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Attention loyalty program marketers. Let’s lift our game.

This may be read as a rant.

I prefer you understood it as a call to action.

If you are a marketer of any type of loyalty or rewards program (see definition at end of article), then please spend a few more moments reviewing this article and consider the actions you can to take to drive the long-term value and viability of your program.

There are many factors that impact the success of a loyalty program, however the
For Love or MoneyTM 2019
research reveals two issues that I believe need the attention and focus of loyalty programs marketers.

Issue one impacting the value and viability of programs: ACTIVITY
  1. Activity: While memberships of programs remains steady, there has been a decline in ‘active participation’ in programs and the lowest since 2015. * An active member in the research was defined as ‘having presented their card or membership number when making a purchase in the last 12 months’
  • ‘Activity’ has declined from 59% (2015) to 47% (2019).
Issue two impacting the value and viability of programs: DATA
  • Loyalty program data collection and use: a privacy and trust issue: For the first time in the For Love or MoneyTM ongoing research studies, we looked deeper into loyalty program data collection and use.
    • The research reveals members are concerned about the collection, security and use of their loyalty program data.
    • The most alarming insight is the revelation of the loyalty program Net Data Trust score of -38. This is a new metric introduced in For Love or MoneyTM 2019 to assess the level of confidence members have in loyalty programs to safeguard their personal details and data. There is a trust issue!

I’ll address both 1. and 2.

Volume is for vanity. Activity is for sanity

While a volume of members is a success factor (no members, no program), scaled activity is the first indication of a members’ interaction with a program.  

Whether it is a purchase or a defined program action eg redemption of a reward, if there is a depth of activity (by whatever definition assigned), then that’s great.

If they are not active, then why not?

While there are more measures of a program’s health that can go deeper and further, activity is a simple metric to start the process of improvement.

How do you improve activity?

If you choose to start somewhere, start with a deep look at your members and their appetite for your program’s proposition as opposed to your business offering.

Note: When working through the reasons for inactivity, bear in mind this is program specific as there may be other reasons outside the circle of a program’s influence eg service, price, competitive activity that have impacted on inactivity.

  1. Who is active and why? What action are they taking that defines them as ‘active’.
  2. Who is inactive and why? How long for?

Identify why they are inactive. Member behaviour analysis will tell you the past behaviour, may also be able to predict future behaviour and research from the members point of view will add another layer of insight.

If you choose to do research with your inactive members, dissect your program’s proposition (whatever structure and benefit mix it has) and ask why members do not find them appealing.

A program needs to be SPV (my mantra) = Simple. Personal. Valuable. Beneath each are a blend of benefits as highlighted in the For Love or MoneyTM study. (Transactional; Experiential; Utility; Personal; Social). Review each with relevance to what you can deliver and what your members desire.

When you know why members are inactive, you can take action to improve.

Call to action: Please improve ‘activity’!

P.S. Motivating reward redemption increases activity - case in point is the recent Qantas Frequent Flyer revamp - "Since the changes were announced there has been a 25 per cent increase in points redemption flight bookings from members who had never used points to get a seat before, a 20 per cent increase in international economy bookings using points and a 40 per cent increase in international business reward seat bookings, compared with the same time last year."

The loyalty program data value-exchange is at a precarious inflection point

We need to change our approach. Currently, I see it as the givers and takers.

At the moment of value exchange - members give their data in exchange for a benefit and programs take the data in exchange for giving that benefit.

Let’s reframe that.

At the moment of value exchange – members give their data in exchange for a benefit and for the promise of personalisation and relevance to who they are and what they want.

  • They also give their data with the inherent trust that the program will take care of their data and use it to enhance their experience, not invade their privacy.

At the moment of value exchange - programs need to accept the data with respect and sensitivity, telling members why they are asking for their data, how they will use it and how secure it will be.

So, it’s simple.

Firstly, programs need to be more transparent with the collection and use of a member’s data.

The For Love or MoneyTM study reveals the seven factors that members consider as important when providing data to loyalty programs.

The top 3 are:

  • Knowing how secure my data is
  • Knowing how my data is being used
  • The reputation of the company asking for my data

Review all the factors and take steps to be transparent on all.

Secondly, once data is gained, programs need to deliver on the promise of the personal in personalisation with an overlay of relevance (message and timing).

