Loyalty KPI's with Brierley

Paula: I’m delighted to announce Capillary Technologies as the new title sponsor for Loyalty TV.

Paula: Capillary’s mission is to bring the loyalty market out of the 1980s and into the present, ditching the slow, chunky manual services of the past.

Paula: Capillary is all about making loyalty management easy with scalable AI-powered tech that turns loyalty managers into superheroes.

Paula: Say goodbye to outdated methods and check out the exciting new way to achieve loyalty excellence in 2024.

Paula: Hello, and welcome to Let’s Talk Loyalty and Loyalty TV, a show for loyalty marketing professionals.

Paula: I’m Paula Thomas, the founder and CEO of Let’s Talk Loyalty and Loyalty TV, where we feature insightful conversations with loyalty professionals from the world’s leading brands.

Paula: If you work in loyalty marketing, join us every week to hear the latest ideas and insights for loyalty marketing specialists around the world.

Paula: Hello, and welcome to today’s episode of Let’s Talk Loyalty and Loyalty TV.

Paula: It’s Paula Thomas here, and I’m delighted to be today chatting with Don Smith.

Paula: Well known to many of you for his role as the Chief Consulting Officer of Brierley, which is now a capillary services company.

Paula: Don joins me to share his expertise around optimizing some of the most common KPIs for loyalty professionals.

Paula: The importance of the mental mantle of loyalty, as well as some of the biggest nuggets he learned from the recent Capillary Captivate Conference in Mumbai.

Paula: As one of the loyalty industry’s most respected brands, I’m thrilled to bring you some of Brierley’s unique frameworks and perspectives that can help all of us build better loyalty programs.

Paula: I hope you enjoy our conversation.

Paula: So, Don Smith, welcome to Let’s Talk Loyalty, and most importantly, welcome to Loyalty TV.

Don: Thank you for having me, Paula, excited to be here.

Paula: Indeed, and I know you’ve been doing so much incredible presenting work, Don, over the years, so it’s a real honor to have you.

Paula: We’ve done lots of interviews as well, in or around Capillary itself, all of your clients, but I think you’re one of the leading personalities in the business, dare I say it, at this stage.

Don: You’re very kind.

Don: I’m super excited, a fan of your broadcast, and it’s about time this happened.

Paula: Totally.

Paula: I feel it’s long overdue.

Paula: So let’s get straight into it.

Paula: We’ve both just had an extraordinary time together at the Captivate Conference, which we are going to come back to in a little while, because that really inspired me in terms of, I suppose, the depth of your knowledge.

Paula: I really felt like it was a master class, particularly on the KPI side, which I know our audience is super hungry for, and you’re going to share with us today.

Paula: But before we get into talking about any of that stuff, as you know, we have a, I suppose, a more general question that we’re loving to ask our guests now, just to get a sense of you as a person and what you, I suppose, like to read in terms of anything to do with life or leadership or, of course, loyalty.

Paula: So Don Smith, my first question, what is your favorite book?

Don: My favorite book, Paula, is An Economic Theory of Democracy by the famed economist Anthony Downs that he penned in the 1950s.

Don: You may not get that answer all the time on this podcast, but it’s one of the, and I started my career in academia.

Don: I was a political scientist, and this was one of the first things that I read in graduate school.

Don: The basic premise is, here’s this economist who says, wow, I wonder if we could take theories of how customers shop and theories of how the micro economy works and apply them to politics.

Don: And he came up with this very deductive set of hypotheses, well, really theorems and derived hypotheses about how voters vote that’s in their economic self-interest, but how they take lots of shortcuts and adopt heuristics to do so.

Don: And I think Wyatt’s my favorite book.

Don: I’ll go back and read it many times.

Don: It’s because it’s so clear.

Don: And as someone whose passion is architecting good consumer and loyalty and engagement programs, I think the fundamentals are so important.

Don: We have to don the mental mantle of the customer or the consumer, and we have to architect programs that are easy for her or him to understand and play in and make sure that they’re in that consumer’s best interest.

Don: And if we have that theory of action laid out explicitly, and we don’t try to boil the ocean with too many whistles and bells and too many information signals or costs, you have a really compelling loyalty solution.

Don: And so I do love those nice deductive set of hypotheses that Downs lays out.

Paula: Wow.

Paula: Well, listen, it sounds like it’s above my pay grade, Don.

Paula: So I’m not going to promise to read this one, but I did know and I do know that you have a PhD in political science.

Paula: So definitely a lot of really clever stuff.

Paula: But honestly, the reason that you love it is a reason that matters to me.

Paula: So for me, simplicity is one of the most important values, particularly as we’re all, whether it’s overwhelmed with social media, our email inboxes or whatever, like my favorite book title.

Paula: Actually, I’ve said this on the show a few times, you might like this.

Paula: And it’s not the contents of the book, actually, but it was the title.

Paula: It’s about 20 years old.

Paula: But I remember a book title called Don’t Make Me Think.

Paula: And I was like, that’s genius.

Paula: Oh, my God, I’m so relieved.

Don: Absolutely.

Don: Absolutely.

Don: And we see that, don’t we, in the landscape?

Don: Like everyone wants to inject so many handles into a program.

