points where they, you know, you went to the A&P dominion in the Northeast and you could also earn them there, or you could go to travel, or I think Radisson was their hotel group at some point or connected. I can’t forgive me. I may be wrong on that. So don’t hold me to that.
But the point being like this idea has been around for a while, and there’s lots of examples of it. Like I think of an Asia, Asia one pass with AW Watson, where you can earn your local currency in the country that you’re in. But then when you go to other Asian countries in and around the region, you can still earn at all of the retail outlets. And I think there’s like, there’s a many, that’s a huge conglomerate of retail, sort of that as Watson owns. And really, as you said, any hotel programs, you know, Marriott Bonvoy, Accor, Hilton, all have sub brands, but you still earn that common currency. You know, that’s the key thing. It’s multi brands with common currency. And so proprietary really is a broader definition than what we traditionally think about it.
And I think people, and maybe this is the transition to your thoughts on the next section, which is people would maybe typically take those and put them into, well, no, that’s a partnership or that’s a, you know, a Player Model of some sort. But I think that’s changed and certainly Coalition still exists, but there’s kind of 2 emerging groups with a bunch of subgroups coming in. If I see it correctly, I don’t know what it is.
Bill: That’s so interesting. So you could almost say, then we’d say proprietary is still a good term to use. Don’t you think?
Aaron: I think so.
Bill: I think so. And, but it might be, you need to add another descriptor to it. So it’s proprietary with a sole brand or it’s proprietary with an ecosystem or portfolio of brands terminology.
Aaron: Multi-brand. Yes.
Bill: So you use, and then the interesting thing about the partnerships is, partnerships have become the feature of many programs, they can be, they could almost be a program model unto themselves, or they could be a feature of a proprietary program. Right? And so when I think about the other one that last week, we won’t quite get to Coalition. I don’t think today, but when we talked about Proprietary and Player, the interesting again about player to me is. I go back and think about when you say Player Model, I say a rental car company and airline.
And so that’s something I think that’s what inspired the term in at the time that when all this original thought was coming together. But how often do you see that happening today in the marketplace? It’s really, there aren’t too many programs that are just solely based on my brand, your currency.
Aaron: Yeah, I think, I think the one decent example that I see that’s there and it’s, and really the framing up is about choice to the consumer choice to the member is actually with Lyft, right? You can still get Lyft foot but Lyft has done a good job with Delta. And then they added on Hilton. I think now you can go to Alaska and even built rewards and you as the Lyft and a rider guest can choose which you earn it. Right. And those actually like that type of Player Model, if you will, right?
And then we would be splitting hairs here again, to, for some of the purists out there, you know, that’s a good example of where we’re seeing it’s not about the control, right? I mean, that is an aspect of it, but really it’s about the end benefit to the member, which is I can choose and consolidate my points and spend across these areas and these brands that I use in my travel journey in that example. I mean, airline conglomerates have been doing a little bit of that as well, too. Star Alliance, One World, Skymile, like you get to choose which airline you want of that when you fly in the network and we just don’t think of them as that term, like you said, of Player Model, but they’ve been around for a while. So it’s really about the partnership, right. To me, that’s what rises up as partner.
And even when I think about third parties. Managing that partner, like with a currency exchange. You know, whether it’s status match or by loyalty status or points.com by Plus Grade. And there’s others as well too. Like those connecting points are really about a group of customers that, you know, whether the third party brought them together or one or two of the major partners was the broker to bring ’em together. And really they’re giving the choice to the consumer at the end of the day. And that is in partnership and in benefit of that consumer from my perspective.
So, that is that’s right. Oh, pardon me. I was just gonna say collisions are the same in that regard to. Right there, they’re just like the, I think you described that well, in terms of, you know, what collisions could be in terms of the multi partnership, or the ultimate partnership, if you will happen to remember.
Bill: Right, right. And I think I just was occurs to me that listening to you talk about this was driving all of it is a desperate need on the part of the brands that are sponsoring these programs to add more value. You know, it’s just really hard to generate sustained engagement. And what you might call loyalty when you’re giving away 1 to 3 percent back in a deferred rebate.
I mean, when you boil it down, it’s kind of ugly to say that, but you’ve got to find a way to break through that. And you’ve got to find a way to add more value. So how do you do that? You bring in partners. And so you allow people to earn maybe at a greater rate across multiple businesses, or you allow them which kind of Trump’s the whole idea of value. You might look at it and say, gosh, I’ve got so much choice. I’ve got control and I’ve got flexibility because I can exchange points between different programs that has value intrinsically. In addition to just the pure percentage rebate that it is.
Aaron: I think you summed that up well, and I think we should maybe take a pause here as we don’t get too long winded like I was last week.
And next week, what we’ll do is we’ll come back and we’ll take a look at partnerships and proprietary as those two kinds of, stake stakeholder foundational groups, and then what are some of the sub buckets and give some guidance and our thoughts and perspectives on what the naming convention could be. And we, but we won’t be necessarily held to it, but at least we, you know, we put a stake in the ground so that there’s some commonality for practitioners around the world. Sound good?
Bill: That’s great. Yep. That’s a good way to do it. And we’ll wrap up the entire topic and maybe we’ll open up some sort of mechanism where we can get some listener feedback and questions. Just you know, we’re challenging the original concepts and we’re happy to have somebody challenged some of our thinking and what we can have a discussion around that.
Aaron: A hundred percent until next week.
Bill: Come back to The Wiser Marketer. Thanks everyone.
Paula: This show is sponsored by Wise Marketer group, publisher of The Wise Marketer, the premier digital customer loyalty marketing resource for industry relevant news, insights and research. Wise Marketer Group also offers loyalty education and training globally through its Loyalty Academy, which has certified nearly 900 marketers and executives in 49 countries as certified loyalty marketing professionals.
For global coverage of customer engagement and loyalty,check out thewisemarketer.com and become a wiser marketer or subscriber. Learn more about global loyalty education for individuals or corporate training programs at loyaltyacademy.org.
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