#263: Sharing Data, Sharing Ownership & Renting Fashion - New Models Driving Loyalty

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

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PAULA: Hello, and welcome to episode 263 of Let’s Talk Loyalty, featuring a long overdue catch-up conversation with Simon Rowles, Managing Director of Beyonde, a customer experience consulting firm based in Sydney, Australia.

PAULA: With a single-minded focus on identifying, evaluating and implementing the best global solutions to create compelling loyalty concepts, Simon is someone I always enjoy talking to, to get an idea of some of the latest emerging loyalty and customer experience trends.

PAULA: In today’s conversation, Simon of course talks about data, but no longer just as the new oil, but now as an even more powerful and profitable asset, as it’s becoming increasingly shareable.

PAULA: And that’s despite our increasingly restrictive privacy laws worldwide.

PAULA: Simon also shares some incredible performance statistics around a way to drive customer or employee loyalty using the power of fractional ownership.

PAULA: He also talks about the increasingly important option to allow loyalty members to aggregate the rewards across multiple programs.

PAULA: For everyone listening, I know you love hearing about customer strategy and innovative loyalty propositions, so please do enjoy listening to Simon Rowles from Beyonde in Australia and some of the inspiring ideas his team are exploring.

PAULA: So, Simon, welcome back to Let’s Talk Loyalty.

SIMON: Thank you, Paula.

SIMON: A pleasure to be back, and congratulations on your wedding.

PAULA: Thank you so much, Simon.

PAULA: Yes, I think it’s been an extraordinary time.

PAULA: So certainly the highlight of, I don’t know how many years of planning and looking forward.

PAULA: So yes, it was interesting to share it on LinkedIn, not something I would have thought I would have done before, but it seems like it’s the Wild West now, sharing everything in our lives on LinkedIn.

PAULA: So thank you for your kind words.

PAULA: And thank you for being here, Simon.

PAULA: I know you were in the UK less than 48 hours ago.

PAULA: So to show up for Let’s Talk Loyalty when you’re probably suffering from all sorts of jet lag and all sorts is very much appreciated.

SIMON: I don’t know if I’m suffering from jet lag, but that’ll come out in the next few minutes, I’m sure.

PAULA: Absolutely, if you start rambling, we’ll shut you up.

PAULA: Grant, well, listen, Simon, as you know, first of all, it’s been two years since you were on the show last time.

PAULA: So we will touch back on that.

PAULA: But one of the big changes that I made in that couple of years was our opening question is quite different to what we did before.

PAULA: So with all of your expertise, insights there in the Australian New Zealand market, please do tell me, what is your current favorite loyalty program, Simon?

SIMON: It was a hard question to answer because at first I thought, what’s my favorite loyalty program?

SIMON: And there’s some I like and there’s some I don’t.

SIMON: But professionally, the one I really do like is Commonwealth Bank has launched a whole of bank program called Yello.

SIMON: And we’ve been waiting for whole of bank programs to explode around the world.

SIMON: They haven’t really.

SIMON: E-Bucks in South Africa, perhaps.

SIMON: Axis in India, perhaps.

SIMON: But Commonwealth has gone at Boots and All.

SIMON: They have leveraged the open infrastructure, the customer data, right?

SIMON: We have open banking.

SIMON: We’ve got open and other categories as well, including Telco and Utility.

SIMON: They’ve bought into a Telco.

SIMON: They’ve bought into Utility.

SIMON: And that becomes part of your rewards set under Yello in the Commonwealth Bank app.

SIMON: And it’s a reward for being a customer.

SIMON: They’re not asking you to go and spend more money.

SIMON: And it’s going to apply to all of their customers across the board.

SIMON: So they just have to fund it at a banking margin.

SIMON: And they’re funding it out of all sorts of other margins from other industries.

SIMON: And probably making the merchant funded piece work more effectively than anybody else in Australia.

SIMON: So from a professional perspective, they’ve bundled almost all the current themes and loyalty into one program.

PAULA: Wow, my goodness.

PAULA: I mean, the complexity, the mind boggles, Simon.

PAULA: I mean, we’re all familiar with the old reliables, of course, and banking loyalty.

PAULA: But to get it across the whole bank, I mean, it must have been years in development.

PAULA: When did it actually launch there, Simon?

SIMON: It’s launched earlier this year.

SIMON: It’s announced actually earlier this year and it launches later in the year.

SIMON: It launches for home loan customers on a new home loan product first and then rolls for the rest of the bank.

PAULA: Okay.

SIMON: And I think, I don’t know that it’s years in production.

SIMON: It’s probably years in thinking, but the market’s moved and open banking just makes a whole lot of things possible.

SIMON: And if you’re brave and bold, and you leverage the customer data, right, in industries outside of your own as a bank, and go and buy into those categories, all of a sudden, I’m sure it looked simple on paper, but probably very complex under the water, getting all the pieces joined up.

PAULA: Absolutely.

PAULA: Yeah.

PAULA: No, and you’re absolutely right, Simon.

