#116: Leveraging Loyalty to Build Your Brand with Epsilon's Paul Davies

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

PAULA: I’m your host, Paula Thomas, and if you work in loyalty marketing, join me every week to learn the latest ideas from loyalty specialists around the world.

PAULA: Thank you.

PAULA: This episode is brought to you by Epsilon and their award-winning People Cloud Loyalty Solution.

PAULA: I am always delighted to have Epsilon on board as a sponsor, and particularly right now, as they were just named a leader in the Forrester Wave Loyalty Solutions Quarter 2 2021 report, with the top score in the current offering category.

PAULA: This report is designed to help you as marketeers find the perfect partner for your loyalty program.

PAULA: So to download your copy of the report, visit epsilon.com forward slash Let’s Talk Loyalty.

PAULA: Hello and welcome to episode 116 of Let’s Talk Loyalty.

PAULA: Today, I’m chatting with Paul Davies, Senior Vice President for Epsilon, Apac and Mea, based in Singapore.

PAULA: Paul’s marketing career began in the UK in the world of analytics and data, but also he spent many years on the more creative and agency side of the marketing world.

PAULA: This gives him a unique perspective on the power of leveraging the entire marketing toolkit to ultimately build brand loyalty.

PAULA: In today’s show, we discuss some innovative ideas around how loyalty marketers and brand marketers can and ideally should work even more closely together to build customer connection and trust, particularly as we evolve our businesses to reflect changing customer needs in global markets.

PAULA: So Paul, please do tell me, what is your favorite loyalty statistic?

PAUL: Hi Paul, yes, my favorite loyalty statistic goes back to my education in marketing, which I got taught very early age, a number of statistics, but one of them that really struck for me is that 5% of your customers, returning 5% of your customers, can help you generate 95% profits.

PAUL: So to me, it’s a very simple math so you can undertake on a spreadsheet.

PAULA: Absolutely, yes.

PAULA: And I’m sure you’ve run lots of spreadsheets in your time because I know you have an extraordinary background in data analytics, which we’re going to go through.

PAULA: And as we were talking about that, I was thinking that’s something that we as loyalty marketeers, I think we know it so well that we perhaps forget to remind our colleagues in our companies of exactly how powerful loyalty can be.

PAULA: So I think you’re right to bring it back to the simplest stuff.

PAULA: And yeah, if we’re able to do it on a spreadsheet and prove the point, I think it’s incredible.

PAUL: Yeah, I think it goes back to this belief that I have is that loyalty is just part of brand build, part of marketing, right?

PAUL: Marketing communications.

PAUL: And it’s an evidential point to say why it’s so essential of part of your mix that you’re actually sort of constructing.

PAUL: So yeah, to me, it makes a lot of sense.

PAULA: Absolutely.

PAULA: And I definitely think it’s getting increasing respect and recognition.

PAULA: And I was looking back at your own career, Paul, and I think you’re the only person in 1989, I think it was, who was actually maybe talking about data and analytics.

PAULA: So tell us about your career.

PAULA: There’s some incredible experience there.

PAUL: Well, I wasn’t the only one.

PAUL: There’s a lot of us actually back in the UK in those days.

PAUL: But yeah, I started my first ever project in marketing was to build a de-duplication algorithm for business to business.

PAUL: So that’s how I started.

PAUL: So it was in the sort of technology world.

PAUL: But when I came into the agency world in 89, I started actually in loyalty, sort of developing or running a loyalty program for British Telecom, BT.

PAUL: And yeah, and that wasn’t a typical loyalty program.

PAUL: It was, didn’t have points, didn’t have tiers, but very much the client viewed it as a loyalty program.

PAUL: Very much viewed it as part of the brand building efforts to generate loyalty to the customers.

PAUL: Every 12 weeks was a communication going out, educating the customer about the products and services, engaging with them, trying to get some reaction.

PAULA: Okay, so good old fashioned direct mail, hey?

PAUL: Yes, in those days, that’s all you could do.

PAUL: Yes.

PAUL: And then from a loyalty perspective, my next big foray, I did that for a number of years, was it for Holiday Inn in Hong Kong.

PAUL: I run the loyalty program from a technology standpoint.

PAUL: So they appointed us.

PAUL: That’s how I got to Wager, actually.

PAUL: I came out to run that program because we ran all the loyalty solution for Holiday Inn, the priority club as it’s called, across Apac in 1994.

PAULA: My goodness, yeah.

PAULA: So you’ve been an expat for I think about 35 years.

PAULA: And again.

PAULA: Too long.

PAUL: Not quite that long, but too long.

PAULA: Okay, for sure.

PAULA: And a lot of it actually on the marketing agency side, Paul, as well, which I think is a lovely context in terms of, I suppose, understanding clients’ requirements.

PAULA: Because obviously now on the technology side, you obviously have to build and launch, and it’s a whole different mindset.

PAULA: But I suppose the whole marketing world is extraordinary.

PAULA: Ironic, I suppose, that you’re back with the Publishing Group actually through Epsilon.

PAULA: So some incredible work.

PAULA: So do you think it’s a useful context and background to have that kind of, I suppose, client-side perspective given, you know, I suppose, how loyalty is evolving?

PAUL: Oh, definitely.

PAUL: I think I was fortunate enough to actually work on the client side before I joined the agency.

PAUL: As well, cool.

