Paula: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.
Paula: I’m your host, Paula Thomas, and if you work in Loyalty Marketing, join me every week to learn the latest ideas from Loyalty Specialists around the world.
Paula: This show is sponsored by Comarch, a global provider of innovative software products and business services.
Paula: Comarch’s platform is used by leading brands across all industries to drive their customer loyalty.
Paula: Powered by AI and machine learning, Comarch technologies allow you to build, run, and manage personalized loyalty programs and product offers with ease.
Paula: For more information, please visit comark.com.
Paula: Hello and welcome to today’s episode of Let’s Talk Loyalty, featuring one of the world’s most successful companies in both technology and entertainment.
Paula: Now, Microsoft for me has always been an extraordinary hardware and software company.
Paula: And now I’m increasingly realizing its dominance as one of the world’s largest gaming companies.
Paula: With globally renowned products and services, I was really excited to discover Microsoft Rewards, the company’s loyalty proposition, which is used to drive deeper engagement with two of their key products.
Paula: Joining me on today’s show is the director of Microsoft Rewards, Adam Grupp, who shared his global loyalty insights to build customer connection.
Paula: And what he believes are important trends and ideas for loyalty professionals throughout 2022.
Paula: So, Adam, joining me today from, I believe, Seattle, Washington, from Microsoft Headquarters.
Paula: Welcome to Let’s Talk Loyalty.
Adam: Hi, Paula, thanks for having me.
Paula: It’s great to have you, Adam.
Paula: I think if I recall correctly, our paths crossed because you were listening to my show.
Paula: So, that was a wonderful message that I got from you on LinkedIn.
Paula: So, delighted to have you as a listener.
Paula: And then, of course, I saw Director of Microsoft Rewards, and I went, oh my goodness, this is somebody I need to talk to.
Paula: So, super exciting time for me, Adam.
Paula: To kick off the show, as you know, we always love to get into understanding, I suppose, what you admire and respect in the world of loyalty.
Paula: So, above and beyond everything you’re doing with Microsoft Rewards, I’d love for you to share with our listeners, what is your favorite loyalty program at the moment?
Adam: Sure.
Adam: So, I knew this one was coming.
Adam: So, I thought a lot about it.
Adam: And where I’ve ended up is recognizing that over time, our preferences change.
Adam: The thing that seems most important in the moment changes.
Adam: And certainly, we look at the last two years, the market has evolved tremendously, whether it’s travel or retail or you name it.
Adam: The thing that keeps bubbling up for me is the Amazon Smile program as an element of their prime subscription platform.
Adam: And just the customer experience that they deliver through that.
Adam: I know that sometimes we take a compartmentalized view about loyalty programs, and we think of them as a bolt-on to the core business.
Adam: I prefer to take a different view, and especially when designing them, look for ways of making them as inseparable as possible, really integrating them where the values and the goals that we take up and the way we see the world in the loyalty team resembles the way the brand team for the whole company, for the whole business, looks at things, the customer experience team, the core product team.
Adam: And so what I love about Amazon Smile is it’s a program that’s been around for a little while, and if there was ever a category that probably would struggle to carve out a little bit of value for charitable interest in retail, skinny margins, right?
Adam: But they found a way to do it, and they found a way to sustain it.
Adam: And I’ll tell you what it was that made this my favorite.
Adam: It was when Amazon re-released their mobile app and made it much easier for an Amazon Smile customer to have the whole Amazon experience.
Adam: They didn’t have to choose to go to smile.amazon.
Adam: They could get that whole integrated consumer experience on being an Amazon customer without having to do some strange end run, right?
Adam: And that to me is like when you’re really nailing it as a loyalty program, when you kind of mainline what you’re doing and you make it easy for your everyday customer to both discover it and to stay with it.
Paula: Absolutely wonderful example, Adam.
Paula: And if I’m right, first of all, in case there are people around the world who are not familiar with Amazon Smile, as you said, it’s part of the prime program, but my understanding is that they actually on their side make a donation to a charitable cause, but not at the expense of the user.
Adam: That is correct.
Adam: That is correct.
Adam: So, and this was, you know, I’m sure there are lots of other programs that do this.
Adam: We do this at Microsoft also.
Adam: The kind of the OG or the original way that companies would do this was you go through, say the checkout stand at the grocery store, they’d say, would you like to top off your purchase with the donation to this cause or that cause?
Adam: And of course, you know, probably generated a lot of impact that way.
Adam: For this to be something that is essentially sponsored by the brand, as opposed to coming out of the pocketbook of the customer.
Adam: I think it makes it a really powerful statement, not just of what it means to be a customer, but what the company stands for, what the product and the brand stand for.