PAULA: I mean, we all know the risk of overstating it.

PAULA: We’ve been through a tumultuous few years.

PAULA: It was April 2020 when you were last talking with this on the show here.

PAULA: But I would love to just get your perspective in terms of in that two years, what do you think has happened with loyalty in general?

PAULA: Again, particularly, I guess, in your own market, but even from a global perspective.

PAULA: I mean, to me, it certainly has been kind to our industry.

PAULA: I always feel that loyalty is countercyclical.

PAULA: Many of my listeners will know I got into loyalty just after the big recession of 2008.

PAULA: And to your point earlier, actually, brands that are brave do see an opportunity when there’s a crisis, particularly globally.

PAULA: So just give us a sense of what’s been happening in the loyalty market there in Australia and New Zealand in the last couple of years.

SIMON: It’s a very good question.

SIMON: And yes, I would agree.

SIMON: We are countercyclical.

SIMON: But we’ve seen an explosion in loyalty in our part of the world, certainly in Australia, also in New Zealand, with new programs launching at probably the rate of one a month and in some months at one a week.

SIMON: So the adoption has been off the charts, but we’ve also seen a struggle with complexity.

SIMON: So there’s a lot of new loyalty managers coming to market.

SIMON: There’s a lot of new loyalty models coming to market.

PAULA: Yeah.

SIMON: And they don’t know how to navigate it.

SIMON: So we’ve also seen a whole lot of new suppliers come to market.

SIMON: So we’ve had more loyalty platform vendors coming to Australia in the last year than ever before.

SIMON: All the new programs have been won by internationals coming to town for the first time.

SIMON: And there’s a host of new innovations and bolt ons and orbiting solutions that are starting to take off that historically, I think, would have really struggled.

SIMON: Perhaps doing everything over screens from any part of the world became normalized.

SIMON: And that’s made it more possible.

SIMON: But certainly the demand is there and the investment is going in.

SIMON: The move away from travel possibly helped it a bit because the airlines are the center of gravity of the Australian royalty market.

SIMON: And with no one traveling, some brands, I think, started to think that there might be a world outside of frequent flyer points for their programs if they weren’t an airline, retailers, banks.

SIMON: And there’s been a lot of development there.

SIMON: We’ve seen a lot of activity in some businesses where they put big teams on to build up new loyalty propositions under the water that are now coming to fruition now that the pandemic has started to be a normal thing.

PAULA: And I guess only time will tell if all of those innovative new propositions are welcomed by consumers, because I always think there’s there’s the risk of obviously fatigue and confusion.

PAULA: So, you know, it’ll be down to exactly how they’re executed, I guess, in terms of how how they land and what actually really does resonate with customers.

SIMON: That’s a very good point.

SIMON: And one of the key differentiators, I think, is these are not niche, fun plays that apply to only a portion of the base, but have good press coverage or good shareholder coverage in the annual reports.

SIMON: Most of these are scaled plays across the very big programs, which have several million customers and their advances on the core proposition.

SIMON: So they’re not fly by night and they look to be really, really well structured against a good foundation.

SIMON: You’re quite right.

SIMON: Time will tell whether they do pay off.

PAULA: Yeah.

SIMON: But we’re already seeing competitive responses to the same thing.

SIMON: So that, for me, is an indicator that whoever moved first got something right if the competitors are following them.

PAULA: Yeah.

PAULA: Yeah.

PAULA: My goodness.

PAULA: Super exciting, Simon.

PAULA: I always love hearing what’s going on.

PAULA: And, you know, for people who maybe didn’t get to listen to your last show, the reason I always love talking to you is, I guess, that you, I suppose, really enjoy innovative propositions.

PAULA: You specialize, I suppose, in identifying, you know, global best practice and representing that, bringing it to the Australian market in many cases.

PAULA: Would that be a fair summary of how you how you would see your business and your services?

SIMON: That would be an exceptional summary, and you probably said a bit better than I could.

SIMON: That is true.

SIMON: I would add that it’s not just innovations, but it’s innovations that have been adopted by a major player offshore.

SIMON: So a large bank like a Barclays, which gives it some credence and weight, but also means the innovation’s been through the pain and suffering of a procurement process.

SIMON: With a big enterprise, and not going to play with one of the big Aussie enterprises.

PAULA: Totally.

SIMON: But I think the problem we’re facing at the moment is velocity.

SIMON: There are so many of them being adopted offshore and making it through those gates, those disciplines, that it’s becoming quite hard, particularly for a new loyalty manager, who’s just for the first time seeing what a points program looks like, to be able to filter their way through the tools that make sense now and the tools that will make sense in three years’ time as their program scales.

PAULA: Yeah, yeah.

PAULA: No, absolutely good point.

PAULA: And again, quite remarkable to hear that that level of innovation and opportunity is around and coming forward.

PAULA: And clearly you’re advising all of your clients and all of that.

PAULA: I always love to comment it from the, I suppose, the consumer perspective, because with my, I suppose, marketing mindset, I don’t really understand the technology in the same way that other people do.

