#377: Loyalty Program Principles for Success and the Role of Loyalty Program Communications.

This episode is focused on the role of customer communications in driving customer loyalty.

Rick Ferguson is a loyalty thought leader, with proven success in transforming traditional corporate communications into innovative, storytelling content across multiple platforms on a global scale.

Today, he shares insights from his more than 20 years’ experience, including a reminder of the three fundamental drivers of customer loyalty – trust, commitment and reciprocity.

We also discuss how our member communications can drive emotional loyalty – a lever that’s often neglected as a way to optimize our programs.

Show Notes:

1) Rick Ferguson

2) Phabolousity

Audio Transcript

Paula: Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals. 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.

Did you know that Mastercard is one of the world’s largest loyalty service providers? Working with leading global brands across financial services, travel, retail, dining, fuel and consumer goods, Mastercard designs loyalty strategies that build and sustain authentic personal relationships. Their loyalty platforms, Power Points, cashback and offers programs to deliver Mastercard’s priceless benefits and incentives in real time to your consumers. Visit go.mastercardservices.com/ltl to learn how Mastercard can help you build stronger relationships through smarter engagement. 

Hello, and welcome to today’s episode of Let’s Talk Loyalty, which is focused on the role of customer communications in driving our customer loyalty. Rick Ferguson is a loyalty thought leader with proven success, transforming traditional corporate communications into innovative storytelling content across multiple platforms and on a global scale.

Rick has worked for some of the biggest loyalty brands in the US on both the consulting and the technology side. Today he shares his insights from more than 20 years experience, including a reminder of the three fundamental drivers of customer loyalty: including trust, commitment, and reciprocity. And he explains how they relate to loyalty communications in practice.

I hope you enjoy my conversation with Rick Ferguson from Phabulousity.

So Rick Ferguson, welcome to Let’s Talk Loyalty. 

Rick: Hi Paula. Thanks for having me. It’s really great to be here. Appreciate you having me on. 

Paula: Thank you so much, Rick. I know you have an incredible career in loyalty for many, many years, so I will be dying to dive into that. And I think you have an amazing actual expertise on the side of loyalty communications, which is the reason I wanted to have this conversation today, because I tend to think, you know, loyalty is something that we all know as an emotion.

So as well as our transactional programs, I think the tone of voice that we use and all of the kind of tools and techniques that you’ve used throughout your career are exactly what we need to be thinking about as extra things that we can be doing. So before we get into all about loyalty communications Rick, as you know, we always start this show asking our guests about their personal favorite loyalty programs to get a sense about what you admire.

So why don’t you kick us off and tell us your favorite loyalty program? 

Rick: Great question, Paula. And when you told me that I, would be answering this question, I did spend a lot of time thinking about it because you know, it’s easy to just give a kind of the first answer that comes off the top of your head.

And many people, you know, as you might imagine, are gonna imagine a lot of the same programs because there, there’s some consensus about, you know, who….

Paula: Of course.

Rick: The most successful programs in the market. So I thought about it and, I had the opportunity, a while ago in my role at Aimia, to meet with the folks at, from Harley Davidson, the motorcycle brand that ran the, the what they call the Harley Owners Group. Hog for short, which is one of the best program names you know, I’ve, I’ve heard in my career. 

Paula: Totally. Super cool. Yeah. 

Rick: And, what’s great about the program is, you know, first of all it’s, it’s embedded deeply in the brand because as you know Harley Davidson is an aspirational purchase, right? So the typical Harley customer is not exclusively, but largely, you know, middle-aged men who have been successful in their careers and have worked very hard. And, this is something that they, buying a Harley Davidson is something that they dreamed about for a long time.

And now they finally get to make that purchase. And, you know, Harley, to their credit, doesn’t want someone to just purchase a Harley motorcycle and ride off into the sunset. They view that as just the very beginning of the relationship with the company. So it’s, it’s a fee based program, you do have to pay to join. It’s a reasonable, it’s a reasonable fee though. It’s not, it’s not terribly expensive. But once you, you make that commitment, you are introduced to a whole world of experiential, benefits through Harley Davidson. You know, everything from, you know, a monthly magazine to a dedicated websites and forums to, probably the meat of the, the program, which is exclusive writer events, which are held, all over the country and you can get on your Harley and ride to the event.

And then there’s, you know, road rallies and meetups and you form real friendships and relationships with other Harley owners through this program that you would not necessarily, be able to enjoy otherwise. So it really does create the sense of community and family around the Harley brand.

In a way that I, I don’t, I’ve not seen, I’ve seen few other programs do you know, and there’s no, there’s no points involved because as you know whether it’s, you know, any type of vehicle or big ticket purchase like a motorcycle or an automobile there’s a very long lead time and the idea of accumulating points.

For purchases just doesn’t really work in that environment very well. 

Paula: Of course. Yeah. 

Rick: So it all, it does have to be around experience and about building that sense of community and, and the relationship with the brand between purchases, you know, because once you purchase a Harley, you’re likely to keep that vehicle for 10 years, you know?

And as we all know, Harley Rider, motorcycle rider like to work on their bikes. That’s part of the whole process of owning one for, for many Harley riders. So, they can network with other riders and figure out how to do those types of things, so, just in terms of building that and sustaining that emotional connection with a purchase, it would very easy to just buy the, the motorcycle and disengage. Their, track record with sustaining that sense of emotional loyalty through to the next purchase, even if it’s 10 years away or, you know, in, in some cases, building generational loyalty, you know, with Yeah, yeah.