Paula: Yeah, I totally agree.
Paula: And also I think Adam, what they nailed is rather than just, you know, having it sitting, let’s say within a CSR department, you know, the corporate social responsibility area, which for years, in my experience, you know, has been very well intentioned and sat down every year and maybe chosen a charity and done that by the company, but it didn’t feel in any way connected with how the consumer was behaving.
Paula: So I think what Smile has done, you know, again, for me is it connects my shopping behavior, which is obviously what they want to stimulate with their generosity, like they’re directly connected.
Paula: And I just feel, you know, it’s simple, it’s generous.
Paula: And I feel like I’ve done something good just by buying the stuff I was going to buy anyway.
Adam: Yeah, absolutely.
Adam: I mean, if we step out of kind of our space as humans and thinking of ourselves as customers, and instead look at this more clinically as loyalty program managers, loyalty marketers, there’s something really important there that you said, this idea of, you’re not creating any kind of separation, even inside your organization, of what the Smile program is as different or separate or distinct or kind of buried away from the core customer experience.
Adam: One of the things that I think we’ve stumbled upon in our organization is recognizing that the more you can drive a clear and almost just implicit understanding of the connection between a customer’s values and what they believe in and what they aspire to with what they’re doing, what they’re choosing to do with you, where you can closely link the purchase decision or the engagement decision to a vision of impact in the future.
Adam: And it’s that linkage between what they’re doing now and where this is all going.
Adam: And when you can craft that so that it becomes just in the air and the water, that’s when I think cause marketing and social impact in the context of loyalty becomes really, really powerful.
Paula: It absolutely does, Adam.
Paula: And you’ve reminded me of an article I wrote a couple of years ago.
Paula: And I kind of, I was trying to, for myself, I suppose, clarify what does make a good loyalty program, you know, from a consumer’s perspective.
Paula: And I think again, you know, Amazon Smile has exactly done it.
Paula: And the three words I came up with where it has to be clear, it has to be consistent, and it has to be compelling.
Paula: So I think if you can tick those three boxes, then absolutely everybody wins, you know, there’s that feel good factor, and the emotion of loyalty, dare I say, it grows.
Paula: So it’s beyond almost the transaction, it almost just comes through then, that I just actually like doing business with Amazon a bit more, you know?
Adam: Yeah, I couldn’t agree more, Paula.
Adam: The, I mean, it’s, this is not a new thing in loyalty that we think of this as an emotional product.
Adam: It’s not just a transactional product that it’s, that is, it’s easy to put that on a bumper sticker or a slide deck and have everyone, you know, applaud it.
Adam: But it is sometimes really hard to do.
Adam: It’s really hard to do, because if you think about why we exist, we exist to drive business value, to deepen the relationship that the company has or the business has with the customer.
Adam: And we measure that through transaction data.
Adam: We measure that through retention, right?
Adam: Lifetime value, those kinds of things that are inherently transactional, but that’s not the experience that our customers have.
Paula: Totally, totally, yeah.
Paula: Well, a wonderful already conversation, Adam, and I know there’s a lot of these insights that you’ve already brought into the work you do with Microsoft Rewards.
Paula: And I suppose my next, I suppose confession is that I wasn’t aware of Microsoft Rewards before we met and before we spoke, but I know I’m outside the target market in lots of different ways.
Paula: First of all, geographically, because I know-
Adam: We’re not in Dubai yet, but we’re working on it.
Paula: Well, this is definitely going to be an important discussion point.
Paula: But also I know you have a very clear focus on two core areas for Microsoft Rewards.
Paula: So I’d love for you to explain for listeners, Adam, what is the Microsoft Rewards program?
Paula: What are you kind of doing with it?
Adam: Yeah, you bet.
Adam: So Microsoft Rewards began a number of years ago, more than a decade ago, as two different programs.
Adam: And as often can happen in really big companies like Microsoft, we tend to be kind of vertically focused.
Adam: We have a business over here, we have a business over there.
Adam: It’s like the old joke from that show 30 Rock about the division of television and microwave ovens.
Adam: The reality is we have these sort of independent things spring up over time.
Adam: And some time ago, we realized as a team, as a leadership team, hey, wait a minute, it really makes sense to leverage our brand, bring these things together.
Adam: And maybe moreover, we have a consumer experience that is a little bit siloed, right?
Adam: And we wanted to do something about it.
Adam: So those two programs that we started off with were in the gaming sphere, in Xbox, Xbox Live Rewards.
Adam: And then in the kind of in the, in the Windows worlds, Bing rewards for our search engine Bing, which is our competitor to Google that we launched and rebranded a number of years ago.