PAUL: Yeah, and then I went to agency side, and then I got into the technology area, more in the consulting sort of tech.

PAULA: Okay.

PAUL: And so I’ve sort of seen a mixture of all three, and I think, particularly on the agency side, you have to be very close to your clients and understand your clients’ needs.

PAUL: And I think that is invaluable to understanding how to leverage loyalty and unloyalty solutions to maximize their effect.

PAUL: And it’s also why I’m a big believer that it’s part of the actual mix of marketing communications that a client should use.

PAULA: For sure.

PAULA: So given that kind of perspective, Paul, and I suppose loyalty programs have been around, well, 30, 40 years now, how do you think they’ve evolved over that entire time?

PAULA: And I suppose then we’ll look at where we are now in 2021 and what’s going on at the moment.

PAUL: Yeah, well, they’ve moved on tremendously, right?

PAUL: They’ve gone from points and transactional sort of solution, program, sorry, not solutions, to much more engagement and surprise and delight and much more sort of becoming much more highly personalized as well in terms of its interaction with a member.

PAUL: So I think they’ve changed beyond recognition to some extent.

PAUL: Some of the core fundamentals are still there because you can’t walk away from that, and neither should you.

PAUL: But I think the ability now to engage with a customer or a member, have you want to praise them, is so much more powerful nowadays to be able to do.

PAUL: And so easier, more responsive, gives you much more sort of closer brand building with the actual member itself.

PAULA: Yeah, yeah.

PAULA: And you’re based in Singapore now.

PAULA: So looking after actually a fairly massive region.

PAULA: So Apac and Mea.

PAULA: How would you describe, because again, a lot of our listeners are on the US, in the UK and obviously in Australia.

PAULA: So I suppose very mature markets in many ways.

PAULA: So how is it in Singapore and particularly in Asia, from your perspective?

PAUL: Well, Singapore, sorry, Asia generally, again, there are some exceptions.

PAUL: So Australia is quite a mature market versus an Indonesia or Philippines, which may be less mature.

PAUL: They are predominantly acquisition focused markets.

PAUL: So because of geodemographics or demographics in particular, you’ve got a young population growing, coming off the land, going into cities, growing in wealth.

PAUL: Then ultimately brand marketers, the job has really been to, how do I acquire these customers?

PAUL: How do I bring them into my brand and then drive that forward?

PAUL: So a lot of marketing in Asia has been acquisition-focused.

PAUL: Clearly, the pandemic, clearly the sort of issues around data and the importance now is starting to change.

PAUL: There has been a mix of clients.

PAUL: Obviously, some clients have obviously realized the importance of data and customer loyalty and retention as well.

PAUL: But generally, that’s how they view it, I think.

PAUL: So you go, and again, different industries, different perspectives, F and CG, particularly that way.

PAUL: Obviously, we’ve got transaction data, then it’s different.

PAULA: Absolutely.

PAULA: Well, at some point, I definitely want to do a whole show on FMCG Loyalty, Paul.

PAULA: So I’ll be picking your brains on that because certainly in my mind, that’s probably one of the next big trends in terms of people recognizing, I suppose, that relationship building capability.

PAULA: But interesting to hear you talking about acquisition.

PAULA: And I guess if I was in a country with a billion people, you probably understand, okay, if I can keep filling the pipeline, I guess, it’s a really good strategy to build the business.

PAULA: But I think as you’re saying very clearly, it becomes retention to your point, the favorite statistic at the beginning, if you can retain those people, you can build your profits so much more easily.

PAULA: So great to hear you’re having those conversations with clients.

PAULA: But given, I suppose, COVID and the current situation, I suppose, how do you think clients are feeling about their loyalty programs?

PAULA: Like, do they see them as a core part of addressing, I suppose, the different behavior changes going on right now?

PAUL: We’ve seen more interest in loyalty in the last two years than anything else, to be honest.

PAUL: So we’re getting definitely more inquiries, more RFPs certainly are being run.

PAUL: And a number of things are driving that, right?

PAUL: So it’s not just a pandemic, and obviously then consumers go into e-commerce, but it’s the data challenges that are sort of now recognized with cookies.

PAUL: And they realize that first part of data is more important.

PAUL: So it’s a number of factors that are driving it.

PAUL: But yeah, you increasingly see that sort of trend.

PAUL: And I think in the last two years, it’s just accelerated.

PAUL: And it’s going across all industries.

PAUL: It’s not just a big transactional industry.

PAUL: It’s going across even some smaller ones, retail, you know, sort of many others, yep.

PAULA: Yeah, wow.

PAULA: And in terms of how it’s positioned in most of those countries, Paul, would you say, you know, in my experience, I’ve often said on the show that, you know, we always felt like a lower priority, for example, than let’s say the brand team.

PAULA: So a lot of the big budgets would go to the TV campaign and everyone was super excited and they were all off kind of shooting super sexy stuff.

PAULA: But, you know, for us in loyalty, it really felt like, I suppose, much more of a long-term customer relationship building piece.

PAULA: But again, didn’t seem to always get the respect that it deserved.

PAULA: So I’d love to get your perspective in terms of how is loyalty positioned in the clients you’re working with?

PAULA: Is it seen as central or is it more the brand teams that tend to lead?

PAUL: It’s not.

PAUL: So in terms of loyalty, it is a huge, typically owned by a separate division or department or team.

PAUL: And they have been typically separate from the brand teams or separate from the big brand teams.