Don: And that’s good when it’s increasing the customer experience, making it fun and it’s relevant.

Don: But you do too much and it can be overwhelming.

Paula: It totally is.

Paula: So we can very easily go from one extreme to the other.

Paula: And sometimes we are a victim of our own ambitions and sometimes the scale of our enterprises as well.

Don: Absolutely.

Don: Couldn’t agree more.

Paula: Amazing.

Paula: So listen to me.

Paula: You mentioned you started out in academia and clearly you’ve been in the business world and the loyalty world for quite a long time as well.

Paula: So tell us a bit about your background and history for anybody who doesn’t know you.

Don: Well, loyalty is really my passion.

Don: I’ve been doing this working for, I started with Brierley 18 years ago.

Don: And Brierley, of course, was really the first entrant into the loyalty space, doing consulting as well as technology hosting at the first product for running loyalty programs.

Don: And I’ve had a great time.

Don: I kind of stumbled into that though.

Don: I spent the first decade of my career in academia, and I was a political scientist, but I was a political scientist who was really focused on statistics and econometrics in understanding how government programs work.

Don: And that translation spilled over very, very nicely into the business world.

Don: As I kind of moved forward, it’s the same principles, the same math.

Don: And so there was a natural affinity for me to cross over when I left poverty of academia and joined the business world.

Don: So I’ve been with Capillary, well, Brierley for 18 years.

Don: Capillary was acquired a couple of years ago.

Don: We were proud to be a part of that family.

Paula: Amazing.

Don: Yes.

Paula: I was going to ask you to explain that because Brierley is an absolutely famous brand.

Paula: As you said, some very famous personalities, if I’m not mistaken as well, so that really set that business up.

Don: Absolutely.

Don: So Brierley was, Hal Brierley is really sort of the godfather of modern loyalty.

Don: He was one of the independent consultants on the American Airlines Advantage program.

Don: He was instrumental in United’s program, bringing Hertz’s program into market, and really kind of wrote the book.

Don: He founded Epsilon Consulting as well.

Don: And so he founded Brierley as first this kind of think tank.

Don: How do we engineer programs?

Don: How do we come up with solutions that work?

Don: Add it on a technology platform.

Don: And it’s been great.

Don: He’s been inspirational to learn from.

Don: And we’ve had a lot of other personalities in the mix as well.

Don: And run some of the biggest programs out there.

Don: And I think, you know, a couple of years ago, when we were acquired by Capillary Technologies, I got to tell you, this was one of the cases where the chocolate really meets the peanut butter, like in that old candy commercial for Rhesus.

Don: Because I think where we were at is, there’s a tremendous amount of brand equity built up in the Brierley brand.

Don: Folks have trusted us to design programs, tune their programs, make them work harder.

Don: And that’s strategic consultancy is there.

Don: It’s our passion.

Don: I’m excited to be able to lead that portion of the business.

Don: But Capillary had been on the scenes for about 15 years, largely in India, Southeast Asia, really gaining increasing market presence.

Don: And what they did very quietly, but very well was built the best technology platform, the best SaaS platform in market, we believe.

Don: And Forrester said so as well.

Don: And I think they really invested and took their time.

Don: And it’s just feature rich in functionality, lots of embedded AI and the right roadmap.

Don: So here’s the best in class technology solution.

Don: And they come in and say, we’d love to have the strategic consulting capability and the client list of Brierley.

Don: And it was just one of those things where this wasn’t a hostile acquisition.

Don: This was a marriage.

Paula: Wow.

Paula: Wow.

Paula: And I do remember actually, Anish Reddy, one of the capillary founders saying exactly that at the Captive A Conference last year, Don.

Paula: So, you know, it’s all well and good to have a beautiful platform.

Paula: But unless you know what you’re going to do with it, there’s actually no point.

Paula: So you kind of need to start at the beginning.

Paula: So sounds like, as you said, a match made in heaven.

Don: Yes, it’s been good so far.

Don: So far, so good.

Don: Onward and upward.

Paula: Amazing.

Paula: So everybody’s behaving themselves.

Paula: And while we’re talking about acquisitions, actually, is it a good time to talk about the latest hot off the press from the capillary side?

Don: Woo!

Don: Yeah, you heard it here, Paula.

Don: It’s, yeah, we are excited.

Don: We have completed the acquisition of Cognitive.

Don: And for those who are familiar with Cognitive, based out of Minneapolis, they’ve been in the game for a while.

Don: Cognitive is an omni-channel personalization SaaS platform and solution set.

Don: It’s about taking the data assets of loyalty and programs and injecting them into every customer touch point.

Don: And they have a storied set of clients that live under their logos.

Don: Everyone’s familiar with Uber Awards, of course, but they’ve got PetSmart, Hallmark, many brands that folks are familiar with and they’re in 20 countries.

Don: Heaviest footprint is in the US and North America.

Don: And that’s been fantastic because it’s another complementary set of skills and solutions that they bring to the table and that we get to add in and serve up to our clients as we build a better one capillary.

Don: So we couldn’t be more excited that this has happened.

Paula: My goodness, yeah.