Our father buying a Harley and then, you know, giving that Harley to their child and then that child forming a relationship with Harley. They’ve done it more successfully than, than, most brands that I’ve seen in their space. And I’ve always been a big fan of that program. So, that was the answer that that came to mind.

Paula: Wow. Well, a very well thought through answer Rick, so absolutely. Thank you for that. And, I’m, I’ve definitely added it now to the wishlist of brands that we need to interview on this show. So, I’ll make sure that we do reach out to them because I think what I’m hearing coming through from what you’ve said is it’s absolutely incredible, of course to have that relationship between the brand and the Harley owner. But what I’m loving is the community piece between each other. Because I remember, in fact, we did an interview with IKEA and they said exactly the same thing. It’s not just about the brand and the member communicating.

Bidirectionally, it’s actually that whole piece of, you know, what are the questions and answers that I have about a Harley that only another Harley owner, first of all, wants to indulge in that level of detailed geeking out. Like I can just imagine the joy in those conversations, but as a brand, it’s a bit too corporate. You just can’t do it. 

So I guess it fits in nicely as well with everything we’re gonna talk through today in terms of communications. But I really like that you’ve picked something, as I said, where that community’s getting to, to talk with each other. 

Rick: Yeah, absolutely. you know, there’s a longstanding, marketing concept that I’m sure you’re, you’re familiar with, you know, about the, around the network effect, right?

Paula: Yeah. 

Rick: So anytime you just have the two-way communication between you know the brand and the, the customer there, that can certainly be a robust relationship and there can certainly be an emotional component to it. But what network effect teaches us is that, the more nodes there are on the network, the more valuable the network becomes to each individual user.

So in that context of the Harley Davidson, owner just as you mentioned, the ability to connect with other Harley owners and have conversations that the brand is just facilitating, but not necessarily being a direct part of, that has a lot of emotional value to the, to the individual consumer and the more of those Harley writers that they’re able to connect around the world. And the more valuable that network becomes. 

Paula: Yeah. Yeah. My one anecdote, and I’m not a Harley owner or even an aspirational owner, Rick’s. He’ll have to forgive me, but, when I first moved to Dubai back in 1995, I did date somebody who was a Harley owner. And I can tell you, first of all, he kept it in his sitting room. So, so to me that was a level of obsession, which I’d never seen before. 

But I can certainly tell you I felt very safe on the bike because he loved the bike so much that even though I was just new to meeting him, you know, there was nothing gonna happen the bike, whether I was on it or not. So, 

Rick: That’s great. That’s a great story. 

Paula: It was super fun. Super fun. So listen to me, I know as well as the Harley owners group, you also have a lot of respect for Apple from a very different perspective in terms of loyalty, because I know there’s a, you know, a B2B 5% discount. We won’t call that a loyalty program, but I think some people kind of think of it in those terms.

But Apple has perhaps the most extraordinary loyalty of any brand in the world. So what is it that you think is. That they’re doing so well. And what is it about Apple that’s really so successful when we think about loyalty as an emotion? 

Rick: Yeah. When I think about kind of a holistic, you know, customer loyalty strategy that, is independent of any type of you know, specifically branded loyalty program, obviously Apple comes to mind as, as world class, in building that loyalty. And, you know, as I’ve spoken with loyalty operators, you know, around the world throughout my career. And as I’ve done research and wrote about, the topic, what I’ve learned is that, you know, there is no loyalty program or points program or any, any type of customer recognition or reward program, that can overcome a bad.

Paula: Product. 

Rick: Customer experience at the most basic level. So if the, if there’s something off about the customer service or if the products aren’t good or if there’s any type of fundamental thing that’s broken about what you’re delivering to your customers, then no loyalty program is gonna fix that.

What Apple has done, first of all, they’ve done, they’ve gotten the basics right. They, they deliver products that can their customers want. They are aspirational. They tend to work flawlessly. And when I talk about that Apple ecosystem, what happens is if, you know, let’s say you’re a longtime Andrew Android user.

And you’ve kind of just kept Apple at arms length. My wife was a perfect example of this. Right? She was an, an Android user for most of her life. You know, started out with the Blackberry. Once smartphones came on the market, she became an Android user. Didn’t really like Apple that much.

Didn’t preferred the, the, the Android interface and then when she be, we got married and she became, you know, part of our family with, with my son and I. We were longtime Apple as I was one of the, I was a first generation iPhone owner and I had used, you know, max long before that. 

And what happens is when you get that first Apple product, we’re like, you know, come over to the dark side. Get your apple. We’re all gonna be on the same, you know? We’re all gonna be on the same system. And she saw the wisdom in that. So she got her iPhone. And then suddenly like everything works together.

You know, we’re able to be on the same family plan, we’re able to communicate with each other much more easily because we’re all on the same platform. And then you start adding more Apple products. Right. So it’s like, well, I I, I kind of like this iPhone now. So for Christmas, I’m gonna ask for an I, you know, for an Apple watch. So she added the Apple watch to her Apple portfolio. And myself, I’ve already got the iPhone, I’ve got the iPad.. I’m talking to you on an iMac, right. I’m all in on the Apple, experience and what happens is, the more products you add, the more devices you add, your extended family network of Apple products, the more things you can do.

And the more the the they work together flawlessly. They link up and, and, and just work. And you don’t have to think about it. There’s, there’s not a lot of, there’s not a learning curve. So just the ability to create this ecosystem. I’ve heard it described as kind of a walled garden. Like once you’re inside the apple walled garden of products and services, you feel very safe. Everything works well. And you’re kind of happy there and there’s a, there, it becomes kind of a, almost a barrier to exit because once you’ve gotten all these Apple products, they’re all linked together and all working together. Allison probably still would prefer to be on an Android, but just because that’s what she started using.

