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Hello and welcome to today’s episode, our first with VISA, which I know is a hugely important partner for so many of you and your programs. Luigi Marandola is Vice President, Global Cobrand and Merchant Partnership Development at VISA. And he joins me today to share his approach to partnerships with programs around the world.
We begin by reviewing some of the key success factors that program owners need to think about constantly. to ensure your card is always top of wallet for your members. He also shares his insights on some great acquisition channels he sees, particularly in the US market, one of which is definitely controversial and involves effectively leveraging the purchase path for e-commerce transactions as a key opportunity that more brands around the world can explore.
We also talk through some of the trends in co brand cards that VISA sees from its data, which is one of the largest data sets on the planet, as well as new sectors that are emerging and beginning to explore both the financial and engagement potential of co-brand cards. I hope you enjoy our conversation.
Luigi Marandola, welcome to Let’s Talk Loyalty.
Luigi: Thanks so much, Paula. Really excited to be here.
Paula: I’m really excited to finally be recording with you, Luigi. I feel like our paths have crossed many times. Your name comes up in conversations. I think we’ve probably crossed in planes and different continents from time to time, even.
Luigi: We absolutely have. And your name as well. I see constantly when I talk to partners they mention you by name. So very thrilled to finally be here.
Paula: Amazing. Okay. Well, that’s good for my ego, Luigi. So thanks a million. Brilliant stuff.
Luigi: That’s what I’m here for, Paula. That’s all about your ego.
Paula: It’s all about me. It’s all about me. Listen, Luigi, you’ve been doing some incredible work in the whole industry, I suppose, of co-brand cards and everything to do with loyalty and how it connects with payments for quite a long time now. So we’re going to get into a very exciting conversation specifically about what VISA has been doing and all of the work that you lead there with that incredible team for the co-brand.
But before we get into all of that, as you know, we have a standard opening question on Let’s Talk Loyalty, which is designed to put you on the spot and get a sense of you as a loyalty professional or as a consumer. So feel free to go whichever way you want to. So if I was to ask you, what is your personal favorite loyalty program, Luigi? What would you tell me?
Luigi: So I know it’s meant to keep me on the spot, but Paula, you did give me a heads up and I appreciate it. And I will say, I actually spent quite a bit of time thinking about this. Cause I wanted to come across as, you know, smart, like, you know, on par with the latest trends. And over the holidays, I actually spent time asking my family and friends. Like, what’s your favorite loyalty program? And no one really came up with a, an amazing answer that I thought would warrant, you know, this podcast. So, you know, I thought, let’s go back to this, what my needs are. Right. And if you think about myself as both a personal and business professional, I have two foundational needs.
The first is, there’s a lack of time, right? So I want things that are going to save me time. And the second is I travel much like yourself quite often, both personally and professionally. And so I want things that are going to make that experience sort of easy for me. And in all honesty it’s, I’m not alone. I know many people feel strapped for time and I know that a lot of folks are traveling again and actually VISA data would tell you that compared to 2019, we’re seeing 141 percent growth in travel. So, I am not unique and I am not alone. But coming back to your question, my favorite program would be the United Mileage Plus program and their family of co-brand cards.
And if you think about why they meet my needs, right? Priority boarding, priority check in, fast track security, access to the lounge. They’re saving me time. They’re making my experience easy. But I would be remiss if I didn’t talk about the fact that sort of those lines between loyalty and membership and subscription, like the different ways that loyalty is defined today, they are blurring.
And so you know, while I love being upgraded at my hotel stay, or I love it when my local coffee shop, you know, gives me, you know, some discount or a free coffee on my 10th coffee. I’m equally excited. And appreciate when someone just recognizes me and tailors sort of my perks, right? Or they just appreciate me on my birthday, for example.
And you know, the story that I wanted to share and I’m not one to talk about birthdays and I’m going to mention it a couple of times now. My birthdays are Friday. But one of the most incredible experiences that I’ve had was on my 40th birthday. I know I don’t look at Paula.
Paula: Not at all, yeah.
Luigi: You don’t have to comment, but on my 40th birthday, my partner and I decided that we would take a two week road trip. His birthday is a month later than mine. And so we went on a two week road trip across Europe. One of the stops was in Istanbul and we decided to stay at the Ritz in Istanbul because it was newly renovated.
Paula: Wow.
Luigi: I show up. I check in and they say happy birthday. And I was surprised I shouldn’t have been because I know that they’re capturing my data. But I was surprised and I was pleased. And then the general manager walks out from the office, greets me. And wants to bring me to my room, which I thought was a nice touch.
Paula: Wow.
Luigi: They bring me to my room and there I find a birthday cake and a bottle of champagne, which I thought, like they really went above and beyond. And then to top it off, Paula, to top it off, there was a personal handwritten note that said, My 40 favorite things to do in Istanbul on your 40th birthday.