Paula: And what a lot of people might actually do know, actually, because I certainly do, because I’ve come across cognitive people everywhere, Don, but there’s also a very famous brand that cognitive did merge with a couple of years ago on the Amia side.

Paula: So that’s also something I think almost every alumni in the industry seems to be ex-Amia or ex-cognitive.

Don: Absolutely.

Don: That took place in 2020, with Amia Loyalty Solutions merged with Cognitive.

Don: It was a great merger.

Don: It allowed them to consolidate their client bases, and all of the personalities we all know have come through there.

Don: So I think between Brierley and Amia, and quite frankly, the other brands that have joined the portfolio and Capillary as well, because we purchased the digital assets of Tenority as well as Persuade.

Don: And so we’ve gotten some big players that offer different things in the market, and we really brought a lot of talent into one company.

Don: And it’s kind of exciting to have that sort of garden of ideas where we can all feed off of each other and challenge each other, and we’re just going to get bigger and better.

Paula: Amazing.

Paula: Absolutely.

Paula: I hear world domination is on the cards.

Paula: So again, you heard it here first.

Don: Yeah, there you go.

Don: World domination or just world class loyalty.

Paula: Totally.

Paula: Totally.

Paula: So listen to me.

Paula: We’ve had a wonderful couple of days together about two weeks ago.

Paula: Don, you, of course, were the MC for the fantastic Captivate event, which was the second time that Capillary has run this.

Paula: And for me, certainly the first time in Mumbai, I had been, of course, at Captivate when it was here in Dubai in 2024.

Paula: But listen, just maybe for then, you know, I suppose folks who weren’t aware that that conference, I suppose, has grown so big and with such amazing speakers, maybe just give us a sense of, I suppose, the intention behind locating it in India, the content, and I suppose how the whole thing came together.

Don: Yeah, Captivate has been a fantastic conference, and our goal really was to sit down and go, we’d like to serve something up, and we heard this from our clients and our customers.

Don: They’re always asking, well, what are the other customers doing on the platform?

Don: Can you facilitate the sharing of success stories and case studies?

Don: And that’s always a delicate balance to broker those conversations.

Don: And we really felt like, what if we just had a best-in-class conference where we brought all of the brands that are on our platforms together, introduced them to each other, made sure they had time to network, but also let brands raise their hands and share their stories and talk about what they’re doing, how they’re leveraging our platform, but also just how they’re connecting with their customers.

Don: And so we did that.

Don: And we also invited folks like yourselves.

Don: You were there, you gave us a whole read on some of the biggest loyalty programs and what you’re seeing.

Don: We had Forrester there, we had many other folks there as well.

Don: Amazon Web Services, Peak 15, Cataboom, and others.

Don: And I think balancing that kind of industry thought leader perspective with actual brand experience makes a really good solution set.

Don: And so we decided to have a two-day conference.

Don: We had done it in Dubai previously, and that’s certainly an appealing destination, but we thought, wouldn’t it be fun to go somewhere most folks haven’t been?

Don: And that was the case for many of our customers in Mumbai.

Don: You know, of course, the financial hub, the Hollywood hub, it’s a great city.

Don: And why not do it there?

Don: But we were able to secure the Taj Mahal Hotel, which is one of the leading properties in the world.

Don: I mean, it’s just breathtaking.

Don: And the fact that we were able to put our clients up in there and get so many clients showing up, I mean, we actually were running out of hotel space at the end because the response actually exceeded what we had planned for.

Don: And so that was exciting to have so many of our clients, hundreds of people there at the event.

Don: And I think it’s the kind of thing that agencies should be doing for their clients, is bringing them together.

Don: We had amazing brand presentations.

Don: I mean, we had the CEO of Indigo give a fireside chat where he could not have been more candid.

Don: We had a great presentation from Hertz, great presentations from Tata New, from Domino’s Indonesia, from Pitality, from many others.

Don: And I think this was just, and they were sharing actual information, right?

Don: I mean, Holly, you’ve been to industry events where sometimes the brand presentation is just a hyper sanitized sort of brand narrative where you don’t learn anything about what folks are doing.

Don: But this was all in the house and everyone’s like, hey, and here’s how we’re using these features to get these campaigns into market with our customers.

Don: And folks actually answered pointed questions.

Paula: Yeah.

Don: And I think that kind of exchange is money.

Don: And that’s where we want, that’s the event that we want to create.

Don: And those are the events that I think most of us want to attend.

Paula: Yeah.

Paula: I mean, I couldn’t have said it better, Don.

Paula: I mean, for me, the high point was the CEO of Indigo Airlines because I do have a background on the airline side.

Paula: And to hear such an explosive, ambitious, incredible airline and just a character like that again, like I always feel like we do need more C-suite perspectives in loyalty anyway because otherwise I think there is a risk we could just become an echo chamber and that’s a reflection for me on how my show goes.

Paula: And I want to hear more people like that.

Paula: So it was incredibly inspiring.

Paula: And to your point about the hotel as well, honestly, I woke up on day one, opened my curtains and there was the gateway to India.

Paula: And I was like, I have arrived.

Paula: This is just like a professional high.

Paula: Honestly, I mean, you guys have did yourselves.

Paula: And obviously, that hotel is a client of yours as well through the Tata Group.

