Paula: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.
Paula: I’m your host, Paula Thomas, and if you work in Loyalty Marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
Paula: And today, I would like to introduce you to a lovely lady speaking to me from Indiana, United States, by the name of Ali Cudby.
Paula: Now, Ali has a number of claims to fame.
Paula: First of all, she’s the managing director of a marketing agency by the name of Alignment Growth Strategies, which she will be telling us all about.
Paula: She is also a bestselling author of a book she will be telling us all about.
Paula: And her third feather in her cap, she is also adjunct professor at Purdue University in Indiana.
Paula: So first and foremost, Ali Cudby, welcome to Let’s Talk Loyalty.
Ali: Thank you.
Ali: So glad to be here.
Paula: Great.
Paula: And I think I didn’t do justice to your company.
Paula: I think you’re a full marketing, sorry, full business agency, business growth agency.
Paula: Is that a better description than marketing agency, Ali?
Ali: It really is.
Ali: When people hear marketing agency, they think websites and branding, and we really focus on helping companies align for growth, looking at their customer experience and how that plays into the employee experience.
Paula: Perfect, thank you.
Paula: And apologies for saying it in the way that I’m used to talking about so many marketing agencies, but this is very different.
Paula: The other thing I think which is very different about our conversation today, Ali, is that you focus on what I call SMEs and what you call SMBs.
Paula: And we’re both smiling as we’re saying that, because I think we were talking about two completely different things when we first met each other.
Paula: So for the sake of the audience, I will explain that Ali specializes in small and medium-sized businesses, which I call small and medium-sized enterprises.
Paula: So that’s, I think, a very different topic for discussion today on the show, and one that Ali brings years and years of experience to.
Paula: So Ali, as you know, I always start the show asking about our favorite loyalty statistic.
Paula: So without further ado, tell me, what is your favorite loyalty statistic?
Ali: So this one comes straight from my book, Keep Your Customers, and it is from the firm Zodiac Metrics.
Ali: And the statistic is that up to 20%, only 20% of first-time buyers will make a second purchase.
Ali: So only 20% of those first-time buyers actually buy again.
Ali: And first of all, it’s just kind of an outstanding number.
Paula: Sure, sure, it totally is.
Paula: And I’m sure it varies hugely by sector, Ali, and we don’t really need to get into the nitty-gritty, but I think it really provides laser focus, particularly for smaller business, that you really have to nurture those customer relationships.
Paula: And I know that’s exactly, as you said, what the book is all about.
Paula: So, I mean, where do you start from with, with, as you said, a staggering number like that?
Paula: As you know, most of the audience listening to this show, many of them run very big companies, Ali, so they might run loyalty programs for a telecoms company or a bank.
Paula: But I think what’s often missing is just this focus on loyalty as an emotion.
Paula: And I think that’s what I like about your work.
Paula: It’s really going back to basics.
Paula: I know you have a framework you’re gonna talk us through, but tell me, really, what is the starting point for creating loyalty with customers?
Ali: The starting point is creating a sense of connectedness between your company and your customer.
Ali: And this is the part that gets missed so often.
Ali: And it is the critical piece.
Ali: When people feel seen, heard and valued by organizations, they stay.
Ali: And when people don’t feel seen, heard and valued by organizations, they are much more inclined to leave.
Ali: And yet what we see is that companies, and this is true even more so in large enterprises, they focus so much on the automations and the technological solutions.
Ali: And there’s been this movement toward having tech solve problems, but tech cannot solve for connectedness.
Paula: For sure.
Ali: And so loyalty programs can be great, but if customers end up feeling, and it really is a feeling thing, if they don’t feel like they’re being valued by the organization, then they leave.
Ali: I had an experience just last week with a retail company.
Ali: This is a global company.
Ali: And I actually really like the company a lot and have shopped them on multiple continents.
Ali: And I bought something, and before the package had even arrived, they offered it at 25% off.
