Paula: Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals. I’m Paula Thomas, the Founder and CEO of Let’s Talk Loyalty and also Loyalty TV. If you work in loyalty marketing, you can watch our video interviews every Thursday on www.loyalty.tv. And of course you can listen to our podcasts every Tuesday, every Wednesday, and every Thursday to learn the latest ideas from loyalty experts around the world.
Today’s episode is part of The Wiser Loyalty series, which is hosted by our partners, The Wise Marketer Group. The Wise Marketer Group is a media education and advisory services company providing resources for loyalty through The Wise Marketer Digital Publication and The Loyalty Academy program that offers the certified loyalty marketing professional or CLMP designation. I hope you enjoy this weekly podcast, The Wiser Loyalty Series, brought to you by Let’s Talk Loyalty and The Wise Marketer Group.
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Aaron: Hi, I’m Aaron Dauphinee, CMO of The Wise Marketer Group and one of the two hosts of The Wiser Loyalty Marketing series. I’m here today with my partner, Bill Hanifin, who’s our CEO. Hi, Bill.
Bill: How you doing Aaron?
Aaron: Pretty good. Thanks for asking. It’s been a while since we’ve been together, so it’s nice to see you again.
This is somewhat of a special episode for us since there are actual five weeks of the month in April and we’ve been covering key success factors, one of our courses in the Loyalty Academy CLMP curriculum and it’s a bit by serendipity that we’re going to be able to talk about this particular topic because we’re adding new content to our courseware as we go through a bit of a refresh of the core curriculum over the next few months.
And so this, today’s topic will be a little bit around that kind of design. So, I’m looking forward to the conversation. A little bit on us. We’ve been both been on assignment recently. I was in Dubai at the Loyalty Connect Dubai conference and also at a client event and Bill was at a client event in the US and this is just literally last week. So we’re doing this fairly current to the time period. And today we’re going to do a bit of a recap on some of the constructs from those events last week.
But just real quickly before we do that, for those of you tuning in for the first time or simply as a reminder for those of you who come and follow us each week, this series introduces constructs from our Loyalty Academy course curriculum that we find interesting. And then we hope that listeners will become wiser on loyalty. Every month, we tend to tackle a construct from a new set of course curriculum. And throughout this month, we’re talking about, as I mentioned already. Key success factors for logic programs, which is Course 112 of our curriculum. We won’t be covering all of the content obviously for that course, but we’ll cover off the four plus have already happened in this special edition to ground out thoughts for key success factors in April of this month.
So without further ado Bill, as I mentioned, it’s been a, it’s been a few weeks since we’ve actually seen each other. And so I don’t think we’ve actually spent this much time apart. Have we in a while? I don’t know.
Bill: Actually. Yeah we’ve had a few time zones between us, but you know, the interesting thing is when we compared notes before the episode, we were ended up talking about kind of tangentially, at least the same topic, right? We were talking about kind of bringing loyalty up into the C suite and then what concerns CEOs. I know you gave a talk in Dubai about what keeps CEOs up at night.
Aaron: Yeah. That’s exactly right. So why don’t we why don’t we venture back and forth about those two things and I’ll let you go first since I did the intro today.
Bill: Yeah, you know, I think I told you I’ve been reading a book about Excellence as a CEO and it’s interesting. I think, I don’t necessarily think you have to be a CEO to be interested in reading the book. It’s a good business book for any business person, whatever your title, if you’re leading a company
line of business or you’re leading an entire company or something like that. But there was a lot in there about what were the common traits that CEOs had among them and regardless of business.
And I think one of the things that always comes to the top that I’ve noticed is focus. Like, there’s an uncanny ability and commitment to focus on behalf of the people that lead and it’s, and kind of going with that is that whole idea of being able to say no capably and without guilt. Right? And we’ve talked about that a lot in our businesses. You know, you can be pulled many, many ways. And with the, you know, with just the pressing needs of everything from clients to LinkedIn posts to having to get content out, you know, you can feel like you just can’t say no to anything because you might miss out. And if you miss out, oh, my gosh, I’ve fallen behind. So all those sort of things come to mind. And and so it’s interesting.
So now think about here we are in this customer loyalty business. And we’re trying to connect with the CEOs that we’re talking about have this like overtaxed, you know, the demands on their time is way beyond what you would consider reasonable for a normal human being. And then here we are trying to get them to pay attention to a customer loyalty initiative.
And it’s not the easiest thing to do at all, but I wanted to ask you. I think you focused on five and we don’t have time to go into all of them, of course, but you focused into five general areas, like big buckets of things that would keep CEOs up at night. Do you want to just tell me what they were and then maybe we could dig into one of them or something?
Aaron: Yeah. I mean, I mean, I wasn’t coming at it a little bit slightly different in terms of my focus, I came at it from the perspective of there’s a lot of things keeping CEOs up at night. You know, the I would say that the National Sleep Foundation, and that’s out of the US, but it’s relevant for anywhere in the world, says that the average adult gets about seven hours of sleep in order to feel rested. Like, that’s what they need. And, you know, we’ve always been long told to like the importance of getting a good sleep, but for executives, it’s just not in the cards. Right?