Paula: So it just all came together amazingly.

Don: It really did.

Don: It was a fun event.

Don: I think it was, I think it’s memorable and I hope we get to do it again.

Don: And we may be doing regional variants of this as well, because we certainly had a lot of Indian and Southeast Asian clients coming to the event.

Don: We’re going to have to figure out how we do this with a footprint too next time to get more of our European and US and Canada clients.

Paula: Absolutely.

Paula: Well, I think I hear your MC career is going to take off, Don, on the back of that perhaps.

Don: There you go.

Don: You know, there’s always that if this doesn’t work out.

Paula: Oh, totally.

Paula: And I think a little birdie told me you have a background in drama somehow along the way as well.

Paula: So you’re perfectly qualified.

Don: That’s true.

Don: I had a theater scholarship to undergrad.

Don: So that was good fun.

Paula: Amazing.

Paula: Brilliant.

Paula: Well, everybody does love to be entertained as well as educated and inspired, Don.

Paula: So with all of that as context, yes, we’re just, I suppose, still on a high from the whole event.

Paula: But the other piece that I really wanted to talk through today was your own presentation.

Paula: So you gave us, I suppose, a master class, particularly in, I suppose, what is your specialty, really getting a sense of, you know, KPIs for loyalty, a bit of a boot camp, a couple of frameworks, and really, I suppose, an awful lot of deeply thought through insights and models.

Paula: And that again, we’re not going to do justice to today, but I’d love to just talk through whatever you can share that will be, I suppose, accessible for both our audio audience and people who are, of course, watching the loyalty TV as well.

Paula: So where do you want to kick off?

Paula: I think squeezing more juice from common KPIs was a great headline.

Don: Yeah, yeah, I think that’s a good place to start.

Don: We kind of say, look, there’s five lessons that we’ve learned in the process of analyzing loyalty programs.

Don: And you know what?

Don: Peter Elbers, the CEO of Indigo, when he was giving his talk, Paula, got asked pointed questions about cost benefit analysis.

Don: How do you know the true incrementality of a program?

Don: And I thought he gave the best and most candid answer ever, which is, it’s too hard to measure.

Don: But I know that it’s working because I see it in how our customers respond.

Don: And I see it in an elevated and enhanced customer experience.

Don: And I think that’s absolutely the right approach.

Don: We can try to analyze things to death and debate each other about statistical methodologies.

Don: But there are very simple things you can look at to see where your program is working well and where you can make it work a little bit harder on your behalf.

Don: And I think one of the things when we say squeezing a little more juice from the most common KPIs, there’s five simple lessons, right?

Don: And the first one is retention is not a dichotomous concept.

Don: And let me explain that.

Don: I think if we asked folks that were listening right now and said, you know, do you know your customer retention or your member retention in the program year over year or period over period?

Don: An overwhelming majority would say yes, that is a KPI that is on my dashboard.

Don: I have 68% customer retention.

Don: I’m trying to get 72.

Paula: Yeah.

Don: And they would know this.

Don: Here’s the problem with that measure.

Don: I mean, it’s good.

Don: You should know your retention, but it’s masking another dynamic.

Don: And that is retained member velocity.

Don: And what I mean by that is you can be shopping brand X in the previous year and come back and keep shopping brand X in the following year.

Don: And I can go, oh, shop both periods, retained dichotomous outcome.

Don: But what if during that period, you actually start decelerating away from the brand, and you start splitting with several competitors and becoming more promiscuous with your share of wallet during that time period, you’re actually on the slippery slope of deceleration.

Don: And that’s a problem.

Don: While you’re retained, if you’re only delivering a third of the value that you were in the previous year, we have a problem, one that needs to be remedied.

Don: And I think the same is true when we look at other customers.

Don: And we really need to look, and because I think there’s this Pareto effect that a lot of brands will say, well, we’re getting 80% of our activity from 20% of our best members.

Don: And that may be true, but Paula, that 20% isn’t constant over time.

Don: There are folks that are moving into it from the lower ranks that have been on boarded, or sort of reawakened into the program, and there are folks that slip and decelerate.

Don: And I think you really have to follow those flows.

Don: And not only that, you should action them.

Don: When you see someone stubbing their toe and moving away from your brand, or maybe they’ve had a problem, you need to trigger proactive outreach and do something special to win them back or keep them on board.

Don: And the same is true for customers that are starting to increase, and they’re doing more with you.

Don: Celebrate them, surprise and delight them with something, acknowledge their contribution and do more with that.

Don: I mean, those data signals are low-hanging fruit in any loyalty or CRM database.

Don: And it’s amazing how often we don’t use them, because they’re such simple trigger campaigns.

Don: And a little outreach, as you know, when it’s personalized, goes a long way.

Paula: Absolutely.

Paula: Yeah.

Don: I think that lesson about retention is true.

Don: I think there’s also the second lesson we…

Don: Polly, you hear a lot, I bet, about the leaky bucket and brands talking about how they fill it, right?

Paula: Yeah.

Don: Yeah.

Don: And I think that focus on a leaky bucket, am I acquiring more that are dripping out due to attrition is fine.

Don: But the one thing that we have learned over the years is keep a handle on that.

