Profitability in Loyalty Programmes - Powered by Collinson (Ep 648)

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

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

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

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

PAULA: Today’s topic is probably my overall favorite.

PAULA: We’re here to talk about profitability in loyalty and strategies for extracting maximum value from your program.

PAULA: Our guest is Priyanka Lakhiani, who is Senior Vice President at Collinson, and she has worked there now for over 25 years.

PAULA: From my perspective, Collinson is perfectly positioned to lead the conversation about profitability, as they’re a global company dedicated to helping the world to travel with ease and confidence for more than 30 years.

PAULA: Collinson now works with over 1,400 banks, 90 airlines and 20 hotel groups worldwide, delivering market-leading airport experiences, loyalty and customer engagement and insurance solutions for over 400 million end consumers.

PAULA: Collinson is also the operator of PriorityPass, the world’s original and leading airport experiences program.

PAULA: As part of this conversation focused on profitability and loyalty, Collinson has prepared a slide deck to support the conversation.

PAULA: So please do listen to the whole conversation to learn how you can get a copy of the supporting slides.

PAULA: I hope you enjoy my conversation with Priyanka Lakhiani from Collinson.

PAULA: So Priyanka, welcome back to Let’s Talk Loyalty, and welcome to Loyalty TV for the first time.

PRIYANKA: Thank you Paula.

PRIYANKA: It’s a pleasure to be here.

PRIYANKA: Quite exciting to be on camera with you and talk about our favorite subject.

PAULA: Indeed, I remember being blown away by your knowledge last time you came and joined me in a studio, but we didn’t have all these cameras around, so it’s a whole other experience today.

PAULA: So thank you for joining us in person.

PAULA: Always very, very exciting.

PAULA: And we’re here to talk about one of my favorite topics.

PAULA: Loads to talk through, all about Profitability.

PAULA: And in fact, that was the whole reason I even started this podcast, if I’m totally honest, because it was something I always felt I didn’t know how to measure, didn’t know how to manage, and you are an absolute expert on that.

PAULA: So thank you for coming to share that knowledge with us today.

PAULA: But before we get into that topic, as you know, we have a new opening question, very different to what we did with you before.

PAULA: And what I’m trying to do is get a sense of you as a leader, you know?

PAULA: So you as a human being, you in business.

PAULA: So we’re generally asking people what is their favorite book of the moment?

PRIYANKA: Oh, very interesting question.

PRIYANKA: So, you know, as we were discussing a bit earlier, Paula, for me, there are a number of topics that are of interest that are currently sort of making me read material either on Harvard Business Review or McKinsey Reports and so on.

PRIYANKA: And, you know, as we all know, AI is quite a hot topic, and particularly so and right now, because we’re talking about AI and human evolution at the same time in parallel.

PRIYANKA: That is, this is the next stage of human evolution.

PRIYANKA: And where would the relationships go from being the master today, where we tell AI what we, you know, until a few years ago, we told it what it had to do to where it is now, where it’s learning quite quickly, chart GPT, you know, transformative AI and generative content that’s happening.

PRIYANKA: So that’s making it quite interesting to say where the human society is going to go and how as parents and as leaders and what do we need to do to embrace it, but also be aware of the challenges that come with it.

PRIYANKA: You know, it is still in early learning stages.

PRIYANKA: So there are a couple of books that I’m reading, which have got to do with what are the different tools of there.

PRIYANKA: And the one that has particularly come into the in the organizations are the generative AI that’s about transformation.

PRIYANKA: So language, large language models.

PRIYANKA: What that is, is basically you give a question to say that I have a marketing presentation that I want to do and I want to research on topic of X, Y, and Z, and it goes and sort of looks at content and generates that for you.

PRIYANKA: So it’s, you know, how does that apply and what does it do in terms of efficiency?

PRIYANKA: But what does it do in terms of workforce?

PRIYANKA: What does it do in terms of employee strength and does it replace employees?

PRIYANKA: Or, you know, is it a case of co-existence or co-intelligence?

PRIYANKA: So that’s that’s sort of space and a lot of reading around that is where most of my time spent.

PAULA: Indeed.

PAULA: Yeah.

PAULA: And it’s probably fairly early days.

PAULA: I think it’s fair to say in terms of getting books on this topic because I think we’re just all catching up with the reality.

PAULA: It’s definitely in our everyday lives.

PAULA: I do remember seeing a video about a year ago.

PAULA: I looked up the guy’s name because forgive me, I don’t have a good memory for authors, but he was speaking about it.