Ali: And so I emailed customer service and said, hey, I don’t wanna have to go through the rigmarole of returning it, repurchasing it.
Ali: That seems silly.
Ali: Can you take care of this for me?
Paula: Yeah.
Ali: And they made me jump through hoops.
Ali: And then I got conflicting messages from their customer service support, saying, sorry, tough noogies, kind of.
Ali: Once you buy, it’s final, the price is final, and it says so on our website.
Ali: And I had to go back and say, look, I have purchased from you so many times in so many places.
Ali: Are you really gonna make it this difficult?
Ali: And then finally somebody said, okay, fine, we’ll credit you.
Ali: Why would they make that choice?
Ali: It is so customer unfriendly.
Ali: And like I said, this is a retailer I genuinely like.
Ali: If I had one of their outlets in my town, in a city where I live, I would shop there a lot, but I don’t.
Ali: But they make online purchasing so difficult that I buy much less frequently.
Ali: And this experience was so frustrating that I don’t know how much I want to go buy from them the next time I’m in a town where there is a store.
Ali: And I’m telling the story.
Ali: And so the multiplicative effect for our company is not something they can easily calculate.
Ali: So this is one just small example of how this works.
Paula: Totally, Ali.
Paula: And if you were the type of person to name and shame, then this podcast could become very embarrassing for that company, which I know you’re not.
Paula: However, in a more private environment with your friends and family, I’m sure you’re comfortable naming and shaming because we all do that because we want to prevent people from experiencing disappointment like you’ve discussed.
Paula: And I did see you talking about this on LinkedIn, again, in a very generic way, Ali.
Paula: So I can see it’s really struck a chord with you.
Paula: And I liked the way you framed it because you opened by saying, if the customer brings this to your attention, what should you do as a retailer?
Paula: And you invited particularly retailers to come back and comment.
Paula: And I think we’re all in business.
Paula: I think we all recognize that no retailer is going to go and send an email out going, oh, to every customer who’s even unaware, here’s your money back.
Paula: That would be the other end of the realistic expectations.
Paula: But I think when you self-identify with, this is something that has disappointed me, and it might be something completely different for another customer, but clearly you are a loyal customer.
Paula: And if you say, look, it’s going to cost $10, $20, I don’t know what the pricing we’re talking about is, but here’s a way to really make me appreciate you because I feel hard done by.
Paula: Why would a loyalty mentality not kick in in that scenario?
Ali: And that’s the kind of short-term thinking that so many companies get stuck in.
Ali: They want to keep that 20 bucks.
Ali: And what they don’t see is that by keeping the $20, they’re losing, it’s truly a win the battle, lose the war scenario.
Ali: And it’s a good example because it’s a version that people see all the time.
Ali: And it was interesting on that LinkedIn post, how many people who are not in the retail space came back and said, oh, you should proactively tell your customers that you have reduced the price.
Ali: And I don’t think that is realistic.
Ali: And to some extent, it’s on the customer to say, okay, I’m gonna notice that this happened and follow up, but be gracious about it.
Ali: It’s so short-sighted.
Ali: But here’s the flip side that I will say, is that in any company, there are customers that are your super loyalists and the ones that I call in the book, your lucrative loyals.
Ali: And these are the very, very, very small number of customers that you know are not only buying more, but they are driving referrals, they are engaging with your company.
Ali: And for those, you don’t have to have the same set of rules.
Ali: And so there might be a time as a company where it is strategically valuable to say, for the sake of $20, I’m gonna proactively tell some of my best customers and just say, hey, we’ve taken care of this for you.
Ali: And those times when companies do that in some way, shape or form, hey, we noticed such and such, we’re just gonna go ahead and take care of that for you.
Paula: Yeah.
Ali: That’s really valuable.
Ali: That happened with me, and it was GoDaddy, and they actually came back and adjusted a price downward for me.
Paula: Wow.
Ali: And I was shocked, really shocked, but I’m seeing smart companies do this more now.