But she’s all in on the Apple ecosystem now, along with the rest of her family, and she’s probably not gonna leave anytime soon. But if Apple, you know, products didn’t work that well or, you know, the, the price point was off or there was something about the, the experience. At that base level that didn’t, work well and, and build that kind of customer loyalty, then none of this would work. So just the ability to get folks into the Apple ecosystem. 

Experience how well it works and experience a high level of customer satisfaction with the products. That’s just a fundamentally,well executed loyalty strategy. And it’s just worked well for them in a way that, you know, I doubt if you would ever see any type of, you know, Apple Rewards Points program or because they don’t need it. It just works on a fundamental, basic level of building that type of sustainable loyalty. 

Paula: Yeah, but it’s, it’s a point well made as well, Rick, because as you said, I think as loyalty professionals, it’s incumbent upon us, within our organizations to make sure that there’s never this perception that a loyalty program can fix, you know, underlying basics that may be, not functioning to the level that customers expect them to. So, so Apple is absolutely perfect for that. 

But the other thing that struck me as you were talking it through is, The, the degree of innovation. So, you know, when I think about the audience listening to this show, actually 70% are listening on Apple podcasts. So,

Rick: Right. 

Paula: You know, even that degree of strength given how competitive, you know, Spotify for example, have invested hundreds of millions in, you know, supporting podcast creators, for example, with the likes of Joe Rogan and all this kind of stuff.

But, but Apple was first. So whether it’s back to iTunes or anything else, like I think that level of vision also creates loyalty because people just think that’s so cool. Oh my God. And the App store, and all of those other things. So yeah, I know it’s quite different to what we normally do talk about, but that was part of the reason I wanted you on the show because I do think you have quite a unique perspective.

So, tell us a bit about your career, Rick, you’ve alluded to Aimia as one particular, incredible organization, but just give us the highs of what you’ve done in, in loyalty throughout your career. 

Rick: Yeah, I, I got my starting loyalty back in the late nineties with a little company that’s, no longer with us called Frequency Marketing.

They were based in Ohio, where, where I lived at the time. And, at the time when I joined the company, I didn’t know anything about loyalty programs or customer loyalty, you know, I was just, I was a writer and a web designer and, and that’s what they look for. 

And I had met my first mentor in the business. He was kind of one of the pioneers of customer loyalty, one of the founding fathers, gentleman named Rick Barlow. He had gotten a start with American Express. And then after the American Air, after American Airlines launched the Advantage Program back in the eighties. You kind of saw, you know, in a visionary way that that was a concept that was gonna spread beyond the airlines.

So he formed this agency to start, you know, selling loyalty consulting and products and services. So he was one of that first wave of, of, loyalty providers that came onto the market after the, the airlines launched the frequent flyer programs, so very well regarded, a figure in the loyalty industry back at the time.

And at the time, in addition to my day job, I was also a film critic. I had a, a website. 

Paula: Okay. Wow. 

Rick: And I was fairly well regarded as an online film critic at the time, and when I applied for the job of running his company, magazine called Colloquy, which was one of the, yes, first loyalty publications in the marketplace.

You know, I applied for the job and he had looked at my resume and saw that I was a film critic. And read a bunch of my reviews. And coincidentally, his son was a budding filmmaker who was writing a script and was gonna shoot his first film. And Rick was kind of helping his son through that process.

So I come into the job interview with, with Rick Barlow and for 90 minutes, we don’t talk about the job at all. We don’t talk about loyalty, we don’t talk about Colloquy, we don’t talk about anything but movies. For 90 minutes. That’s all we talked about. And then at the end of 90 minutes of talking about movies, he’s like, eh, I think you could do the job. And he hires me. 

Paula: Amazing. That’s a great story.

Rick: So I started running, running the Colloquy magazine and website. And there were a lot of people that worked at Frequency Marketing at the time. That were, you know, kind of folks that are still, many of them are still in the business today and have moved on to, to have great success outside.

But that was a really good incubator for, for loyalty concepts and loyalty strategy at the time. And a lot of the terminology that we used to talk about loyalty programs like Hard and Soft Benefits and concepts like that. We invented those at Colloquy and we kind of defined the language of how people talk about loyalty programs.

So it was a great, incubator to get a deep dive into the whole concept of customer loyalty and how to design and execute a successful loyalty program. So I was kind of the, the voice in the face of Colloquy and then went from there to a company that at the time was called Group Arrow Plan based in Montreal operated the, Air Miles program for, or not the Air Miles program, The Aeroplan Program for Air Canada.

And, I worked with another great mentor there, Rupert Duchesne, who was the guy who worked at Air Canada. Who pioneered the concept of spinning off the, the frequent flyer program into a separate company. So they did that. 

They spun off the Aeroplan program into a company called Group Aeroplan Inc. And then started acquiring other companies. So they acquired Carlson Marketing in the US. And they acquired the Nectar Programme in the UK. And they started assembling this, this large multinational loyalty conglomerate and then brought me over to run thought leadership for Group Aeroplan

And then I was part of the whole, team that rebranded Group Aeroplan into, Aimia which became, the, the name of the company, combined company. So again, I got to work with great people like Rupert and expanded my remit, you know, just from the US to globally.

And as part of my remit at Aimia, I started going all over the world and talking about loyalty. So I always joke, and it’s true that I’ve given a speech about customer loyalty on every continent on earth except for Antarctica. So at some point I need to get to Antarctica.

Paula: Just that tick box.