PAULA: Very famous guy who wrote the book Sapiens, which I know you’ve also read, Yuval Noah Harari.

PAULA: So just for anybody who is watching this episode of Loyalty TV, he gave an amazing perspective on AI, suitably frightening, but without necessarily saying it’s a doomsday.

PAULA: You know, so we’re not in Hollywood to the movie.

PAULA: Good to know.

PAULA: Totally.

PAULA: But also I think, you know, the scale and speed of what is happening.

PAULA: So I think it’s a very good answer.

PAULA: The fact that we are in leadership positions.

PAULA: So absolutely, AI is here to stay.

PAULA: There’s no doubt about that.

PAULA: So so good to know.

PAULA: So you’re reading a lot online all about that.

PAULA: So that’s amazing.

PAULA: Yeah.

PAULA: Yeah.

PRIYANKA: Super.

PAULA: So give us a quick recap then, Priyanka, before we get into this amazing topic, because you have an extraordinary career and a lot of loyalty to the company you work for.

PAULA: So maybe just take us back to the beginning and tell us a bit about your professional background before we get into the slides.

PRIYANKA: Yeah, sure.

PRIYANKA: So, you know, in the two decades that I’ve been in, two and a half decades that I’ve been in loyalty, you know, I still remember the first time we did the first launch of a loyalty program and the definitions that I want to give points to my customers and I want the cart to look like this.

PRIYANKA: And I want it to be, you know, available in three colors.

PRIYANKA: And that was sort of the highlight of the brief, right?

PRIYANKA: To the days we are right now.

PRIYANKA: And there’s so much that’s possible through technology and data, where everybody understands that our loyalty program needs to be done.

PRIYANKA: There are points that, yes, there are different ways to offer rewards, incentives, but also recognizing people.

PRIYANKA: But the question that is being asked today is that, how do we actually make it profitable?

PRIYANKA: And that’s sort of top of mind for most brands, because they’re finding that a research we did recently, which involved a lot of loyalty leaders in UAE and KSA, and we asked them, what are the top things that you were thinking about in terms of loyalty?

PRIYANKA: What is it that you want to solve?

PRIYANKA: And the answers that we got was, one is new programs are leapfrogging.

PRIYANKA: So they are the new technology with the new data, and as a result doing things far faster, quicker than some of the older traditional programs that we’ve had in the region.

PRIYANKA: There’s a desire and a lot of pressure from the CFO and the board about, okay, what is the performance?

PRIYANKA: What is the profit it delivers?

PRIYANKA: There’s also a desire from the program operators to say that I want to tangibly be able to show value of what I create, which is not just commercial, but also to what I contribute to the brand.

PRIYANKA: And how do I actually drive a lot more for the business than just what we see in numbers?

PRIYANKA: And then finally, most of them are quite concerned about the changing expectations and how to cope with those, right?

PRIYANKA: Because consumers are now consuming content in so many different forms and so quickly.

PRIYANKA: And they want to be able to meet all of those different requirements or at least the most relevant requirements to their consumers’ demands.

PRIYANKA: So these are the four or five key themes that we find are coming out on top of mind for most loyalty programs.

PAULA: Indeed.

PAULA: I mean, it’s fairly existential, Priyanka, at the risk of overstating it.

PAULA: And maybe I am, but I don’t think I am, actually, as I think about it, like fundamentally, you’re absolutely right.

PAULA: Like when I started in loyalty, which not quite as long, so fair play again.

PAULA: You know, 25 years, you’ve been with Collinson doing this amazing work.

PAULA: We really didn’t have the answers.

PAULA: I certainly didn’t have the answers, but I don’t even think I had the right questions.

PAULA: You know, there was pressure from the CFO.

PAULA: So I think this fundamental narrative changing is coming from all sides, if I’m understanding you correctly.

PAULA: So coming from the loyalty managers themselves, coming from the CFOs, coming from the whole C-suite, actually, whether it’s the CMO or the CEO.

PAULA: So there really is, I suppose, a very important conversation that you guys are leading in terms of making sure that certainly our audience knows how to answer those questions.

PRIYANKA: Yeah, and what’s surprising is that while all of them are talking about, you know, we want to be a profit center, we need to understand what value we’re creating.

PRIYANKA: And still majority of them, over 70% are just losing, are leaving a lot of value on the table.

PRIYANKA: They’re not optimizing all their channels.

PRIYANKA: They’re not looking at all the ways they can generate revenue.

PRIYANKA: And more than 60% of them don’t even track all their costs.

PRIYANKA: They’re not able to get to the level of detail of what exactly does it cost them, you know?