PAULA: But I always believe that if I’m excited as a consumer, then I can always figure out the tech and find the pieces to build it.

PAULA: So with all of that kind of idea and mindset, Simon, what would you say are the most compelling opportunities for loyalty professionals to be thinking about beyond our traditional earn and burn that we love so well?

SIMON: The earn and burn is always going to make sense.

SIMON: And I think we’re not looking for things that are completely different to that.

SIMON: This industry is not going to be wiped out by whatever comes next.

SIMON: It’s not TVs are going to replace movies.

SIMON: But I think it’s very much in the foundations of the data.

SIMON: So historically, we’ve had loyalty coalitions, which are fundamentally enterprises which offer the same currency, but really underneath was a data sharing play.

SIMON: You joined a loyalty coalition so you could sell your product to the other coalition partners.

SIMON: And we’ve seen them struggle all over the world unless their owner operates it.

SIMON: But the principle remains companies want to collaborate.

SIMON: And we’ve had several goes at data coalitions, customer data outside of loyalty coalitions, with possibly the most famous for our part of the world in Australia being a company called Data Republic.

SIMON: Brilliant idea.

SIMON: Banks, retailers, airlines, everyone pulling their customer data in the bucket.

SIMON: And you could learn all sorts of things that you couldn’t learn otherwise.

SIMON: And you can market much better because data is the heart of the whole loyalty game.

SIMON: And we had this theory that data is the new oil.

SIMON: Well, Data Republic crashed.

SIMON: And I think one of the reasons it crashed is data isn’t the new oil.

SIMON: That was a Clive Humby saying from 2006.

SIMON: And he was right at the time.

SIMON: But it’s changed.

SIMON: Customer data really is more like plutonium than oil.

SIMON: And it doesn’t get used up.

SIMON: You can use it again and again.

SIMON: And every time you use it, it makes new things.

SIMON: So we’re more and more starting to lean on to the theory that customer data is the new nuclear waste.

SIMON: You’ve got to dispose of it.

SIMON: You’ve got to look after it.

SIMON: It’s dangerous.

SIMON: You’ve got to protect it.

SIMON: No one really knows what’s going on with privacy laws.

SIMON: There was GDPR, but that’s changing.

SIMON: California stepped in.

SIMON: I think Ireland has said all those pop ups on your websites don’t count anymore.

SIMON: And Data Republic crashed because the partners got scared.

SIMON: What happens if this gets to the front page of the paper?

SIMON: Well, customer data is the new nuclear waste.

SIMON: We’ve now got an answer.

SIMON: Historically, you used to be able to encrypt data at rest.

SIMON: You used to be able to encrypt data while it moved.

SIMON: But you had to open it up and see that that was Paul’s details when you’re analyzing it.

SIMON: The new technologies that have come to market now, and we’ve seen two launch in Australia and there’s several in the UK, encrypt at rest.

SIMON: So even if you’re hacked, even if you’ve got bad actors, even if your analysts aren’t doing what they should be doing, you have no risk.

SIMON: There’s processes that wrap around that in terms of the governance.

SIMON: So it’s not possible for the first time ever, really, for two companies who have customer data to share that customer data and work out things that they may not have worked out before.

SIMON: The only thing you have to have is the customer’s permission to do it.

SIMON: But that does mean you get much richer offers out in front of customers.

SIMON: And an example, Barclays and Vodafone in the UK collaborated.

SIMON: Vodafone knew who their handset customers were.

SIMON: But they didn’t know if a customer also had a broadband contract with a competitor.

SIMON: And working with Barclays, they were able to work that out.

SIMON: And Barclays was able to put an offer in front of that Vodafone customer to say, you’re with a competitor of Vodafone, not in as many words.

SIMON: There’s an offer for you.

SIMON: Vodafone went from one product to two.

SIMON: Two products per customer is always going to be better.

SIMON: Basket size is up.

SIMON: Retention goes up.

SIMON: And we’re seeing that happening across the board as this new technology moves away from anti-money laundering and so on where it first started and scales to be able to match customer data.

SIMON: And it means you can run your own loyalty coalition with your own currency across several different companies.

SIMON: You have different currencies.

SIMON: You don’t even have to announce it as a coalition, but you can collaborate with partners that make sense.

SIMON: We’ve got a telco and a supermarket that want to do that and not let their competitors know what’s going on.

SIMON: But it just means your first party data gets better.

SIMON: But one thing you need to have is the customer’s permission that you can do that.

SIMON: And most loyalty programs and probably only in loyalty programs have a rule that says, and we’ve checked most Ts and Cs for the big ones in our part of the world, we will use your customer data to give you offers from our partners.

PAULA: Yes, I think that is being explicitly built in so much.

PAULA: My goodness, Simon, it’s absolutely mind blowing that that level of solution, I guess, has emerged, you know, in the context of GDPR, because I mean, we all know you literally can’t even raise the words data, certainly in any program I ever worked on without the legal people being wheeled in.