Ali: And it is a great way to build on loyalty.
Paula: Absolutely.
Paula: And do you know what it also does, Ali?
Paula: It’s the fact that it’s so unexpected, because again, so much of the work we talk about in structured loyalty programs is we’re setting expectations, then we’re looking to exceed expectations, we’re looking to build those connections.
Paula: So any opportunity to stand out with something that has a bit of a wow factor, no matter how that arises, I think what I’m hearing is that there is an opportunity to empower the staff to really go and say, okay, here are our true fans, our super fans, or our lucrative loyals, as you’ve labeled them, I like that.
Paula: And really give the staff an opportunity to treat them differently in a practical sense on a day-to-day basis.
Ali: Or a not day-to-day basis.
Ali: I mean, so there’s the ongoing part where you say, absolutely, these are our people and we’re gonna take extra special care of them.
Ali: But then there’s also something that I call these random acts of celebration.
Ali: And in those instances, you make a point of doing something that is completely out of the box.
Ali: And you know, completely beyond the norm.
Ali: And there’s a great story about it.
Ali: There’s a guy named Peter Shankman, and he’s also in this sort of customer loyalty space, and he’s also a prolific tweeter.
Ali: And one day he was getting on a plane, and he tweeted out, and I guess, so he is both himself a person who has strong loyalties to brands.
Ali: And one of those brands is Morton’s.
Ali: And he tweeted out, Man, I would really love to have a Morton’s Porterhouse steak when I get home from this flight.
Ali: And he got off the flight and lo and behold, waiting for him at wherever the passengers are discharged is a guy in a tux with a bag from Morton’s with a porterhouse and all the sides and cutlery and all the trimmings.
Ali: And right, incredible.
Ali: And it was a short flight.
Ali: It was only about a 90-minute flight.
Ali: And so they saw the tweet, they activated their team.
Ali: There wasn’t a Morton’s particularly close by, so they had to have the guy drive whatever, half an hour.
Ali: And yet this story is one that, so clearly, Peter tweeted it out.
Ali: Peter has talked about it for years.
Ali: I’ve been talking about it for years.
Ali: The amount of ROI on that free steak, is incalculable.
Paula: There you go.
Paula: And I’ve heard of Morton’s by reputation for their steaks and now for their loyalty marketing, my goodness.
Paula: That’s a great story.
Paula: I love it, Ali.
Paula: And actually, I was reading through a lot of your own articles.
Paula: And I think what you’re talking about really embodies, this lovely principle, and it’s, you’ve described it as finding small ways to show people how much they are valued.
Paula: Now, clearly that example with Morton’s is a really big way.
Paula: But I’m hearing, you know, this small ways to show people how much they are valued.
Paula: That seems to be what’s missing.
Paula: And again, in companies of all scale, like small companies, big companies, is that what you’re seeing and hearing?
Ali: Absolutely.
Ali: And the research backs this up.
Ali: Brene Brown tells a wonderful story.
Ali: It’s the story of the marble jar.
Ali: And the story goes that her daughter came home from school one day and was upset because a friend broke her trust.
Ali: And in her classroom, the teacher had this marble jar.
Ali: And when the kids did something good, the teacher would put marbles in the jar.
Ali: When they did something bad, she would take marbles out of the jar.
Ali: And when the marble jar reached the top, they would have a party.
Ali: And so Brene Brown, talking to her crying daughter, says trust is like a marble jar.
Ali: And when you engage with somebody, when you meet a friend, you build trust.
Ali: And over time, when they do something that builds trust, you put a marble in the jar.
Ali: When they do something that breaks trust, you take a marble out.
Ali: And it’s really only when the marbles get to the top of the jar that you have trust.
Ali: And she goes on to say that when she thought started thinking about this concept of the marble jar, she really, she Brene really thought that it was going to be the big things that built trust, big acts of generosity.
Ali: And what she found was that actually it was small acts consistently over time that built that trust.