PRIYANKA: And what are the areas that they impact?

PRIYANKA: So, while there’s aspiration to understand that, fundamentally, they’re still operating in a model that sees them as a cost center.

PAULA: Totally, yeah.

PRIYANKA: Without saying further, you can see it’s a self-fulfilling prophecy, right?

PRIYANKA: That you’re a cost center, but you get successful.

PRIYANKA: As you get successful, higher the cost.

PRIYANKA: Higher the cost, the higher demands from the CFO to cut down costs.

PRIYANKA: You’re re-evaluating your programs, reducing the value of the points and so on, resulting in customers not engaging.

PRIYANKA: And then you have a self-fulfilling prophecy of your success is the reason for your failure.

PRIYANKA: You know, so it’s very important that we change this position from a cost center to a profit center for loyalty.

PAULA: I was going to say, how did we end up here?

PAULA: Because again, I always thought it was just me, but clearly this is an industry problem.

PAULA: And you and I were at a great event together, actually just at the end of 2024, not that long ago.

PAULA: And certainly my panel were all having the exact same conversations that you were presenting, which is, there’s a very important conversations that we’re having with the CFO, but that conversation is changing.

PAULA: So I think that original, I suppose, background and context is a good understanding of how we ended up with so many questions coming, because initially we were all set up as call centers, we were constantly defending ourselves, whereas now it’s just so much better once you have the right information.

PRIYANKA: Yeah, exactly.

PRIYANKA: And we’ve seen, you know, and when you do that, you know, when the cost of, there’s a pressure from the C-suite to try and control those costs and everything, and you really look at the value of the program, and you can see the customers are seeing what happens to it, right?

PRIYANKA: So BA did it recently, not a long ago, you had Delta look at it, Emirates has done their revaluation as well, and there’s been a lot of noise customers are noticing that the longer, and in fact, I think it was one of the results of our research as well, where when we ask customers that how do you find the value of a program over time, where over 30% of them said that we see the value diminishing, and nearly 25% of them talked about that we give a lot of data, but we don’t really see how people use data, or what value do they add to our relationship.

PRIYANKA: And we also had, I think, a fairly higher number compared to the other two, of nearly 40% saying that redemption is difficult, you know, using our points is difficult, the CX and the UX is not friendly, you know, everything that is created in the program is created as a barrier to actually enjoying some of the rewards and benefits, you know, it’s not done with a customer-first mindset.

PRIYANKA: And that all originates from the factors, because when you look at it as a cost center, everything gets scrutinized from that point of view.

PAULA: Yeah, yeah, absolutely.

PAULA: And the slides that you presented again back to that event we were at together, first of all, for this audience are available, obviously on thecollinsongroup.com website.

PRIYANKA: Absolutely.

PAULA: So we’ll make sure, of course, they’re in the video for anybody watching us on Loyalty TV.

PAULA: But for those people listening, of course, it’s important that they can visualize and understand.

PAULA: And for me, I thought it was a very good, I suppose, journey showing how that mindset of the call center creates all of those problems.

PAULA: And as you said, if success is breeding failure, with that original mindset, then actually we totally need to change the conversation.

PAULA: So I hope that’s a good way to summarize where we are.

PRIYANKA: Absolutely.

PRIYANKA: I’d agree with you.

PRIYANKA: All that very well said.

PAULA: Good.

PAULA: Well, okay.

PAULA: So we’re off to a great start.

PAULA: So there’s a lot that needs to change, a lot that will change.

PAULA: You have a very different point of view on profitability.

PAULA: How do we start to change this narrative?

PAULA: So again, everybody listening or watching, again, this conversation is probably facing those internal concerns.

PAULA: So how can they start to, first of all, educate themselves about what needs to change?

PAULA: What is the situation that the industry needs to go through in order to start of, first of all, as you said, measure everything that is correctly generating profit and making those shifts internally so they can have the conversation with the CFO.

PRIYANKA: Yeah, we were just, when we were writing this paper, one of the key things, we were looking at, okay, let’s look at the programs, the number of programs we’ve launched, and then let’s look at the ones that have really succeeded and still after a decade are performing and very much have a seat at the board table.

PRIYANKA: And what makes them different compared to the others?

PRIYANKA: And constantly, 86% of all the programs that we’ve designed are still in their second decade.

PRIYANKA: So clearly, we’ve got something right there.

PRIYANKA: And the way I would say is that fundamentally, what we have done is to ensure that when you’re setting up a program, you’re clear about the ROI.

PRIYANKA: Why are you setting this up?

PRIYANKA: What is the objective?