No more one size fits all batch and blast.

Keep investing in the tech to drive the personal of personalisation. Be an enhancer and not an invader (See For Love or MoneyTM 2019 for some hints on these).

Call to action: Please respect your members data. Please power up the ‘personal’ with relevance.

In summary, the time is now for loyalty program marketers to lift their game on activity and data.

if we start with these, there are sure to be incremental improvements to the longer-term sustainability of loyalty programs as a valuable and viable asset to a business and a relevant and valuable benefit to their members.

If you’ve read this far, then I am sure you have a point of view on the contents of this article – please share your views.

Have a happy loyalty day!

Definition of a loyalty program:
“A defined structure of rewards and recognition designed by a business to enhance a member’s life (emotionally, financially & with simplicity) in exchange for desired behaviours that benefit profitable business growth (income, insight and advocacy)”.
Adam Posner – The Point of Loyalty

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The annual customer loyalty and loyalty program research - For Love or Money 2019 - Australian edition will be released later this June.

This year it reveals insights on:

1. Changes in the Australian loyalty program landscape (Profiles of loyalty program members; Active participation in programs; Ranking Australian loyalty programs - ‘doing a very good job’)

2. Attitudes to ‘loyalty’ and loyalty programs (What is ‘loyalty’? The consumers’ point of view; Are loyalty programs valuable to a brand and business? ; Why do members think brands offer programs?; Do brands need loyalty programs to keep customers loyal?; Member interaction, identification & payment integration; Are members making the most of their program memberships?; Member defection: % leaving, when and why)

3. Preferred loyalty program structures and benefits (Earn and redeem rewards within vs beyond the brand specific program? ; Rewards for transaction vs tenure with a program? ; Rewards that are quick & small vs more substantial rewards that take longer to earn? ; Rewards with small value and no minimum spend vs larger value with a minimum spend? ; Points vs cashback? ; Tiered program structures vs no tiered programs?)

4. Loyalty Program data collection and use: a privacy and trust perspective (How do members feel about loyalty programs collecting and using their personal details? ; Personalisation: Enhancing the member’s shopping experience vs invading their privacy ; What do members consider when providing their data to loyalty programs? ; Level of concern about loyalty programs being hacked or subject to fraud; Loyalty program Data and Trust = The Net Data Trust score (NDT) )

5. A deeper dive into loyalty program insights (The five loyalty program persona profiles ; The four touchpoints impacting the ‘last mile’ of a member’s interaction with a loyalty program ; Insights into loyalty programs with a subscription fee ; Do members think of points like cash? ; Credit cards with rewards – are they still worth it? 

If you would like to be notified when the reports are released you can register your interest here.

A first for New Zealand For Love or Money 2019 - New Zealand edition

For the first time since the For Love or Money research studies started, we have also completed the research with New Zealand consumers and have released two new reports: 

• A unique New Zealand report revealing insights on New Zealand consumers and their view on loyalty and engagement with loyalty programs 

• A comparison report of Australian and New Zealand consumers and their view on loyalty and engagement with loyalty programs 

All reports will be availableas a complimentary Executive Summary and comprehensive reports are also available for purchase. 

To be notified when the reports are released you can register your interest here.

Have a happy loyalty day!

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A pointed interview with Steve Hui –CEO and Founder of iFLYflat (otherwise known as The Points Whisperer)

I have heard of a ‘horse whisperer’.

Definition: horse-whisperer. Noun. (plural horse whisperers) A horse trainer who adopts a sympathetic view of the motives, needs, and desires of the horse, based on modern equine psychology.

And now we have a ‘points whisperer’. My Definition (allow me some creative license):

Points-whisperer. Noun. (plural points whisperers) A points trainer who adopts a sympathetic view of the motives, needs, and desires of the points earner, based on modern loyalty program points earn and redeem psychology.

So, there you have it. Steve Hui ‘The Points Whisperer, is the founder and CEO of iFLYflat and in my view a brilliant curator and creator of content on all aspects of earning and redeeming points to fly business class.

I had the pleasure of getting to know Steve and discussing the ‘points economy’ with him.

1.Who are you Steve?

I was born in Hong Kong, came to Australia when I was five and grew up in Sydney. I am accountant by profession, so it’s in my DNA to run the numbers whenever I discover value. Points have value and it makes sense for me to make the most of the ‘value’ and help others benefit from the same.