PAUL: And again, there’s different structures within every organization.

PAUL: What you stand to see, I think, though, is because now the importance of first-party data, the importance of recognition of fault, how do you bring loyalty to your customers, and brand building is only one, loyalty is one part of that component.

PAUL: That’s what you’re trying to do, really, at a brand level.

PAULA: Totally.

PAUL: So I think they are increasingly coming together, but ultimately, how you do that, the organizational design you need, how it’s come to work is still in evolution.

PAUL: So if you look at our clients around the region, that’s definitely happening.

PAUL: They’ve recognized the importance, they’re putting more money behind those programs.

PAUL: But obviously it’s still evolving, I would argue.

PAUL: And in Asia, I think you’re maybe behind the curve, maybe it’s evolved, maybe potentially more, I don’t know, in the US or something like that.

PAUL: So yeah.

PAULA: Yeah, yeah.

PAULA: Yeah, no, it’s definitely something I’m hearing more and more about.

PAULA: So I think as you alluded to earlier, originally, I suppose we all started with promotional programs, direct mail and all of that kind of stuff.

PAULA: Then we all evolved through and considerably built all of our points and whether it’s gamification or whatever else.

PAULA: But increasingly, I think all of the conversations about emotional loyalty mean that, brands really needs to be involved.

PAULA: So I think what I’m hoping is to see more loyalty marketeers having bigger conversations about where they sit in the marketing structure.

PAULA: And it’s definitely not something that’s gonna shift overnight.

PAULA: But I think what we’ve seen certainly, even a couple of shows that I did in the last year or so, loyalty programs, first of all, are being seen as a strategic asset.

PAULA: I think we’ve seen that most clearly in the airline business, where certainly they’re being used to raise debt and to finance through the pandemic.

PAULA: But increasingly again, with this feedback from customers, I do think really what we want is to be more connected with our brands.

PAULA: And I think loyalty is obviously the only kind of infrastructure that facilitates that.

PAULA: So again, in Asia, do you see that opportunity?

PAULA: Do you think you have that potential?

PAUL: No, absolutely, definitely.

PAUL: I mean, because the consumer is a consumer, right?

PAUL: So how do you build a brand with a consumer?

PAUL: Okay, I mean, in part, obviously, you’ve got the recollections of what that brand means to you in your history, or you’ve got the images that it creates, all the smells, all the colors, but ultimately it’s the engagement.

PAUL: You know, if you go into a shop and you have an engagement with that particular brand or an experience, and technology can now facilitate that much easier.

PAUL: You mentioned gamification earlier now, it creates much more interactive, immersive experience with a particular member.

PAUL: So, you know, you’re seeing activities like that coming in predominance.

PAUL: And I think it will go into, for retail clients, particularly how they use retail shops to be more virtual reality, augmented reality, leveraging their customer data to drive their customers in, particularly their high-value customers, to give them that experience, which will then drive their brand preference and brand loyalty going forward.

PAUL: So I think definitely you’re seeing it.

PAULA: Yeah.

PAULA: And do you see your clients?

PAULA: And again, I suppose Epsilon around the world has some extraordinary, you know, both capabilities.

PAULA: And also what I’m seeing, I suppose, is the example of gamification, obviously, is Dell.

PAULA: We did a fantastic show about Dell.

PAULA: And I wrote an article recently as well about Walgreens, because I can see again, particularly again, maybe in mature markets where there is this potential to build almost a separate profit center around the loyalty as an asset.

PAULA: And so I think that’s an extraordinary capability.

PAULA: I did a full show about it actually as well.

PAULA: But, you know, Walgreens have developed this entire advertising group, which again, I’m not saying is absolutely right for every single brand.

PAULA: But I think what I’m hearing coming through, Paul, is that loyalty doesn’t just have the the reliance on points and prizes and the transactional stuff we’ve talked about before.

PAULA: You alluded to the experiences and there’s so much more.

PAULA: But I think the whole, you know, loyalty as a profit center is a super exciting idea.

PAUL: Yeah, and I mean, a number of companies have gone that way and even separated companies out.

PAUL: I mean, you know, and there are even as we know, like Ermarts, for example, it’s always been a separate entity with its own P&L and makes its own margins and profits.

PAUL: And a number of, you know, particularly the companies that have large scale transactional data has that advantage to do that and really leverage the program in a big way.

PAUL: Yeah.

PAUL: So, you know, but obviously that requires good design of your program.

PAUL: How do you do that?

PAUL: Well, but also and how then therefore, because it becomes such high profile to take Singapore Airlines, it really becomes representative of your brands.

PAUL: We go back to that brand discussion about how does it support, how does it work?

PAUL: How does it sort of align and build value across each one of them?

PAUL: But yeah, but going back to that sort of, you know, the actual sort of financial sort of opportunity law provides.

PAUL: I think the other thing that as new clients come into this space is the risk reward balance that you have to have.

PAUL: Obviously, with every program, there’s always some sort of element of risk as well as a significant reward.

PAUL: Otherwise, you know, totally, there’s no risk.

PAUL: Everybody just be doing it anyway, right?

PAULA: Of course, it’s too easy.

PAUL: So, yeah, so I think that’s the other equation that I think newer brands are entering.

PAUL: This is to say, well, not only do does it work with my brand, but also how do I make sure it’s actually sustainable, provides real value, generates customer lifetime value for me over the longer term.