Don: And it’s important, but focus on quality rather than quantity.

Don: And what I mean by that is this happens all the time.

Don: And we have a proprietary measure called Ballard, the becoming active to lapsing out ratio.

Don: And we measure it not just as a count of active customers or members with the brand, but as how often they’re shopping and how much they’re spending.

Don: And we’ll often measure it on other desired behaviors as well that are consistent with the program’s theory of action.

Don: But the idea is, of course, we want to fill the funnel with more new customers than drip out due to attrition.

Don: But even if I might be a little cattywampus or not level pegging on that goal, if I’m acquiring high quality customers who appreciate my product and are willing to pay full price or willing to do things that are good for us and good for the customer, that’s really what I’m looking for.

Don: And if the folks who are slipping out and falling through the funnel or dripping out of the bucket are the ones who were more promiscuous with share of wallet, were lower margin, sometimes even have those kind of catfish like qualities, it’s okay to let some of those folks go.

Don: Focus on the health of your file.

Don: And I think everyone remembers Groupon, you know, back in the day when it was a firestorm.

Don: And Groupon was the most horrible acquisition vehicle for loyalty programs because you had people who just wanted a deal and they were moving from one opportunistic deal to the other.

Don: Well, they would go into the funnel and drop right back out and that’s exactly where they needed to go.

Don: You know, what we wanted is customers, I don’t care if we acquire customers through a good deal, but when I’m providing a great experience and a great program, I want them to continue shopping and transacting with us and enjoying the benefits of the program and becoming brand loyal.

Don: And those are the folks you need to look at.

Don: It’s okay to fire a few customers, as long as you’re bringing more in that are high quality and doing the things that you need to happen, because it’s win-win for you and them.

Paula: Amazing.

Paula: I think the title for this episode has to be It’s Okay to Fire a Few Customers.

Paula: I think that’s radical, but actually blindingly obvious.

Paula: I mean, we need to be brutal.

Don: Yeah, I think, or at least know what’s happening with our margins.

Don: And I think this is one of those two, like one of our lessons is you got to kind of go with the flow.

Don: Yeah, when you’re doing loyalty and that is the flow through to net sales and margin.

Paula: Yeah.

Don: And I think too often we don’t understand all of the ways in which margin gets deprecated through customer interactions because most brands, like if you’re in retail, most brands, not all, will have hard marks in sales, right?

Don: They’ll just say, you know, these things are 20 percent off this week and we have sale prices.

Don: Whether you’re in loyalty, you’re not in loyalty.

Don: And they’ll also be doing at the same time CRM work.

Don: Maybe it’s under the auspices of the program, but it’s like, hey, shop.

Don: And if you spend 100, you know, you’ll get 20 off on top of this.

Don: And those things resonate with customers.

Don: And they’re part of a brand strategy.

Don: But you’ve got these hard marks that everyone gets.

Don: CRM that’s out there.

Don: And then you have loyalty.

Don: And loyalty might be the reward that lives in the incentive structure of the program, like a certificate or a free product.

Don: And the point is that all three of those things impact what’s happening with what products are marked at and what a customer ends up tendering.

Don: And as a statistician, I’m just so keen to know, and I preach this to all of our clients, we have to understand how many double dippers and triple dippers we have in our mix and what that looks like.

Don: Because there will be some members who are very, very good at waiting till there’s an amazing sale or clearance at the same time that they use that to tender CRM or coupon or take advantage of a great offer at the same time that they manage to redeem their rewards.

Don: And that can be a woo woo woo to move through.

Don: It can also be a very good thing if it’s empowering for the consumer because you know the act of redemption begets future loyalty.

Don: And we love for customers to feel like the program is working for them.

Don: But you do have to keep your fingers on the pulse of this because I think as loyalty marketers, we all often get beat up by finance and folks going loyalty is a cost center, I want breakage, not redemption, wrong answer, right?

Don: And I like to do is go in and go, hey, actually, if you look at the decomposition of margin, as it exists in baskets or services, it’s actually often heavier.

Don: In fact, it’s usually heavier on the CRM and on the hard mark strategy than it is on the loyalty strategy.

Don: And good programs let customers triple dip, but they find ways to make the loyalty assets work harder for them.

Don: And that in turn can reduce the reliance on discounts and other promotions if done correctly.

Don: And that’s what I want to see more brands propagating redemption structures using next best action analytics.

Don: Paula, I see you’re shopping our wardrobe, but you’ve never purchased denim or casual.

Don: Here’s your reward.

Don: It’s $10 today, but I’ll make it $25 if you buy your first pair of jeans.

Don: That is a win-win proposition because if you don’t like it, you just redeem for what you want.

Don: But if you’re willing to give it a try, chances are I’ve got you into another stickier merch category.

Don: You feel like you’ve won.

Don: I’ve gotten you to try a new product that I think will have a high retention rate in category.

Don: Win-win, right?

Don: I mean, that’s what we want.

Paula: Totally, yeah.

Paula: And I mean, so many things I want to pick up on, Don.

Paula: The first thing is, you’re absolutely right, the double dipping, triple dipping, you know, the finance guys can often go, oh my God, this is a disaster.