And CEOs, they aren’t really that average, you know, they, so I’ve heard it not to be uncommon, like, I mean, even yourself as a CEO, maybe four nights per or four hours per night. Like it’s pretty minute in terms of what they get, you know, whether it’s focusing, as you said, on those day to day responsibilities or these larger scale, higher mindshare type of ideas that they’re really formulating around strategy and whatnot. And so, you know, for me the conversation really stemmed from actually talking about things that were top of mind for them.
That came out of a McKinsey piece that was called What Matters Most, the Eight CEO Priorities for 2024 was published in December, 2023. And they published this report for a couple of years now, I think since like 2021. And it was, you know, top line things, you know, generally speaking, I kept people up and you can think about them off the top of your head, you know, whether it’s the fallout of the global pandemic and all the PTSD that we shouldn’t laugh about that, that we all kind of have in some regard or some, some shape or form busted supply chains and the impacts of those the irritants, I guess, that come with stubborn information or just, you know, economic inconsistencies around the world, and then I won’t even get into any commentary around geopolitics, politics in general that just are burgeoning out but those are the type of things, and McKinsey had eight.
But what I went into is I went into five of them that I thought that were a little bit more links, stronger linkages into what we do in loyalty. And the first was around customers, which, you know, as we think about this bucket, it’s about, you know, how do I acquire, how do I engage, how do I get them to advocate on my behalf of my brand? Innovations was the next one, which is really around product service design and enhancing experiences for my customers to make that stickiness to them much stronger.
The third was revenue and growth, which is ultimately comes down to, like, how do I make money and talked a little bit more about the drive or the lean in as you will to getting to a profitable view of your customers. So it’s not just enough to say how much money am I making from them, but now, like, how profitable are my customers? Because that’s possible with the technology and the. And the information that we have around customers today.
Fifth I’ll go a bit out of order of what I think I did in Dubai. But the fifth was people, which is employee retention and recruitment and overall satisfaction and wellness. You know, we all plays a role there in terms of rising up both for our third party vendors who are selling on our behalf, but also our own employees.
And then the last, but not least was a market valuation. Which I think some people would go, wait, how does loyalty connect to market valuation? And there’s been a lot of, a lot more conversation around that. And so the nuances of, you know, what are the things that loyalty can do both, you know, little loyalty, like the programmatic elements and large L loyalty, the more experiential that can start to impact a, the valuation of a company. And so, I don’t know, which one do you want to dive into? I think the market valuation might be the kind of one, but.
Bill: Yeah, market valuation grabs my attention. I’ll tell you why, when I was very early in my consulting career, and I didn’t have the classical training and consulting. I sort of picked it up as a second career. So I was learning from others as I was there.
And I remember people saying, Hey, nice presentation, but where’s the money slide? Money slide. Oh, you mean the person who’s sitting the farthest in the back of the room? Who’s giving us the least amount of attention. Who keeps asking where the executive summary is, also wants to know why am I sitting here? Where’s the money? Like what, why is this important to me? Because I have 14 other initiatives that people are asking me. You know, for budget support on and show me the significance of this.
And so it, it’s really interesting to me because we’ve been able to show and, you know, the best source of this information is probably in publicly disclosed information that you can, you do see quite a lot of companies that will disclose some attribution of loyalty program to to profit or percentages of revenues or the, you know, you know, the size of their customer universe that participates, there are lots of numbers there. But I think it’s really key to, to be able to somehow distill everything that you’re talking about in terms of strategy to a group of people and be able to demonstrate to the CEO why it’s worth sitting through the meeting.
This is, and so let me ask you before I throw it back to you. There’s two things. Why is it worth it? But then, you know, there’s a this element of proof, which I’ve always noticed that there’s attribution because the first question that usually comes back, even if you say we’re going to have 10 million net contribution margin from this program. Then, you know, there’s a question about attribution. Well, I’ve got three other really significant marketing initiatives going on right now. How do I know that all that really is attributable to the loyalty program? So it’s challenging.
Aaron: Well, I think it is challenging. I think that’s where we trip ourselves up. Sometimes, as we say, we started to get to what we have to attribute all of it. And the reality is just knowing that some of it is attributable to loyalty program and the efforts that around it is where we need to land for now, at least. And what we’re seeing more and more is that Wall Street and then the other you know, powers that drive economic value, or at least market value for companies in the world are starting to reward those companies that kind of have three things in mind, or at least two of them.
And then the third one’s a bit of a bogey. And depending on what the end goal is for the business. The first is around, you know, being rewarded for knowing your customer valuable, you know, the repeatability, the tenured elements of knowing a set of customers that have been around for a long time. And then, as I said, moving beyond just revenue into that level of profitability and we can track that now through loyalty programs.
I mean, it requires some of our finance team to readjust that. It makes them and process changes. But the reality is that we can get down to that profit level on a customer. If we so choose, it takes it takes some work. I’m not trying to be light of the fact, but that is that there are brands that are, they’re able to do that. And they’re being awarded for that.