Rick: And give a speech about loyalty, just so I can say that I’ve done, done and everything.

Paula: I’m sure somebody will come. I can’t promise it’ll be me, Rick. Cool. Okay.

Rick:  But, yeah, it was a great experience and I got to, you know, I got to,go to, Mumbai in India and deliver a workshop, you know, workshops and speeches. And I got to go to South America and I got to go to South Africa, and, I hadn’t, I haven’t made it to the Middle East yet, so I’m hoping to do that at some point.

But yeah, it’s just, it was just a tremendous experience to be able to you know, just globe trot and talk, meet groups of people and operators and talk about customer loyalty, talk about best practices, and to be able to do research in, all these markets. 

So, I was very blessed to, to have that experience and it’s just been, a wild ride for somebody that, you know, when he walked into that Rick Barlow’s office. And talked about movies. I had no idea that it would lead here to talking with you. So it’s been, it’s been a fun time. 

Paula: A rollercoaster. So bring us up to date then, Rick. What are you working on now in 2023? 

Rick: Well, it’s a combination of things. After I left Aimia, I took some time off. And you know like many writers, I always want had a, you know, a novel in my back pocket.

And, you know, once I left Aimia, my wife was like you know, you should take some time and do it. So I did it. So since I left Amy, I’ve had a combination of working with, loyalty providers in the background, still doing thought leadership work. But without my name on it. You know, helping them, you know, build their brands and build their content.

And get into the marketplace. So I’ve been doing a lot of that.  And, then being, putting my novelist hat on on the side. So I’ve been able to, to do both, which has been a real blessing to, to, scratch that itch, but at the same time keep my, my foot in the loyalty game. 

Paula: Yeah, and I have to say your LinkedIn profile, Rick, is probably the best I’ve ever seen in terms of how it’s written. So I, I really, honestly, because as, as a, I guess as a content creator, if I think about my own kind of, you know, efforts in, in writing, thought leadership, it is extremely difficult to do and I’m always kind of looking for somebody who can actually capture my attention. 

And so I, I just wanna make sure that everybody does look at your LinkedIn actually, just purely from that perspective. Because when I think about loyalty communications, and so much of it is bland and you know, it’s just not cutting through in terms of appealing to me and making feel that emotional connection.

But I remember the first time it struck me Rick, and I don’t know if you have any perspective on this one, but it goes back to Groupon of all things as a, you know, radically new business model when it emerged. I can’t remember exactly what years, but let’s say it was 10 years ago, I can’t exactly remember, but when Groupon started with its marketing communications again, apart from obviously the incredible deals, It was always the copywriting that grabbed my attention.

Rick: Right. 

Paula: It was so compelling, and I think that’s the first time I had that level of respect for writing. In terms of for example, what you’ve talked us through in terms of your career, so would you say that it’s something that is well understood by loyalty professionals, that it has that much power if you do it right?

Rick: Well, I mean, I think certainly, yeah. I mean, the most successful programs I would say, are definitely going to take that voice into account. Because one of the key, things you have to remember, is that customers are very adept at sniffing out, dishonesty or disingenuousness. Right. So if there’s a disconnect between what your copy is saying about your, your brand or your loyal, even in your loyalty program directly.

And the experience that the customer has when they’re interacting with you. They’re gonna catch that disconnect right away, and it’s going to actually have the opposite effect of what you intend. So the, as important as the voice is It cannot be disconnected from what you’re actually delivering through the experience of your program. 

And I think that’s probably, if there’s a disconnect that I think may be some, that it’s easy to overlook if you’re an operator and you’re focused on the, you know, the financials of the program and, and you’re focusing on all the operational components.

You know, if you are saying that, if you’re saying through, you know, an email interaction or some other customer touchpoint that you are, reward, reward, your reward program is the most rewarding in the business. And yet, customer just read an email from you saying that you’ve slashed your funding rate and suddenly all the rewards are gonna cost more.

They’re gonna catch that disconnect, and your clever corporate voice is not going to overcome that disconnect. So I think that’s probably the, the, the basic blocking and tackling that I think folks need to remember is don’t promise anything in your communications that you, you’re operationally not delivering.

And make sure the, that tone of your communications matches the experience that your customers are having with the brand. 

Paula: And what I always think it comes back to Rick is, you know, the, the level of integrity actually, you know, coming from the branch because that’s where. You know, you can’t necessarily always monitor those communications with that kind of perspective all of the time unless it’s something that’s inherent in terms of what the, the objective as the, of the program is fundamentally. Would that make sense? 

Rick: Right. 

Paula: Yeah. Like to me, like I got into loyalty, as you know, everyone listening’s probably heard me say a hundred times, but I got into it with the priority program with 02. Telecommunications is not sexy, super competitive. But they loved their customers and, and working there was a joy.

So when we did run the loyalty program, we got to do stuff and we wanted to do stuff that delighted people. So the copy was always amazing like. 

Rick: Right. 

Paula: It, it’s actually, you know, it, it’s, it’s one thing to kind of, you know, understand it intellectually, but I think it’s only when we work for brands. And it sounds like you’ve worked for plenty of them through your career with all these kind of amazing roles, but to me, it comes back to what is the program intended to do? 

How do we want our members to feel? And therefore the copy will be done with that mindset. So there would never be that situation, you know, where theoretically, of course, you know, programs are devalued. That does happen, but it would never happen that it wouldn’t be picked up. Do you know what I mean? 

Rick: Absolutely. Yeah. 

Paula: Super. Yeah. 

Rick: So. I’m sorry, go ahead. 