PAULA: Absolutely to forbid, as you said, Ireland is often the hotbed of regulation around it.

PAULA: But sounds like everybody’s actually getting comfortable with this idea.

SIMON: Everybody getting comfortable with the idea is probably not quite where it’s at at the moment.

SIMON: But some brave players are getting comfortable with it.

SIMON: So particularly amongst our banks, we’ve got this theory that the transaction is the new cookie.

SIMON: OK, so whatever you did and the bank knows what you did because they got your transactional data, defines who you are.

SIMON: And retailers are very interested in what that data is.

SIMON: We have from three of our banks launches of capabilities which fundamentally monetize their transactions.

SIMON: The transaction does become the new cookie.

SIMON: It identifies who you are.

SIMON: They can find you.

SIMON: A retailer and a bank can find you and they can make an offer to you.

SIMON: Now, it’s not widespread and these are recent launches.

SIMON: So Westpac is one of our big four banks.

SIMON: They launched a program called DataX.

SIMON: ANZ is another of our big banks.

SIMON: They have partnered with their venture division to launch a thing called DataCo.

SIMON: And our biggest bank, Commonwealth Bank, the guys who are launching my favorite Yello program, they’ve had a collaboration for some time with Australia’s version of Dunhambi called Quantium.

SIMON: All of them are looking to play this first party data game in a sharing fashion.

SIMON: Not all of them use the same technology I’ve just mentioned, but we do know that one of them do.

SIMON: And one of them, and it’s Westpac, they’ve said we will help you, our corporate clients, our retailers, will help you launch loyalty programs because we can match our two sets of data together.

PAULA: Yes, absolutely.

PAULA: I think banks are the most risk-averse, in fact.

PAULA: So even if others haven’t yet spotted the opportunity, I think if the banking sector has found ways to be comfortable that they’re protecting all of the relevant interests, that’s absolutely extraordinary growth.

PAULA: So definitely one that seems to be exploding for you.

PAULA: I suppose thinking about it from a consumer perspective, that explicit permission piece that you mentioned, Simon, do you think that is clear enough for the consumer?

PAULA: Do you think that we’re opting into things that perhaps we mightn’t?

PAULA: Because I think we all kind of ignore the terms and conditions.

PAULA: We tick all the boxes and we trust the brand, I think, to take responsibility for us, but we don’t really understand the detail.

PAULA: So what level of comfort do you have that consumers really do understand what’s happening behind the scenes?

SIMON: It’s probably, it’s good.

SIMON: It’s a good question.

SIMON: It’s probably very, because some customers in some programs will understand and have an expectation.

SIMON: But of course, we know that not all our customers are the same.

SIMON: So some want and some will be surprised when suddenly an offer arrives from another partner.

SIMON: So I think it’s going to be widely spread.

SIMON: So from fully expecting it all the way through to hating the idea that it might ever happen for customers, the same will be true of the executives sitting inside the enterprise.

SIMON: And we’ve seen that in terms of these launches from our banks in Australia, we’ve seen exactly the same reaction amongst the executives.

SIMON: I would hate if this ever happened.

SIMON: And I’m thinking of myself as the only customer in the world all the way through to I’ve been expecting this for years.

SIMON: Obviously, an overlay of is this legal and are we allowed to do this?

SIMON: How desperate am I to get my numbers?

PAULA: Absolutely.

PAULA: And I guess we have all been trained and we’ve seen enough of the cookie tracking, I suppose, to not be surprised anymore.

PAULA: So I guess it’s when I think about myself in that situation, I probably would be a little surprised in the initial and the first time I might see it.

PAULA: But again, it comes back to the brand trust and how it’s presented and managed to see if I’m comfortable continuing that relationship, I guess.

SIMON: Yes, it’s a minefield.

SIMON: The privacy game is a complete minefield.

PAULA: Totally.

SIMON: You would have to as a brand, as part of your engagement, I think, ensure that you’ve got explicit permission to be doing this.

SIMON: And that would help some of the executives in the enterprise to feel more comfortable that there’s explicit permission for this particular piece.

PAULA: Yeah.

SIMON: To be getting a Vodafone offer from a bike lease as an example.

SIMON: But in other instances, potentially the airline frequent flyer programs, which are the most aggressive and best users of some of this data, it would be a surprise at all.

SIMON: And they move quite quickly.

PAULA: Yeah.

SIMON: But to be clear, these things have all launched.

SIMON: They’re all available.

SIMON: They all run in pilot.

SIMON: We haven’t seen a huge scaled version of it.

SIMON: But we have this fabulous solution to an existing problem.

SIMON: And the two are going to be drawn together by gravity.

SIMON: We can’t see it not happening.

PAULA: Totally, totally.

PAULA: I can hear that.

PAULA: And I’m just smiling as I think about your data is the nuclear waste, you know, analogy.

PAULA: So definitely one to watch out for and probably the right way to frame it, Simon.