The second one is really around data asset monetization, right? So we all know that data is a valuable resource and being able to take that and start to utilize and make adjustments so that you can affect consumer behavior change positively for the brand you know, is being a rewarded as well, too. And it’s not just a function of, you know, those who have a loyalty program that can do this. There’s Big L loyalty where some brands have that, but that data asset is still becoming a value to organizations, irrespective of whether they run a full fledged traditional loyalty program, or if they’ve got, you know, much more of a brandy esque type of view of this, where they’re, you know, enacting the ways in which loyalty programs act upon, but using it from the data information perspective and just they don’t have a currency per se.
Bill: Right, right. So you know what? So in the meeting that I was in, as you were a couple of time zones apart from me, there was a statement made that data should be the outcome of loyalty, and we always traditionally, obviously, we talk about behavior change, but, and we know a lot of companies that have built business cases around the data asset that they’ll be building. So it’s interesting just to tag onto what you were talking.
Aaron: Yeah, I think with the regulations that are coming into place and having that permission to be able to utilize that data. You know, otherwise, you know, you can’t collect it if you don’t have a really good reason as to why you’re utilizing it anymore in certain jurisdictions. It’s not everywhere, but certainly that’s probably the momentum that we see of where we’ll end up. And then as individuals consumers become much more savvy, I mean, they already have come leaps and bounds in terms of the savviness of their data and the worth to brands. There’s gonna be a point in time where they probably come to a point that says, Hey, I wanna make sure that I know this and utilize this.
And I start making concerted choices as to which brands get access to my data. We see this in Gen Z and the younger millennials of being very open ’cause they’ve always known loyalty. They’re willing to provide data to brands. Up until the point is which the brand doesn’t provide them value back and then they cut them off. They’re very sharp and quick to do that. So, you know, it’s one of those things where this data asset has a monetization, whether it’s the front or the back is what you experienced. The point is that there was some gold in that data asset and then. I guess the last thing I’ll say here is just a really a question that we sparked, and this is not all of the reasons that loyalty programs are adding to market value. This is just some of them.
The third one is a time held truth in terms of some industries of if you’re building the actual program to be about CLTV or customer lifetime value, of course, in Akron, that’s never ideal then that’s one thing. But if you’re also building it to be run its own P&L and eventually be spun off. We’ve seen some success stories with doing that, particularly in the airline and hospitality industries as a whole. And as you think about the new industries or the newer industries that are getting loyalty now, the hypothesis is, you know, at some point if there’s some economic downturn or you know, stifleness in, in those particular sectors.
And they have a full P&L that’s been built that way. Could they spin it off to be its own unit and run independently while the business goes into maybe some bankruptcy and comes out to reform itself and reshape? I don’t know. We’ve certainly seen that happen in, like I say, in airline and others. Could it happen in other sectors? It’s just a hypothesis, but the point being that there is a path to means to suggest that multi does add market value to an organization. So I guess I’ll leave it at that. What do you bring us home?
Bill: Well, I agree with you there that what I would say is that the case that you were just making is exactly the case that I would make to the CEO and why I would say that loyalty can’t if you allow it to reside in the marketing area, you’re really missing an opportunity.
So if you consider like the connected commerce, the unified commerce aspect of loyalty, now that we have to include, you know, cross functional business leads across an entire enterprise to really make it work correctly. And then you’re building value in a very special part of your customer portfolio. Hopefully that becomes the majority of your, you know, your overall customer portfolio. But if that’s the goal, and you’re also telling your shareholders that you’re intended to become a customer centric business, then those two things taken together. The sum of the parts really do become more than a single element.
So while we know to get through the meeting and survive, we have to be able to put a number on a slide and say we’re going to get x from this program in a certain amount of time. I think that it’s really incumbent upon us now to make the bigger case. And I’d rather be making the bigger case and welcome kind of the pushback and have somebody say why, and have the opportunity to explain why because if we limit ourselves just to talking about, well, the loyalty program is going to produce a number, we’re missing an opportunity.
Aaron: I think we’re missing the boat. I agree with 100%. Right? Yeah. So, that’s tie off there. And I thank you so much for your thoughts, Bill. I’m glad it’s glad to be back. We’ll be back next month with rewards and redemption experiences as the next take for our course that we’re covering in the month of May.
Bill: Great topic.
Aaron: So thanks everyone for sticking with us. And as Bill always says, stay loyal. We’ll talk pretty soon. Bye now.
Bill: Okay. All right. Bye everyone.
Paula: This show is sponsored by Wise Marketer Group, publisher of The Wise Marketer, the premier digital customer loyalty marketing resource for industry relevant news, insights, and research.
Wise Marketer Group also offers loyalty education and training globally through it’s Loyalty Academy, which has certified nearly 900 and executives in 49 countries as certified loyalty marketing professionals.
For global coverage of customer engagement and loyalty, check out thewise marketer.com and become a wiser marketer or subscriber. Learn more about global loyalty education for individuals or corporate training programs at loyaltyacademy.org.
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