Paula: But I’ve certainly had brands on this show, you know, maybe different models, maybe a coalition program, for example.

Paula: But, you know, as long as the funding is clear and the margin is being covered in some ways, that double dipping and triple dipping, like I get super excited.

Paula: And that’s where you get that incredible stickiness.

Paula: So I totally agree.

Paula: Like with my consumer hat on, the more double and triple dipping I can get, the better.

Paula: And the other piece that I love is that idea of incentivizing proactively with a new category.

Paula: And I think it was Panera Bread.

Paula: I can’t remember, but I remember talking to one of our guests on the show where, you know, you might be coming in to get your lunch a few days a week, but have you tried breakfast?

Paula: Have you tried coffee?

Paula: So again, for me, certainly in the restaurant category, you know, absolutely, like people get favorites.

Paula: I certainly, I’m a creature of habit.

Paula: So if you’ve got a good breakfast and you get me in once, I’m just going to keep coming back for it.

Don: I completely agree.

Don: And often, you know, you can do this with high perceived value rewards.

Don: Panera, and they’re not our client, but I do like their program.

Don: I think they did a lot of smart things.

Don: And one of the things as a Panera member, I would constantly get lots of, hey, come in for a free baked good today.

Don: We’ve got a bagel or we’ve got a muffin.

Don: Well, you know, it didn’t take long to realize they were just using the assets on hand in the store, and we’re going to have spoilage.

Don: Let’s surprise and delight with a high perceived value gift.

Don: And you know, I’m going to come in for that great coffee that they have.

Don: And I think that’s the smart way to do it.

Don: It’s win-win.

Don: You don’t want it.

Don: You don’t have to take it.

Don: But, you know, chances are very good that many people tried it.

Don: They’re like, oh, I need that again.

Don: I need to bring in a dozen of those to the office.

Paula: Totally, totally.

Paula: The other couple of pieces.

Paula: And again, we’re not going to nearly do justice to everything you were sharing with us.

Paula: But the idea of share of wallet for me is probably the one that doesn’t get nearly enough attention.

Paula: I guess my question on behalf of the audience, Don, is that available generally speaking?

Paula: Because certainly, you know, I was running programs, you know, 10 years ago, so I’m definitely out of date in terms of what’s possible on the data side.

Paula: But is it OK and possible to get a sense of where is your customer spending sometimes maybe with competitors?

Don: Absolutely.

Don: And now it’s tricky.

Don: Like one of the things I would say, I have auditioned different commercially available sources.

Don: There are aggregators, as you know, Paula, that have tried to sell.

Don: Yeah, I can get the credit card or registered tender share.

Don: And I’m going to steer your guests away from those solutions for the most part.

Don: They’re not reliable enough.

Don: The best source of information about share of wallet is your members, your guests and your customers.

Don: And so we religiously propagate regular voice of customer testing.

Don: And we explicitly ask members, where else are you shopping in this category?

Don: And we ask them to estimate either how much they’ve spent with our brand and with competitor brands or give a percentage, use a slider, one of those things.

Don: And a lot of, I know folks will go out that at first blush and say, oh, well, you can’t rely on that.

Don: It’s self-reported.

Don: You know what?

Don: It’s actually remarkably accurate.

Don: You know, as we’ve matched things up and we have done work before, you know, like just the recall that customers have of how many times they’ve shopped a brand.

Don: They’ll be like, oh, it’s been to end of 12, and they almost always get it right or they’re very close, you know.

Don: And one of the things we know is people don’t really have a reason in a survey to lie about that or mislead you.

Don: They’re pretty honest.

Don: And I think getting that share of wallet data is incredibly helpful.

Don: And measuring these things in a regular basis is helpful because when we’re designing programs, we’re not just giving our customers a rational reason to shop with the brand.

Don: We’re trying to cultivate an emotional connection with them, making them feel appreciated that we’re always piping something new and fun, sexy, into the mix, that keeps the brand engaged and really shows genuine appreciation.

Don: And if we do that, we will naturally watch changes in that share of wallet.

Don: And I think it also contextualizes our right to win, too, with some customer sets.

Don: And you can try to model this a little bit, and it’s good, but we’ll often find, you know, there are different demos.

Don: Like, I might have a college student shopping my fashion brand, and go, well, she doesn’t look like she’s a particularly fantastic customer until you realize I’m getting 80% of the share of closet.

Don: Celebrate and sing her and treat her like royalty, and let her know that you appreciate that.

Don: And similarly, we might find someone that’s spending thousands of dollars with us and think this is my best customer ever, and it will be very humbling when you get the response back.

Don: And we’ve seen it in focus groups as well.

Don: Well, you probably have 25% of my share of wallet, but I’d love to shop these other brands as well.

Don: And so I think you have to measure that, and you have to measure it going beyond share of wallet and the usual suspects of net promoter score.

Don: You know, I like net promoter score, but I think it’s just would you recommend this brand is too limited.

Don: It’s tapping into a rational, not an emotional dimension.

Don: Yeah.

Don: Yeah.

Paula: Yeah.

Paula: And we’ll definitely touch on that now as well, Don.

Paula: Again, I just feel like there’s so much here.

Paula: But just before we move on, I just love this whole idea.