Paula: Wow!
Luigi: We’ll talk about that to whoever listens, right? To family, to friends, I’m talking about it now. And for me, that is what loyalty is about, right? They had sort of that, you know, personal touch, that experience that went above and beyond. And now they have me as a customer for life, right? Cause I’m still talking about it almost seven years later.
Paula: Well. It’s definitely one of the best stories, Luigi. So thank you for sharing it. And in fact, I think I should make every guest have a story because it brings it to life. So, so absolutely a beautiful one. And as you said, seven years on, you’re still as passionate and as convinced. I don’t think that’ll ever leave you. The things that have given me that same experience, for sure. I will tell the story for 20 years. There’s no question. And I think it picks up on a couple of things that we love talking about on this show.
So first of all, that whole idea of, you know, why are we capturing data if we’re not going to use it? So like, there’s so much data in our industry and yet. so much complexity around what’s that going to do when Luigi shows up and books into one of our hotels, you know, probably 10 years after they captured that data initially. So the operational excellence that they demonstrated for you there is absolutely off the charts.
So kudos to the Ritz Carlton in Istanbul. I’ll have to put it on my travel list and thanks for sharing that. And as you said, United as well as obviously ticking a lot of boxes. And so, we’ll give a shout out to them. They were on the show recently as well. So this is a great way to kick us off, Luigi.
And again, I think as industry professionals, we’re probably a bit nerdy about it. In that we notice all of these things where they mightn’t just be obvious to friends and family, but we certainly do as a, as professionals. So, so thank you for that.
So listen, take us back to the beginning of your career in cards specifically, I know that you did, I suppose, do some amazing work. I was looking at your LinkedIn, of course, even as an intern, it looked like you were leading some huge projects. So tell the audience, how did you get started in the industry?
Luigi: Yeah. So I’m not going to bore you with my resume. I’ve been in payments for over 20 years. Within that I’ve been primarily in partnerships and sales. So almost about 15 years now. And I’ve been doing loyalty and co-branding work for close to 10. And, you know, I mentioned that cause I think it’s important and it’s relevant for the conversation because, in my opinion, partnerships and co brand aren’t essentially, they’re an extension of loyalty, right? It’s a way to deepen that customer engagement and drive that additional loyalty with a brand. So that’s sort of a little bit about me in a nutshell.
Paula: Okay. Amazing. Great. And you obviously fell in love with that. I think that’s what is amazing to me because I’ve been guilty of the exact opposite, Luigi. I’ve literally, you know, one time I’m a digital marketing consultant. Next of all, you know, I’m doing all sorts of different things. So I’ve done corporate, I’ve done small business, but you have remained, dare I say it, loyal to payment. So, so why do you love the industry?
Luigi: Honestly, I love partner work. You know, for me, it’s all about sitting across the table or alongside the table with a partner, understanding their needs, understanding their priorities and figuring out how we can help each other. Right?
And when I think about co branding specifically, what I’ll tell you is like the key to success that if you were to ask me what is like the most important thing, it is strategic alignment between partners hands down. And if you don’t have this, you will fail. You will ultimately fail. And I’ve seen portfolios fail because of that. And, you know, partners will launch co brands for a lot of different reasons, right? They’re, they might be looking for scale. They want to, you know, they’re seeking a foothold in a new target segment, or maybe they’re trying to just deepen their relationship with existing members.
Whatever those reasons are, that alignment is going to be key, right? They got to align on target segments. They got to align on what we call credit optimization. And you touched on it earlier, right? But also data sharing, right? That’s another crucial factor within that strategic alignment. And you need to have this from the start, right? You got to understand each other’s priorities. You know, this is an impact your resourcing. It’s going to impact your marketing and it’s going to drive the financial success for all parties involved. And I know it sounds mundane, but that governance is so crucial, right? Your needs are going to evolve over time, so you got to have the annual planning, you got to have the quarterly planning, you got to have the pulse checks, right, in order to maintain sort of a successful co-brand.
And, you know, again, coming back to sort of data, right, since you mentioned that we both mentioned that at the onset you know, if you think about, again, like when you’re making that credit decisioning decision, right? You may have a partner that is worried about a consumer’s credit worthiness, right?
Well, that other partner has data that they can share that can enhance it. And even we, VISA, you know, what we bring to the table, because it’s not just a partnership between an issuer and what we call merchant, but you know, VISA is also a partner in all of this. And we have probably the largest, if not the largest, one of the largest, let’s say that data sets in the world, right?
We have 4.3 billion cards, 15 trillion in annual volume. We cut across 130 million merchant locations and what this provides, I’m not sitting here. You know, boasting, but what this provides is an ability to provide our partners with those insights and those learnings in order to drive success. And so it is sitting across the table from partners and figuring out how we can do business together that has kept me in this space for so long.