PAULA: And would you be included in that, I suppose, strategic planning piece in general, in terms of understanding exactly, you know, at the very early stages, what your potential clients, I suppose, are looking to create?

PAULA: Like, would they bring you in to help design and structure it?

PAUL: Yes, I mean, I got examples of Telco in the region that were doing the program design.

PAUL: So it’s called program design.

PAUL: So what’s a point worth if you’re using points?

PAUL: How do partners play a role and how do you use them to maximize and generate value and leverage them?

PAUL: How do you use tiers if you’re going to use tiers?

PAUL: How do you know what is experience you want to create at the front end?

PAUL: So your whole program design is actually very broad and very sort of immersive in terms of what you have to include, so it’s something very much we’re doing.

PAULA: I’m happy to hear that because sometimes I hear that a lot of companies, I suppose, maybe underestimate the element of complexity.

PAULA: So they might come in with an idea about what the value proposition might be, but might not include their technology partners like you guys in, is it going to work leveraging your learning as well?

PAULA: I think that’s a really big opportunity.

PAULA: And I love that you’re referencing a poor airline as well, because I actually think that’s a brilliant example of where the brand is extraordinary.

PAULA: And again, their loyalty program supports it absolutely beautifully.

PAULA: And I know we talked before, Paul, about, you know, there are risks, as we know.

PAULA: I think there’s one that we share in terms of a memory of a loyalty program that went very badly wrong very early in both of our careers.

PAULA: And I don’t ever like talking about, you know, making anybody look bad.

PAULA: But I think we have to just, you know, as a caution, perhaps for maybe younger listeners who wouldn’t have been around like you and I back in the UK and Ireland when Hoover launched their famous, let’s call it promotional program.

PAULA: It wasn’t exactly a loyalty program, but I know you witnessed it as well as me, yeah.

PAUL: No, we did talk about this earlier, but yeah, no, it’s a great example.

PAUL: And because it’s so long ago, it was in the early 90s, right?

PAUL: Because the brand now longer exists, I guess we’re not damaging anybody’s reputations or smearing them.

PAUL: Not something we want to do.

PAULA: Totally.

PAUL: No, it can happen to anybody.

PAUL: There’s, there’s good examples of EMS doing, having issues, you know, and many other major brands.

PAUL: So it’s not actually just one or two brands.

PAUL: You can, again, because it is, it’s large, you typically use programs of very large scale and therefore if you do a promotion or any activity, you can have big upsides, but if you get the calculations wrong, have downsides, then it’s important that, you know, go back to that data and analytics piece is essential part of the consideration, whether you’re doing a campaign or you’re doing the program design, it’s got to be all the way through the process.

PAULA: For sure.

PAULA: Yeah.

PAULA: And I’m not the analytics side as well.

PAULA: So Paul, I always kind of really do kind of need somebody who’s totally geeking out on that stuff so I can go and get creative, because I do believe loyalty can be super creative.

PAULA: But yeah, the Hoover example, do you want to just tell listeners exactly, I suppose, how it was intended to work and how it unfolded?

PAULA: Yeah.

PAUL: So Hoover, for people who don’t know, is a vacuum cleaner manufacturer back in the UK.

PAUL: I think the US based as well.

PAUL: I think I’m not sure exactly which countries are in, so they manufactured Hoovers or vacuum cleaners.

PAUL: And they basically were struggling at the time in the 80s.

PAUL: They had a poor sort of period of sales and performance.

PAUL: And they came up with a promotion idea with a travel agent to offer two, if you bought a free vacuum, you could get two free flights to the US.

PAUL: And I know this is where you want to dive in, because you’ve actually sort of went to Bolton at Hoover, I think, so to do that, and the problem is they got such a big response, which they couldn’t cope with and overestimated that they couldn’t fulfill it.

PAUL: They also tried little tricks and treats to sort of, not tricks, treats, little tricks to get away with it, which also backfired on them from a customer service perspective.

PAUL: So yeah, it was a bit of a disaster.

PAULA: Yeah.

PAULA: And in this day and age, obviously, you know, everything can be magnified if you do get it wrong, because obviously social media does amplify everything.

PAULA: But you’re absolutely right, the end, the proposition was extraordinary.

PAULA: And again, as loyalty professionals, I think what we typically focus on is, you know, first of all, you know, can we drive engagement, you know, the concern about, you know, under redemption.

PAULA: But equally, I suppose there needs to be absolute peace of mind in terms of the risk of over redemption.

PAULA: So clearly, that’s what Hoover got wrong.

PAULA: And yes, I will say, I actually went out and I bought two Hoovers.

PAULA: I didn’t just buy them and I clearly didn’t need two Hoovers in one house, Paul.

PAULA: So and so it is an amusing example, huh?

PAUL: It’s very amusing.

PAUL: Yeah, there’s actually I was reading up a little bit before this call.

PAUL: And there’s a good example of a guy in northern England.

PAUL: He bought a Hoover and was to get the free flights.

PAUL: Unfortunately, the Hoover broke down.

PAUL: So he got a service engineer to come out to repair it.

PAUL: And the guy was saying, well, why have you bought this Hoover?

PAUL: He said, I hope it’s not for the free flights because you’ll never get them.

PAUL: So he decided then to say, OK, well, I’ll make sure you don’t get home very well.

PAUL: So he stole his van from him.