PRIYANKA: And what do we expect to see?

PRIYANKA: What does success look like?

PRIYANKA: Being very clear about how we’re going to achieve that path and what the paths could be.

PRIYANKA: The details can change, obviously, as you go along, customer expectations change, businesses’ objectives change.

PRIYANKA: But fundamentally, where does that program sit in that business has to be very clearly defined.

PRIYANKA: Is it just a goth center in marketing?

PRIYANKA: Is it actually an entity of its own?

PRIYANKA: And that’s an exercise that we do right at the early stages of the workshops that we conduct with our brands, is where do they see loyalty going.

PRIYANKA: The second thing that we look at is really defining all the various channels of revenue and making sure there’s an education process to understand.

PRIYANKA: Now, there are some of these obvious ones that we have seen over the years because loyalty is quite mature in this region.

PRIYANKA: So we’ve seen revenue that you can generate through partnerships, through go brands, through any of those channels.

PRIYANKA: We’ve seen revenue that can come through ancillaries.

PRIYANKA: So while you’re doing this, here’s another way to upsell or cross sell or sell some ancillaries as well.

PRIYANKA: We’ve seen value to some extent data monetization, probably not as mature in this region as it is in some of the markets.

PRIYANKA: But we’re still quite far off from doing a lot of other things, whether it’s media and marketing.

PRIYANKA: So media spend, and how do you optimize that?

PRIYANKA: And how do you actually drive revenue through media?

PRIYANKA: There’s elements to subscription and subscription programs, which again are very popular these days because people are willing to pay a price for something that they value.

PRIYANKA: So Amazon Prime is a great example, right?

PRIYANKA: Everybody swears by it, and they really value their prime membership because of the fact that it delivers on something that you value, right?

PRIYANKA: So there’s still a lot of opportunities that are not fully utilized.

PRIYANKA: And obviously we’re not even talking about the full spectrum of loyalty where programs do get listed and there is a whole entity set up and the others as well that you can do and you can have a valuation of a program, which again became quite popular during the pandemic because everybody was looking at extracting value from the assets.

PRIYANKA: So it was a big topic around that time.

PRIYANKA: But so there’s still a lot of journey to be taken in terms of just the revenue part of it.

PRIYANKA: Similarly, the benefits that it adds to a company from not just from acquisition retention and member spend, which are normally things that everybody measures.

PRIYANKA: But what are the other business benefits that it brings in?

PRIYANKA: Does it give you a better idea about your inventory?

PRIYANKA: Does it give you a better idea about who’s buying what and why?

PRIYANKA: And at what times?

PRIYANKA: And how do you use all of that information when do the points of certain nature work versus a recognition of certain nature?

PRIYANKA: There’s a lot of insight that helps you determine and run other areas of your business, which are not necessarily driven by just acquisition, retention, and so on.

PRIYANKA: So whether that’s cost efficiencies you can drive or so on.

PRIYANKA: There’s a third aspect to it as well, which is more to do with the brand and the close association with the brand, right?

PRIYANKA: So how does it help enhance your brand value?

PRIYANKA: And I think that’s a very interesting topic because there are schools of thought where some of the programs want to get to an extreme of monetization and revenue generation that they get so disassociated with the brand that the brand itself doesn’t see it as a facilitator of customer relationship anymore and it’s just become a commercial engine, right?

PRIYANKA: So it’s finding that balance between, you know, that close association with the brand, ensuring that you’re actually using the brand assets and you’re using the brand value and translating that into the program that you design is again a big, big part of it.

PRIYANKA: So these are some of the things that we look at when we are designing programs, you know, is looking at it holistically as well as the cost areas I think are quite big, you know, it’s not just about the cost of a technology and the cost of the team that you have that runs and manages the loyalty program.

PRIYANKA: You know, it’s looking at how other costs of the cost impacts that you have in other areas as well.

PRIYANKA: So having a holistic view about those.

PAULA: Yeah, indeed.

PAULA: And rewards, I suppose, is another obvious point as well, which is typically seen as a call center.

PAULA: And yes, of course, if more people are redeeming, so that that budget line will go up.

PAULA: But I think certainly we would always say on this show that drives the flywheel, you know, that actually drives the upspend.

PAULA: So if they don’t have that clarity, particularly if you don’t have the language to say to the CFO, we absolutely want maximum redemptions, then the CFO is just going to say, no, we need to.

PAULA: And honestly, I mean, I shouldn’t, I won’t give too much away.

PAULA: But the very first program I ever worked on, there was a goal to minimize redemptions, and they made it as difficult as possible because there was a fixed budget and that the agency were charging the business.