Adam: The, these two programs, because they, because their origin story was inherently about a single product or a single target customer, had the gift of clarity in regards to what was it that they existed for, right?
Adam: Why?
Adam: One was to deepen the gaming experience, particularly in the ecosystem around the Xbox marketplace, where you would buy and experience digital content, as well as the gold subscription platform, which was really at the time, I think, and I’m not speaking from my own business experience on this, more as the consumer side of this, which I was at the time.
Adam: The kind of the online gameplay, the collaboration, the connection, the social aspects, and sort of the beginnings of a subscription-based gaming business.
Adam: Then over on the other program, Bing Rewards, it was pretty simple.
Adam: We wanted people to try and stick with this new search engine.
Adam: It was an alternative to the big guy, right?
Adam: And in doing that, we had very, very simple measures of customer success in terms of what’s the outcome that tells us we’re doing it right.
Adam: And so those two programs existed in their own spheres for quite some time, and we eventually brought them together.
Adam: There was a moment where we had to make a tough decision.
Adam: Hey, will these programs individually be stronger if we combine them or not?
Adam: Are we compromising something in the integrity of what we’re doing to serve the individual businesses or the customers in each?
Adam: And that was a decision point for us.
Adam: We were able to determine that that was not the case, that in fact, or rather, we would be strengthening both by bringing them together, that there was this kind of network effect, this ecosystem value, and that was ultimately a core tenet of our decision to bring these things together, to deliver a better overall consumer experience.
Adam: And I think when we consider our vision and what we hope to become, we really do want to become a strengthener of the relationship between a consumer user, Microsoft services and products, and Microsoft all up, right?
Adam: It’s not just about these individual businesses.
Adam: And there’s an aspect to this that does start to creep into the core customer experience when we think about what are we doing with our consumer business all up and how do we best support that?
Paula: Yeah, absolutely.
Paula: So yeah, absolutely wonderful.
Paula: So I’m definitely not a gamer.
Paula: So another reason why I’m outside the target market.
Paula: Although I was really impressed.
Paula: I had already seen the headlines about the recent acquisition.
Paula: I think, is it Activision?
Paula: Is the gaming company Microsoft?
Adam: Yeah, I think that was announced not too long ago.
Paula: Yeah, about a week or so ago.
Paula: So incredibly impressive, I suppose, to see the scale.
Paula: I think Microsoft is now officially the or will be when this closes, obviously, the third biggest gaming company in the world.
Paula: So extraordinary performance.
Paula: But again, I haven’t even gotten into it.
Paula: And I know it’s become more, let’s say, gender diverse, for example.
Paula: It’s not just war games.
Paula: There is more, dare I say, candy crush or more female oriented things.
Paula: But I suppose when I think about Microsoft, Adam, I think about it as, first of all, the software company.
Paula: That’s what I engage with most commonly.
Paula: So all of my outlook and all of my word applications, the office products, and then obviously hardware.
Paula: So actually, for me, it’s almost like way down the pecking border to think of Microsoft as a gaming company.
Paula: And again, I’m speaking obviously very much as an individual.
Paula: But I guess my question is, is there a role, would you think?
Paula: And you might probably have to just speak personally here in terms of an opinion, but would you think there might be a role for Microsoft Rewards to go beyond the gaming, the Xbox proposition and search into hardware, software, other parts of Microsoft?
Adam: I mean, I will tell you, if we had enough time, I could give you a list of all my ambitions for growing the loyalty experience for the Microsoft consumer.
Adam: Obviously, we’re not going to do all those things.
Adam: There’s a little bit of the mad scientist in the lab mindset for me on those things.
Adam: But I think there is a lot of opportunity.
Adam: And this is something that I think we experience in larger companies that have lots of option value, lots of different places.
Adam: Or we experience as professionals and leaders in our careers, in the businesses that we lead.
Adam: In order to figure out what to say yes to, we got to say no to a whole lot of stuff.
Adam: And this is something that I would say is, when I find loyalty programs that I’m really impressed with, there’s usually a lot of stuff they’ve said no to in order to get really good at the things they choose to do.
Adam: So the thing that’s really fascinating about the gaming world is just this multitude of studios who will collaborate, who will throw in together, who will recombine themselves and reorganize, like we’ve seen a lot of in the industry over time.
Adam: And there are all these pockets of brand love, and they’re at the game title level, they’re at the studio level, they’re not usually at the corporate level, to be honest.
Paula: Not just.
Adam: Well, right, there are debates to be had there.
Adam: But the reality is you get these pockets of heats where the customer, where the consumer, where the audience is just like, wow, this is great.
Adam: It’s like people who love Marvel, and that’s their reason for subscribing to Disney Plus.