PAULA: I agree that it’s absolutely it has to be handled with that level of concern in order for it to deliver properly.

PAULA: But the stakes are super high.

PAULA: So everybody’s got a vested interest.

PAULA: I can imagine now if I was sitting in a bank and spotting this as a business opportunity, it does seem, as you said, inevitable and very exciting.

PAULA: So hopefully that’s one that we continue to see growing.

SIMON: Yes, indeed.

SIMON: I mean, it’s fairly well deployed in the UK already.

SIMON: Boots have used it, TSB have used it, Lloyds have used it.

SIMON: So it’s not uncommon.

SIMON: It’s starting to mainstream as a marketing player.

SIMON: But the beauty for all of us who are loyalty professionals is we are the only ones who have explicit permission from customers to make offers from partners.

PAULA: Yeah, for sure.

PAULA: OK, so moving on then beyond the data play.

PAULA: What’s happening, would you say, Simon, in the reward space for the kind of projects you’re looking at?

SIMON: Several things all at the same time.

SIMON: And to go back to your foundation of earn and burn, the burn still needs to happen.

SIMON: Rewards still need to happen.

SIMON: Several movements there we’re seeing because of the explosion of programs.

SIMON: As a customer, you have an explosion of points.

SIMON: And because of the explosion of card linking and other good tools, you’re not able to opt out or ignore them.

SIMON: You’re starting to automatically accrue them.

SIMON: What do you do with all these buckets of minor points balances in different programs?

SIMON: We’ve seen two or three plays come to market.

SIMON: But the first to really do it was a points.com type play, which has always existed in travel, starting to appear in retail and banks and TD in Canada and Starbucks have a swapping mechanism, much like you might have switched your frequent flyer points for a hotel.

SIMON: You can now switch TD to Starbucks.

SIMON: We’re seeing that happen on a wider scale with new offerings and again, not heavily adopted from a company in the US called Bakkt and a company in the UK called Swapi, letting you bundle all those points together into a single balance and obviously, you have to get every program that’s potentially a collaborator to allow that to happen.

SIMON: But we’ve seen in terms of introducing those models to Australian clients, strong appetite to play because there’s an upside to them in terms of switching their points to different currencies.

SIMON: As a customer though, you can see the win.

SIMON: I take my whole digital life back to go as far as adding crypto as does Swapi.

SIMON: My whole digital life, which is loyalty points, gaming points, crypto, whatever else it might be, gift cards and bundling them into a single balance.

PAULA: Nice and simple.

PAULA: And that’s live in market already, Simon, you said?

SIMON: They are both in pilot in their parts of the world.

SIMON: I’m not sure how much is public yet.

SIMON: And most of them leave quite heavily on, certainly Bakkt leads quite heavily on crypto.

SIMON: Crypto is a bit of an unusual one we find because you’re either a massive supporter or a massive denier.

SIMON: And there’s cases to be made either way.

SIMON: We’re seeing a good one sitting in the middle being a company in Australia called Upstreet, which instead of issuing points or crypto, you issue something in the middle called a fractional share in the company that you’re shopping.

SIMON: And they’ve proved very, very successful with some of the metrics that they’ve deployed in terms of reduction in churn and uplift in revenue by giving customers a share in the company that they’re shopping.

SIMON: So they run a trial with a subscription business, which, as you can imagine, most of the subscription businesses we know outside of a Spotify, Netflix, have very high churn, a chopped churn by 48%.

SIMON: Now, that’s a nice number if you’re a loyalty manager.

SIMON: And giving away a share in your own company, and it wouldn’t be a whole share each time, it would be a piece of a whole share, if you think about how small the loyalty reward would be, means the customer becomes more loyal to you.

SIMON: So that’s part of the churn.

SIMON: They also raised revenue per customer 36% because of a whole bunch of better behaviors inside that.

SIMON: So as a loyalty manager, those are two numbers that you would really like.

SIMON: And you’re not giving away somebody else’s currency, like a coalition, you’re not giving away a toast or a TV, you’re not giving away a piece of your company.

SIMON: So these customers become owners in your own enterprise.

SIMON: And we’ve seen strong, I wouldn’t say demand, but very strong interest.

SIMON: We haven’t seen any major adoption.

SIMON: We’ve seen strong retailer adoption.

SIMON: We think it’s time for bank adoption.

SIMON: And again, a funding of your wealth life, your retirement savings together with these incremental pieces that you can earn.

SIMON: Strong theory that it applies heavily to younger members of the market.

SIMON: They may not be able to buy a house, but they can earn a share in Tesla.

PAULA: So I was going to ask exactly that.

PAULA: What kind of categories is it appearing?

PAULA: It sounds like retail, yeah?

SIMON: Heavily retail.

SIMON: And as you can imagine, most retailers have always given away their own product, and now they’re giving away a piece of their own business.

SIMON: Also, professional services.

SIMON: So Upstreet have some good cases where they have employee loyalty programs.