PAUL: So anyway, another little anecdote.

PAULA: Another aside, yeah, yeah, I thought you were going to say he returned to the Hoover and got a refund as well as the free flights.

PAULA: Yeah, yeah.

PAUL: Made the customer service guy pay back for him.

PAUL: So, yeah, that is factional.

PAULA: But yeah, but on the I suppose again, back to the positive side of the brand story, Paul.

PAULA: And one, I suppose, I think is probably my favorite example.

PAULA: And I don’t know if you’re familiar with this program at all, actually.

PAULA: But it’s called Vitality by a company called Discovery in South Africa.

PAULA: And I’m dying to get them on the show.

PAULA: So if anybody’s listening from Discovery, please do contact me because I’m dying to do a full show on it.

PAULA: I have talked about it before.

PAULA: But I think the most extraordinary example because, first of all, I don’t always think South Africa gets the recognition it deserves in terms of how mature it is as a loyalty market.

PAULA: But I think what Vitality did was really start with this whole, I suppose, it was a business model as well as a loyalty model, I would say.

PAULA: So I think it’s this opportunity to say, look, how can we build the business to be loyal to our customers?

PAULA: So it’s, I suppose, the whole mindset of loyalty, but then it just expands into everything.

PAULA: And what I particularly love about that one, Paul, and again, just for listeners, essentially, I suppose it’s a shared value model.

PAULA: So again, I’m sure you do loads of this kind of stuff, Paul, and advise all of your clients about it.

PAULA: But the whole idea that if I’m healthier, for example, let’s say I go for walks, I go for runs, then my health insurance premium should be lower.

PAULA: My claims long term should be lower.

PAULA: But really, I think in addition to the transactional piece of the typical earn this kind of loyalty, I think the Discovery brand has just exploded in terms of how it’s perceived by customers, because they feel that integrity coming through to the extent, and I don’t know if you saw it, but I think it was about two years ago, they’ve now launched a bank on the back of the health insurance company and the car insurance company.

PAULA: So I just think it’s a great example of what you’re saying in terms of building the brand.

PAUL: And I’ve actually seen Vintality advertise, so obviously they’re carrying through that whole strategy into their advertising approach.

PAUL: So I didn’t know about the bank, I didn’t know some aspects of it, but I’d certainly seen it and I haven’t actually inquired about it, but I’ve seen this strategy of what they’re trying to do.

PAUL: And it was all about that of, you know, be healthier and then you get benefits in terms of the services and the products.

PAUL: So it’s interesting to go back to that brand building, the leveraging, the loyalty aspect to help build a brand.

PAULA: Absolutely.

PAULA: Yeah.

PAULA: So what kind of things, I suppose, are you kind of talking to clients about now, Paul?

PAULA: So we’ve talked about changing customer behavior.

PAULA: I’m sure there’s a massive amount of market research going on from every brand left, right and center at the moment to see what customers do value.

PAULA: But I suppose from an Epsilon perspective, you’ve done extraordinary work.

PAULA: I know recently, obviously, you’ve got the top score in the current offering category in the latest Forrester Wave Loyalty Solutions report just in quarter two 2021.

PAULA: So congratulations.

PAULA: Actually, you must have been thrilled with that coming out again.

PAUL: No, it’s fantastic news.

PAUL: I mean, yeah, we’ve got the highest scores possible in 17 of the 28 sectors.

PAUL: So it really is an evidence of our real strength in this area at the moment.

PAUL: But in fact, we’ve actually won this award, or been in the, sorry, not won this award, but been in the actual sort of wave leader area for I think the last six years.

PAUL: So it’s not sort of just a one-off, it’s a consistent focus and dedication to loyalty in that respect.

PAUL: But no, very pleasing.

PAUL: And also supplement all the other awards that we have in the Forrester Wave area on email and database and other things.

PAULA: What is your view on email actually Paul?

PAULA: Because I do really, what I’m hearing is it’s still the most powerful communications tool available.

PAULA: And just a couple of days ago, obviously I was speaking with Persona Live, so your colleagues in the US, about lots of different things that I’m hearing coming through from having conversations like this.

PAULA: So is it the same in Asia that email is still the default and the most powerful tool that clients need to be focused on?

PAUL: No, it’s, well, it’s different by markets.

PAUL: So email is not the, maybe the only channel in all markets.

PAUL: Obviously there are some real outliers like China, it’s all WeChat.

PAUL: So you look at Marriott, which is a customer of ours, Bonvoy is a loyalty program, which is a great program.

PAUL: If you go into China, you’ll find it all on WeChat.

PAUL: It’s all within the WeChat ecosystem.

PAUL: Your points, you’re booking your hotels, et cetera.

PAUL: You go to somewhere like Thailand and you’ll find programs online.

PAUL: The line is the app, the social messaging app, and you’ll find the program actually embedded within there.

PAUL: So what we’re seeing is a lot of social messaging sort of tools and capability being used by consumers across the region.

PAUL: Email is certainly part of the mix, but it’s not the only part of the mix.

PAULA: And clients then like Marriott Bonvoy, I mean, if I literally had a magic wand, Paul, I’d love to ask whoever had the marketing budget to launch that program.

PAULA: It was just extraordinary.

PAULA: And I mean global dominance from what I saw.

PAULA: Incredible to have a client like that.

PAULA: I happened to be in Hong Kong at the time, I think when the rebrand happened.