PAULA: And of course, the fewer people who managed to redeem, then the more they kept as profit.

PAULA: I mean, I was appalled.

PAULA: It still makes me go crazy.

PRIYANKA: It’s surprising that people don’t realize.

PRIYANKA: There was one brand that we worked with, then in order to control the cost, they stopped sending statements to customers.

PRIYANKA: And when they stopped sending statements to customers, so the brand had the program in multiple markets, and you could see in one market where they were completely utilizing the program and really driving it and promoting it.

PRIYANKA: You had close to 70% of turnover coming in from members, and you had the upside to the spend was quite visible.

PRIYANKA: And you had this another situation where another market, they decided to control the cost, and as a result stopped the statements.

PRIYANKA: There was no communication.

PRIYANKA: The engagement had dropped.

PRIYANKA: There was less than 30% of the turnover coming from members.

PRIYANKA: There was no uplift, and you could just see a simple decision like that can have a big impact to the program.

PAULA: Totally.

PRIYANKA: And you know, rewards, I mean, traditionally, I think when loyalty programs were started, the reason you were offering the points was because you wanted customer data.

PRIYANKA: In the day and age we are today, the data is available, right?

PRIYANKA: So it’s not about data, and that’s the reason why we’re offering the rewards.

PRIYANKA: It’s the opportunity for a customer to put a hand up saying, I like your brand, I’m interested in what you have to say and everything, and I’d like to do more.

PRIYANKA: So it’s by signing up to programs, you’re sort of giving those signs to say that, I want to engage more and engage further.

PRIYANKA: And hence now, the programs we design now, we don’t just talk about points or that being the only currency, it’s really understanding what’s relevant to this customer.

PRIYANKA: Should it just be points?

PRIYANKA: Should it just be cash back?

PRIYANKA: Should it just be this?

PRIYANKA: Or should it be something else?

PRIYANKA: So I think the whole definition of rewards and the rewards that are meaningful, and now with the technology we just started talking about, at the beginning of the call, makes all of these things possible, right?

PRIYANKA: To say, okay, this group of customers, others who are similar like them, actually enjoyed this as a benefit or a reward better than traditional points.

PRIYANKA: Or this customer values a parking slot or a valet parking, more than anything else.

PRIYANKA: So how can you take some of the things that they use, their value and translate them into a meaningful reward?

PAULA: Indeed.

PAULA: I’d love to have been a fly on the wall in that meeting where I suppose you started to identify that the same program managed with a different perspective was producing such radically different results.

PAULA: Was it something they were open to understanding and accepting that there was a better way?

PAULA: Or how did it turn out?

PRIYANKA: It was because the whole reason we were asked to come in and to look at and evaluate the programs were because they felt that they had started with a vision and over the years it had become quite distributed.

PRIYANKA: So you had each market doing their own thing and somewhere in the process, the objective of why the brand wanted to do loyalty, what was the meaning and purpose and how they could encompass some of the newer brands that they had launched into the program was getting to be challenging because it was just so varied.

PRIYANKA: So we had the support from the board.

PRIYANKA: The board was the one that really wanted to see this new version of the program.

PRIYANKA: And they saw the vision of what the program could generate if done right.

PRIYANKA: And it is one of the most successful and used programs in the region today.

PRIYANKA: So that’s how as far as we can go in terms of talking about it.

PAULA: Of course, of course.

PAULA: Well, publicly, I know you can’t name them and share that.

PAULA: But you might tell me a little bit later because I love to hear a good success story.

PAULA: But genuinely, Priyanka, when I again was in that kind of loyalty manager position, like a lot of people coming in as a senior, you know, experienced marketer, but without the depth of expertise that you have in loyalty marketing, I couldn’t have those conversations.

PAULA: And what I always wished was that I could find somebody external who could come in.

PAULA: You mentioned workshops.

PAULA: So it sounds exactly like that’s what you guys love to do, because I think you’ve absolutely hit the nail on the head.

PAULA: Like when we launched the loyalty program, particularly in Telefonica in 2002 in Ireland, you know, all the investment was there, the above the line marketing budget, everybody was super excited.

PAULA: It was just everybody was on board.

PAULA: Three years later, it was, you know, at the case of, oh, no, the marketing people are much more excited about something else.

PAULA: And I was left, you know, trying to drive the program forward.

PAULA: But without the expertise to basically say, this is the value we’re driving to the business and having every single line and item that you’ve just talked about.

PRIYANKA: Yeah, so we’ve got a methodology that we follow and it’s got six dimensions to it.