SIMON: And the employee, instead of getting 50 bucks on their birthday and 100 bucks at Christmas, and I forget the categories, so I’ve made those up, they’re getting pieces of the company.

SIMON: They’re getting shares in the company as rewards for whatever the good behavior is or whatever the anniversaries are.

SIMON: And they’re seeing much stronger interest in those rewards than historically they would have.

SIMON: The one case that Upstreet mentioned was during a blackout period for that company where they made a lot of trade shares.

SIMON: Somebody hit an award level, expected their 25 bucks worth of shares and didn’t get them.

SIMON: And we’re all over Upstreet to say, but I’ve earned them.

SIMON: Give them to me.

SIMON: But in the blackout period, obviously, they can’t trade.

SIMON: So they had to wait a few days for their award.

SIMON: That’s fairly high attractiveness, I think, for an employee award.

PAULA: Totally.

PAULA: Well, when it comes to sticking a Simon, I can’t imagine many propositions really competing with ownership of the company, even if it is fractional.

PAULA: And again, I don’t have the bandwidth this morning to figure out exactly how big you would want that to get either as an employer or as a loyalty program operator.

PAULA: But clearly, there’s people putting a lot of great thinking into it.

PAULA: And what I always love again is this idea that if it’s a simple, compelling proposition, then automatically everything else kind of falls in place behind it when the proposition makes such clear sense.

SIMON: It is a difficult one to explain first time around.

SIMON: But we do find with a younger cohort in Australia, they understand their investing game.

SIMON: Not all of them, of course.

SIMON: Memes don’t help them get there.

SIMON: But being able to earn a piece of a share of a company is always going to be better than something disposable.

SIMON: We’re also seeing the same cohort, in fact, have a strong interest in ESG and particularly carbon.

SIMON: So we’re seeing some very good carbon related rewards coming to market.

SIMON: And the one that if you were to write it down and explain it, you’d think the attractiveness would be very low.

SIMON: But we’re seeing the attractiveness being very high.

SIMON: There’s much like a fractional share in a company.

SIMON: It’s a fractional share in a carbon credit.

SIMON: So in Australia, as a polluter, a mine or similar, you have to buy carbon credits before you do whatever it is you’re going to do as the offset.

PAULA: Yeah.

SIMON: We have a very successful start up coming to market called Beta Carbon.

SIMON: And we see strong demand from our retail clients for their offering.

SIMON: And the offering is you get a fractional piece of a carbon credit, an Australian carbon credit as a customer.

SIMON: And we see the demand coming from the younger cohort.

SIMON: Because what that means is you’re earning over time as rewards from your favourite apparel retailer, pieces of a carbon credit that you’re then going to sit on for the rest of your life.

SIMON: What that means is the polluter can’t buy it and the polluter can’t pollute.

SIMON: So in a way, you’re stopping the polluter making the planet any worse.

SIMON: Now, as I said, if you’d written that on a piece of paper a year ago and said, Oh, this is for a plan, you would have struggled.

PAULA: As you’re telling us, Simon, I’m sitting there going, Oh, my goodness.

PAULA: Wow.

PAULA: But what I am loving, I suppose, is, you know, again, understanding, first of all, the demographic that these ideas are appealing to, because, you know, if we think about, you know, fractional ownership, you know, just to go back to that one for a minute, I would have assumed it was perhaps our generation.

PAULA: So, you know, people, you know, who understand, you know, buying and selling of shares, you know, so for that younger demographic to be so tuned in to the opportunity and with the carbon credit idea to actually prevent a company from, you know, polluting long term, that’s an extraordinary insight and an extraordinary level of power to give to a consumer, again, even in its tiny fraction.

PAULA: Sometimes I feel like with loyalty, you just have to give people the idea that they’re making a difference, that they actually do buy into that.

PAULA: And then the word of mouthpiece grows.

PAULA: And I mean, we all know that ESG is a massive opportunity anyway, in terms of like it has to, things have to change quite dramatically.

PAULA: So I love the fact that that’s something that people can feel that they’re, you know, signing up to long term and changing behavior long term.

SIMON: It’s exceptional.

SIMON: And that possibly is one of the major changes over the last couple of years, is the attitude, certainly from large corporates.

SIMON: And some of it, I mean, we discovered beta carbon through a client who wants to offer it as a reward in their program that they’re about to launch.

SIMON: And they have just become a beat corp.

SIMON: So they’re very serious about what it is that they’re doing for the planet.

SIMON: Yet to be seen how well a fraction of a carbon credit behaves as a reward compared to whatever else they might give away along the classic lines.

SIMON: But there will be a segment that give it a go.

SIMON: Hopefully, it’s a big enough segment to make it meaningful and comparable.

SIMON: And while we talk a big enough segment, we’re also seeing the banks offering the capability for you to track your carbon footprint.

SIMON: NatWest launched it last year.

SIMON: Commonwealth Bank, the developers of the Yello program, my favorite program, have launched it this year.

SIMON: It’s been a pilot for a part of the year and will be offered to the whole base.