Paula: I love that. Wow. Well, thank you again, Luigi. I mean, one of the things I haven’t done in my loyalty career was launch a co-brand and actually it’s something I would love to do. And at the same time, I think one of the reasons I think it would be so much fun is because it’s so exciting. It’s such a big opportunity, but is quite daunting. So I do love a challenge.
And what I love that you just said is that you’re sitting alongside people. And I do of course, pay a lot of attention to words as a podcaster. So, so I can hear that there is a very genuine commitment to how is this going to work long term. You know, because at the end of the day, nobody’s going to launch a co-brand with VISA or anyone else if it’s something that’s going to change over time for the wrong reasons. So absolutely, I love that point about strategic alignment and can see the passion coming through and hence the 20 year career.
So lots to talk about in terms of what you’ve been working on in that time, Luigi. So give us a sense of, you know, over the last couple of years because obviously here with the start of 2024, I really want to get a sense of what’s coming, of course.
But before we do that, I thought it’d be useful to take a step back. So, when we think about best practice, we’ve talked about strategic alignment, okay, at the very outset, in terms of who you partner with. But what else has VISA been doing to make sure that, you know, these partnerships are going to work? And exactly, you know, what is, you know, a good idea in terms of co-brand from a relationship perspective?
Luigi: Okay I’ll, I’m going to answer your question. And there’s gonna be maybe a little bit of a circuitous way of getting there. Right. But fundamentally, and I speak much like yourself around the world at conferences with partners at forums. And I talk about this a lot. There are four key pillars or four key best practices for co-brand success, and they sound pretty simple, right? I’m going to, I’m going to say things that you’re like, yeah, I can learn this in a one on one class, right? At any university, but it’s segmentation, it’s value proposition, it’s distribution, and it’s marketing.
And while it’s basically easier said than done, right? And so I’m gonna, I’m gonna get into each of these just briefly, right? So customer segmentation, right? You got to understand who your customers are. You got to make sure you know who you’re targeting with the card. You got to understand what your product strategy is, right? Should you have multiple cards because you have multiple segments of customers that have differing needs. And this is crucial and there’s a lot of ways to segment, right? You can do it on demographics or needs based, values based, behaviors based, right? Tiers in a loyalty program. But what I typically say is that unless you have a very niche portfolio or a smaller portfolio, like a one size fits all is not the most effective. So segmentation got to start there, right?
Then you get into your value proposition, right? What’s going to be compelling for your customers? What’s going to drive what we call in the industry top of wallet behavior, right? Getting that person to use that card every day, everywhere. And what can you as a partner bring to the value prop that is differentiated and that they cannot get that anywhere else. Cause this is what’s going to create that differentiation across against other sort of products and market. And so basic questions, you know, customer needs, what’s going to motivate them? You know, do you have relevant benefits? Like, what behaviors are you trying to drive? Like, you got to ask yourself all those questions. And then the value proposition has got to be simple, right? Like, easy to understand.
And what I typically say is that you should have three things. One, incentivize that everyday spend. I talked about that. Two, I’m gonna, I’m gonna harp on this, those unique merchant benefits, because that is how those customers are engaging with your brands, right? And then, you know, if you want to round out your value prop, you can add some new relevant benefits. And, you know, through a partnership, like a streaming service or a delivery service, something else that’s tied to that customer need.
And then the last two things, right, the distribution and the targeted marketing, those go hand in hand.
I’ll start with distribution. You know, you need to leverage all of those relevant channels to acquire and speak to your customers. And so often as I make my way around the world, partners are staring at each other saying, well, no, you should open this up at your branches or no, you should open this up and your website. The reality is you got to use all channels. And I will say something that has been controversial. When I say it, I’ve gotten, I’ve had people angrily stare at me. Like, why are you saying this? But leveraging the purchase path is the most important channel, Paula.
And I know that partners do not want to create any friction at that moment of truth, right? When a customer is going to pay, you do not want that customer to abandon the cart, to be sent to another website. And then lastly, right, the targeted marketing. Again, easier said than done, but messaging something that’s very tailored to the right customer at the right time in the right channel.
So, coming back to what’s VISA been up to? How can VISA help? Yeah. Right. Yeah. The reality is about three years ago , we created what we call a portfolio optimization center of excellence. And what that means is we have over 46 years of experience. We work with 700 programs around the world. We’ve learned a lot. Right? And what we do is we take that experience and we sit down with our partners and we help work on, right? Marketing plans, we help work on governance, we help work on all those things that are going to be crucial to the success of the program because ultimately it is in all partners interests, right?
And so that’s what we’ve been up to. We’ve created this team to sit alongside our partners and help with all of these best practices.