Adam: So I will say our Xbox friends are going to have some big decisions to make about how they choose to set this up, right?
Adam: Do they look to be very deeply integrated in creating kind of a single loyalty experience for all in their portfolio, or do they retain some distinctiveness?
Adam: Microsoft made an acquisition of Minecraft some years ago.
Adam: And that’s, while I can’t comment on decision-making that we’re doing now, I can’t say, if I take an outsider view or the way I teach my students at the University of Washington, take a look at what a competitor or what an organization has done before, how they make decisions.
Adam: And sometimes it can be instructive as to what the wisdom might be about a future decision.
Adam: Now, it’s not to say you can predict what they’re gonna do because the world changes, right?
Adam: But I think there’s a lot to be learned from how companies who have made acquisitions over time have made the decision to either fully integrate or to retain some kind of separateness, some distinctiveness of the units that they bring together.
Adam: It takes a bit more precision in why are we doing this?
Adam: What is our goal?
Adam: But ultimately it can allow you to retain a lot of the value that you’re seeking to bring in by not blowing it up.
Paula: Yeah, yeah.
Paula: Well, I’m happy to hear that you see the opportunity and potential.
Paula: I also really like the clarity of doing less.
Paula: I think that’s a very, very good insight, actually, because we’re just all so overwhelmed and so well-intentioned, I think, that it is tempting to try and be all things to all people.
Paula: But I sometimes feel that just leads to that sense of not really being on top of things.
Paula: So yeah, I mean, it’s probably the reason that I’ve given up consulting, for example, is I can just do podcasting.
Paula: So actually it gets my full attention now, which is super exciting for me.
Adam: Yeah, yeah.
Adam: And it’s, you know, the reality is there’s sort of like two attention spans you have to contend with, right?
Adam: When you’re leading teams and organizations like this, first and foremost, you have to contend with your customer’s attention span.
Adam: What do they have the cognitive load capacity to retain, to engage with?
Adam: And frankly, what do they care about, right?
Adam: We exist because they exist and they have a need and we’re serving it, right?
Adam: So that’s the first bit, like the clarity thing that you mentioned at the beginning.
Adam: The second one is internally, right?
Adam: Just like you choosing to go deep on podcasting is a core focus for you right now.
Adam: That unlocks so much of your resourcing to go and be great at that.
Adam: Same thing goes when we do loyalty, right?
Adam: What is the thing that we are really all about?
Adam: What is the thing that we are gonna be so focused on that we will be better at that than we ever thought we could be?
Adam: Because we set aside all these other distractions, we just focus on getting that one thing really, really right.
Paula: Yeah, yeah.
Paula: And I can only imagine the temptation when you do have the opportunities, as you said earlier, in terms of a company like Microsoft, there’s an opportunity around every single corner.
Paula: So yes, I guess you have to exercise that discipline.
Adam: No doubt.
Adam: And it’s, I mean, we talk about this notion of the growth mindset in the technology sector a lot, and Microsoft’s no exception.
Adam: It is really easy to say yes.
Adam: When you’re trying to be growth minded, when you’re trying to explore what’s possible, stretch yourself and challenge your teams.
Adam: Yes, sounds really good.
Adam: Yes, feels very resonant.
Adam: No is hard.
Adam: No is really hard.
Paula: Totally, totally.
Paula: Okay, well, well done on saying no.
Paula: So tell us about what are the propositions then, because I know it’s very different, for example.
Paula: So as you said, Microsoft Rewards has a Bing search proposition.
Paula: So I’d love you to explain that.
Paula: And probably will sound very compelling given what we’ve already talked about.
Paula: And then the Xbox proposition.
Paula: So I do think they’re very different.
Paula: So tell us exactly what you’re offering to your members.
Adam: Sure, absolutely.
Adam: I’ll start with Bing, because that’s where I got my start.
Adam: I kind of came up through the Bing universe at Microsoft.
Adam: The high proposition for the search component of our program is that when you search on the Bing search at Microsoft Bing, you have the opportunity to earn rewards for yourself, for causes that you care about.
Adam: And really all you have to do once you’re signed in with your account is just keep searching.
Adam: Just when you search, you accrue points that can be used to redeem for gift cards, subscription value, store credit with Microsoft or Xbox, or even for a cause that you care about through what we have launched over the past several years, Give with Bing, which is a set of features around helping you to both connect your reward earning to social impact.
Adam: But we hope can eventually be something that helps to shift how we see search as a way of engaging with the world, how we see giving back as something that can be an extension of how you earn value for yourself through the businesses that you choose to work with, the brands that you select for yourself.
Paula: Okay, very nice.
Paula: Okay, yeah, super simple.