Paula: Yeah, no, I was just gonna ask you like principle wise then, like, you know, when you think about what does create loyalty, you know, communications is absolutely one, but I know you have some good ideas about the, the fundamentals in terms of even from an academic perspective.

So I’d love you just to share some of those for you know, just to share your expertise. 

Rick: Yeah, sure. Thank you. So, I did. Some work. When I was with Aimia, I had mentioned that, Amy acquired Carlson Marketing in the US and there’s a lot of really smart people there that I met, you know, when I joined the company and they had done, some proprietary academic research that they then turned into a consulting product.

It was time, it was called Relationship Score. They, they had, some work that they had done with the University of Alabama. Some marketing professors there. And they had really tried to determine, at a fundamental level what activities a, a company could do or brand could do and deliver that would build sustainable loyalty. 

And they kind of a distilled those down into some core concepts. And then when I arrived, we did some additional research and kind of refined those concepts and we called them The Fundamental Drivers of Loyalty. And they’re the expectations that your customers have of you, when they begin an interaction with you by purchasing a product for the first time or interacting with your, even interacting with your reward program.

The things that they expect from you and the feelings that they want to experience from you, that will help them feel that sense of emotional loyalty that we all hope that we’ll have with our customers. And we, the fundamental drivers that we settled on were around the concepts of trust, and commitment and reciprocity. 

And if you think about any relationship that you have, even a personal relationship that you have with a, with a spouse or a partner, or even a friend. Those are the expectations that you have out of that relationship. The expectations are, you wanna be able to trust this person, right?

You trust that this person has your back, that they have your best interests at heart. That they won’t do anything dishonest or deceitful. it’s a fundamental, ability to know that you can, count on this person, or in this case, in a corporate context or a, a loyalty context, a brand. You wanna be able to be able to count on that brand. 

And the, the, the first way you have to do that, as we’ve already mentioned, is through executing those fundamentals well on an operational level so that there is trust there. For example, this just happened yesterday, I, I went to pick up this microphone that I’m wearing right?

From an electronics retailer here in the US, which I won’t name. But I, I’d been in this electronics retailer for a while because, for a lot of reasons, right. Because, you know, COVID and I’ve, we’ve shifted largely in our household online shopping. So we get probably five to six Amazon packages a day.

Right. Delivered to our house. But I said, I need this microphone. I’m not gonna be able to get it delivered to me in time. I’m just gonna go to the store and buy one. And you know, this is a big, well-known electronics retailer and they’ve got a good reputation and they’ve, they’ve done a lot of good things in the, in the loyalty space.

But I walk in there and the shelves are almost bare. You know, I get to this section where the microphone should be, and it’s a bunch of empty shelves and they’ve, there’s only like two or three products on the shelves. And I’m looking around thinking to myself, you know, there’s a bunch of board employees here and there’s no inventory in the store.

And no one is offered to help me. Right. So right away I’ve had a bad experience with this brand. I already don’t have that level of trust. And there’s nothing that they’re gonna be able to do within the context of offering me a reward program that’s gonna overcome that experience.

So the trust is not there right away. So that’s the core element of trust is being able to make promises that you can keep. You know, there’s always a fundamental promise inherent in any brand expression. And, if your experience as a customer does not align with what the brand says it is, then the trust is broken.

So you’ve gotta get that right, right away. And that extends into your loyalty communications as well. As we just talked about. Cause anything that you communicate through your loyalty program channels, has gotta match what the customer is actually experiencing. So that’s the trust component.

Then there’s the, commitment component which, basically defines the difference between a short-term transactional relationship, and a relationship that has staying power. The customer wants to understand that you are committed to them. And probably from a communications perspective, the best way that you can demonstrate that commitment is through what we call memory. Right. 

So you wanna demonstrate that you, that as a brand, that you have a memory of the relationship. So if a customer joins your reward program, and starts interacting with you, they want to sense that you are paying attention to them that you remember what they bought the last time.

That you maybe are able to tell them in a non-intrusive way, we understand that you’re interested in these products. Maybe this is an offer that will appeal to you. So it’s all, that’s all about personalization, right? And using data effectively in a way that the consumer demonstrates, or feels that you as a brand are paying attention to them and that you’re committed to the relationship over the long term.

And it’s not just, okay, you bought our product from us. See you later. We don’t care if we have any interaction with you beyond that. So that’s the commitment part. 

And then the last piece of it is reciprocity. Again, if you think of a personal relationship, if it’s a one-sided relationship, if you’re the one that has to always call, if you’re the one that’s doing all, making all the effort in the relationship and the other party is just not trying very hard, eventually you’re gonna disengage. You know, this isn’t working for me. I’m not getting, I’m putting a lot of work into this relationship. And I’m not getting anything out of it.

So it’s the same again with a brand relationship. If a customer is engaged with you and they like your products and they’re spending a lot of money with you, and they have a sense that they’re a valuable customer and they don’t see any reciprocity coming back from you, from the, the company. Then they’re gonna disengage and they’re vulnerable to switching and they’re vulnerable to competitive offers. 

And the way that you demonstrate reciprocity is through those classic concepts of recognition and reward. I’m going to reward you for your loyalty by giving you a little something extra. Points, discounts all the things that we know work within the context of a loyalty program. And I’m going to recognize you as a valuable customer by giving you, you know, exclusive access. Making you feel like an insider, bringing you into the fold. That’s the, the way that we demonstrate reciprocity.

And these three concepts, trust, commitment, and reciprocity. They’re kind of like the three legs of a stool, right? Or the three s of a triangle. You cannot fall down on any one of them. You have to make sure that you’re, you’re conveying those emotions. Through your program operations and through your fundamental brand operations to the customer.