2. Random Question: What’s the ‘one thing’ you would still love to do that you have never done before?

…jump out of a plane, skydive!

How ironic is that, when my whole reason for being is about flying ON a plane (upfront ie Business Class) and helping others to get there, why would jumping out of a plane be my ‘one thing’ … crazy! (Now that’s a topic for another day)

3. Do you travel as much as it seems?

Interestingly, not as much as you might think. About five times a year. I’ve been to 20-25 countries however I see flying more than just being upfront for the free champagne (although that is nice).

The act of travel is what creates the memories. Having said that, my most memorable experience is my very first, first class flight about eight years ago. Up until I was seated onboard, I still did not believe that I had scored a $10,000 flight just through a clever use of points. From that moment on I was hooked.

4. What are the biggest challenges for your business?

  1. Helping people to understand the value of the points they’ve earned. The frequent flyer and credit card points systems are too complicated. Most members of these programs are not aware of what rewards are possible. If they don’t know the value, they have no desire to earn more points in the best way.
  2. Educating members that booking seats with points works differently to paying for seats, so when they can’t find the seats they want with points they give up on the whole thing.

5. What would happen if one day points no longer existed?

Oh well, I’ll find something else to do! (a spontaneous answer to a confronting question and proof Steve is a true entrepreneur who can adapt to change)

6. What’s your view on the current state of loyalty programs
(frequent flyer, credit card or others)?

Credit card programs are in a re-alignment phase to ensure sustainability arising from the recent changes to the RBA interchange fees.

Airlines seem to be selling more seats for money as a priority over frequent flyer seats. On the one hand they are heavily promoting the points earn economy, but on the other they are not providing enough seats for people to redeem their points on. It seems to me they are focusing more on revenue yield vs benefits for points earners and trading on inertia while people don’t realise it. But I think they need to re-focus on a fairer balance to avoid shooting themselves in the foot.

For other loyalty programs, I am not seeing changes or innovation that excite me and they seem to be too focused on transactional/discount offers, which is potentially just giving away margin or seen by their customers as a simple (and boring) discount program.

7. What are the 3 biggest opportunities for loyalty programs
(frequent flyer, credit card or others)?

For Frequent Flyer programs:

  1. Deeper cross-functional benefits of frequent flyer programs to credit cards (as per Qantas) to keep the whole relationship.
  2.  Allowing members to pay for excess baggage fees, last minute flight changes with reasonable points redemptions.
  3. (An idea I floated with Steve) – how about providing members with points for NOT taking carry on baggage. Why? The time lost trying to find place for carry-on bags is sure to be a cost to airlines (time on the ground creating delays further on). PLUS, the hassle and irritation and injured backs from stuffing bags in the overhead carriages.  So, if you incentivise members with points to leave their carry-on baggage (or reduce it) a change of behaviour might just happen! There are bound to be a percentage of travellers who take that up. It seems obvious however maybe there is a disconnect between operations and the frequent flyer program management.

For credit card programs:

1. I’m still not seeing my data being used in a personal way that is of benefit to me. I’d like to be able to choose a benefit with the businesses that I regularly spend with, example: the ability to earn additional points at my favourite bars, café, restaurant or shop – where you can already see that I’m spending money with every week. An example of this is a USA based credit card that lets you select the bonus rewards category.

8. What are the 3 biggest challenges for loyalty programs
(frequent flyer, credit card or others)?

  1. For Frequent Flyer programs it’s about providing enough redemption opportunities for free flights vs enticing members to redeem for products. Members get more value and engagement when using their points to redeem for a free flight than for a vacuum cleaner (when did you last hear someone show their photos of their clean carpet vs their recent holiday to Hawaii)
  2. For credit cards who use points to acquire customers through 100,000 points offers are teaching people to sign up and then cancel. Even with restrictions in the terms and conditions, the culture has already been changed. It’s motivating the churning of credit card customers from one points offer to another and from one bank to another.
  3. A few frequent flyer programs (Delta, Malaysian and recently United) have switched to revenue-based points redemption. In my view - this is the biggest single risk that could become the start of the long-term destruction of value for all frequent flyer and credit card rewards globally. WHY? Moving from disclosing a fixed chart of x points required to fly from A to B, to a variable price of the day means customers no longer know how many points are needed. This means they don’t know how many points they need to save for, and when you have no target – you have no value measurement. As mentioned before, when members cannot understand the value, they become disinterested in collecting points. And the rewards system starts to unravel.

