#297: The Epsilon Loyalty Index - Consumer Loyalty Insights for Australian Brands

The “Epsilon Loyalty Index” is a superb new loyalty study from our friends in Epsilon, showcasing a holistic new way to measure the relative loyalty of consumers for leading brands in Australia.

Eugene Yap, Head of Consulting, Strategy, and Analytics at Epsilon shares the fascinating findings of the first edition of this proprietary work.

We discuss their key findings in each of the four categories Epsilon has researched – beauty, apparel, grocery retail, and the banking sector and discuss the key drivers of loyalty and what matters to customers in each of these verticals.

Listen to hear Epsilon’s perspective and the exciting insights from this Australian consumer research which will serve as a benchmark for Australian loyalty marketers in the years to come.

Show Notes:

1) Eugene Yap

2) Epsilon Loyalty Index

Audio Transcript

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

This episode is sponsored by Epsilon. Today I’m delighted to announce a unique opportunity, for one lucky listener of Let’s Talk Loyalty to enjoy a complimentary workshop with the loyalty experts at Epsilon. One brand every month will have the chance for a unique, independent loyalty lab, a review of your loyalty program, where Epsilon will share their expert ideas, how to drive your program’s performance to a whole new level.

This workshop is a powerful way for you to measure and then increase the return on your investment in your loyalty program. So to apply, head over to letstalkloyalty.com/epsilon and enter your details.

Hello and welcome to episode 297 of Let’s Talk Loyalty. Today we’re learning about a superb new loyalty study from our friends in Epsilon, showcasing a holistic new way to measure the relative loyalty of leading consumer brands in Australia. This research is called the Epsilon Loyalty Index, and today’s interview explains how the underlying drivers of loyalty are shaping both consumers attitudes and of course their behaviors.

We discussed some of the key findings and each of the four categories researched with this proprietary methodology. Beauty, apparel, and grocery retail, as well as some learnings from the banking sector. I hope you enjoy my conversation with Eugene Yap, who is Epsilon’s head of strategy consulting and analytics for the Asia Pacific region based in Singapore.

And if you’re interested in hearing more about this Australian brand research, we have a dedicated website and podcast for you to enjoy. Simply head on over to www.epsilonloyaltyindex.com, where you can download the report and listen to the dedicated podcast of insights.

Paula: So first and foremost, Eugene, welcome to Let’s Talk Loyalty.

Eugene: Yeah, thanks for having me.

Paula: Super excited to talk to you today about the Epsilon Loyalty Index. Um, it’s a really big piece of work and a very impressive initiative. Uh, before we get into, um, I suppose even explaining what that report is, as you know, we always start this show talking about our favorite loyalty programs.

So I will ask you, first of all, Eugene, what is your favorite loyalty program?

Eugene: Yep. Thanks Paula. That’s a great question. So, well, since I just took, uh, Singapore Airlines, uh, just a couple of days ago, I would say KrisFlyer is top of mind, and I think the reason why it’s a great program for me is because the whole Singapore Airlines brand experience is so embedded into the program. It’s such a solid, uh, proposition as, as a brand that it, you know, people really aspire to the program, right? It really kind of drives behaviors and drives connection, uh, with the brand. Mm-hmm. . The other thing I love about KrisFlyer is that, you know, even though they’re doing so well, they have not stopped innovating. So I believe they’re one of the first, uh, programs or airline programs to actually, uh, kind of put their app on the block chain.

Paula: Wow. Cool. Oh my goodness, . Yeah. It, it’s been something that so many people have talked about and we’re all struggling for, for the use case and, and the execution. So sound like KrisFlyer or are way ahead of the pack.

Eugene: Yeah, they, they’ve done it.

Paula: Wow. Great. Well, you’ve added, uh, I suppose more, um, intention from my side of being, talking about having KrisFlyer on the, the program for a long time.

So we’ll certainly make sure to, uh, to reach out to them and do that. So anyway, back to our Loyalty Index. Um mm-hmm. . I know there’s an awful lot of focus from an Epsilon perspective, both in Asia Pacific and specifically in the Australian market. So you’ve invested in this incredible, comprehensive piece of research.

Mm-hmm. , which is really to understand exactly what’s going on in terms of consumer perceptions of loyalty in Australia, which I think we all know is a very mature market. So tell us a bit about the Loyalty Index, Eugene, which I know you’ve been leading, and where did this idea come from to, to do this research?