And if you’re doing that as well, you as you can, then the customer’s gonna respond by starting to feel that emotional commitment and attachment to the brand that we all hope that we’re going to achieve. 

Paula: Yeah. And it sounds like actually Rick, even though that research, you know, was done an awful long time ago, like they still hold true, like, you know, when there’s fundamental truths and I really, that’s what I’m hearing coming through is like..

You know, yes. There’s lots of other things that we do need to think about, and perhaps it’s more complex, but those fundamentals need to be there, and it always amazes me that it is just how does the member actually feel? Maybe it’s the same thing about integrity. How do they feel that brand is demonstrating, particularly this trust, this commitment, this reciprocity.

And I thought actually your, your, you know, idea of it being like a personal relationship is very good advice for anyone listening to this show. You know, if we’re concerned, confused, or maybe even internally having to negotiate changes to a program, be there good or bad campaigns or who, who knows what, you know, how would I want to be treated as an individual?

It’s a very simple but powerful idea that actually should keep most of our loyalty programs, I think totally on track. 

Rick: Yeah, I agree with that. And what’s funny, those of us that have been around, you know, the business for a little while and we’ve lived through Groupon and we’ve seen some concepts come and go and some different loyalty strategies come and go.

A lot of these fundamentals we’ve been talking about for, for quite some time now. And we’re still talking about them today because they’re still a challenge for brands to get things right at a fundamental level, like using data effectively and personalizing effectively. You know, I’m sure you have experience with programs that, that you’re involved with today.

And, and I do as well where you’re kind of surprised at because you know how much data the company has on you. They know everything that you’ve purchased. They know what communications you’re responding to. And it shouldn’t be, it shouldn’t be that difficult to deliver an offer that does have that surprising level of personalization where the, you get open up the email and you say, oh, that’s a, that’s a great offer. I, I, I, this is an offer that’s ideal for me. I’m gonna respond to it. 

But there’s still a, a, a lot of companies, even companies that have been in the game for a long time that aren’t necessarily doing that as effectively as they could.

I think the good news is, you know, in the old days it was much more of a challenge just because the tools weren’t available. But I think with today’s, you know, loyalty platforms and all, all the other, you know, AI and machine learning stuff that’s going on in the background, I think there is an opportunity now to finally get some of these things right in a way that was, that’s much easier than it was in the past. 

So, I’m actually excited to see what, what operators are gonna do with some of these new tools. And I would expect to see, you know, kind of an, an explosion of personalization over the next few years as, some of these tools come into play.

Paula: Yeah, and I guess particularly as a writer, actually, Rick, I was just beginning to think there, you know, what is your perspective on AI, you know, in the context of Chat GPT and these tools that you know are unfortunately, I think probably going to do a lot of, a lot of damage as well as, you know, maybe save a lot of time for a lot of people. I think it’s, it’s so early, we don’t really know. 

But given that you are on the creative side and a thought leader, what would you say or what is your perspective on, on the, the writing tools like, likeChat GPT?

Rick: Well, I’ve been, I’ve kind of dove in head first, so I’ve actually been using some of these tools quite a bit. And, and I think the short answer is they, they are potentially very disruptive but, disruptive in a good way.

I mean, my sense is, some of the dooms hair doom saying that we’ve heard about these tools. I think is a bit overblown. what’s funny is this morning as I was doing my, you know, my new scrolling I do in the morning when I’m having my coffee.

I saw this advertisement video that creative person had done a fictional pizza company, a pizza delivery company. And he created an ad for this company that was done entirely with AI tools. The script was written by Chat GPT. The images were created in mid journey.

The video was created by different AI program, the music was created by an AI program, so the entire thing was artificially generated this, and it was a 32nd commercial for a pizza chain. Fictional pizza chain. 

And this thing is like something out of a nightmare. Like it’s really, really bizarre. The script is bizarre. The videos are bizarre. It, it’s literally like something you’d, you’d see on Saturday Night Live. It was so weird. And so I, I look at that and I say, these tools have a little ways to go. Before they’re gonna replace writers and, and design graphic designers. That’s not to say they won’t. Because the tools are only going to get better. 

Paula:  Of course. 

Rick: So even though it’s bizarre, nightmarish today, five years from now that you’re probably gonna be able to completely artificially generate a, a campaign or a, a, a commercial without any writers or designers involved.

So I think for folks on the creative side, you’re not gonna be able to fight this progress. So I think you’re going to have to find a way to live with it, to use the tools and to, to, to make yourself that connection between the, the AI tools and the companies that you’re working for. And becoming an expert in using those tools effectively.

So that’s where I see it going, and I’ve seen that happen just from my fiction writing standpoint, you know, I have written some historical fiction and research would tend to take a really, really long time. But now I can go to Chat GPT and say, I need an expression in German that was in common usage in the 1860s, and boom, spits it right out. Right. So suddenly my research time has been cut in half. 

In terms of loyalty programs and loyalty communications, obviously these tools are gonna be integrated. And I think there’s some real opportunity to do a lot of things faster. So you’re gonna be able to generate you know, AI text.

You know, a hundred different emails, campaigns. You’re gonna be able to generate those with AI. You’re gonna be able to immediately put them out. You’re gonna be able to test what’s working. And refocus on those things that are working and expand those, and all those tools that I think are really gonna provide a lot of, a lot of opportunity for marketers to do a lot of things faster. 