Paula: Again, very clear and very compelling.
Paula: And that’s when it sounds like it has been around for a long time, did you say, Adam?
Paula: Like, yeah, yeah, about 10 years or so.
Paula: My goodness.
Adam: Yeah, that’s right, that’s right.
Adam: It’s been around a while.
Adam: And it’s one of those things.
Adam: The Bing product as a challenger brand has had a more, I would say, localized approach to getting the word out.
Adam: Right?
Adam: And so you see that in our loyalty efforts as well, where there are some markets we have chosen to really focus our attention.
Adam: We’re not in every country in the world today, but we are, what we’re choosing to do is to pick the places where we can be really effective and do a great job for our customers.
Adam: And to stay there and kind of get great at that.
Adam: And as we have the opportunity to extend that to other markets and other customers, we will.
Adam: But yeah, it’s back to what we were talking about earlier in terms of saying no to say yes, something really good.
Paula: Yeah, yeah.
Paula: And what I did pick up just again, researching the Bing proposition there is, it does seem to be particularly resident with console users, which actually sounds like exactly what you were just explaining.
Paula: Find people who have built up a trust with the brand and the product in another area.
Paula: So if I am an Xbox user, then I guess it’s more likely that I would be happy to default over to Bing as my search engine.
Paula: So that seems to make perfect sense.
Adam: Yeah, there’s ecosystem value there for sure.
Adam: The thing we figured out after a while is that there’s a gamified aspect to what our customers get to do with Bing Rewards, right?
Adam: Okay.
Adam: And it kind of makes it fun to search sometimes, right?
Adam: We kind of look forward to completing the quizzes and the different games that we make available.
Adam: And for the gamer audience who’s sort of looking for, who almost look at gaming as like their job.
Adam: When they think about being all they can be, when they think about achievement, they are thinking about gaming.
Adam: They’re thinking about fun.
Adam: And so that notion of fun has always been really important across both wings of the program, because we recognize that when you design an incentive or when you build a campaign to get your customers excited, you don’t want to talk to them about vegetables and antioxidants.
Adam: You want to talk to them about dessert.
Paula: Yeah, totally.
Adam: Funnel cake, ice cream.
Adam: And I’m probably tipping my hand a little bit there about my dietary preferences.
Adam: But the reality is that element of fun or defining work and play as being kind of one and the same at times.
Adam: It’s like the business of fun can be serious business.
Adam: That I think is sort of the emotional link there for our gamers who have discovered how easy it is to earn value using Bing.
Adam: And in many cases, they pile that back into their engagement with Xbox because it gives them a little extra balance that they can put toward that next game, that next piece of content.
Paula: So tell us then about the Xbox proposition.
Adam: Yeah, sure.
Adam: So with Xbox, this program grew up in parallel to Bing before we brought them together.
Adam: And with Xbox, you have this sort of, it’s almost like a conglomerate within a conglomerate.
Adam: And what I mean by that is, compared to Bing for a moment, search is a very simple product, pretty simple concept in terms of what it represents.
Adam: So it’s a text box that you type into, and it delivers you magically powerful results that help you to make decisions, find things around them, right?
Adam: And it’s not just Bing, there are others too that will go nameless.
Adam: The Xbox world is big.
Adam: There is, first of all, there’s both the gaming aspect of it, the growing social landscape around gaming and the interactivity of it, which I’ll tell you when I felt like a dinosaur is when I realized that I was aged out of this prospect of, at least for me as a person, getting online and playing with my friends who all have kids, or we’re like, what’s this online game like now?
Adam: A lot of our gamers are guys who look and sound just like me, who hop on after their kids go to bed.
Adam: But you have this kind of social landscape around it.
Adam: You also have the traditional commerce platform where you can buy games, you can buy media from Microsoft or from Xbox.
Adam: And then you have the other layers of marketing and experiences that have been built around that.
Adam: So the thing that is of late becoming a really big thing is Game Pass.
Adam: So Xbox Game Pass is sort of a business model innovation geared toward making, like remaking what it means to have access to all the games that you want to play, right?
Adam: Lots of people call it Netflix for gaming.
Adam: My Xbox friends would be up in arms if I said that, or if they knew that I was saying that on a podcast.
Adam: But it’s this idea of bringing a subscription model, this perpetuity to gaming content where just like we have this kind of software as a service model pretty highly penetrated in software generally, the reason that that works so well for customers is because they don’t have to go out and buy a whole bunch of new stuff every time there’s a new piece of content or there’s a new software update.
Adam: And much like the way consumers engage with Netflix, there’s a lot of us who probably watch a lot more movies and TV than we did before.
Adam: We had access to it on a subscription basis.