Eugene: Yeah, tha thanks Paula for the question. So I, I think there are a lot of studies out there that go out and ask, uh, consumers, what they’re looking for in a loyalty program. Um, but we, you know, we are not sure if that really answers the question of what is driving, true loyalty, right? Among consumers. I think, you know, that we, we felt that those studies are quite lacking to some extent in, in terms of really, uh, quantifying, uh, how some of this loyalty drivers actually influence, uh, behaviors.

Um, so the, the Epsilon Loyalty Index was really designed to answer three questions, right? The first is, how do we begin to measure true consumer loyalty, right? Um, uh, what, what kind of behaviors, uh, do we define as loyalty, right? Um, the second question that we wanted to address was what kind of attitudes then predict, uh, those behaviors?

Mm. And, and lastly, how can we influence those attitudes, right. So that’s in a nutshell what we are trying to do with the study. Mm-hmm. , and of course the, the, the intention is to create some kind of a quantitative benchmark, uh, that brands can track themselves against overtime.

Paula: Yes, Yes. That’s a brilliant explanation. So thank you for being so succinct. What I also really liked about it as well, Eugene, is the fact that you do plan to do this on a recurring basis. So we’re obviously launching the very first Epsilon Loyalty Index today for Australia, and then the plan I know is. You know over time that this will be repeated.

I’m sure it’ll be like an annual basis, but brands can actually measure their performance, as you said, on the key drivers, the key attitudes, and ultimately the behaviors.

Yep. Yep. Okay. So tell us exactly where did you focus your attention, because it’s a busy world out there. Uh, lots of different sectors, lots of loyalty programs. As we’ve said, Australia’s incredibly busy from a loyalty perspective. So what is the Loyalty Index focusing on in terms of consumer attitude?

Eugene: Right. So I, I think for this pilot study we’re focusing on, uh, four categories, uh, apparel, beauty, uh, groceries, as well as, uh, consumer banking.

Paula: Okay. Okay. So we’re gonna get into a bit of detail on all of those.

Um, I also really liked that you, you’re splitting down, I suppose, two different types of loyalty drivers. And I just would love if you would explain this, Eugene, this idea of fundamentals versus accelerators because again, there’s different languages, um, I suppose internationally as well. But will you just talk us through what does Epsilon decide or define as a loyalty fundamental versus a loyalty accelerator? As we get into looking at these four verticals.

Eugene: Yeah, I think that’s a great question, Paula. So in conceptualizing this study, uh, we wanted to move away from the narrow concept of, uh, kind of this looking at loyalty programs, right? We would really wanted to understand what are all the drivers of, uh, behavioral loyalty among consumers. And, and we believe that goes beyond the loyalty program is the entire brand and customer experience. And so some, we, we believe that, uh, in order to develop this model is essential for us than to look at some of the fundamentals or, or basic, uh, drivers of loyalty like price, place, product, service, uh, and promotions.

Those fundamentals of marketing and customer experience that will certainly, uh, impact, uh, behavioral loyalty among consumers, right? Mm-hmm. , and then we can layer, uh, on top of that, those, uh, potential levers that we can, uh, use to further accelerate loyalty, right? Things around rewards, incentives, um, around, uh, education and recognition, right? Things, typical levers that we have, uh, in a loyalty program.

Paula: For sure, for sure. And given the amount of detail, I guess we should immediately let people know, Eugene, that this is all available to download in a beautifully packaged presentation. So we’re not expecting people who are listening to the show today to, uh, to capture all of that immediately because there is a lot of thinking going into it.

So we’ll be talking through exactly how to get access to this Loyalty Index as we go through. Um, So, So that’s super important. The other thing I think in terms of, you know, understanding the context, this whole idea about, you know, the various ways that you’re measuring behavior, and measuring as well attitudinal loyalty.

So would you mind just explaining, I suppose, those two kind of key sections as well for us, because. There are lots of different ways to measure loyalty, whether it’s market share or whatever. So again, I know this Epsilon Loyalty Index have has a very specific framework in order to simplify an awful lot of data into a simple number.

So will you just talk us through those particular measures again about behavioral and attitudinal uh, definitions.

Eugene: Yeah, sure. Uh, so in, in terms of measuring behavioral loyalty, uh, there are really kind of three factors that we looked at. So, one, uh, is the spending of the customer on the brand relative to their overall spend in the category.

And the other one is how long they have been buying from the brand, right? So if you look at this two, uh, factors, uh, they, they essentially approximate lifetime value of the customer, right? So those are, it’s a common way of measuring, uh, loyalty to some extent. Um, the other factor that we added in, just because in this study we’re looking at brands, um, that were cutting across, uh, multiple subcategories, right?