PRIYANKA: So it starts with obviously the customer value proposition, right?

PRIYANKA: What’s in it for the customer?

PRIYANKA: Why would a customer sign?

PRIYANKA: What is the value that they see in the program and everything?

PRIYANKA: And unfortunately, 80 percent of the conversations when you talk to people are just about that.

PRIYANKA: They’re not interested in anything else.

PRIYANKA: Just want to know, should it be points?

PRIYANKA: Should it be cash back?

PAULA: Should it be tears?

PRIYANKA: Silver, gold, blue?

PRIYANKA: You know, what do we do?

PRIYANKA: So that’s a very important part of the conversation because that’s the hook, right?

PRIYANKA: That’s the hook that gets customers engaged to the program.

PRIYANKA: But equally big a part of this is obviously the commercials.

PRIYANKA: Like we said, you know, it’s important to understand what is your KPI?

PRIYANKA: What is your objective?

PRIYANKA: Because, you know, often you’ll see when in a loyalty program, people talk about, you know, when they reduce their cost, they come and talk to you about your retainers or your technology and this and that.

PRIYANKA: But we all know that’s a fraction of the real cost, right?

PRIYANKA: The real cost is in the rewards.

PRIYANKA: And many don’t realize that that’s where so they do RFPs and everything, trying to get the cheapest technology, but at the most use and so on.

PRIYANKA: But, you know, fail to do the exercise they need to do to make sure their biggest cost is actually tackled, which is going to be what you give to the customers.

PRIYANKA: So the commercial side of it is really important as well.

PRIYANKA: And equally, the technology, I would say, is a big part of the conversation, because technology is not just a points engine or something with five fancy features that allows you to set up some rules and then award points to people.

PRIYANKA: The world we’ve entered in now is an ecosystem world, right?

PRIYANKA: So customers are interacting with you at different touch points.

PRIYANKA: They’re interacting with you on your website, they’re interacting with you on your app, they’re interacting with you in your social channels, and they’re different ways in which needs to be awarded.

PRIYANKA: They’re things that one side of the business needs to understand that’s happening in the other side of the business.

PRIYANKA: So you need a 360 ecosystem.

PRIYANKA: And that’s one of the reasons why we took a call a few years ago when we saw the trend towards where the world of loyalty and customer engagement is going, is to partner with Salesforce Loyalty.

PRIYANKA: And to see, because Salesforce, as many of us know, have a very strong CRM platform.

PRIYANKA: It’s had a very strong call center and the others.

PRIYANKA: It’s got a 360 degree view of the customer already.

PRIYANKA: So it allows you to really work the customer throughout that ecosystem, which we think is a fantastic thing.

PRIYANKA: So technology is a big part to it.

PRIYANKA: Another big part to it is also the data strategy.

PRIYANKA: So some of the things that we talked about, uplift and cost and the others.

PRIYANKA: If you don’t have your data strategy right, then the only data that you’re sitting with is the data that your customers or their members do on your program and the earn and burn data.

PRIYANKA: Whereas what you need is a slightly more holistic view of things.

PRIYANKA: So how do you, in some instances, brands already have a single customer view, they’re building their data centers and they’re building those.

PRIYANKA: But how do you ensure that loyalty is integrated with that?

PRIYANKA: Or if not, then you’re making sure that you’re getting the access to that data in some shape or form that allows you to look at things.

PRIYANKA: So having a very clear data strategy as well is a very important part of it.

PRIYANKA: And then equally important is the UI UX, right?

PRIYANKA: You’d put all of this effort into it and you did everything possible and then you created an app that requires you 10 steps to even get registered.

PAULA: Oh yeah.

PRIYANKA: You know, so I think it speaks for itself in terms of what that would do to your program, right?

PRIYANKA: It’s just the final details as well.

PAULA: Indeed.

PAULA: Absolutely.

PAULA: Yeah.

PAULA: And somebody said on this show once, which I thought was very wise advice as well, Priyanka, like don’t ask for data unless you know what you’re going to do with it.

PAULA: Like, I think we’ve all been guilty in the past of saying, yes, I want to get all this knowledge about my customer, which is fine.

PAULA: It’s well intentioned.

PAULA: But actually, if you ask for all of that upfront, particularly when you’re asking them to onboard a new application, for example, most people like, you know, and I think particularly in retail, I think we’re so spoilt maybe in this part of the world as well.

PAULA: Like, you know, if I get to a till and I can’t remember what program I’m supposed to be opening or whatever.