PAULA: And again, here in Dubai, over in Hong Kong, everywhere I went, I saw Marriott Bonvoy.

PAULA: So that’s absolutely extraordinary.

PAULA: So yeah, I’m really kind of excited about the power of them.

PAULA: And I suppose tailoring by market, which again, as loyalty professionals, I suppose, we don’t need to be told to do that.

PAULA: But amazing amount of variety that you’re having to execute on in order to keep a global program to some level of consistency.

PAUL: Yeah, I mean, that’s the way of the world.

PAUL: Proliferation of channels now is really part of the mix.

PAUL: And it’s a challenge for marketers because obviously it increases costs to have you serve these customers.

PAUL: So they all want to have their own preferences and choices.

PAUL: So yeah, so it’s just, I think, just one of these things you now need to cope with and manage.

PAUL: Obviously, that’s where you can use analytics or you can use AI, for example.

PAUL: So embedded in Rtool is an AI model, which says, okay, particularly for email, when you send that email, it automatically sort of runs at the background and then helps you determine that sort of sequence of events.

PAUL: I think that’s sort of what will happen, starts to happen across orchestration, across all channels, which channel does that particular consumer sort of prefer to use?

PAUL: When should you best send it?

PAUL: How do you best do it?

PAUL: I think that’s where technology will start to play a bigger part.

PAULA: Yeah.

PAULA: And you’re right, absolutely, Paul.

PAULA: I think this whole piece around the global nature and reflecting exactly the way of the world to use your term.

PAULA: And there’s a retailer I spoke to recently, I can’t name them, but they are restructuring.

PAULA: And instead of loyalty being headquartered in Europe, they’re taking an opportunity to locate it in China for global.

PAULA: So that was really interesting.

PAULA: So I think geographically, you’re in a really good place.

PAULA: And I guess digital transformation is essential.

PAULA: But would you agree with that?

PAUL: No.

PAULA: Wow, tell me.

PAULA: Okay, controversial.

PAUL: Well, because your ecosystem in China is very different from a technology standpoint.

PAUL: So again, it depends on what that team is going in to do and what their role is.

PAUL: But I know a number of major clients, including when I was on the agency side for this client of IBM, they tried to relocate the whole regional team into China.

PAUL: After a year and a half, they realized it was too difficult.

PAUL: Now that was quite a few years ago.

PAUL: It’s changed.

PAUL: It may have changed since then.

PAUL: But I think China is such a big and unique market in its own right.

PAUL: I think it can start to dominate your team ultimately, because there’s so much opportunity or pressures.

PAUL: Well, I think if you’re in Singapore or some of the other markets, to some extent, you wouldn’t focus on the local market as much, you don’t get dragged into all of that sort of challenges.

PAUL: So I think that would be my…

PAULA: Be careful is obviously what I’m hearing.

PAUL: Yeah, I mean, I’m not saying it’s wrong or right.

PAUL: What my experience says is it will be a challenge.

PAULA: But I do follow a lot of people in loyalty, obviously, but particularly when I see stuff coming through from the Chinese market, a lot of the kind of messaging from people who are executing stuff there is around, it’s totally underestimated in terms of the complexity needed to be ready for that market.

PAULA: So again, if you’re going to build a brand on WeChat, build a loyalty led brand on WeChat, obviously you need local expertise, but again, the rest of the world doesn’t have WeChat.

PAULA: So we have to go back to our loyalty mechanics and all of our various tools in the toolbox.

PAULA: In the Epsilon toolbox to be able to build that.

PAULA: We hear a lot of the buzzwords around AI, machine learning.

PAULA: You’ve talked there about predictive algorithms in terms of knowing my preferred channels of communication, for example, which I think everybody’s getting better at.

PAULA: Well, what are you thinking are the next big things that we need to be either handholding listeners through or brands through in terms of making sure that we get these kinds of returns that we need?

PAUL: So I think, again, it will be different, I think by markets and by industries to some extent and your maturity.

PAUL: So, when we look at totally new clients coming into us, it is the latest gamification, the latest engagement, how you engage with consumer, how you bring that brand component into the engagement process and build a brand loyalty.

PAUL: In some other areas, it’s more about personalization, so it’s real-time personalization, creating that sort of agile content, providing ability to provide the latest offer, provide the latest sort of example or product to them.

PAUL: So again, it’s a little different each one, so they all have sort of their own requirements and changes.

PAUL: I don’t think there’s no, I think, Big Bang or something brand new.

PAUL: I think it’s all sort of specific to a client’s needs or challenges or where they are in their maturity of loyalty.

PAULA: And would you hear a lot about them saying that we expect this loyalty program to build our brand, or we’re diverting brand resources, or do you still hear the more traditional kind of, this is an earn and burn, we need to drive behavior change.

PAULA: Where would you say the balance is in terms of the people you’re speaking to?

PAUL: I said it’s moving out of the transactional more into the sort of recognizing it’s more of a brand program, but it’s still a journey in that respect.

PAUL: What we are seeing as well is that clients were appropriate.

PAUL: I started to realize that it shouldn’t be for one brand, but doing a cross group brands.

PAUL: So they’re doing it more group level as opposed to a sort of single, yeah, in that way.

PAUL: And then you got, again, you’ve got more variety for that customer.

PAUL: You’ve got the ability to cross sell as well as an upsell.