Paula: We’ve talked about share of wallet, but you briefly mentioned non-transactional behavior.

Paula: And for me, that’s still like an opportunity that I don’t hear enough talk about.

Paula: I think pretty much everybody’s kind of very clear that they do need to get the analytics right for the transactional behaviors.

Paula: But what about the posts on social media?

Paula: What about the referrals?

Paula: What about all of that other stuff?

Paula: So are you seeing that coming through from the programs that you’re consulting with?

Don: Oh, absolutely.

Don: But we’re seeing it as still an opportunity, too.

Don: And it needs to be evangelized.

Don: And it can be trickier to measure because a lot of…

Don: We are big fans, or I am as a program architect, of rewarding explicitly for non-transactional activities, even when they’re not necessarily positive.

Don: Like, I think one of the most important things, if a customer is shopping on your website and doing your e-com, you ought to be offering her or him something for writing a product review or sharing their experience.

Don: Even if it may not have been a five-star experience, if they’re taking the time to post a review, write a sentence with constructive feedback, there ought to be a few hooks for that, like a few points or something else for doing that.

Don: Let’s say, thank you for engaging with us.

Don: But I think there’s myriad activities, right?

Don: Because a lot of brands, there’s a, yeah, you know what the cadence looks like between transactions.

Don: Paula, is there anything more up, I mean, imagine you’ve just gone shopping and had a fantastic experience at the Dubai mall and you’ve wardrobeed, and you’ve had some major purchases with the brand, got you some new kitten heels, they’re not as big a thing as they were two years ago, but they’re big, and you’ve done this.

Don: You don’t want an email that says, hey, here’s a coupon for your next purchase or here’s what’s on sale.

Don: I mean, what you want are non-transactional wraparounds and facilitation, right?

Don: I mean, with one of our fashion retailers, we had our best email where we said, here’s how customers who bought this dress rocked this dress, and different body types, like here’s how to wear a belt with it, if you’re a little bit on the plus size, here’s if you’re wearing a skinny boot, here’s how you can make this sort of like play.

Don: And people really love that because you’re not trying to sell them something, you’re saying, here’s what I purchased, check out how other members look in it, right?

Don: That’s exciting.

Don: And it’s that kind of wraparound that says, I appreciate you as a customer.

Don: Thank you for using our product.

Don: Here’s how to use it and get more out of it.

Don: And I think those things too are part of that larger non-transactional user experience pot that we can’t afford to neglect when we’re always focusing on the hard metrics.

Don: But I’m all for it, Paula.

Don: Social media, do it.

Don: Let’s reward for engaging in it.

Don: User generated content, all of it.

Don: Being on a feedback board, taking a survey, all of it should be rewarded.

Don: I mean, if you look at the NASCAR program that’s in market, NASCAR fan rewards, they have so many different ways.

Don: I mean, they’re rewarding folks for coming to events, for going to the campgrounds, for participating in all of it, and they should be doing those things.

Paula: Totally.

Don: Yeah.

Don: As a statistician, again, I’ll have brands say, but I only have 2 percent of my customers doing this activity.

Don: My answer is, you have 2 percent of your customers doing this activity.

Don: That’s amazing and they’re probably the right 2 percent because they love you and they’re saying great things and they’re amplifying your brand message.

Don: And you shouldn’t be deterred by a single percentage penetration rate.

Paula: Yeah.

Don: In non-transactional engagement activities, you should just look at it and go, I’d like to grow it if I can.

Don: I’d like to quantify what I think the impact is of doing that.

Don: Is it positive?

Don: Hopefully.

Don: And then you try to grow it.

Don: But don’t assume that everyone’s going to do everything, but celebrate those things that happen where people engage with your brand outside the transaction.

Don: Because that’s where you’re going to forge an enduring relationship that makes it harder to quit and really cultivates that true emotional connection that is amortized over an extended customer lifetime value.

Paula: A hundred percent.

Paula: And my view on that one would absolutely be if there’s a two percent usage rate, then there’s a ninety eight percent opportunity.

Paula: So again, as long as it’s ultimately being measured and still profitable, that that’s an amazing idea and absolutely one to be tapped into.

Paula: The other piece I think that’s important to say, of course, is the reward rate for those non transactional behaviors doesn’t have to be huge.

Paula: I mean, people just appreciate the gesture.

Paula: I don’t think it’s about the ultimate amount, to be honest.

Don: It’s not.

Don: And I don’t even think they do the math rational for the most part.

Don: I think people say, look, I appreciate when it happens.

Don: I appreciate that you’re asking for my opinion and you’re acknowledging it in some way.

Paula: Yeah.

Don: And incentivizing it.

Don: And those things are great.

Don: I love the brands that let me, one of our brands lets folks check in at the store on the app.

Don: They might just be shopping and browsing and not in the market to make a big purchase.

Don: We still want to know that they’re there.

Paula: Yeah.

Don: Give them a few points for checking in.

Don: It’s helpful to know.

Don: And I think those are the things that we ought to celebrate and make it fun.

Don: And it also lets a customer, when you have an elongated cadence and everyone can’t shop every day, as much as we wish that were the case, finding ways to let people earn a little bit and stay engaged with you, whether it’s a little gamification or a little rewarding for engagement or what have you, is really good.