PAULA: And again, if it’s any more than one step, I’m just not going to go there.

PAULA: So it has to be super easy.

PRIYANKA: Yeah, you want to be at the early stages.

PRIYANKA: You want no barriers to entry.

PRIYANKA: You want quick registrations and the others.

PRIYANKA: And at the timely points, ask the right questions that you that’ll help serve the customer better.

PRIYANKA: So asking them at a certain point where they’re signing up for communications to say, okay, how would you like to receive them is the right point.

PRIYANKA: Or similarly, if somebody is shopping online, for then everything is like, how can we enhance your journey?

PRIYANKA: Is there any kind of things which tend to collect more social demographic behaviors can be at that point rather than, you know, make sense throughout the early stages of the process?

PAULA: Absolutely.

PAULA: So if I’m hearing you right, then you guys love to go in, look from an external expert perspective across these six dimensions, which again are in the slide deck, so everybody can go and have a look at those dimensions.

PAULA: Get your perspective on where the value is either not being measured or managed or reported with the correct language.

PAULA: So whether it’s on the income side, whether it’s on the cost side, there are lots of different lines that have to go in.

PAULA: And with the best will in the world, I think most of us as loyalty managers again, might have come in from a different type of marketing.

PAULA: So that depth of knowledge on the commercial modeling is something I have always believed should be done externally.

PRIYANKA: Yeah, and you touched upon a good point, which we didn’t really talk about as yet is the reporting side of it.

PRIYANKA: So the whole dashboard reporting and stuff, but also setting up those right up front.

PRIYANKA: What are the 10 things we all agree as this board are going to be defining success?

PRIYANKA: You know, have that conversation in the beginning, not when the challenges come up.

PAULA: Totally, and regularly.

PAULA: I think back to your point.

PRIYANKA: Absolutely.

PAULA: It’s like it’s all good at launch, but then three years later, some people are jaded, disillusioned, diluted sometimes as well.

PAULA: I think that often happens with programs.

PAULA: So again, keeping it fresh and exciting.

PAULA: But again, fully transparent.

PAULA: And I think when we were talking about this episode, what I think we conclude is that the conversations with the CFOs, first of all, are never going away.

PRIYANKA: Absolutely.

PAULA: That’s a given.

PAULA: But it’s very different from, I suppose, where I was, you know, again, 15 years ago, being quite defensive to having to talk about minimizing costs, for example, to now, how much more value can we create without being too commercial, where we don’t lose the customer experience.

PRIYANKA: That was a very interesting discussion we had at the panel the other day, right?

PRIYANKA: We were just talking about, in some instances where the conversation has moved from the cost to P&L, now the conversations are more about, okay, your target is now double, 100% more.

PRIYANKA: Can you generate this in next year?

PAULA: Yes.

PRIYANKA: Like, hang on a second.

PAULA: Absolutely.

PAULA: Yeah.

PAULA: But I think what we agreed and I think we’re quite lucky here as well, whether it’s the lovely airlines or whatever we fly with, I think there is that balance that you talked about where it is a case of no, first of all, it’s a loyalty program so we can be loyal to our passengers or whatever.

PAULA: And yes, it has to be good for the business as well.

PAULA: So we need the revenue line, the correct measurement and attribution.

PAULA: So we don’t want to go so far down that we’re tempted to do something too commercial or too transactional.

PRIYANKA: And I think you eluded to that creates the disassociation with the brand.

PAULA: Exactly.

PAULA: Exactly.

PAULA: I think anybody watching this as well is probably familiar with some of the again, more challenging program behaviors, as you said, the business behaviors at the moment where programs are being devalued, certainly in the UK, certainly in Australia, and availability of reward flights has gone through the floor in some particular cases.

PAULA: So I think that’s a case where, you know, it just goes so far in the direction of what does the business need and totally forgets what does the member need.

PAULA: So I think we’re at risk of of going too far.

PAULA: It’s a bit like swings and roundabouts.

PAULA: Back to balance, Priyanka.

PRIYANKA: It’s a good thing that our customers are there to remind us and, you know, ensure that, you know, we’re here, we see, we’re watching what’s going on.

PRIYANKA: So you clearly see the engagement change, you know, when you do these changes into a program.

PRIYANKA: So they’re very measurable.

PRIYANKA: And I think it’s one of those disciplines of marketing that’s truly measurable to a level of depth that, you know, I haven’t seen in many others.

PAULA: Absolutely.

PAULA: It’s why I love it for sure.

PAULA: So I guess the final piece I wanted to talk to you about then is, I suppose you’ve done all of this incredible research.