PAUL: So I think that also makes sense, but it’s more complex to manage internally.

PAUL: Certainly, more potentially politics because you’ve got your brand manager, his brand and somebody over there and they use the data.

PAULA: So, yeah, but you’re right.

PAULA: Consumers love it like that breadth of potential where I can, you know, reward my everyday behavior, for example, across everything I’m doing.

PAULA: I’m definitely seeing a huge amount of that.

PAULA: I know I did a show about a group-wide program in Mauritius, for example, recently and also in Hong Kong.

PAULA: So definitely a big kind of global trend.

PAULA: And again, here where I live, there’s plenty of, I suppose, big conglomerates that the master brand mightn’t be known, but they certainly are kind of creating programs and running them across multiple categories.

PAUL: Yeah, and we’ve seen that as well in the Middle East.

PAUL: It’s definitely a trend in the Middle East, sort of conglomerates coming in, looking to bring their individual portfolios together.

PAUL: Yeah, definitely, and leverage value from it.

PAULA: And the other part I’m also fascinated about, Paul, is you mentioned social messaging earlier.

PAULA: So whether brands are interested and comfortable, I suppose, with incentivizing non-transactional behavior.

PAULA: So things like if somebody is posting nice stuff on Twitter, Facebook or whatever else, is it worth rewarding?

PAULA: Are they comfortable investing in that?

PAULA: Again, given the focus away from, budgets have been spent on acquisition and now hopefully moving back into the loyalty space.

PAULA: So do you see that kind of behavior coming through as well as programs are evolving?

PAUL: Yes, no, I mean, in building our platform, it’s the ability to give points to somebody who shared something or tweeted something or whatever.

PAUL: So they get value from doing that, which is two ways of a benefit.

PAUL: Exchange, yeah.

PAUL: So it’s definitely seeing that sort of coming into it.

PAUL: I wouldn’t say it’s been the primary focus, but definitely it’s an area that’s sort of evolving more and more.

PAUL: And I think that social channels increase and become not just a messaging channel, but so you take LINE, for example, it started off purely as a messaging channel.

PAUL: Now you can do a lot more in LINE, a bit like WeChat, where you can actually have mini programs and other things.

PAUL: I think that also means you need to engage in those channels more interactively rather than just pushing, it’s not about pushing a message out, it’s about using the channel effectively in that way.

PAUL: I think that will be a big area to marketers to understand how they use that.

PAUL: I’m pretty sure things like TikTok, for example, will also be to understand how to use that particular channel, which is given its growth.

PAULA: Yeah, you’re absolutely right.

PAULA: I hadn’t thought about TikTok, so now I have another potential podcast to figure out how to do.

PAULA: But again, actually to the conversation earlier, I think what that does again, illustrates the importance of the loyalty team intersecting with the brand team to decide how are we going to message or communicate or connect and to use the simplest term in new emerging channels because clearly TikTok is one of the big new stories, but certainly not going to be the last one.

PAULA: So hopefully there’ll be more of that going on.

PAUL: Yeah, and it’s all video, right?

PAUL: So obviously before you have a more immersive experience, you have much more emotional pull potentially in your communications.

PAUL: And that’s where it becomes either a brand message or is it a loyalty message?

PAUL: And then, you know, there must be all sort of, you know, sort of merged together to some extent or share the brain.

PAULA: Yeah, I hope they’re at least starting to measure that.

PAULA: So again, I must kind of ask more of my guests coming up on the brand side, whether, you know, I know obviously things like NPS and the KPIs and all of that kind of stuff is being measured.

PAULA: But certainly when I worked, let’s say, with O2 Priority, as you know, I also started in Intel Coase.

PAULA: When we did our brand research, the loyalty program was a part of that in terms of its influence on the overall brand.

PAULA: So hopefully that’s something that’s starting to come through as well in the clients you’re working with.

PAUL: Yeah, the brand research I’ve seen, they still see loyalty as are you a member of it and how do you experience it, as opposed to saying how it contributes to the brand.

PAUL: So I wouldn’t say, I mean, I’m not saying, I’m sure the clients are doing it.

PAUL: I’ve not seen that experience of really treating it as part of the brand component yet.

PAULA: Yeah, okay.

PAUL: Hopefully that will definitely come through because I think it is an integral part.

PAULA: It is an integral part.

PAULA: And it feels to me, Paul, and I don’t know if I’m overstating it, but it feels like it’s maybe the next big opportunity because as we’ve said before, you can have all the technology in the world.

PAULA: And again, you have an extraordinary platform and you’re very proud of it and winning awards and getting recognition from the Forresters of the world.

PAULA: But I think the shift in customer expectations is, I don’t think they’d ever use the word emotional loyalty, for example, as a consumer, but I think that’s what they’re expecting to feel coming through.

PAULA: So I think brands have to show up, have to be there.

PAULA: And I think it’s that critical intersection.

PAULA: And I’ve talked about it in, I’d say, broader terms, Paul, where I would have called it maybe customer experience.

PAULA: But certainly what I’m starting to feel like now is, no, the TV budgets and those other kind of brand teams are probably people that we can get closer to.

PAUL: Yeah, I mean, if we look at what’s happened, I mean, particularly in the last 12, 18 months of the pandemic, all the research you’re saying people are looking for a deeper, more meaningful connections.

PAUL: Brands are starting to look more for purpose or authenticity, to a hand you want to describe it, but certainly more purposeful driven brands.