9. What do you think is creeping up on programs that could disrupt them for the better or for worse?

If more frequent flyer programs follow towards a revenue-based redemption (like Delta, Malaysian, United), the value of frequent flyer programs will decline.

Then I think the new Apple card with cashback (and other cashback cards) will entice many consumers due to the simplicity and immediacy of the benefit. Consumers will move from points-based rewards to cashback and the points economy will shrink which will have consequences down the value chain.

10. In five years, how will loyalty programs (frequent flyer, credit card and others) be different?

I expect a deep integration (and cross collaboration) of frequent flyer and loyalty programs with customer credit cards and their mobile devices. So that every dollar spent at every business will be tracked, analysed and rewarded. The businesses you spend your custom with will know how much and how often you visit and have automatic rewards designed for you.

11. Finally, what three tips does the Points Whisperer have for those out there collecting frequent flyer points?

  1. There is value in every point you earn. Think of the points as money (AUD3.5 cent to be exact).
  2. Points are not for retirement. Earn them and if you have enough for a redemption use them sooner rather than later and benefit earlier from having that experience (business or first class is better).
  3. Small business owners should consider earning points from paying all their company expenses with the right cards and use the points to travel.

Summary

Steve certainly has his finger on the pulse of points and is watching the evolution of the credit card and frequent flyer programs with keen interest.

He is a master at promoting his offering and the benefits of using points for flying pleasure.

He is the ultimate Points Whisperer … A points trainer who adopts a sympathetic view of the motives, needs, and desires of the points earner, based on modern loyalty program points earn and redeem psychology!

Have a happy loyalty day!

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Deliveroo’s new subscription program ‘Plus’ at $18.99 per month for unlimited free delivery, has ignited the subscription model as a growth strategy of choice.

The numbers tell the story.

“Within a few days of its soft launch of Plus, more than 20,000 have signed up to the subscription service.”

20,000 x $18.99 pm = $379,800 per month = $4.57 million+ pa.

Without attributing any other influencing factors on these numbers to move them up or down such as - new member growth, cancellations or cost of service, a top-line figure of $4.57 million+ p.a. is appetising!

This one example (there are many more across retail, entertainment, fitness, software, health and wellbeing, prepared meals etc) highlights why the subscription model is so appealing to business.

The benefit to business

Depending on the service offered and cost to serve, the benefits are:

  • Revenue: Upfront and renewal revenue provide some predictive and sustained cash flow
  • Reason to relate: Ongoing reason to communicate with subscribed members
  • Retention cost: Retaining existing subscribed members tend to be at a lower cost than acquiring new members
  • Referrals: New members generated from existing members who are enjoying the benefits
  • Business intelligence incrementally improves: Member behaviour insights accrue based on activity and interaction with the benefits provided

While all these benefits are enticing, it’s important to avoid the trap of subscription “sleep money” (earning income while you sleep) as a subscription member base needs to be carefully nurtured to ensure longevity.

Incremental revenue (another benefit to business)

In the Deliveroo subscription, there are sure to be those that change behaviour to make an extra order that pushes them past the $18.99 subscription amount based on the thought…”Let’s order from Deliveroo so to take advantage of the subscription’s free delivery”.

I have researched this member behaviour in our For Love or Money 2017 study where 24% of members of loyalty programs make a purchase that they might ordinarily not have, to maintain or gain the benefits of the program. That’s the power of programs and no doubt even more for a paid subscription program.

The “I forgot about my subscription” factor

There is also a subscription ‘I forgot factor’ or quite simply, those that subscribe and then forget about it. They don’t take advantage of the benefits offered and therefore the cost to serve these members is zero or low. This adds to the profitability of the subscription program.

I don’t believe this will be a big factor in the Deliveroo program as there is high engagement with the ‘home delivery’ category.

Also, you don’t really want members to forget about their subscription as when they do remember, they will question the value gained which might lead to a higher propensity to cancel!