Ali: And the same is true with customers.
Ali: It is not always the big moment that creates trust.
Ali: A big moment can create an impact, but it is the small, consistent actions of engagement over time that build sustainable customer trust.
Paula: Absolutely, absolutely.
Paula: And that’s very well said, and I love Brene Brown.
Paula: I’m sure you’ve read all of her books and listened to her podcast actually now as well.
Paula: She’s podcasting, so I must take a look for that particular story.
Paula: And I know what you mentioned to me as well, Ali, that you see even in small companies, which actually I have to say surprised me, because this is an issue that definitely happens in big corporations in my experience, which is that it often becomes very siloed, and particular departments, for example, become laser focused on acquisition, and very often they forget to nurture those customers once they land them.
Paula: And to me, the benefit of a small company actually is usually, I thought, that they had that the other way around.
Paula: But you’re telling me you’re hearing that there’s still this laser focus on acquisition in smaller companies.
Ali: In smaller companies, the focus is on acquisition, and then the expectation is that the authentic nurturing of customers is going to carry the day.
Ali: And the reality is that even in small companies, you need structure.
Ali: You need those clear, consistent steps that every employee knows to take, that you know how to track and measure, so that you can create sustainable processes.
Ali: Otherwise, you just have an ad hoc mess, and you don’t know what’s working.
Ali: So for companies that want to grow and truly extend those customer relationships and see the value showing up in their revenue, you can’t just have nice people doing nice things.
Ali: You have to have a structured process.
Paula: Well, that’s a perfect segue in to telling us what is your structured process?
Paula: What do you train and coach and teach in terms of alignment growth strategies in your own book?
Ali: Yes.
Ali: So alignment is spelled with alignment, M-I-N-T, because it aligns to the mint method that we use to help companies grow.
Ali: And so the, and mint is of course an acronym.
Paula: Of course.
Ali: So, of course.
Ali: So the first thing that we do is we map the existing landscape, because you have to know what’s going on in your organization in order to be able to identify where the opportunities are and where the challenges are.
Ali: And then identify where you’re aiming.
Ali: One of the things that we do that is unique and incredibly helpful is we create with companies a customer-facing mission statement.
Ali: Because if you think about the concept of the mission statement, it is always about the company.
Ali: You know, my mission, my vision, my values, and it’s very me, me, me.
Paula: Yeah.
Ali: But really what companies need in order to activate the mission more effectively is something that every employee can use together to engage.
Ali: And so there’s a great case study in the book from a company that is actually local here to Indianapolis called Cluster Truck.
Ali: And I always have to be very careful.
Ali: Clearly.
Paula: I can hear that going badly wrong at some point.
Ali: Yes, it’s always, I always say it like, there’s this company called Paws, Cluster Truck.
Ali: And especially on podcasts.
Paula: Oh my goodness.
Paula: Wow.
Paula: Tell us about Cluster Truck.
Ali: So it’s a really interesting company.
Ali: It is effectively a virtual restaurant that delivers.
Ali: And so they have their own menu.
Ali: It’s completely vertically integrated.
Ali: They actually have relationships with local farms in all of their locations across the country.
Ali: They cook all the food in their own kitchen, and then they hire their own delivery people who are true FTEs.
Ali: So it’s not, you know, they’re not gig economy employees.
Ali: And they deliver the food.
Ali: So they control the entire spectrum.
Ali: And when the company, and their food is actually very good.
Ali: And when they launched the company, the CEO went to the kitchen and he said, don’t ship maybes.
Ali: And what he meant by that was, if there’s a meal that just doesn’t come out quite right, or if it sits too long, then don’t ship it out.
Ali: Don’t ship a maybe, throw it away and make it again.
Ali: And what happened in the company over time is that idea, that notion of don’t ship maybes became a mantra that extended beyond the kitchen.