And for the folks on the creative side, my advice would be, make peace with the tools, learn how to use them. And become an invaluable component of that process. And you may find that it opens up new avenues of creativity that we, we don’t even comprehend yet.

Right.So I try not to be a, on the doom saying side. I, I, I try to, try to work with the new technology, but I will say that, you know, those of us,that, you know, Gen X folks that have been around for a while. We’ve lived through a couple of these tech, tech revolutions now. Right. 

So we’ve lived through the rise of the internet. Yeah. We lived through the rise of smartphones. And this feels like another one of those. I, I’m getting the same feeling that I got, you know, in the, in the nineties when we’re all trying to figure out what the internet is and, and when smartphones first came on the market. I, I feel kind of the same way I did then. So I think it’s, we’re in store for exciting times from a technology front and being able to use these tools. 

Paula: Yeah. Yeah. And I think the key thing that I’m learning as well, I guess, is they do need to be trained. 

Rick: Yes.

Paula: And yes, you can train them, for example, like, you know, write an article in the style of Rick Ferguson, for example, or write an article in the style of Paula Thomas. So that is, that is really an interesting idea as well. 

But yeah, I think in time, the same way you kind of you know, talked earlier, for example, about when consumer sense a disconnect, I have a feeling that we’ll also develop that, almost sixth sense about AI written content. You know, we’ll start to distinguish the human, you know, whether it’s humor or, or expertise or, I’m not quite sure why I think that, but I really feel that it’s, it’s, it’s probably going to remain quite formulaic for some time. 

Because we know it’s only kind of regurgitating kind of recent content. So I think there is a lot of similarity already that we all see on all the blogs in the world. So yeah, hopefully we’ll start to, have our, you know, AI detectors and our human detectors.

I think that’s going to, so back to, I guess, which is a key principle I guess, as well for loyalty is that idea about authenticity. You know, when you talked about commitment earlier, to me, authenticity comes through, for example, in our work because everybody knows it’s me and I’m the one writing the description and I’m the one doing the stuff.

So I know it’s different at scale, but yeah, there’s so much in it, Rick. So listen, we don’t have that much long left, and I really did want to focus on the communications and its role in driving loyalty. So will you share some words of wisdom in what you think are the key components of you know, amazing communications in order to achieve loyalty in the way that we all really want to?

Rick: Sure, yeah. I mean, just on the creative level, obviously you want to have a, a, as we mentioned, an authentic, brand voice that’s expressed. Both through your copy, through your images, and in a way that’s consistent with the customer experience as we mentioned. So I think, there’s a lot of great examples of that in the marketplace, you know, and folks respond to that voice.

I think one of the things that we’ll, we’ll take into account again, as a lot of content is, is becomes AI generated, is that folks, readers, you know, just on, whether it’s a novelist or any type of creative person, they want to feel like they have a relationship with that writer. Folks respond to individuals and they respond to people, and they, they’ll feel a sense of, of a relationship with the writer that they’ve never met in person through their work. And that’s not something that can ever be replicated through AI. Right? 

Paula: I agree. 

Rick: You’re never gonna have that type of, oh, I can’t wait to read the next book by this AI program. Right. You’re gonna wanna read the next book by Stephen King because you’ve read enough of his work that you feel like you have a relationship with them?

It’s gonna be the same thing with brands, right? So I think that human component is always gonna be essential that voice is not something that’s necessarily gonna be able to be replicated by AI. And it’s gotta be delivered consistently across every channel, whether it’s through your loyalty program to your customer service through interactions in the store. 

You want to have that voice nailed, so that customers respond to it. And that in itself can create a bit of a, an emotional connection between the customer and the brand. And then obviously as we’ve talked about, we’re gonna have to see, that continuing drive towards personalization.

And even today, again, I’m surprised by some of the basic blocking and tackling. That doesn’t happen in terms of just being able to take that one piece of data, you know, your last purchase and communicate that back to the, to the customer through an email that says, hey, we know you just purchased this. How about these products? They would go, they would work well with this product, or based on your choices. We think this is gonna be a good, good fit for you. 

Reward offers that, follow that those same personalization guidelines. For example, I’m a big live music fan and I see a ton of concerts and I, I’ve purchased, you know, early access concerts that are offered through my credit card provider, right?

So my credit card provider will say, yeah, you know, here’s a code. Go to this Ticketmaster, put this code in. Take a stone on, go on sale until, you know May 5th, but you’re gonna have access on May 1st. So you can have, you can have that early access to the show. I love that. But by the same token, I’ve never ever seen in the 10 years that I’ve been a a card holder with this company, I have not once seen an email come in. With a reward offer based on something that I’ve exp, redeemed from them before, or purchased them before. It seems like they should be doing this all, you know.

And that there’s the one time that I, that I thought I was, I had gotten one  I saw an email that said it was a concert event, exclusive concert event for an artist that I liked, and I’m like, oh my gosh! They finally did it! They went up the email and it’s, in California. Oh, right. And I’m, I was in Ohio at the time, right. So I’m like…

Paula: Oh my God. Yeah. 

Rick: Actually they didn’t do it. Because they didn’t make that data connection and give me something local. Right? So it’s just that basic level of personalization that we need to see. And our rewards, communications and the offers that we send. That’s gonna be critical.

And then, finally, I think it’s the, as we get towards that level of personalization, it’s understanding where the line is between being facilitating the relationship and being intrusive. 

Gentleman that I used to work with at LoyaltyOne, who purchased FMI. And, the Colicky brand, a gentleman named Bryan Pearson. He was president of the Air Miles Reward Program for many years. 

Paula: I know Bryan. Yeah. He’s been on the show. Yeah. 