Paula: I mean, fundamentally, like, when I was consulting, I will say, actually, that is what used to get me excited, particularly about loyalty programs, is you can take learnings from a retailer, from an airline, from a hotel, and implement that in a totally different vertical, and have explosive results.
So with the team, like you’ve got there within VISA, looking at those 700 programs that you have built and optimized and taking those to other clients and other merchants. I think that’s absolutely extraordinary. So, so great to hear what you’ve been doing.
The other piece I will of course pick up on is the controversial one because we love a strong point of view and I definitely haven’t had that experience, Luigi. So I’m quite intrigued that, you know, you know, this idea of leveraging the purchase channel to actually then, you know, take a credit card product. And as you said, interrupt the e-commerce experience is definitely something that I can only imagine the reaction and the open mouths and the resistance. Because I would not be happy if you sat in front of me and said that, but it sounds like something you’ve actually seen is working.
Luigi: It’s absolutely working. I mean, think about this, right? And it doesn’t happen well around the world. I will say that it’s happening really well in the U. S. Okay. And other markets around the world are catching up.
But if you think about it, you’re shopping on your favorite website. And you’re going to purchase and it says, Hey, Paula, would you like 10 percent off this purchase? If you are approved for the, for this co brand product, right? Or Hey, Paula, would you like 50,000 points miles, which is equal to a free round trip to your favorite destination if you apply now, right? And so that’s just a very powerful moment as powerful as the purchase itself to acquire a new customer or an existing customer and make them more loyal to your brand.
Paula: Totally. Totally. And I think what you’ve demonstrated there as well as the idea both of simplicity and I suppose that compelling value proposition that you talked about is one of the key pillars.
Because again, I’ve been noticing our own spend behavior here in Dubai, myself and my husband, we did take a new card out recently, and I’m actually checking that he’s behaving in the way that he needs to, so that we get the rewards and the benefits that I’m expecting. So totally driving what we call, of course, profitable behavior change. So, so really good advice.
And again, different markets around the world. We of course have a huge audience in the US. But there may be a lot of loyalty program owners listening in the UK or in Australia, for example, who haven’t really thought about as that may be the next enhancement for their co-brand partnership. So, so really good advice.
So we’re in 2024. You know, there’s all sorts of buzzwords, of course, we don’t need to get into all of them, but what do you think we, you know, we should be thinking about now, Luigi, as we get into this year? For me, super exciting. I’ve just been today at a content creators conference. And actually I had to laugh. Somebody was talking about AI and they had a conversation at home with their parents. And this girl’s father said, Oh yeah, what is Al? So I thought that was super funny. So certainly Al or AI is going to be something that, you know, is definitely something that’s a buzzword, but specifically within VISA and specifically within co-brands what kind of shifts and changes are you seeing in terms of what these propositions or portfolios are starting to look like?
Luigi: Yeah, I mean, evolution, right? It’s the transformation across all industries is incredible. So, so Paula, let me turn the tables for a second. I did not give you a heads up, so I don’t mean to put you on the spot, but a very simple question.
Paula: Go on.
Luigi: Feel free and just take a random guess, but like. What year do you think the first co-brand was launched? And, you know, what vertical, what merchant segment do you think it was? And just a random question.
Paula: Okay. So definitely I have no heads up. So if I get it right, we’ll be celebrating. But when I think back to the origins of I suppose, technology based programs, I’m gonna say, 1981 American Airlines. So with that context and little bit of knowledge, I’m going to say 1990 in the airline industry.
Luigi: So that is an incredible guess. It’s an incredible guess. So the first co-brand card was actually launched in 1976.
Paula: Wow.
Luigi: Yes. And it was launched with our partners at AAA. It’s basically stands for the American Automobile Association.
Paula: Sure.
Luigi: And you know, if you think about the co-brand at that time, right, the card was used to pay dues like no fee travelers checks, buy your airline tickets, get emergency cash. But as you know, a lot has changed over the years.
And so in 2003, you know, they evolved their value prop, right? So they added a 5 percent gasoline rebate. And what’s fascinating to me is that it took 25 years for that evolution to happen. And, but there was no need to, right. There was no need to until then. And you, why I said you, it was an incredible guest is the reason they started to evolve their program is because in the 1990s is when you saw a proliferation of like airline co-brands come to market. And so the competitive landscape changed. Right.
But then in 2011, they changed it again. At this point, they made their base value prop 3 percent back on AAA and then they added 2 percent back on other categories and 1 percent back on everywhere else. And then just a few months ago, they evolved it again. And this time, they’re rewarding 5 percent back on gas and electric vehicle charging. Then 3 percent back on grocery, restaurant, some other categories. And then AAA and then 1 percent everywhere else.
And, you know, what’s fascinating here is if you just think about this one product and how it evolved over the course of the past 40 years you really start to see the importance of what I touched on earlier, which was the importance of generating that top of wallet behavior and that everyday spend.