Ali: So, if you need to hire somebody and you really need to fill a seat, which of course we can all relate to, and you have a candidate sitting across from you who’s just okay, well, don’t ship maybes.
Ali: And it became this guidepost for everybody in the company.
Ali: And truly thinking about the customer in a more expansive way, if everybody in the company is aligned to serve the customer at their best and highest level, then that means there can’t be maybes.
Ali: And so that is the story in the book, that’s the case study that illustrates this idea of this bullseye, this customer-facing mission statement.
Ali: And that is one of the key pieces of what we do.
Paula: Yeah, I love it Ali, because there’s genius in its simplicity.
Paula: And as I said, this audience may be very different to who you normally advise, but if there was one thing I would want for most of the companies I would work for, it’s to agree a customer-facing mission statement, because I do tend to glaze over when the internal workshops are happening about how great we all feel and what we’re all going to say we’re going to own up to doing.
Paula: But if you’re going to truly hold your colleagues accountable, then actually it does have to be visible to customers.
Paula: And it doesn’t matter what kind of company you are.
Paula: So I think that’s absolutely incredible.
Ali: It also gives employees an empowerment factor because if they can tie their decisions back to this bullseye, then it empowers them to act.
Ali: And so, and companies have to be okay with that.
Ali: I mean, that’s part of the give and take of having one is that leadership says this guides your actions, this guides your decisions.
Ali: It’s one of the reasons that I always say that your mantra, your bullseye should not be, the customer is always right.
Ali: Because A, it’s just not true.
Ali: And especially nowadays when customers seem to want and expect more and unreasonably so.
Ali: And second of all, it is not a standard that almost any company is willing to adhere to.
Ali: And so you’re setting your employees up for failure by setting this standard of the customer is always right.
Ali: I think that whoever introduced that into the Lexcon has done a great disservice to customer support and customer experience.
Paula: And I think it’s probably, in my experience, it’s just quite dated.
Paula: I feel that maybe when that emerged in business thinking, it might have been 40, 50 years ago, that’s my sense on it.
Paula: And it was probably true at that point in time in order to create this awareness of the value of customers.
Paula: But I agree, it’s time has come to pass, so we’re definitely moving forward and we’re holding ourselves accountable to our mission statement with our customers.
Paula: So tell me, what is the next stage then in the process in terms of how you build a growth strategy?
Ali: So the next stage is to navigate your path.
Ali: So we’ve mapped our landscape, we’ve identified our bullseye, now we’re navigating our path.
Ali: And this is really creating the playbooks by which the organization engages.
Ali: And so that’s going to vary a little bit based on the key steps in the path, but whether it’s really understanding and nailing your welcoming and onboarding, what are the key inflection points that a customer is going to go through, and that’s going to differ a little bit based on industry.
Ali: So a company that is working on a sort of renewal basis is going to have a different cadence than a retail company and that kind of financial services, that kind of thing.
Ali: And then that we do both looking at it from the standpoint of the customer side of it, but also the internal training side of it, because what often happens in companies is that you create all this great stuff that you’re going to do for the customer, and then companies shortchange the integration inside.
Ali: And you end up with a flavor of the month initiative because the people who happen to be there in the moment that it gets rolled out with all the fanfare and the shwag and whatever, great, but it doesn’t get reinforced enough.
Ali: The internal customers, the employees, don’t get the support that they need to be successful.
Ali: Management is frustrated because, by God, they told them what to do.
Ali: Why aren’t they doing it?
Ali: But your employees, and especially your customer support employees, aren’t thinking about strategy and marinating in opportunities for growth in the same way that the people at the top are.
Ali: And so it all fizzles out, and then everybody’s frustrated.
Ali: And so we really focus on that, making sure that both sides have the opportunity to be successful, the customer and the employee.
Ali: And then finally, that sort of feeds into the last piece, which is to transform the results.
Ali: And that happens by making sure that this becomes living inside of the company and truly knit into the fabric of how companies operate.