PAUL: And therefore, ultimately, I think you’ve got to bring those things in and loyalty can help to demonstrate some of that and become more purposeful and more authentic.

PAUL: It certainly can drive more meaningful conversations and experiences with those consumers, because obviously you have the data on them.

PAUL: So I think this sort of consumer need with this ability to sort of bring loyalty into close to the brand will actually sort of help both parties.

PAULA: Yeah, you’re right.

PAULA: Yeah, I think as consumers, we feel it.

PAULA: I think as brands, we see that consumers need it.

PAULA: And a case of just kind of coming together to leverage things in a way that is a fair value exchange and really kind of driving the overall business, but feels a bit better, feels less transactional.

PAULA: And as you said, grows overall value over the long term.

PAULA: Wonderful.

PAUL: That’s why I think it’s going.

PAUL: Yeah.

PAULA: So I think that’s a really interesting conversation, Paul.

PAULA: As I said, I get excited about any loyalty conversation that has, I suppose, a commercial focus, but also the integrity of the emotional piece coming into it as well.

PAULA: So I love the fact, as I said, that you were working back in analytics in 1989, all the way through to building extraordinary programs and running them like Marriott Bonvoy.

PAULA: So are there any other kind of key topics that you’re seeing coming through that we should just kind of chat about in terms of what the listeners around the world might learn from?

PAUL: I think this whole area of loyalty and brand coming together goes back to when I started in the industry, it’s recognizing that you have left and right-sided brains in marketing, the creative and the rational.

PAUL: And I think how you bring those together, I think is really important.

PAUL: So you’ve got to have the creative side of it.

PAUL: You’ve got to have that emotional side of it.

PAUL: But you’ve got to have this rationality about the value of the program.

PAUL: And sometimes those two don’t always connect.

PAUL: And I think also from a marketer standpoint, how do you recruit people that has those skills and bring them and get them to work together?

PAUL: Because it requires very…

PAUL: You’ve got an analytics person, which is usually a much more rational, by numbers perspective.

PAUL: You’ve got somebody who’s much more about experience or engagement.

PAUL: But ultimately now engagement can be and certainly informed by the data.

PAUL: So you’ve got to now start to bring these two together to work together.

PAUL: And I think agencies have been able to do this for a while because they’ve had analytics built into the business.

PAUL: But marketers, not so much possibly.

PAUL: And you don’t tend to have usually out and out creatives as well in marketers.

PAUL: I mean, obviously that has changed within housing.

PAUL: But so I think that there’s an interesting dilemma there for those senior marketers, how they bring that sort of skills and understanding.

PAUL: And as you’re trying to bring your loyalty program into your brand program and have the two disparate sides work in tandem and harmony.

PAULA: I like that idea, Paul, because I’ve often said, I feel like I missed a bit in my career in various things.

PAULA: I would have loved to have worked in PR and I would have loved to work in a creative marketing agency because I really do think you get permission almost to come at business objectives like loyalty, actually, and come at them with a totally different perspective.

PAULA: And you’ve reminded me of another good example, actually a show I did over a year ago now, Paul, but it was British Gas Rewards, again, in the UK and like both of us in the utility sector.

PAULA: But what I really loved about that, again, particularly was they were struggling on the brand side.

PAULA: So the whole energy sector, I think particularly the British media give it a really tough time.

PAULA: Energy prices rise and the service providers are almost blamed for that.

PAULA: But British Gas Rewards then gave them almost a new tool, a new whole set of messaging to give back and have that overall experience for the customer where they could connect, I think, in a different way.

PAULA: They have a lovely character called Wilbur, where you can just make it friendly, make it family focused.

PAULA: And actually people then see it not just as a utility and as an energy company, but they start to like the brand a lot more.

PAUL: Yeah, or they maybe not even see it as a program.

PAUL: They now see it as a figure, a representation of the program.

PAUL: And it becomes less corporate in a way and much more consumer orientated.

PAUL: I think that’s part of what Creative brings to the table.

PAULA: Yes, absolutely.

PAULA: Well, I doubt it was a data analyst who came up with Wilbur.

PAULA: So I think you never know, but I think it proves your point that we probably need to be looking to the marketing agency community to bring those into our loyalty programs to see what we can do to dehumanize it, to emotionalize it, if that’s a word.

PAULA: And yeah, really drive the feeling of loyalty, not just the overall loyalty program.

PAUL: Yeah, and I think the other thing is, again, now coming back into a publicist agency, they don’t have a loyalty agency per se.

PAUL: I mean, a lot of big agencies don’t.

PAUL: You know, they’ve been sort of the sort of domains of specialist loyalty companies in a way.

PAUL: So again, it’s another interesting sort of dynamical whether that becomes now more mainstream in an agency environment.

PAULA: Absolutely, yes.

PAULA: And I know I was looking up publicists and I know it is still one of the largest and longest established marketing and PR agencies in the world, obviously headquartered in Paris.

PAULA: So publicist does extraordinary work.

PAULA: So I think the partnership between publicist and Epsilon is just extraordinary.

PAULA: So Paul Davies, Senior Vice President for Apac Mea, for Epsilon, thank you so much from Let’s Talk Loyalty.

PAUL: Thanks, Paula.

PAULA: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.

PAULA: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.

PAULA: For more information, check out thewisemarketeer.com and loyaltyacademy.org.

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

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