The benefit to members

The benefits of subscription programs to members depend on the value proposition offered. There must be a combination of financial, utility (make life easier) and where possible an enhanced sense of privilege and uniqueness.

In the Deliveroo case, I am sure they did the financials to show where past and predicted orders per month would give members the “no-brainer” financial benefit.

Four orders per month (at let’s say an average of $5 delivery fee per order) and you are ahead. (Deliveroo introduced dynamic pricing varying from $2.95 to $6.95 depending on the distance)

In all subscription programs, the value and utility (financial, time and energy) being offered for the exchange of the subscription fee must be greater and clearly visible.

No mental gymnastics required.

Three considerations for a subscription business to keep on the radar

1.Be brilliant at the basics

It’s important to remember that all things being equal, the experience with the core service, in Deliveroo’s case - the app ux, choice of food and service delivery, must be same or better than competitors. They must still be brilliant at delivering on their core promise. A subscription offering, no matter how compelling, will not cover up a poor core service delivery.

2. Subscription guilt

In For Love or Money 2019 (due out later this year), I am researching what I call ‘subscription guilt’, where members of subscriptions programs feel guilty for not taking advantage of the service and benefits offered. I am looking forward to quantifying this insight.

Have you ever felt guilty for not accessing a gym membership (or similar)?

My hypothesis is that as guilt kicks in, there are two outcomes – reinvigorate use of the services offered or cancel.

The opportunity for businesses with subscription models is to identify the signals of ‘guilt’ and reinforce reasons to members to engage with the subscription's benefits.

3. Subscription detox
As subscription models gain momentum, with offers to pay for extended services - here, there and everywhere, watch out for the subscription detox. Cancellations will gain momentum, especially as members go through their credit card and see what they have signed up for – on an ongoing basis!

I wish Deliveroo 'subscription success' and I look forward to avoiding the ‘guilt’ factor!

Have a happy loyalty day!

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A delightful and insightful interview with Aussie Merciadez - Senior Partnerships and Rewards Manager at Optus.

With a first name like ‘Aussie’ and surname that sounds like ‘Mercedes’, I had no idea what to expect from the interview I had set up with Aussie Merciadez to discuss loyalty.

A personality that is infectious, a passion for customer loyalty that pumps from her heart and the rigour for customer insights makes Aussie an absolute all-rounder.

(A note to the reader: Aussie’s background is an abridged version of what she shared with me and could be a movie screenplay!)

1. Why ‘Aussie’?

Mum and dad came to Australia on an adventure and enjoyed it so much they stayed. I was conceived and born here (too much information). Dad wanted to call me ‘Canberra’ and Mum wanted to call me ‘Adelaide’.

When they were discussing this with the doctor, he asked them why those names and they said … because I was born in Australia. To which he said … so now that she is a true-blue Aussie, just call her ‘Aussie’. 

I guess that made it easy for them and the rest is history. 

2. So what’s your history?

I always wanted to be a performer and actor and in fact landed a few roles back in the late 80’s.Acting was fun, however not as stimulating as I had hoped for.

I wanted to be more involved in the business side of movies. ‘Executive Producer’ seemed to be the title for me! When I interviewed for a role at a post-production studio, they asked me if I had any experience, to which I replied ‘no, but I’ve got personality!’.

I landed a marketing role at the post-production studio (design, visual effects and animation) and had many years of working on the digital production of high end TVC’s, broadcast & movie blockbusters.

My experience in marketing and digital production took me to a global design agency where I used the expertise gained to work on brand activation campaigns bringing the ‘theatre’ to brands and music labels. In one year I managed over 180 brand activation and promotions testing my project and people management skills in a massive way!

I moved to the world of advertising and one day met a lady (thank you Linda Jones) who said to me…’Aussie you should be in loyalty’, to which I responded…’You mean all those points programs...?’ Yes!

With a hop, skip and a jump I landed into the nirvana of loyalty programs!

I worked at a loyalty agency (Global Red) and gained a significant love for the measurability and data-driven decision making that loyalty programs could provide. I gained significant experience there and then made the leap into the corporate world taking on a loyalty role at Optus, which after 7 years brings me to today!

3. Let’s talk about Optus Perks

We have started at zero customers three times as a program, based on establishing new platforms.  We grew our base from zero to over a million in the first year and currently access over 5 million customers through our app and through a web portal.