Now this evolution though, right. Because you’re asking about like sort of the future. We’re in 2024. What I will say is like the evolution is not taking place just for AAA is taking place across all verticals. Right. And so co-brands started with travel and retail, like you rightly remembered. It then moved on to categories like grocery and fuel more recently. Right. We’re seeing a surge in e-commerce and gig economy.
But now in 2024, we’re seeing a lot of new verticals come to market, right? As those needs evolve, those consumer needs evolve and as those payment trends change, right? And so some of those segments, some of what we call emerging segments, right? It’s gaming, it’s lifestyle, it’s property management, right? Just to name a few.
And then as it relates to the value proposition because you asked about value prop and that’s how, what triggered AAA. I think we could all agree that historically and probably almost exclusively, we had a focus on what we call sort of like tangible or rational rewards, right? Like the number of miles, the number of points or cash back. Right. I think what’s happening going forward is that your consumers are now showing higher loyalty to brands and products that really deliver something that’s value on like emotion, right? So that emotionally triggered value, right?
And so what you’re starting to see is brands move towards experiences. Those could be digital experiences or physical experiences. You’re starting to see brands move towards providing access, right? Just delivering benefits that are aligned with their customers values. And I think that is the evolution we’re starting to see.
And the reason why I mentioned emerging is because I think with some of these emerging verticals, you’re going to see there more of these non tangible or non rational rewards, if you will. Less about a loyalty currency and more about a different definition for currency, if you will.
Paula: Interesting. Yeah. And certainly, Luigi, we’ve heard it a lot on this show, the idea of the transactional versus the emotional. So you’re absolutely spot on. I love the AAA example in terms of, I suppose, particularly that sustainability approach. You mentioned, for example, that they’re focusing on the charging piece.
So I mean, this is, you know, I suppose just a, an assumption, but what I’m hearing of course is that it is different demographics. You know, you talked about segmentation earlier, so it might be something that would be particularly appealing perhaps to Gen Z. And I guess where you guys are thinking about is absolutely we do have our, you know, I’m over 50 now. So, you know, I’m in a certain demographic, I need my lounge benefit and whatever. So I’m May be less excited so far about electric charging, although please God, I’ll get there. But would you say that there’s very different demographic needs, particularly for these emerging demographics?
Luigi: A hundred percent Gen Z. Everyone’s talking about it and they’re talking about it for good reason, right? If you think about Gen Z, I mean, they literally represent the largest generation in the world today. I think it’s about. Two billion people and about 40 percent of shoppers worldwide, right? And then if you think about, you know, what’s important to them, right? It’s convenience and ease, it’s personalization and it’s experience. And, you know, there are a few specific trends within this demographic that I think are really important and that I think all loyalty sort of professionals, all brands are thinking about. And I have an affectionate term for some of their needs, right?
So the first need is, you know, they really value the highly customized and relevant content, right? They want something that is truly personalized to their tastes. Like I call this the tick tock effect, right? Like everything is so customized. They want immediate gratification, right? They want that ability. To get anything at the click of a button and, you know, the Amazon prime effect. Right. It’s interesting how brands come to market with a unique benefit that suddenly becomes so.
Paula: Ubiquitous.
Luigi: Just ubiquitous. Thank you. That’s the word. Right. They want no interruptions. Right. And that can mean no interruptions with commercials. Right. But more broadly speaking they want that level of access. They want that value to be received right away. And you know, that’s something that Netflix brought to the market. Right. We call that the Netflix effect.
Other things that I don’t have, like, I don’t have a cute term for Paula, you know, they’re a value based demographic, right? They’re purpose driven. And their spending will follow their values.
And then lastly, I mean, This generation has grown up in an era of prolific social media usage, right? And so, social media is so key to, you know, who they are. Yeah. And that’s becoming really important. And You know, we’ve seen, and I could speak to this if you’d like, but we’ve seen, you know, co-brands come to market really addressing these key insights.
Paula: Yeah. What I would love you to address actually, Luigi, is the comment you just made there that the spending does follow the values, because sometimes I think people again, listening to show, my show or attending the conferences, hearing us speak, you know, may sometimes have tried propositions maybe in the past that didn’t necessarily drive sufficient behavior change.
So it almost felt, and I sometimes hear this feedback, for example, with charity propositions. So we hear a lot about the values being important as part of the proposition, but of course it has to be something that really does resonate. You know, I don’t think it can be, I suppose, half done. Maybe that’s, you know, the issues that we’ve heard in the past.
I think you have to go all in if you’re going to make a commitment to a demographic like Gen Z, because I don’t know about you, but any that I’ve met super clear on what is true, what is real and what they don’t, you know, they know exactly probably because of social media, exactly what is the brand standing for and how powerfully they’re standing for it. It’s not just on principle and on paper, it has to be in reality.