Don: And I love it when a customer might have swung on a transaction, and he or she is close to a reward but not quite there.

Don: And then we find something to top it off for them so that they have the reward and they can come in and redeem it.

Paula: Beautiful, beautiful.

Paula: Well, listen, I feel like we could talk for hours, Don, but the other big topic, and I’ll close on this one, you did refer to emotional loyalty.

Paula: And again, it’s a topic that’s been discussed on the show a lot.

Paula: But what’s your take on it?

Paula: Is it getting sufficient attention, would you say, from your clients as a focus?

Paula: And are they getting there?

Paula: Are they managing to achieve that, do you think?

Don: Well, I think the answer is yes.

Don: Everyone, unless you’ve been under a rock, you’ve heard the term emotional loyalty, and everyone’s talked about it.

Don: But it’s kind of nebulous, and the measurement has eluded most practitioners.

Don: And I was lucky enough while I was at Brierley to spend three years of my life with my great team, really working on coming up with the best way to measure emotional loyalty compared to rational loyalty.

Don: And we actually auditioned hundreds of different measures to come up with our solution.

Don: It’s called the BLQ, the Brierley Loyalty Quotient.

Don: We actually have a way, we go in and when you were asking about Share of Wallet, when we talk to our members, we go in and we ask them a few questions about their brand, Seven Rational, Seven Emotional, and we ask that of their competitive set as well.

Don: And I think we’ve actually got a really neat scale from 0 to 100 that measures this, and shows you where you over and under index relative to your competitors.

Don: And that’s the insight that’s most important.

Don: It’s not trying to have a perfect measurement, it’s trying to understand where you are in the mix and in your space, and how you can improve and move the needle and chip away at it.

Don: And so I think voice of customer tracking for emotional loyalty is more important than anything else you can do, and brands need to commit to it as part of an ongoing measurement solution.

Don: Because a lot of brands regularly do NPS.

Don: Unfortunately, they often do it right after a transaction too, which is not my favorite time to do it.

Don: Because I think we should be measuring the totality of the relationship.

Don: But if you’re going to do NPS and have an NPS tracker, get your emotional loyalty questions in there as well.

Don: And make sure that you’re not comparing yourself to some pie-in-the-sky standard.

Don: Compare yourself to your industry, your vertical and your competitors, with whom your customers can split.

Don: And that’s going to give you the direction that you need.

Don: And as you try to map more fun, experiential components into your program to celebrate your members and your customers, you should be able to see a slow progression in improving those emotional loyalty scores.

Don: And we’re certainly proud of how we measure it, but it’s not rocket science.

Don: There’s lots of brands can be auditioning their own measures as well.

Don: And the point is to just do it, and test the things and find out what works for you and learn something, so that you can measure how you’re doing and figure out how to get better.

Paula: Amazing.

Paula: Well, listen, on that note, Don, I think it’s the right place to first of all say a massive thank you for again, a master class in what we should be thinking about as we go and continue to drive our programs, love our customers, and really make sure that we’re getting the best return on the value that we’re investing.

Paula: I’m guessing what a lot of people are going to want, Don, is more access to certainly the slides that you did put so much work into.

Paula: I wanted to just ask you that maybe it’s a closing question.

Paula: I know they’re not available publicly, but you have very kindly said that if people do reach out either to you or to me, you can, I think, do private complimentary workshops to help them understand some of this.

Paula: Yeah.

Don: We are happy to do that with any brand.

Don: Certainly, we wouldn’t do it with our competitors or other agencies, but if you’re a brand and you would like to sit and just talk through some of the most important metrics, benchmarks, and frameworks for loyalty and how to squeeze a little more juice from your KPIs, we are happy to do 45-minute to one-hour complimentary workshops.

Don: In fact, we have over half a dozen of those scheduled after the Captivate Conference from folks who are like, can you do this again for my team and bring my data scientists in?

Don: It’s really lay and friendly and not super technical, I promise.

Paula: Amazing.

Paula: I know it will be extremely useful and entertaining as well.

Paula: So listen, I’m going to close on that note.

Paula: We will of course put your LinkedIn profile directly in the show notes for this episode.

Paula: If anybody wants to reach out to me or of course directly to Don, as you’ve just heard, he’s more than happy to advise and take this forward.

Paula: So with all of that said, I’m going to say Don Smith, Executive Vice President and Chief Consulting Officer with Brierley as part of Capillary Technologies.

Paula: Thank you so much from Let’s Talk Loyalty and Loyalty TV.

Don: Thank you for having me, Paul.

Don: That was great.

Paula: This show is sponsored by Wise Marketeer Group, publisher of The Wise Marketeer, the premier digital customer loyalty marketing resource for industry relevant news, insights and research.

Paula: Wise Marketeer Group also offers loyalty education and training globally through its Loyalty Academy, which has certified nearly 900 marketeers and executives in 49 countries as certified loyalty marketing professionals.

Paula: For global coverage of customer engagement and loyalty, check out thewisemarketeer.com and become a Wiser Marketeer or Subscriber.

Paula: Learn more about global loyalty education for individuals or corporate training programs at loyaltyacademy.org.

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