PAULA: There is a journey that every loyalty manager and every loyalty program goes on from very simple and straight forward all the way up to the Holy Grail, where, you know, we’re all aiming to get there.

PAULA: But what are you hearing from the programs in terms of where are most programs operating?

PAULA: And, you know, where do you think they can get to?

PRIYANKA: The good news is they’re not asking us about the color of cards, right?

PAULA: Okay, hallelujah.

PAULA: So we have, we have, we have moved on.

PRIYANKA: Yes.

PRIYANKA: So, you know, I think a lot of the programs have come to the maturity level, where they’ve got a level of rewards.

PRIYANKA: They’ve got some recognition elements in there.

PRIYANKA: Most are collecting decent data and stuff.

PRIYANKA: Some are even using the data, which is good news.

PRIYANKA: And I think from the research, if I remember the stats correctly, the 75% of the programs were in that level three, four.

PRIYANKA: But if you talk about the complete extreme of the hyper-personalization and where they’re not just using it for their brands, but also helping promote their partner brands, and really looking at a customer as one central focus, and then looking at how you can add value through your own brand, through all your associations, through all of your network as well.

PRIYANKA: They’re less than 10%, I think less than 15% maybe who are doing that level of loyalty.

PRIYANKA: So there’s still a lot of opportunities, still a long way to go, and obviously our world is not sitting still.

PRIYANKA: We have new things coming in, so that makes it even more exciting.

PAULA: It sure is.

PAULA: Yeah, so no rest for the wicked, as the cliche says.

PAULA: And absolutely, I think when I saw that scale, and I know it went from 0 to 6, and as you said, 74% were kind of in the middle.

PAULA: And that’s what we would hear on this show as well, Priyanka.

PAULA: So everybody has the big goal, the big vision, but we’re still quite far away from it.

PAULA: So there’s lots of reasons for that.

PAULA: But I think we’re all well-intentioned and we’re certainly on the journey.

PAULA: So that’s all I think I wanted to talk through today in terms of the this amazing topic about driving profitability, lots of incredible ways of doing it.

PAULA: From your perspective, first of all, where can people access these slides if they want to, I suppose again, first of all, to understand where they might be on this maturity scale and how can they learn about your approach in terms of these workshops?

PRIYANKA: Yeah, so at the Collinson Group website, we’ve got all of our papers available.

PRIYANKA: So anybody who wants to get to know better about what we do, but also about some of the work that we’ve done, some of the approaches we take, including these results and statistics are available.

PRIYANKA: So you can may request them from the website and there’ll be email to you.

PRIYANKA: And equally, we’ve got a presence in the Middle East.

PRIYANKA: So we’ve got offices in Dubai.

PRIYANKA: We also have some teams and everything in Saudi who can support you.

PRIYANKA: So if you’re looking for anything to relook at your programs, revalue them or see how you can drive best value out of it, then please do contact us and we’ll be happy to discuss it.

PAULA: Indeed, and all the super cool stuff, the commercial modeling that we talked about, which requires obviously a depth of work and workshops then, of course, we can make sure to link to your profile in the show notes so people can reach out and organize that kind of insights if they need to.

PAULA: Yeah, fantastic.

PAULA: Well, listen, it’s been a whirlwind conversation.

PAULA: I feel like we could talk for twice as long.

PAULA: But the key from my perspective again is that you are leading this conversation and everyone can learn from the work you’ve already done.

PAULA: So any parting words of wisdom, anything else that we didn’t touch on before we wrap up?

PRIYANKA: I would just say that there is a lot to do in loyalty.

PRIYANKA: And I would encourage a lot of the loyalty program operators to think about the programs outside just the points, rewards, tiers, space, and really dig in deeper to see the revenue and the cost opportunities, the cost reductions and the revenue opportunities that are sitting sort of left as value on the table.

PRIYANKA: There’s a lot you can do even with what you have today before you upgrade your programs in technology or in other ways.

PRIYANKA: And it would be lovely to see maybe hopefully in another decade that I’m still going to be around in loyalty to see some of that value materialize.

PAULA: Indeed, indeed.

PAULA: And I hope it’s not so long before we have you back on the show, Priyanka.

PAULA: So thank you for joining us in studio today.

PAULA: Thank you for all your words of wisdom.

PAULA: And I think the future is very bright for loyalty.

PAULA: So Priyanka Lakhiani, Senior Vice President at Collinson.

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

PRIYANKA: It’s a pleasure, Paula, as always.

PAULA: Thank you so much for listening to this episode of Let’s Talk Loyalty.

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