Paula: And it’s a lovely, again, simple framework, where I can see that it’s applicable across so many sectors.
Paula: But you did mention particularly renewal-based businesses, which in my jargon I would call subscription-based companies.
Paula: And we talked off air, for example, that this is really a popular and very well-known business model in certain sectors, like software, for example, or Netflix, we’re all very familiar with our recurring payments.
Paula: But actually, I think one of the big dramatic shifts, I think for me, certainly in 2020, has been physical goods being offered on this subscription basis.
Paula: And I spoke at a number of conferences around the world recently, clearly virtually, both in Australia and in South Africa.
Paula: And in all markets, we’re seeing this in areas like coffee shops.
Paula: And I know where you are, Ali, is obviously in the US.
Paula: So Panera Bread has an extraordinary coffee subscription program based on $9 a month for unlimited coffee.
Paula: So to me, I think paid loyalty is really the ultimate goal for every business.
Paula: So would you also see this shift towards more renewal type?
Paula: Or do you think it’s applicable to more industries than even in the US has already adopted it?
Ali: It’s applicable in industries that I would have never considered to be subscription based businesses.
Ali: Even car companies are now offering these subscriptions.
Ali: I have my Apple phone on a subscription.
Ali: I pay monthly and have the opportunity to upgrade when I want to.
Ali: So all of these things that you don’t even think about as being subscription oriented, I have shifted some of my own products and services or I’m in the process of shifting some of my own products and services to be subscription oriented.
Ali: I used to sell per seat.
Ali: And what I’m realizing is that the per seat model is not as effective as being, and it’s not as customer friendly.
Ali: So in a model where companies are training all of their employees on a per seat basis, they get frustrated when they pay for a seat and the employee ends up crashing and burning or not completing the work or leaving for whatever reason.
Ali: And so I get, I was always fielding a lot of customer support requests saying like, hey, this person only worked with me for a couple of months and I paid for their seat.
Ali: Can I change it?
Ali: And from my standpoint, it’s like, well, that’s not my problem.
Ali: Not a very customer friendly mentality, but as a business person, we’re all human.
Ali: But in truth, in a seat based world, and that’s where I was always feeling this tension between being a good business person and walking my talk.
Ali: As a customer oriented human and business owner, I want to be customer friendly.
Ali: But as a business person, like, hey, I sold you a thing.
Ali: And so it’s that tension.
Ali: And generally I have always found ways to have processes in place to make it customer friendly.
Ali: But this way, but I always felt like I was a little bit out of authenticity with myself because this thing that I was selling was the thing that I was selling, or it should be.
Ali: And I also don’t, it goes back to on some level, that interesting tension from the, even the story that I told at the beginning with returning an item, right?
Ali: Where’s the line?
Ali: And so once I, in shifting to a subscription basis, I’m cool with it because they get to train how, you know, as long as they’re sort of staying in their, their grouping of seats, then it’s okay.
Ali: And so it makes it better for them.
Ali: It makes it better for me.
Ali: And what I am guessing is that in the long run, from a revenue perspective, it’s going to work better in my, it’s going to work better on my side, and I’m going to be serving at a better level.
Ali: So subscriptions and finding ways to do this well is an incredible opportunity.
Ali: And I do think that companies were willing to, you know, stretch themselves in 2020 out of necessity.
Paula: Yeah, yeah, absolutely.
Paula: Yes, I heard a term today called the permanent pivot.
Paula: So I’m hearing that’s exactly what you’re doing in order to remain in alignment, dare I say it.
Paula: But it also reminds me of something a friend was saying to me, and she manages a big group of people, and she’s a very dear friend, and she was coaching an employee who again was managing people, and this employee of hers was saying, look, I need to figure out a way to stop showing frustration to my own team.
Paula: And my friend was kind of going, no, actually, you need to find a way to just eliminate that frustration.
Paula: Like, there’s probably a better way.
Paula: Let’s not try and mask our humanity.
Paula: Let’s not pretend we’re not upset.