For example, apparel could include, uh, shoes, belts, uh, you know, shirts and dresses and things like that, and so the hypothesis here again, is that the more subcategories that, uh, consumers are buying from you, um, the, the more sticky the relationship is and, and the more loyal they are. So that, that was the additional factor that we looked at in, in addition to kind of typical lifetime value, uh, kind of, uh, factors that, uh, you know, uh, loyalty marketers tend to, to look at.

Paula: For sure. Yeah. And I do think that’s particularly important in my experience with the likes of, I know we’re gonna talk about banking, for example, so when I know I have multiple financial products with one institution, Then that stickiness is, is extremely, um, strong, I would say.

Exactly. And yes, I guess it’s, it’s less so of course when we talk about categories like apparel. So definitely important to understand, um, exactly that. And then of course, we’re gonna talk about, uh, share of mind, share of heart, and share of value as well as we go through. Yep.

Eugene: Yep. So I was gonna go there. Um, so, so in terms of attitudinal loyalty, again, we have, uh, a framework and, and this is very much, uh, kind of based on our kind of value led, uh, approach to loyalty, right? So there are kind of broadly three categories of attitudes that we’re looking at, one is share of mind. So whether you’re top of mind, uh, for the consumer, do, do you kind of drive intention to, uh, for repeat visits and whether, you know, your, your customer, uh, is willing to recommend you to others, right? So those are the three factors that we covered as part of share of mind. Yeah. Um, and then we look at some factors that represented share of heart, right? So, for example, whether they had an enjoyable experience with, with the brand, um, whether they feel that their values are aligned, uh, with the brand. And then lastly, uh, is share value. So this is in terms of whether they think, you know, the brand is, is value for money and they, they’re being rewarded for their relationship with the brand.

Paula: Yes. Yeah. And again, that definitely varies hugely by my category of spend. So, um, yeah, no, super important. And you’ve reminded me as well, Eugene, I, I do think there is so much talk about, you know, the impact of the pandemic on consumer behavior.

So I just think this is actually very timely, I guess to, to really put a line in the sand in terms of understanding, exactly where are people at now. So I think, thank God we can all kind of almost say we’re, we’re through the other side of this, um, pandemic we’ve faced over the last couple of years.

So definitely time to take a fresh look at loyalty and see exactly where, where, what people are feeling. So, tell us about the research, you know, who did you research? Um, how many of them? So give us a sense of the scale of the, uh, the Loyalty Index.

Eugene: Yeah. So for this study we covered, uh, 2000 consumers in Australia. Obviously, uh, you know, as part of the study design, we, we, we took care to ensure that it kind of represented the population in terms of age and gender and income distribution.

Paula: Okay. Okay. So broadly, representative, keep it all very simple, very straightforward to, to understand. Um, Yep. And then just talk us through the, I suppose, categories of, you know, various degrees of course, we all know that there’s so many different levels of loyalty, so, mm-hmm. , what kind of, um, uh, level would you say, or how did you classify people in terms of how loyal they may be in one sector versus another.

Eugene: Yeah, so we really kind of looked at it with two lens. One is, uh, you know, kind of a, a slightly more segmented approach, right? To, to looking at, uh, general attitudes towards brand loyalty. So for, for each of the categories that we covered, we essentially tried to, uh, ask the respondents to self-select into one of the, uh, loyalty segments. So one is what we call transactional, like people who mainly shop at a brand because of the price.

Um, the, of course on the other end we have the, the true loyalists, as we call them, Uh, people who are essentially buy from a single brand are kind of emotionally connected to the brand. And then of course you have kind of a couple of, uh, two categories in between, one is, uh, multi, uh, brand loyalists. So they’re loyal to a couple of brands and kind of switch between them from time to time. And then the last category being, um, explorers, right? So these people are not buying primarily because of price, like the transactional, uh, but they’re buying because, you know, there could be a new product, there could be some kind of new innovation from different brands, and they’re not particularly loyal. It just depends on what suits their need in context or whether, you know, it’s accessible at the point of time.

Paula: Absolutely. Yeah. And that covers the full scale then. Absolutely. So yeah. Good. That they have the opportunity to identify how they’re feeling, because again, depends, you know, my grocery spend and as we talked about our banking spend to totally different decision making processes.

Yeah. Yep. So, um, the next point I wanted to make Eugene is we are going to be intentionally vague, I think today on some of the detail in the report. And I think that that’s important probably, if you don’t mind explaining, but I guess, you know, just to set the context from my perspective, you know, it really is important that all of the brands that were featured in this study, first and foremost, I think the key point is it is the consumer perspective. Um, and of course that’s totally subjective and changes over time, but what we don’t want to do is kind of start naming brands, uh, because again, it’s the first time we’ve done it.