SIMON: They’ve got close enough to 10 million customers towards the end of the year.

SIMON: And a bank in New Zealand, Kiwi Bank, which is also a B Corp, will be doing the same.

SIMON: Now, that’s not a loyalty program, but what we’ve seen for bank loyalty is that the app is the loyalty program.

SIMON: The better your app, the better the services in your app, forget the points and prizes and all the other wonderful stuff we as loyalty professionals know about.

SIMON: The better your app, the better your retention, which is where many of the neo banks in the UK have gone.

SIMON: And many of the big banks have then had to follow.

SIMON: And Barclays is a good example of putting all the wonderful stuff that a neo bank like a Monzo might do into their app.

SIMON: Commonwealth is doing the same.

SIMON: They rank the best app in Australia by Forrester.

SIMON: And this is one more service that sits inside their app that will be adopted by a percentage of their base who really appreciate being able to track their carbon footprint.

PAULA: So it is purely, you know, in my mind, it sounds like a CSR initiative then, Simon, like just being useful for the sake of, you know, impressing the customer and driving that utility, as you said, for the app itself.

SIMON: I think so.

SIMON: Kogo works because it can see your transactions.

SIMON: So your shopping at this retailer caused this much of a carbon footprint and your fuel purchase caused a much bigger carbon footprint.

SIMON: It gives you the opportunity to offset them.

SIMON: But yes, it’s utility in the app for those people who would want it and would have to come from a bank because externally you wouldn’t, you’d be able to do it, but you wouldn’t get the scale.

SIMON: So the fact that three banks have scaled it across their whole customer base means there must be some demand from customers.

SIMON: And there must be some utility.

SIMON: And they then differentiate it from their competitors in terms of the features that roll into the apps.

PAULA: Yeah.

PAULA: But I also, it sounds to me like a very clever solution to go back to my, you know, ideal world of simplifying things for consumers.

PAULA: You know, if you can track and report my carbon credit based on my purchasing behaviour, and I’m not having to understand how to account for all of that because, you know, I think we’ve probably both seen technology that allowed you to track your carbon credit, but you had to input the data, for example.

PAULA: So I mean, honestly, that was just not something that was ever going to work for me.

PAULA: So I love that the banks are facilitating that.

PAULA: And again, as a consumer, I can quite simply say, OK, yeah, if I took a load of flights this month, it’s definitely going to impact.

PAULA: So I guess that I’m more motivated to find ways to solve that.

PAULA: And yeah, I would trust that bank that that’s giving me that data a bit more.

SIMON: I’d agree.

SIMON: And I think to as an addition to a degree, the bank has to play that game because they’re sitting in the middle.

SIMON: But the real demand is coming out of the retailers and particularly the apparel retailers.

SIMON: So there’s a multitude of initiatives coming out of the apparel retailers, who are some of the worst polluters in the world because of the rate at which clothing is deployed around the world and how little of it gets used and how fast it gets changed.

SIMON: And fast fashion, if you’re a sustainability watcher, has a lot to answer for.

SIMON: So we’re seeing multitudes of different sustainable plays being deployed as loyalty plays, not just as a, don’t feel so guilty, but as a, here’s what’s better for the planet.

SIMON: And one of them is a startup in Sydney called Renter.

SIMON: And they add a button on a website that lets an apparel brand rent out their clothing more than once.

SIMON: So you might only wear it 10 times.

SIMON: Your friend might wear it 10 times and somebody you’ve never met wears it 10 times.

SIMON: But through Renter, the whole process gets managed, so it’s not something that’s going to go to landfill.

SIMON: And there’s several other places around the world that try and make a secondary market out of clothing.

SIMON: Reflaunt, which comes out of Europe, but also has a base in Singapore, does the same thing.

SIMON: And that then becomes the loyalty program, the loyalty offering for that enterprise, for that particular cohort who have a very strong view about sustainability.

SIMON: And their view we see being pushed by the retailer because the retailer knows they can’t flog any more goods and are now stepping into a far more responsible position, becoming B Corps themselves and doing something about the things that this cohort cares about.

PAULA: Well having just worn a very expensive wedding dress that clearly needs, you know, another purpose in life, Simon, I’m hoping somebody listening is either already doing that in the wedding dress sector, dare I say it, but, you know, joking aside, I genuinely believe that I will take my dress to somewhere where it can be, you know, re-loved and re-worn and absolutely to me that’s important.

PAULA: So fast fashion, I agree, is something that I have enjoyed my whole life, I still enjoy it, dare I say it, but there is an element of awareness now that I can’t really in good conscience continue to shop at the same way without some adjustment in terms of either the retailer’s behaviour or my behaviour to make that more sustainable.

SIMON: So these guys are tapping into exactly that, that there’s now something that can be done.

SIMON: It doesn’t necessarily have to go to landfill.

SIMON: I think today much of it does go to landfill.

SIMON: But there are ways in which you might buy differently and ways in which you might dispose differently.

SIMON: Now, the backend of dispose is a very hard game.