Adam: I think the same thing can probably be said when you look at the gaming ecosystem that Xbox has built.
Adam: It started out as a marketplace where you go and you kind of buy all the cart when you would want something.
Adam: But yeah, so you have this kind of traditional marketplace and a lot of us who game still buy a lot of games, right?
Adam: That’s not going anywhere.
Adam: But increasingly, the shift has been not from, or has been from thinking of our customers as buyers in those kind of moment to moment transactions, that kind of transactional aspect, to making the portfolio available, right?
Adam: And so this is where a product like Game Pass creates such a unique opportunity for loyalty, because instead of trying to drive transactions in the marketplace, we are thinking about, how do we get people more excited about what they already have access to?
Adam: How do we get them to play more games and discover their new favorite game that they never would have found?
Adam: I just was playing one last night for the first time, that it’s been around for 20 years, right?
Adam: This is not a new game.
Adam: And I’m just like, wow, where have you been all my life?
Adam: And again, it brings back in that emotional component, and you focus on the usage.
Adam: And particularly with a product like, or a set of products like Xbox, the delighters are in the experience of the product, right?
Adam: It’s not in the purchase flow.
Adam: It’s not in the balance where you read your statements, or even how many points you’re accumulating.
Adam: It’s in the joy of playing.
Paula: Consuming more.
Adam: Yeah.
Paula: That’s quite extraordinary, because I was going to ask, what is the strategic intent of Microsoft Rewards for Xbox?
Paula: How much is focused on acquiring new gamers?
Paula: Is Paula a potential gamer?
Paula: Who knows?
Adam: Yeah, that’s a great question.
Adam: So I’ll give you a more general answer to that question.
Adam: And this is my opinion.
Adam: I think that, generally speaking, loyalty programs don’t make great customer acquisition programs.
Adam: Now, there are exceptions for sure.
Adam: If you look across the industry.
Adam: They are great at giving the customer a reason to stay and making sure that when they do, they’re glad they did.
Adam: So put another way, I think really great loyalty programs do their best work when they are focusing on the existing customer base and how to make that customer experience for them as good as it can be, as satisfying as it can be.
Adam: And that means engagement and retention.
Adam: If you think about this like a funnel, you work your mid funnel, you work your bottom of funnel so that you don’t see customers leaking out the bottom of your funnel.
Paula: Yeah.
Paula: And another thing that I’m hearing a lot Adam, and I don’t know if it happens within Microsoft Rewards, but it’s the idea of, I suppose, community and being a member of something.
Paula: And I had a guest on recently, just back to your point actually about subscription, because that’s such a huge topic.
Paula: So subscribing to get content is absolutely wonderful and particularly the unlimited content concept.
Paula: And I did see in your latest results, for example, that there are 25 million, for example, subscribers to Xbox Live Gold, I believe is the name of one of the products.
Paula: So I hope I’ve got my terminology right there.
Paula: But yeah, so I just think it’s absolutely extraordinary, but the distinction I wanted to get your opinion on is, do members of Microsoft Rewards feel like they’re part of something greater?
Paula: Does it have like a tribe-like mentality, or is it just, no, I just love gaming, I’m happy to share ideas, but it’s just about my gaming experience.
Paula: I’d just love to understand that a little bit.
Adam: That’s a great question, Paula.
Adam: We talk a lot about creating community, creating a sense of belonging.
Adam: And this gets back to that notion of moving away from just the transactional aspects of loyalty, to really focus on the emotional drivers of loyalty.
Adam: I know I said earlier that we look at great loyalty programs as being deeply integrated in the core business, in the core offering.
Adam: And so now I’m going to say something that probably feels like it’s in conflict with that.
Adam: I think the notion of creating community in loyalty programs can sometimes be a little bit fraught if we believe that people have to create a sense of, or have to have a sense of community as our customer, that is literally about our loyalty program, or about the thing that we call our loyalty program.
Adam: So, let me give you an example of what I mean.
Adam: So, if you look at the Xbox ecosystem today, if you look at the landscape of customers, and users, and gamers online, on social media, on streaming platforms, everywhere, you see community everywhere.
Adam: It’s a vibrant community.
Adam: People are passionate to the point of absurdity sometimes about gaming.
Adam: The community is thriving there.
Adam: And so, the temptation could be for a loyalty program manager to come in and say, okay, now we’re gonna try and take all that and kind of build that into making people really excited about our loyalty program.
Adam: That’s sort of getting it backwards, right?
Adam: That’s trying to get the customer to serve us.
Adam: I remember reading in a piece of literature years ago that when you talk to company leaders, and customers, each of them has sort of an opposite view of what loyalty is in the context of customer loyalty.