But this information is available, um, directly, I guess from Epsilon further down the track, um, in a more private setting. But I think today we’re gonna talk more generally about, you know, how is the category performing? So is that a good explanation in terms of, um, what we’re gonna talk through in terms of each of the brands within each category?

Eugene: Yes, paula, I think you kind of, uh, uh, kind of, uh, spoke by mind, exactly right. So I think the reason why, uh, we didn’t cover, uh, names in this study, at least in a public report, is because this is the first time you’re running the study. And, you know, we, the objective here is not to feel, make any brand feel bad about their performance.

Uh, it’s really a way to have facilitate that one on one discussion with the brand in terms of how they’re performing and how they can do better. Yeah. Um, and, and to be honest, I think one key takeaway from the study as well is the multiple pathways to loyalty, right? So what works for one brand may not work for another.

So while it’s good to know where you stand relative to, you know, all the general brands in, in the market, um, it’s more important kind of focus on your strategy and your proposition to your consumers.

Paula: Yeah. Yeah, and I love that as well, just about facilitating a discussion. So I think that is something that we have talked about on this show before in terms of the value led approach to loyalty, that the Epsilon is very much, I suppose, investing heavily and making sure that they’re adding value, I guess, to the overall thinking of loyalty marketers who listen to the show. Yep. So let’s get into our first category, Eugene. Um, we’re gonna talk specifically about apparel retail. So all of the beautiful fashion brands, I know there’s lots of trends, again, a lot of them affected specifically by, I suppose, global factors. But what did you, um, I suppose find most interesting in terms of understanding the Loyalty Index for this particular category?

Eugene: Yeah. So I think what’s interesting about apparel is that, uh, across all the categories that we have looked at is one of the highest, uh, weightage, right, in terms of share of heart, right? So this is one of the categories where that emotional connection with the brand is most important relative to say, for example, the grocery category.

Totally. Um, and I think this is, yeah, it’s important I guess for brands in this, uh, space to, to take note. I think the other one that is kind of cutting across, uh, uh, most categories, to be honest, is, is the idea that, uh, participation is, is, is quite an important, um, driver of loyalty. And the way that we’ve defined, uh, participation here is really kind of, uh, the sense of building that special community, uh, with people who buy from your brand, as well as kind of ensuring you have this kind of two way, uh, feedback, right? With the, uh, your consumers right? Un understanding, uh, what they like or dislike about shopping with your brand.

Paula: Yeah. Yeah. It’s an interesting insight, Eugene, because I think we often think with apparel that it’s, you know, it’s all about the discounts, it’s all about the sales.

So it seems to be quite different in terms of the, the conclusions you’re, you’re, you’re finding.

Eugene: Yeah, I think the other thing I will add as well is that, um, alignment to value. So for, so for consumers to feel that the, the brand, uh, reflects their values, uh, this is actually, uh, one of the most, uh, important, uh, attitudes, uh, to that predict behavioral loyalty in this category as well.

Paula: Yeah. Yeah, and I think we’ve all seen it as suppose as marketers, the importance of sustainability and as you said, values, you know, of the individual brands. I think that is something that people do feel is super important for apparel or high street retailers, as we might call it in other countries. Um, so overall then, in terms of the various brands, I know for the whole Loyalty Index there was about 40, so I’m kind of guessing there was maybe 10 leading apparel retailers in this particular category.

So was there specific, um, brands that stood out versus others? How did the whole category stack up in terms of, um, you know, the, the index overall?

Eugene: Yeah, so I think for the apparel category at this, uh, just to kind of, uh, caveat that, uh, we focus very much on multi-brand apparel companies, so retailers who are covering, uh, Yeah. Essentially stocking multiple brands, right? Uh, at their stores. Yeah. So, To be honest, uh, generally the category, uh, probably underperform. Um, you know, when we look at how some of the brands and other categories perform, right? So we, we, uh, it is the at least score that we have defined, or the Epsilon Loyalty Index score is, is between zero to a hundred. And, and most of the brands, uh, within the apparel category, were sitting kind of below 70 and just above 60.

Paula: Okay. Yeah, and I think 70 was, I suppose what, what you guys were thinking was the important kind of baseline in terms of excellence. So, So really there’s a lot of attention I, I’ve seen in the report in terms of, you know, which kind of brands reached that threshold and I think of this there, there was only two that, that, that went beyond it. So, sounds like there’s um, right, for, for maybe disruption in the apparel category, in the Australian loyalty market. If I’m, if I’m reading it correctly.