Luigi: Yeah, no, it’s a great point. And I think the example that I’d give here and, you know, we’re talking, currently talking to a lot of our travel partners. Okay. And they want to reward because obviously when it comes to socially conscious and environmental decisions, right, the travel industry is under scrutiny, right?
And so travel partners are thinking about ways that they can reward their cardholders, you know, with miles, with benefits to make eco friendly choices, right? And so that they can spend sustainably on their card, right? So, for example, you know, a cardholder can use their miles to offset their carbon emissions, right? From however they’re spending on that card. And, you know. We VISA, like we see such tremendous we see value in, you know, in this as well and sustainability and environmentally conscious, you know, decisions that we launched something that we call the VISA Eco Benefits platform about two years ago in 2021. I think it was.
Where basically we are now offering a package of sustainability focused benefits that can be applied to portfolios. And we’re doing that in partnership with our partner, Ecolytiq. And so yes, absolutely important to a specific demographic like Gen Z. But important, let’s be honest, it’s important to more than just Gen Z consumers, right? It’s important for a lot of folks. And we’re starting to see partners like travel partners think about how they can incorporate that into their value propositions.
Paula: Absolutely. The other one, which selfishly is very important to me, Luigi. And we’ve heard a few people, I think it was American Airlines actually gave us a great example where they’re starting to look at and actually implement ways where I can achieve my status, even perhaps when I’m not traveling.
So I wanted to ask your views on that. Do you think we’ll see more of that happening? Because again, I want my status and I want it as easily as possible. I can’t always, of course, travel to get it. So, so are you seeing that as VISA?
Luigi: 100%. We’re seeing that. So you know, what are some of these, you know, trends and co-brand and the example that you just gave with like, you know, American Airlines. I think, I think it’s a little bit of context, right? Like I’m going to say some stuff that’s probably well known to most experts in this field, right? But loyalty is a crowded space. And co-brands are competing for customers just like brands are competing for customers, right? Brands are under pressure to acquire, to engage to retain those customers.
And the flip side, you have customers who, you know, they’re looking for a differentiated and tangible or emotional reward for their loyalty behavior. Right. And so I think, you know, there are a couple of trends that sort of we’re seeing.
So firstly, we touched on this, but probably not enough. It’s this rise in non-traditional loyalty, right? We talked about that historically, you typically have an earn and burn today. You know, this remains a hygiene factor. It’s not enough to drive the satisfaction with the program. Right. So when we talk about the non-traditional, you know, it’s going above and beyond. Like what assets do you have that only the brand can provide? You know, and what’s, how can you create a program that provides value through an alternate currency? I personally talked earlier about needing something that was in a save me time. Time is a currency, right? We talked about access, right? Access is now a currency. And you’re seeing this like with established brands and sort of more traditional sectors, they’re going to offer maybe some exclusive concerts or experiences to their customers.
Whereas in the emerging side, right? Their propositions, as I mentioned, may be completely non-traditional at its core, right? Just providing early access to tickets and events, offering free or expedited delivery, right? So for one, that’s absolutely a trend.
I think another trend, and it’s, this is maybe less of a trend, but it’s an evolution of a trend, if you will, right? The importance of partnership, right? And bringing those third party partners in. I think we’ve seen this or we saw this at its infancy when you think about the travel journey, right? So when you think about the travel journey a lot of airlines would partner with ride share companies and they would offer sort of that discounted and streamlined, you know, door to door travel journey.
But today what we’re seeing like even a quick service restaurant partner, they’re partnering with like a transit operator and they’re saying, yeah, how can I deliver rewards on someone’s everyday commute? Right.
Paula: Nice.
Luigi: So, I think that’s another trend. Right. So, or an evolution of a trend, if you will. Right. We talked about everyday spend so, so critical. And I love the example you gave, right? What American Airlines did, and now a lot of folks are following, is they’re saying, you know, you don’t even have to fly with us to earn status with us. Because you are a valued customer. Yeah, we define value in different ways, right? That value can be how often you fly with us. That value can be how often you spend with us right on our products.
And then lastly, and you know, not to beat the dead horse as a cliche goes but the data, right? That, that data is going to play an even stronger role in co-branding and in loyalty going forward, right? As consumers, especially Gen Z consumers demand personalized products and experiences. And we call that. You know, hyper personalization. And, you know, you mentioned, you know, AI before, right? Like that hyper personalization comes from the predictive analytics. It comes from, you know, partners bringing data pools together. Right. There’s just a lot of way to deliver that hyper personalized experience.
Paula: Totally. And where would you say we are on that journey, Luigi? Cause we talk about it so much as an industry. And yet I hear an awful lot of frustration from the people who listen to this show going, yes, we’re working on personalization, but don’t look too closely because we have a long way to go.