Rick: Yeah. Yeah. He probably talk, he may have even talked about this, when he was on your podcast, but he used to do this deliver this great speech at the conferences about the difference between cool and creepy and where that line was, you know?

The, the idea of getting that offer where you’re like, oh, that’s very cool. You know, this is great, and that’s exactly what I was hoping to get. Versus, wow, this is very intrusive. And I’m kind of creeped out now the classic example of that, this is an old example, but it’s the only one that comes to mind.

It was about 10 years ago there was a retailer in the US kind of a, just a general, you know, discount retailer. And, they delivered this camp, personalization campaign where they sent emails with offers for products that would appeal to new mothers. 

Because they could tell from the purchase history that this customer had had a pregnancy. Right. Or was pregnant. Or was pregnant in the middle of their pregnancy and they would send them offers. Well, some of these customers had not told their families that they were with child. Right. So suddenly this spectacularly backfired. And there was a lot of customer backlash because they, the customers found this very intrusive.

Because they just did it. They did it without permission. It wasn’t optin. And this was even before social media had become, you know, the all encompassing beasts that it is now. So you can imagine if something like that happened today the reaction that there would be on, on social media.

So that’s a kind of a stark example of the line between cool and creepy. But as we incorporate more of these personalization tools, we’re gonna have to be very cognizant of where that line is and make sure that everything that we’re delivering is opt in and that the consumers aren’t, are gonna be delighted by it, rather than horrified by it. 

Paula: And to be honest Rick, I’m hoping that happens once you know, the cookies are finally killed off. Which, you know, we’ve been promised now for a while. I’ve given up trying to, to check on when it’s actually gonna happen. Do you think it’ll be a good thing or a bad thing for us as internet users if we even think beyond loyalty but you know, with the, with cookies disappearing, of course.

You know, first party data, zero party data become absolutely essential. So I think our industry is going to thrive. But what do you think otherwise? Like do you think it’s gonna be better or worse from a human being’s perspective? 

Rick: Oh, I, I think it’s good. I mean, you know, that that type of, you know, third party tracking and you know, all the retargeting that happens over the internet, like, and it’s still happening today, as you just mentioned, like.

I always know exactly what my wife is looking for online, online. Because for some reason, if she’s looking for it, it starts to sh, the ads start to show up in my own online experience. 

Paula: Oh my God Rick, I have to make that connection.

Rick: So I’ll be going through my Facebook feed and I’ll be like, oh, Alison was looking at tops today.

Suddenly I’m seeing ads for tops show up on my feed. Right? This is happening right now. That’s quite intrusive that I don’tlike them having that level of, personalization about my family. When I didn’t give them permission to do it, I didn’t ask for it. It’s just showing up.

Right. So that’s been going on for about 10 years now. And I think once this, this whole concept of third party tracking, is finally put to bed. Then we’re gonna get back to those fundamentals. Which loyalty programs have long, that type of environment, marketing environment is long done better than any other type of marketing initiative.

It’s you know, everything is opt in. You understand clearly what you’re giving up in exchange for those recognition and rewards. Yes, I do give you permission to track what I’m buying and to track the offers that I’m responding to. And because I know that you’re doing that, I expect that I’m going to see that come back to me.

In a closed loop, in the form of rewards that I respond to and recognition that I respond to and, and communications that appeal to me. And it’s the transparency of that value exchange. That I think loyalty programs do better than any other marketing initiative. And because of that, the so-called death of the cookie, that zero party data and that, that first party data. 

Loyalty programs have been, you know, one of the best vehicles for collecting that data, in 25, 30 years. And now I think we’re to your point, we’re gonna see that. Refocus back on collecting that, that data and data that companies own and consumers know that they own it.

And, again, I think the transparency of that exchange is gonna be key. So, I’m optimistic that I think, we’re gonna see a, a, a renaissance, around these types of initiatives because of their ability to, to do this so effectively. 

Paula: Absolutely, well, very wise words indeed, Rick. I feel like we need to continue the conversation at some point, dare I say, in the future. Not exactly sure when, but, there’s a lot of wisdom there in terms of what you are thinking about and writing about and really, you know, paying close attention to, in your own world. 

So, really want to say huge thank you for joining us on the show today. And for people who do wanna follow your work Rick, either the, the marketing content or you know, the fantasy fiction, where can people reach out and find you?

Rick: For my loyalty hat, I’m definitely active on LinkedIn. So, I think you’ll be seeing more from me coming out through that channel. You’ll probably see a subtext coming out soon. 

Paula: Very good. Cool.

Rick: So I’ll let let people know about that once it’s available. And, then if you like, you know, fantasy, swords and sorcery, kind of stuff. You can check out my website at phabulousity.com and you’ll, you’ll see all that stuff there. So I’ll probably still continue to do both but, within this context, I hope to continue to, to pump some good content out there and, hope that we’ll be able to chat again soon.

Paula: Please God. Absolutely. And I do wanna say huge thank you to Dave Battiston as well for connecting us and, insisting that I spoke with you. So, I know we know we’re both good friends of Dave. So, thanks Dave for the introduction. 

So with all of that said, Rick Ferguson, Principal and Managing Director at Phabulousity, thank you so much from Let’s Talk Loyalty. 

Rick: Thanks so much, Paula. Thanks for having me.

Paula: This show is brought to you by the Australian Loyalty Association, the leading organization for loyalty professionals in Asia Pacific. Visit their news and content hub for the latest loyalty insights from around the world. Or why not submit your own article for publication? For more information on their loyalty services and networking opportunities, visit australianloyaltyassociation.com.

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