Eugene: Yeah. So just to clarify, uh, I think all the brands, uh, kind of set below 70, um, in the apparel category, but there were brands in the beauty and, and, and banking category that, that went above that.

Paula: Okay. Okay. Yep. So room for disruption, room for, um, I suppose more unique selling points and really standing out, as you said, particularly with multi-brand, because I know if it is a, you know, fashion, sometimes it can be an ex, if it’s an exclusive or maybe luxury apparel retailer, I’m sure there’s very different conclusions. So, so good to, to clarify that. Yeah. Okay, so I know you have a whole section. We won’t have time to get into all of this, but what I do think is super useful in terms of the report is you do have all of your findings and exactly what loyalty marketers can do within a particular, um, vertical, um, in order to address the opportunity and as we said, uh, make sure that they’re ready for any potential disruption coming down the track.

Eugene: Yep, exactly. So I think the power of this study is that it helps to quantify exactly, uh, the importance of different, uh, drivers of loyalty on, on, uh, behaviors, uh, consumer behaviors. And as a brand, you can then see how you stack up across, uh, this different drivers and take a very targeted approach to improving, uh, the way that you drive loyalty.

Paula: Excellent. Excellent. So tell us about the next category then. So beauty retail, uh, very aspirational category. Tell us what did you find most interesting in terms of the Loyalty Index for beauty retail?

Eugene: Yeah, so this is really an interesting and slightly unexpected finding in the beauty category. Um, so in terms of predicting loyalty, um, share of value is probably, uh, uh, probably has the highest, uh, weightage right in this category, right?

So it’s important that consumers, uh, in this category feel that you know that the products that they’re buying is value for money and that they feel, rewarded buying in this category. Yeah. Um, and I, the hypothesis that we have, uh, for why this is the case and, and the beauty category, uh, again, keeping in mind that this, uh, is for multi-brand retailers, is that, um, the, probably the type of brands that different, uh, uh, retailer stock, uh, would be fairly similar. Yeah. Uh, so to some extent it becomes a bit of that price competition, right? If I can get the same brand, uh, or product from, you know, retailer A and retailer B, then I certainly just wanna get it at the lowest price.

So what this really suggests that in this sector, firstly, consumers are a little bit more value driven. Yeah. Um, This also means that, you know, that there is that potential for, um, uh, beauty retailers to kind of create new pathways to loyalty, right? To kind of break out of that kind of price focus, uh, uh, choice that consumers are making.

Paula: Yeah, and I think that’s what we would often talk on the show a lot about. Um, you know, I suppose that shift from transactional loyalty to emotional loyalty, I think in a sector like beauty retail, and it’s my skin and it’s my, my products that are so personal and, intimate to me, I guess then the experience becomes a much bigger factor in terms of driving where I’m gonna go and buy that product, which, as you said, might be the same product in different stores.

So the decision making is um, is very much something that can be influenced, I think.

Eugene: Yep. Exactly. And, and going back to the point that, uh, we discussed around different pathways to loyalty. I mean, if you look at the beauty category, uh, things like participation, recognition, education, those are also fairly important drivers and predictors, uh, of actual behaviors.

Paula: Yeah. Yeah. And you know, I’m very passionate about the education one, particularly Eugene, because that’s, I suppose, the role that we would see that we have ourselves in terms of an industry. So I hear a lot of kind of guests on, on this show, I suppose, talking about things like content marketing and other ways that they can add value. So I think that’s something that you are, are really understanding as, as a potential accelerator, particularly in a sector like beauty, retail. Yep. Exactly. Yeah. Yeah. Super interesting.

So tell us then, with the Loyalty Index, again, with the, the threshold of, of 70 in terms of where we think a good brand could rank, where there standouts in this particular category that you discovered.

Eugene: Yeah. So I, I’m slightly more excited about this category because we have two standout brands that have performed above 70 in this category. Cool. Uh, what is interesting is that the two brands are very different pathways to loyalty are, again, kind of going back to the concept that they’re different ways to craft your proposition and different ways to drive loyalty.

Yeah. Um, and essentially in a way that, you know, the top brand and the the second brand, uh, approach loyalty is pretty much Chalk and Cheese, right? So they, they’re really kind of different pathways, um, to, to kind of drive the consumer loyalty.

Paula: Absolutely different customers, different strategies. So yeah, plenty of room for, for learning and uh, and progressing from there.