Luigi: You’re right. The word is thrown around quite a bit now. It’s not being done well yet. And I think yet is the key, right? So when you think about when I think about hyper personalization, what does it mean? Right? You’re like, who are your customers? What do they want and how do you create something just for them?
And I think brands today, right? They use data well, they’ll use it for the targeting. They’ll use it for the segmenting. They’ll use it for, you know.
Paula: The birthday. Yeah.
Luigi: The value proposition. Right. But there’s so much more that can be done with these insights to really create those hyper, hyper personalized experiences, right?
Consumers today are like, if I’m going to give you my data, I want you to know me. And then I want, I expect that you’re going to do something personalized for me with that data. Right. And so we’re on a journey.
I can tell you that I’ll give you an example in the co-brand space of a partner in the Dominican Republic. They’re called Grupo Ramos. They’re a retailer. They just relaunched their co brand product. It is a single product but they have three different categories, one’s called lifestyle, one’s called home, one is called digital. And they have very similar value propositions across different categories. And that’s their way of trying to personalize their card products for their consumers who may have different needs, right? And so we’re starting to get there, you know, it’s a journey, but I do think that it’s going to continue to evolve rapidly. Right? And I say that because I think we’re going to move from category data to merchant data, to what we call skew level data.
So at a product level, right? Like, like you’re, so I think the reward constructs are going to change.
Paula: Totally.
Luigi: So they’ll go from you know, incentivizing you, Paula, on your gas and grocery purchases to, hey, we’re going to incentivize you for that specific milk that you’re buying at the grocery store. And this is a way to get sort of all partners involved in that value proposition. And, but the reason I’ll leave it with one thing, I think the difficulty in all of this and why maybe we’re not as far along as we’d all like to be sure is, of course, customer consent and privacy, right?
Paula: Totally.
Luigi: That’s so, so critical. But, I will tell you, I do think that hyper personalization better experiences, it’s the future. You know, VISA is definitely investing heavily in these capabilities. So, you know, watch this space. There is a lot left to come.
Paula: Indeed. Indeed. So yeah, no, I, I find it very reassuring. Absolutely. Because as you said, it’s not through lack of intent or lack of will. I think we would all love to be hyper personalizing but the sensitivities and complexities around data privacy, again, particularly coming from somewhere like, like Ireland, particularly we have the European general data protection commissioner based in Dublin. So I think, you know, that?
Luigi: GDPR.
Paula: Totally the actual commissioner sits in my city. So I remember his office called my office one time and it was not a pleasant experience. Thankfully, it was just a cautionary call, but it is something I think we’re all super and unrightly sensitive about. So, so yes, we’re on the journey. So, so thank you for that. So anyone out there listening who doesn’t feel like they’ve totally nailed hyper personalization, you are not alone. But plenty, plenty more to come. So that’s super cool.
So listen, the final question I had, Luigi, I remember when we talked last time we talked about all of these big ideas, big topics, big evolution. And I think personally the comment you made that inspired me the most was perhaps some non traditional sectors emerging, perhaps smaller businesses who may not have had a co-brand before, like they might not be a big airline with tens of millions of customers flying.
So I’d love you just to explain that for the audience, because, you know, I think there are a lot of people who would love to maybe consider having a co brand that are in smaller industries. So there seems to be a bit of an evolution that you hinted would be an opportunity. So I’d love you just to speak to that. Maybe if you don’t mind as a final comment.
Luigi: Yeah, happy to. You know, we call them emerging verticals. But they’re not necessarily emerging because they’re new, right? Like it’s a new product or service or industry that we haven’t heard of before. They may be but they’re new because they’re nascent to co-branding. Right. And so they’re emerging in that sense.
And I, you know, I think I started with co-brand as an extension of loyalty when we first started the conversation and at the end of the day, regardless of size, right? Whether you’re a large airline with millions of customers or a small business, what are you trying to do? You’re trying to generate that loyalty with your member base.
I think the best way to maybe highlight, like what is an emerging vertical is to talk about a few examples. You know, you mentioned small business. That’s absolutely where I would start, right? And a small business can be, you know, small business owner who owns a local shop. But they could also be a seller on a, you know, an e-commerce marketplace. Right. But fundamentally a small business owner, you know, they’re looking to separate their business spend from their personal and they want something that’s going to cater to their needs.
And, you know, an example that comes to mind Natura. I don’t know if you know them. They’re a large cosmetics company in LAC. They, their model is direct selling. And so they have, you know, all these sellers who go out and talk to other customers and sell their products. And so what they did is they offered a co-brand to those sellers, not just to reward them or incentivize them for their transactions, but to also help them with inventory management, for example, right?
Paula: Okay. Wow.