Paula: So that’s what I’m hearing actually with your, dare I say, permanent pivot, that you have found a better way to feel authentic and to feel good about what you’re doing for your clients.
Ali: It’s so true.
Ali: It’s absolutely true.
Ali: And had 2020 not happened, I might not have even investigated this.
Paula: And you know what you’re prompting me to think about, Ali, is I think I need to do a show or somebody needs to do a show about all of the incredible benefits that COVID has brought without in any way, I suppose, disrespecting the pain and financial hardship and God knows what people have gone through, but to find the positive impacts that has come through because clearly it has given you an opportunity to reflect on how you do your own business.
Paula: So yeah, it’s definitely been an interesting year.
Paula: There was just a couple of things I wanted to ask as we come towards the end, Ali.
Paula: There was a particular case study by a company called Soapbox, which I know you’ve mentioned on LinkedIn a couple of times, is a favorite of yours.
Paula: So I’d love to just give you the opportunity to maybe share that story with our listeners.
Ali: Sure.
Ali: So Soapbox is a great example of a company that had the opportunity, had amazing opportunities, and almost lost everything because they didn’t listen to their customer.
Ali: And so they started out, Soapbox is a company that makes soaps and shampoos and other personal grooming products.
Ali: And they are a company that is driven by a social mission.
Ali: So for every product they sell, they donate a bar of soap somewhere in the world that is a place that’s in need.
Ali: And I’ll just say this on behalf of Soapbox, they have been able, there are places where they have donated that have been able to reduce instances of the kind of mild illnesses that lead to fatality in places in the world that don’t have good hygiene and access to just the sanitation that we are so used to in the developed world.
Ali: And so there have been places where they have reduced the gastrointestinal distress that can lead to death by 97%.
Ali: And so truly, while they cannot say statistically or medically or formally that they have saved lives, it’s probable that this company that’s making soap is literally saving lives.
Ali: And so in addition to having just great products at good prices, they also have this great social mission.
Ali: So when they launched, they focused all of their energy and all of their marketing on trumpeting this social mission.
Ali: And they had this incredible success.
Ali: They went from being in mom and pop health food stores to chains like Whole Foods, which are natural grocery stores and high natural grocery stores in the United States, to some of the biggest outlets like Target and Walgreens.
Ali: And just it looked by every measure on the outside that they were just crushing it.
Ali: And this is a company that was launched by a guy who started making soap in his dorm room kitchen.
Ali: So they just saw this incredible trajectory of success on the outside.
Ali: But what was actually happening inside of the company was no customers were buying the product.
Ali: The buyers for the retailers were thrilled to stock them because they loved the social mission and they loved the idea that they were able to do good by putting these products on the shelf.
Ali: But because the company had focused so much on their social mission, they essentially ignored their customer.
Ali: And so the packaging was terrible.
Ali: Not at all appealing.
Ali: And so nobody even got the opportunity to appreciate what it was that they were doing because they never picked the product up off of the shelf to look at it.
Ali: They didn’t smell it.
Ali: They didn’t try it.
Ali: They didn’t see the social good.
Ali: So all of the advice that this young company got to trumpet their social mission was bad advice because it missed the mark with that essential moment of a person is standing in front of a shelf, what are they going to pick up?
Ali: So when they finally took that step back and reevaluated who their customer was and what they wanted and shifted the packaging and their scents and everything else to reflect what this customer wanted, things blew up and the company went gangbusters.
Ali: So when I first interviewed the CEO, David Sibnick, for the book, he said the research showed that if we made this change to the packaging after we completed the rebrand, that we would grow by 250% and we did.
Ali: So that was the first, when I interviewed him for the book, it was 250% and we did.
Ali: When I interviewed him for the book launch, it was, we had grown by 500%.
Ali: When I talked to him recently, they had grown by 1000%.
Ali: So just that one, going back to what we talked about earlier, it seems like a small change.