So again, I know you have lots of recommendations in terms of what the brands can do, so we’ll let people have a look at that when they see the report itself. So, moving on then to, I suppose, more of everyday services and particularly about our grocery shopping. Tell us a bit about the Loyalty Index in grocery in Australia.

Eugene: Yeah, so grocery is interesting and I mean, as we are all aware, there are a couple of big brands out there, you know, could kind of dominate the market to some extent. So, um, you know, you see a lot more kind of mouthy, brand loyalists, uh, in this category. Uh, most people buy from two or three key brands, so that’s one thing to, to, uh, take note off. Yeah. Um, I think the other thing that is interesting, uh, in the grocery category, uh, you know, generally may maybe by conditioning people a little bit more incentive focus. Um, so incentives, uh, essentially financial incentives. It could be discount rebates, points. Uh, those tend to be a bigger driver in this category, uh, compared to other categories that we have looked at.

Paula: Yeah, and I think I saw as well, Eugene, that there, there, there’s probably more propensity, let’s say, you know, by age or different demographics as well, perhaps to, to different channels within grocery retail as well. Is there?

Eugene: Yeah, that’s a good point. So I think, uh, I mean, I, I think this is not just for the grocery category, but of course, you know, in general you see the, the kind of younger generation, the millennials and the Gen Z’s kind of, uh, drifting towards social media platforms as well as influences.

Um, so those are emerging channels, uh, for, for the younger generation.

Paula: Mm. I’ll be absolutely fascinated, I suppose next year to see, you know, with the online influence, you know, really growing because I do think that’s one that’s very hard to, to measure and manage, but I do think we all know it’s extremely important to get it right.

So yeah, definitely interesting to, to see, especially in mature markets like Australia. I was looking at something in the US yesterday as well with online influence and it’s incredible how it can drive loyalty when you’ve got some of these guys with, you know, so many followers on all the various channels. So very exciting, um, and yeah, it struck me, I suppose as well, Eugene, how unexpectedly important, uh, a website and the digital content was even in grocery, because I tend to think of myself as, you know, very much an offline grocery shopper again, during the pandemic. That definitely changed. But it does seem, you know, that all of the people in this research report definitely expect that the, the website is up to date and it’s very comprehensive in terms of them doing research even before they do grocery shopping.

Eugene: That’s a great point, Paula. So I think when we look across categories like the website and app of the grocery retailer, it’s uh, one of the most important, uh, sources of information for the consumer, right? Relative to other categories. I think, as you say, may, a lot of this behaviors are driven by pandemic.

And while people traditionally, uh, uh, buy their groceries in store, I think they’re getting a lot more comfortable post pandemic in terms of buying online.

Paula: Absolutely. Yeah. Yeah. And I don’t know if people expected that to continue. Um, so again, definitely one to watch. And within, I suppose, the top 10 retailers, did you find some standouts in terms of grocery retailers in Australia?

Uh, so how did you feel about the results in this category?

Eugene: Yeah. So unfortunately in the grocery category, we only had one standout brand, so the top brand, uh, scored above 70. Okay. Um, so yeah, it, it was, uh, interesting. And, and for that brand, I think, uh, they generally perform well across, uh, all the drivers, but they were especially attractive in terms of providing incentives.

I think something that I highlighted earlier that’s important in the grocery category, uh, but surprisingly as well, education was a big driver, uh, for this brand.

Paula: Wow. Yeah, and I did, uh, another point that you guys mentioned, which I thought was important was, you know, the, the drive towards, uh, or a shift, let’s say, in terms of the types of products.

So for example, things like healthier foods, um, lower alcohol consumption as trends that were coming through as well. So definitely some interesting insights in terms of actual behaviours, which again, probably in some way subconsciously, perhaps connected with the fact that we’re coming out of this, uh, but definitely something that I think brands need to keep an eye out for.

Eugene: Yeah, for sure.

Paula: Yes. So let’s get into, uh, banking. I do think this is probably the hardest sector to get, you know, let’s say the, the advocacy. Um, you know, because so many of us, I think are quite complacent in terms of our banking relationships. I certainly am. Um, but banking definitely has its own criteria and its own behavior.

So in terms of your Loyalty Index for Australia, then, what did you find for the banking sector?

Eugene: Yeah, so it’s really interesting. So the, the, the best way that I’ll describe the situation is that it seems like a lot of consumers, uh, in Australia kind of sleep walking in their banking relationships. Uh, yeah. You know, the brands that have kind of grown up with, or maybe, you know, recommended by friends and family, they tend to stick with the, the, the brand.