Adam: Customers say, well, loyalty is about the company being loyal to me, the customer.
Adam: And companies say, well, loyalty is about the customer being loyal to us.
Paula: Totally.
Adam: It turns out we’re all the hero in our own story.
Adam: And it turns out we as loyalty managers are no different from our customers in that respect.
Adam: And we need to remember that.
Adam: We’re not here to serve ourselves.
Adam: We’re here to serve them.
Paula: Yeah, I love that.
Paula: Yeah.
Paula: And I think that came out again even quite recently, Adam, because I had Bond Brand Loyalty on the program as well.
Paula: And it was one of their big, big insights.
Paula: So you’re absolutely right.
Paula: It’s one thing for us as an industry to say, yes, we’re here to drive behavior, and we’re here to take care of our customers, but expecting the customer to do more and be more loyal as a result.
Paula: But actually, the customer is sitting there going, what are you doing for me?
Paula: Why should I be loyal?
Paula: So who goes first?
Paula: So it sounds like you have a wonderful mentality about getting the community and taking care of that community as best you can.
Adam: Sure.
Adam: Well, and it’s, I think, also just recognizing that it takes a little bit of humility sometimes to find your space in an ecosystem, like Microsoft Consumer, and recognize, okay, there are ways in which really, really great loyalty programs are practically invisible to the customer.
Adam: When, I’ll give you an example of another loyalty program I really love, the Alaska Airlines mileage program.
Adam: When you talk to Alaska Airlines customers, and it’s partly the benefit of being a regional airline as opposed to having to be everywhere, you ask people what they love about Alaska Airlines, and they will quote you chapter and verse the things they love about the loyalty program, but they’ll also talk about the flying experience and the travel experience.
Adam: And they don’t, you know, the customers of Alaska Airlines don’t really distinguish the loyalty program from the core offering.
Adam: It’s one and the same, right?
Adam: And so with that in mind, I think when we set out to design systems and incentives and programs and experiences for our customers, oftentimes you know you’ve done it right when the customer can’t even tell the difference between what you’re doing and what the core product is.
Adam: Actually, our CMO likes to remind us of this, the marketing is the product is the marketing.
Adam: And this mantra of really creating seamlessness, and sometimes it means you’re not taking the hero position in your customer’s mind.
Adam: But what matters most is they come away from the experience with a warmer heartbeat for your program, your product, your experience that you offer.
Paula: And they probably won’t be able to articulate why.
Paula: Yes, so that’s the point I think you’re making is that they just know that they want to go back into that warm, fuzzy place.
Adam: That’s right.
Adam: And maybe more importantly, they don’t necessarily know to articulate that as being because of the loyalty program.
Adam: They just know they really love Xbox.
Paula: Yeah, yeah.
Paula: And I can imagine the language, and I can imagine the tribal behavior, and for sure, you know, we all have things we geek out about.
Paula: So given how extraordinary, like I’m often thinking, you know, like more and more like our business models need to really learn from, you know, bringing fun into business a bit more, you know, like just genuinely, you know, when I think about education and courses, I’m studying with Seth Godin at the moment, for example, repeating my podcast training just to kind of see what I missed the first time around.
Paula: But again, there’s loads of gamification.
Paula: There’s all the badges in there.
Paula: So, you know, every time I behave in a nice way, and there’s community guidelines and all those wonderful things.
Paula: So, yeah, I definitely feel like I’m part of that cohort of people who’s passionate about something, which clearly gaming absolutely is as well.
Adam: Yeah.
Paula: Yeah.
Adam: Yeah.
Paula: Wonderful.
Paula: So in terms of, I’ve already asked you about expanding beyond the core two areas of focus, geographically then, and I know Dubai might not be top of your wish list from a commercial perspective, although I think you said to me you’re keen to travel here at some point, did you?
Adam: Oh, yeah.
Adam: Oh, I’ve been through the airport a few times on work trips, but I haven’t had a chance to get out and explore yet.
Paula: To stop off yet.
Paula: But do you think Microsoft Rewards will extend beyond the US into, I don’t know, other markets of focus?
Paula: Do you think there’s opportunities and intention to do that?
Adam: Yeah, you know, it’s the will is there, I will tell you.
Adam: You know, it’s cool.
Adam: We love the prospect of being a broad geographic program.
Adam: Today, we operate in about 20 markets, 20 countries, and we have somewhat of a variable offering.
Adam: There are some markets where we have our full program offering that includes the Bing Experience and others, where we focus mainly on the Xbox and store aspects of our program.
Adam: The thing I would say is, and I think this could probably be said of any business that’s making a decision about whether to expand.