Ali: But wow, what a big impact.
Paula: Brilliant.
Paula: It’s a gorgeous story, Ali, and I will say you’re a great storyteller.
Paula: So thank you for sharing that.
Paula: And yeah, no, it really proves the point actually, because again, all of us in the loyalty industry are frequently seen as the panacea that can address all ill in the company.
Paula: And it’s not the responsibility of the loyalty program, even if it’s something with such integrity, as you’ve talked about there, of a social mission to fix the basics.
Paula: So it’s fundamentally got to start with a great product.
Paula: And then a social mission, I know Tom’s Shoes, for example, is another very famous American example of putting shoes on people who wouldn’t otherwise afford them.
Paula: So I love the loyalty that’s built into that business, and I’m super happy to hear how successful they have been.
Paula: So thank you for sharing that story.
Paula: The final question I had then for you, Ali, was you use a term, quite a lot I’ve seen on some of your work, about this idea of hidden revenue.
Paula: And I have no idea what you’re referring to, so you’d better enlighten me so we can understand where’s our hidden revenue.
Ali: So when we look at revenue, when companies look at revenue, they tend to look at the dollars spent by customers, which makes sense.
Ali: But they’re really undercutting the true value of a customer by only looking at the revenue that they bring in the door.
Ali: The value of a customer, the true value is not just the revenue, but also the value of referral and engagement.
Ali: So revenue, referral, and relationship.
Paula: Love it, yeah.
Ali: If companies do not have a process in place to systematically capture referral and the offshoot revenue that comes from that referral and credit the original customer with that additional revenue, then they are missing the true value of that customer.
Ali: And same with engagement.
Ali: So there’s direct and indirect revenue.
Ali: And the indirect revenue is the hidden revenue.
Ali: And oftentimes worth many, many times more than that initial direct revenue.
Paula: Absolutely.
Paula: And probably the least acknowledged.
Paula: And well, actually, to your point, probably the one that we’re least aware of, certainly tracking the least amount.
Paula: And I’m probably overly generalizing here because there are some businesses that do it very well, maybe digitally led companies, but I think you’re absolutely right.
Paula: The vast majority are not capturing it and attributing it back to the original source and then acknowledging that person because obviously there’s a relationship-building opportunity to go back and say, thank you so much for that referral.
Paula: We really do appreciate it.
Paula: And I’ve often said that I think the biggest missed opportunity in driving loyalty is just remembering to say thank you.
Paula: So I love that model, revenue referrals and relationships.
Paula: So really definitely going to be thinking a lot more about hidden revenue as we go forward.
Paula: I think that’s everything I had on my list of questions, Ali, for you.
Paula: Was there anything else you wanted to mention before we wrap up?
Ali: No, but I think that as we look forward to 2021, there’s a real opportunity to pause and reflect on what we did learn in 2020, these permanent pivots or these adjustments that we ended up having to make that really were good in the end.
Ali: Where can we find those silver linings and continue to incorporate them into the future?
Ali: I think there will be some companies that say, great, glad that’s over, back to business.
Ali: And that’s going to be selling themselves and their employees and their customers short.
Ali: So what can we keep and continue to expand upon in 2021 and beyond?
Paula: Okay, it’s great advice, Ali, like everything you’ve said throughout the whole interview.
Paula: So I have to say it’s been an absolute joy and pleasure.
Paula: I think everything you’ve said, there’s words of wisdom there that apply to absolutely everybody.
Paula: I’m a really big fan of the work that you’re doing.
Paula: So just want to say from everyone at Let’s Talk Loyalty, thank you so much to Ali Cudby, Managing Director at Alignment Growth Strategies.
Paula: This show is sponsored by The Wise Marketer, the world’s most popular source of loyalty marketing news, insights and research.
Paula: The Wise Marketer 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 thewisemarketer.com and loyaltyacademy.org.
Paula: Thanks so much for listening to this episode of Let’s Talk Loyalty.
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