So we see that top of mind or share of mind, uh, factors kind of dominate in predicting, uh, whether consumers are loyal to the brand or not. Uh, having said that, uh, that, what is also interesting is we, we see a standout, uh, kind of age segment that is exploring a lot more, right? So people in the middle age, I guess, where their needs, uh, as a consumer, um, uh, needs from a consumer banks start to shift.

Uh, that is when they’re actually open to switching behaviors, right? Uh, and potentially move to, to different, uh, banking brands.

Paula: Yeah, and I would’ve expected that to come out for younger demographics. I don’t know about you, but to me, you know, once I, you know, unfortunately got to middle age, my, my banking behavior does feel like one where I probably make the least amount of, you know, consideration of, of competi competition, for example.

So, So were you surprised it was that kind of midlife that came out as, you know, exploring, um, new opportunities in terms of new banking solutions.

Eugene: Yeah, I, I think probably there’s some major financial decisions that happen around that point of time. So we are really kind of talking around the, the kind of mid thirties to early forties where potentially you’re kind of refinancing your home, buying a new property, uh, preparing for a retirement and things like that.

So the, the new, um, kind of needs and, and they probably have a higher income as well at that point of time, right? So in terms of where to kind of invest their money, uh, thinking about insurance and things like that, does this kind of open up new opportunities for banks to kind of go in and switch behaviors.

That’s actually true. I haven’t thought about it and I’ve never worked in banking loyalty Eugene. But yes, I guess, you know, um, when I was 20 something it was very much around the current account and getting the basics in place. But yes, as we do start to think about mortgages and things like that, um, yeah, the, the point about stickiness that we talked about earlier is definitely something where I guess the stakes are higher, so you do need to think about this a lot more.

Yeah. I think the other thing to highlight as well, for the slightly younger consumers, so those between eighteen to thirty fours is that, uh, they’re increasingly open to digital only banks and, and FinTech platforms. Right? So I don’t think that’s any, It’s not surprising. Yeah. Uh, but I think traditional banks will need to kind of watch out for that, right, as this demographics become. More important in the future

Paula: For sure. Yes. I think everybody’s definitely watching that very closely. Um, and again, I suppose what I did love in your accelerator’s piece was the importance and the opportunity, I guess, for things like, as you’ve said, participation, personalization, of course, is very well known, but also education. So it does seem to me that, again, this is a sector where education can really accelerate, uh, banking loyalty, um, as distinct from other, you know, uh, competitors, for example.

Eugene: Yeah. What is interesting is that education kind of stands out as, uh, one of the top three, uh, drivers across categories. So, uh, this is just kind of signifies or highlights the importance of education as a loyalty driver. Uh, the other thing I will highlight is that for the banking sector, uh, you know, personalization has, uh, one of the higher weightage, right. Uh, compared to, uh, other categories. So, uh, it’s important, especially in the banking sector, therefore, to think about how you kind of customize your messages to different segments or even to individual consumers, uh, to ensure that, you know, whatever offers or messages you put in front of them are relevant to them.

Paula: Absolutely, yes. Yeah. And again, I think we’ve all been talking about it for a long time, but it’s much harder to actually deliver isn’t it?

Eugene: Yeah, absolutely. But I mean if you think about it, you know, banking is that category where you have this tremendous trove of consumer data, right? So the only question is, are we using it effectively, right? To drive that loyalty?

Paula: That’s absolutely true. Exactly. They can say they don’t have the information and actually it is, it’s there, you know, implicitly. Is it explicitly? No. Implicitly, I think is probably the correct word. Where again, purely your behavior will, will give all of the insights if, um, if we can mine it, uh, effectively.

So I do know that that’s something that you guys are doing more and more of actually on the, I suppose overall consulting side is to, uh, to, to, I suppose, really advise, uh, loyalty marketers about the opportunity to, um, to really look at their overall propositions quite strategically. Um, and I suppose think about the platform almost separately, once you have a really clear understanding of your data and your proposition and all of those kind of things, will that be fair to say?

Eugene: Yeah, exactly. Paula, I think you couldn’t have described it better. I think Epsilon is all about using consumer data in an effective way to drive those, you know, kind of marketing and loyalty outcomes. And, you know, the, we really want to kind of build that single view of the customer across all their different interactions with the brand, whether is it online, whether is it offline, um, could just develop that full view right of, of who the customer is and how they would like to engage with the brand and, and then kind of, uh, reach out to them, uh, based on at the right time with the right offer, you know, with the right message.

Paula: Totally, Totally, yes. And you have to have all the ducks in a row, dare I say, uh, to be able to deliver on that. So, um, super exciting times. So listen, I think that’s all the questions I had, um, about the detail of the report. Eugene, what would you say are the most important takeaways from the Loyalty Index for loyalty marketers?