Adam: You have to look at what are the outcomes that you’re trying to land for your customer and for your bottom line.
Adam: And I will tell you that probably the biggest constraint for us is looking at what it will take to operate in a new market successfully, delivering the kind of customer experience we want the customer to have.
Adam: And if we can’t do it with confidence, we don’t go there yet.
Adam: But I say yes, because, you know.
Paula: Yes, yes.
Paula: You’re being disciplined in saying no, but you’re open to saying yes.
Adam: Trying to be.
Paula: Well done.
Paula: Well done.
Paula: And then I suppose my final question then, Adam, just would love your perspective on other trends and concepts.
Paula: And I suppose, where do you think loyalty may end up going?
Paula: We talked before we came on air about hopefully, you know, thinking about, you know, the pandemic might just soon become something that we don’t have to obsess about or worry about that as we have for the past two years.
Paula: So I know in my experience, the conversations I’m having, loyalty is just really, really getting increased respect, increased focus, and of course, the increased discipline, I think, is equally important as well.
Paula: So I know you come, for example, from a finance background, so highly accountable in terms of the profitability, obviously, of anything that you do.
Paula: What else do you think is important for loyalty professionals listening to this show, you know, thinking about loyalty as we go through 2022?
Adam: You know, I think that being clear-eyed about trends is important, recognizing the secular trends that are changing, lots of industries and lots of categories.
Adam: There’s an opportunity there, I think, to lean into those changes and to be okay with experimenting, right?
Adam: But I think, you know, of course, the business fundamentals are essential, right?
Adam: You go to loyalty conferences, and it feels like you’re in a group therapy session sometimes talking to different loyalty program managers about how they justify their program to leadership, right?
Adam: It’s the business case.
Adam: The thing I would say is you have to balance that financial sensibility with the brand love, with the emotional aspects, the creative aspects of loyalty program management that are really about creating that warm connection with the customer.
Adam: You can’t have one without the other.
Adam: And so that’s probably one of the things that I have delighted in learning about over the past five years working on this program is just, wow, you can run a great business, but to really build an even greater business, you have to embrace the customer experience.
Adam: You have to embrace the, and really internalize what it means to love a brand, and how to develop experiences that cultivate that.
Adam: In some ways, it’s the opposite end of the cognitive spectrum from the spreadsheets and the data models and all those kinds of things that we do to crunch the numbers.
Adam: But it is equally, if not more important than the financial stuff.
Adam: Back to your original question, when I look out at trends and what’s going on and what do I expect to come, I think that we are going to continue to see increased leverage of technology and digital experiences across sectors.
Adam: And I think that’s just a statement about how people will consume products and services.
Adam: This idea of the experience economy has been around for a while, and I think that that’s something that we have to take as a given in loyalty, that we are in the business of creating experiences.
Adam: It’s like that idea that people don’t remember what you did, they remember how you made them feel.
Adam: Experiences are all about evoking that emotion, that feeling in a way that’s durable.
Adam: And so that’s a big one.
Adam: The other problem with all these kind of collapsing digital channels and like the barriers coming down between some of these things, as we all spend more and more time online, is there’s a lot of noise.
Adam: It takes a lot to break through.
Adam: And so simplicity and clarity of single purpose remains and has become even more important.
Paula: Yes.
Paula: Well, you know, we will definitely credit you with consistency, Adam, in your messaging.
Paula: So well done, you.
Paula: I can hear laser focus coming through.
Paula: So I can imagine it must be wonderful for your team just to have that level of direction and guidance and, you know, just, you know, the higher purpose of what you’re trying to do to delight your members and your customers.
Paula: So, yeah, so that’s all my questions from my side.
Paula: Adam, is there anything else that you would like to to mention before we wrap up?
Adam: You know, I guess I would just say thanks for the opportunity to join in this conversation.
Adam: It’s a delight to listen to your podcast and to the different guests that you bring on.
Adam: And also, you know, to get in the ring and participate a little bit too.
Adam: So thank you for that.
Paula: Wonderful, wonderful.
Paula: Well, I’m hoping it’s not the only time, Adam.
Paula: I’m pretty sure I’m going to be watching some exciting stuff coming out of your team.
Paula: So, yeah, I’ll be watching with interest and delighted to stay in touch.
Paula: So with that said, I will say Adam Grupp, Microsoft Director of Microsoft Rewards.
Paula: Thank you so much from Let’s Talk Loyalty.
Paula: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.
Paula: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 245 executives in 27 countries as certified loyalty marketing professionals.
Paula: For more information, check out thewisemarketeer.com and loyaltyacademy.org.
Paula: Thank you so much for listening to this episode of Let’s Talk Loyalty.
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