SIMON: And what we’re seeing for some of the retailers even closer up the cycle is even returns is a hard game.

SIMON: I think Target has just introduced a fee for returns because they’re just trying to slow that down because being able to process them is very difficult.

SIMON: They might have that wrong.

SIMON: It might not be Target.

SIMON: But just returns of goods in general is a problem for many of these retailers.

SIMON: That whole cycle is a problem for many of them.

PAULA: Yeah.

PAULA: Yeah.

PAULA: Wonderful.

PAULA: So, listen, we can’t possibly, I suppose, not briefly chat, let’s say, about some of the other kind of crazy stuff that we’re all excited about and really don’t yet understand, dare I say.

PAULA: So I’m sure you get asked about NFTs.

PAULA: We’ve briefly touched on crypto in one context, but what’s your, I suppose, short version in terms of, you know, what’s the role of NFTs to drive loyalty?

SIMON: That’s a tough question.

SIMON: I’m not an expert and I do defer to the experts, some of which you had on your show, and I recommend them to anybody who’s got the same question.

SIMON: In the loyalty work that we’ve been doing, there’s the outlandish, of course, but there’s some applicable concepts that we’re still trying to understand and work our way through.

SIMON: So one of them is an NFT as a membership token for rights within a loyalty program.

SIMON: And we see some of those have some legs, we haven’t seen anything scale, of course.

SIMON: And these are new applications of things that didn’t exist before.

SIMON: It’s not a better version of something that exists today.

SIMON: These are new applications.

SIMON: And we’re trying to work out, as the rest of the world is trying to work out what these are.

SIMON: But we have seen some real applications of the real play before they were called NFTs, but these are digital assets.

SIMON: And Block V is a company that works with Ben & Jerrys and Ben & Jerrys for, I think perhaps their 10th anniversary, one of the anniversaries in Australia launched what they didn’t know was an NFT, but it was an NFT, which was a virtual twin of an ice cream.

SIMON: And with your phone, you could head to the beach and you could find an ice cream.

SIMON: There was only one and it was unique.

SIMON: And you could take that ice cream into a Ben & Jerrys store and get a free version of the real version of that ice cream.

SIMON: There’s a beer version in Australia as well.

SIMON: And in that instance, we’re seeing them work very well.

SIMON: We know Vodafone have done very similar work in London, doing exactly the same thing, being able to find PlayStations and so on and convert them into the real thing.

SIMON: So those are real, but the minor problem with them is they’re not royalty.

SIMON: Those are acquisition or advertising.

SIMON: Those are bringing people in the front door.

SIMON: Of course, you’re going to get a name and an email address to go with whatever it is that you’re doing.

SIMON: But we do like those ones because those are real and you can point to how it might perform rather than having to bet very big on something that hasn’t played out yet.

PAULA: Yeah.

PAULA: That’s super fun.

PAULA: Yeah.

PAULA: And I’m smiling to myself because beer, ice cream and PlayStations, I mean, you know, absolutely.

SIMON: Maybe it’s the category and not the NFT.

PAULA: Exactly.

PAULA: Exactly.

PAULA: I mean, it doesn’t sound very affordable or scalable, but it’s definitely, as you said, it’s a publicity driver.

PAULA: It’s a word of mouth.

PAULA: It’s fun, but a gamification.

PAULA: So great stuff.

PAULA: We’ll definitely have to stay in touch and follow up.

PAULA: I’m sure there’ll be plenty more next time we talk, Simon.

PAULA: So listen, is there anything else that I haven’t asked you about as yet, Simon, that you think is important in terms of new ideas, new propositions or anything that’s exciting you that we should talk about?

SIMON: I think, Paula, we’ve covered all the ones that are making the most sense to our team at the moment.

SIMON: Thank you.

SIMON: I’m sure there’ll be another one tomorrow, though.

SIMON: So I’ll let you know because they’re appearing every day.

PAULA: Absolutely.

PAULA: Yes, yes.

PAULA: Well, we do follow each other very closely on LinkedIn, Simon.

PAULA: So I’ll certainly be paying close attention and it hasn’t when anything just pops up.

PAULA: We’ll make sure to get you back on the show.

PAULA: So, with that said, I want to say a huge thank you, Simon, again, for coming on at such short notice this week after all of your travels, sharing all of your wisdom and insights.

PAULA: Where’s the best place for people to find you?

PAULA: Is it LinkedIn if they want to connect with you?

SIMON: Yeah, as always, as with you too, I suspect, Paula, LinkedIn is the best place to go and you’ll find links off to our various websites and benches there.

SIMON: So if we can be useful, we’re very happy to.

PAULA: Great, and I’ll make sure to link to both Beyonde and to your own personal LinkedIn profile, of course, in the show notes.

PAULA: So with that said, Simon Rowles, Managing Director at Beyonde, thank you so much from Let’s Talk Loyalty.

PAULA: This show is brought to you by the Australian Loyalty Association, the leading organisation for loyalty networking and education in Asia Pacific.

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