Eugene: Yeah. So I think for me, some of the key takeaways, one is to understand that, you know, you know, you should think about loyalty in a holistic way, that the many things, uh, many factors that, that predict, uh, loyalty and you shouldn’t, uh, just focus on, points and rewards and financial incentives, right? So take a balance approach to influencing loyalty.

Think about share of mind, share of heart, share of value. Um, there are many different pathways to creating, uh, that loyalty. So what works for you may not work for another brand. Think about how you can differentiate yourselves, uh, from the competition. I think the third last point I wanna kind of emphasize again, is this, idea of participation and driving that sense of community, uh, with your consumers or your members, uh, making them feel special and, and being part of, uh, the brand, right? So I think that is something that has come up across all the sectors, uh, or categories that’s been quite important in driving loyalty.

Paula: Absolutely. Yeah. And I know you guys like, like all of us are very clear that there’s no such thing as the job being done, you know? And loyalty is constantly changing, evolving. It’s exactly why we spend so much time talking about it on this show. So definitely the more we can educate ourselves and get this type of research, I think that really is the key to making sure that we’re hearing, uh, exactly what our consumers are telling us, so we can earn their loyalty because at the end of the day, if they feel it, then, of course, we benefit as well as businesses. So, so yeah. I think this is, um, a phenomenal piece of work. Eugene, I know you’ve been working on it for, um, probably most of this year, dare I say, at this stage. Um, In terms of people understanding the role of this particular report, um, as I understand it, of course, there’s, um, there’s a wonderful website available, um, which is quite simply the epsilonloyaltyindex.com.

So anyone can go in and download the report and see exactly what we’ve talked through today. I think it’s fair to say. All of the, um, understanding of how the Loyalty Index has been built. Mm-hmm. , there’s also details within that. So if it is a brand that wants to understand how they’ve performed, um, in detail, they can obviously reach out.

There’s, there’s details there in terms of how to get the more detailed report. And of course then after that, I know you guys are doing your loyalty, uh, workshops, The Loyalty Labs. So, um, there’s always an opportunity to continue the conversation. I think as in when people are ready for it.

Eugene: Yep, exactly. I mean, we, we love to engage with the industry and, you know, the report that we have on the website is, uh, a quick summary of the study, but really, as you can imagine, uh, from our discussion today, there’s so much to unpack.

Yeah. Uh, and, and do certainly kind of reach out if you wanna, uh, do a bit of a deep dive into your category, understand how your brand is performing, and really kind of develop a strategy that’s gonna work for you in terms of, uh, driving, uh, customer loyalty.

Paula: Absolutely. Well, we’ll make sure Eugene, to link to your profile on LinkedIn, Of course, um, in the show notes for this particular episode. The other thing that I thought, uh, we should mention today is we are putting together an even more exciting, from my perspective, um, supporting piece of, um, information, which is an entire podcast series which is dedicated to the Australian market. It will be also called the Epsilon Loyalty Index, and we’ll be doing audio insights using exactly what we’ve learned from all of this incredible research.

So whether people want to download the report and read it, or also listen to the car when they’re driving to work, we’re going to have lots of information. So we’ll be going live with the actual podcast. It’s dedicated to the Loyalty Index as well in a couple of weeks’ time, so we’ll be making sure to let all of your customers and anyone interested in Australia know exactly how to listen to the Loyalty Index Podcast.

Eugene: Yeah. Yeah, that’s that’s great. Looking forward to it.

Paula: Yes. So much going on. Listen, that’s all the questions I have from my side. Eugene, do you have any, I suppose, parting words of wisdom before we wrap up?

Eugene: No, I would say, you know, two things. One is definitely think about the whole brand and customer experience when you think about loyalty.

It’s not just about the loyalty program. Um, the second thing, of course, go download the report on the site. Uh, I think it’s in the show notes over here. Um, and, and do reach out if you have any questions.

Paula: Absolutely. So listen, on that note, I want to say thank you so much. I know again it’s a busy trip there in Australia.

So Eugene Yap, Head of Consulting Strategy and Analytics for Epsilon in Asia Pacific. Thank you so much from Let’s Talk Loyalty.

Eugene: Thanks for having me.

This show is sponsored by The Wise Marketer, the world’s most popular source of loyalty marketing news, insights, and research. The Wise Marketer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 245 executives in 27 countries as certified loyalty marketing professionals.

For more information, check out thewisemarketer.com and loyaltyacademy.org.

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