Luigi: I think the more common example in the small business spaces, airlines around the world do this. They know they have their consumers. They’re people who travel personally, and then they know they have business customers. So what have they done? They’ve created specific small business cards where they’re incentivizing things that are important to those small business card holders. It can be, you know, spending on office supplies, for example. So small businesses take many different shapes and forms, absolutely an emerging category for us, because while there are examples of it out there, there is not enough in the way or in a similar way to what’s taking place on the consumer side.
I think another example is what we call sort of fan based economies, you know, examples of this or a sports based economies or like a hobby based co-brand, if you will, you know, this is not unfamiliar affinity programs, as they used to be called have been around for a while, but there’s been a resurgence and proper popularity. And with this, you’re having different propositions come to market. And especially when we talk about sort of those non traditional currency, like this is a space where people are coming to market with like access to tickets, access to merchandise, right? Things that only they can bring to that customer, if you will.
And then lastly, because, you know, we talked about Gen Z. And one of, one of the big sort of categories for them that’s important to them is gaming. And, you know, gaming is. Has it exploded? It exploded during Covid it and it has stayed. And the opportunity here is like it’s so much more than commercial for me.
I think like, you know, gaming offers with sort of new platform to sort of meet your customers right to deepen that engagement. Whether you’re providing a seamless in app experience or, you know, whether you’re giving them, I’m not a gamer, but I hear there are skins, like, like, like maybe your co-brand card is going to offer your customer a skin that you can only get with the co-brand card. Right.
Paula: Totally.
Luigi: So these are just examples of like. emerging co brand verticals and there’s so many more, right? There is rental, there’s lifestyle, there’s healthcare. And so I think there’s a lot more in the evolution of where we’ve seen co-brand.
Paula: And one that springs to mind just again, you know, coming from my content creator conference today, is it possible that we’ll even see it in the influencer industry? I’m really like, I’m almost surprised I haven’t seen it yet. Now, maybe you have, but everyone’s talking about Mr. Beast and this and that. And we’ve seen the levels of trust that these brand personalities have. So, you know, they’ve launched some of them stores, they’ve launched energy drinks. So you’re nodding, you know, as we’re talking, so.
Luigi: Sorry, I am nodding. You can’t see me, but you can see me, but the listeners cannot see me. A hundred percent influencers, content creators, I, that is absolutely part of what we would categorize that under sort of fan based economies. But I definitely think that there’s an opportunity there as well.
Paula: Wow. Okay. Well, I’m super excited and that means we have to have another conversation at some point in the future, Luigi, so you can keep me updated on that because it’s definitely one I just, I just love to see the innovation. And I think I said to you when we were talking about the show, what we want to do on this conversation is talk about educating and inspiring new ideas. So, if only for my personal interest, when it comes to that last specific example.
But anyway, listen, it’s been an absolutely wonderful conversation. I don’t have any more questions for you today, Luigi. Is there anything else that you wanted to mention before we wrap up?
Luigi: You know, the only thing I would say Paula is, you know, oftentimes, you know, we work with partners all around the world, as I mentioned earlier, and oftentimes partners see this as an opportunity. They see it as a financial opportunity. What I would say is it’s so much more than financial, right? It’s so much more than financial because it again, you’re deepening that customer engagement and that customer will engage with you even off the card, but the card can be a vehicle to have them engage with you off card. Right. So I would leave you with that. Is that the opportunity here is so much than just a financial benefit for partners around the world.
Paula: Amazing. And I guess with those parting words, Luigi, the ideal next comment would be if people want to create opportunities and talk with VISA, I guess they can reach out and LinkedIn and maybe, you know, talk through some ideas with you. Would that be an obvious closing point?
Luigi: Absolutely, Paula. By all means, if you want to reach out to me, thank you for the shameless plug.
Paula: Totally.
Luigi: I got to work on my own personal branding. But yes, yeah. Should you have any questions by all means you can reach out to me. And we can chat.
Paula: Amazing. Yeah, no. And that comes from a genuine place of, again, having never launched a co-brand as I said, and when I was running loyalty programs, I never felt I had enough access to expertise. So for us as a show to be able to showcase people like you and invite people to connect it, it’s absolutely wonderful. So delighted to be able to facilitate any connections.
So listen, as I said, it’s been a fantastic conversation. I’m going to wrap it up now. So Luigi Marandola, Vice President of Global Cobrand and Merchant Partnership Development at VISA. Thank you so much from Let’s Talk Loyalty.
Luigi: Thank you, Paula.
Paula: This show is sponsored by Wise Marketer Group, publisher of The Wise Marketer, the premier digital customer loyalty marketing resource for industry relevant news, insights, and research. Wise Marketer Group also offers loyalty education and training globally through it’s Loyalty Academy, which has certified nearly 900 marketeers and executives in 49 countries as certified loyalty marketing professionals.
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