It’s a no strings attached program. No points. No waiting to be rewarded. Our members get rewarded from day one and surprise and delight is at the core of the program. I’ve received calls and emails from customers asking why they received the ‘surprise’ reward to which I say ‘because you’re awesome!’

 I want to make customers feel genuinely appreciated.

We want to help customers connect with the things that matter to them most.  We slightly modified this vision when Optus became entrenched with entertainment being our core offering.

Our program enables our team to support the wider business with access to a great range of rewards on a central platform.

We are now working on ‘Perks with Purpose’ where we are aiming to match members with rewards relevant to their purchases and preferences.

I am always looking for something new that can make a difference to our customers, and nurture users of our network at a service level who may potentially become customers with their own accounts in the future.

We have created a test and learn environment to allow for the flexibility of different offerings, partners and the opportunity for us to be more agile. This is becoming more important as we move into the future.

The program is supporting the ever-changing needs of our customers while taking into consideration the rate at which new technology is rapidly changing and becoming more accessible. 

4. What do you think is the difference between a ‘rewards’ program and a ‘loyalty’ program?

A ‘rewards’ program is a way for companies to recognise and thank customers for their loyalty / tenure with a range of benefits.

A loyalty program is when an entire business gets behind a consistent approach of recognizing customers and applying business rules and treatments to ensure the customer experience is managed with the right level of investment in all channels at every customer touchpoint.

5. Why does the business believe in the ‘Optus Perks’ program?

We make data-driven business decisions and have delivered on our targets and business objectives and continue to support the business within the areas that matter most. 

This could be through our existing or new partnerships or through a deeper understanding of our customers’ needs and wants. I want everyone to win - our business, our customers, our team, our partners.

6. What are the three biggest opportunities for the program?

  1. Being agile and growing with the business with the ability to course correct on demand. 
  2. Remain focused on our customers and listening to what they want and need.
  3. Continuing to build long lasting relationships with our strategic partners with shared objectives and not being afraid to fail, learn from our mistakes and keep moving forward. 

7. What are the three biggest challenges for the program?

  1. Working with tighter budgets and knowing you have a broad customer base to reward and retain. 
  2. When the business priorities don’t exactly align and potentially sending customers mixed messages. 
  3. Integrating into new technology seamlessly without impacting customers from a marketing point of view.

8. If you could start again, what would you do differently?

If I could start all over again knowing what I know now, I would slow down and stay focused on fewer bigger better things rather than everything. 

I am glad though we did everything we did but some of the things that didn’t work, we could have probably done without and if I cleared my plate of some of the lesser priorities, I may have not made some of the decisions I did to try new things. 

Having the test and learn environment doesn’t mean you have to test EVERYTHING.

9. What advice would you like to give brands starting a new program?

  1. Walk in your customers shoes with the lens of the type of customers you want to attract. 
  2. Understand their nuances, have a bullseye target. 
  3. Focus on that customer profile to ensure you maintain that consistency and the program will evolve naturally with an anchor if you ever feel the program brand has lost its way.

10. What advice would you like to give brands with existing programs to keep them relevant?

  1. Be open to change as your program may not serve the same purpose as it did when you first launched. 
  2. Identify the opportunities and plan your transition if a change is required in your program.
  3. Just because your customers are not seemingly receptive to your current program doesn’t mean they won’t react when you make a change.

11. What do you think is creeping up on programs that could disrupt them for the better or for worse?

I think the pace at which social and consumer culture is moving is so rapid. Any company who believes by making customers wait to be rewarded may find themselves in the cold as I believe customers live in a world of instant gratification and a “NOW” society. 

There is a role for points programs if there is the frequency of customers transacting with your business often or/with transactions with significantly higher values.

Where the transaction is less frequent, there needs to be a way for the reward to be meaningful and to be NOW.

12. In five years what will a loyalty program look like?

mmmm…that’s a good one! In five years, customers (members of programs) will determine the partners and rewards they will want to see in their favourite loyalty program. Personalisation will be operating at its best and so it will be the ability of the Loyalty Program to be agile and have the relationships in place that will determine the success of the program.

Summary

Aussie has an amazing tapestry of life experience and expertise. with an abundance of humour, imagination and the belief in rigour and insights.

For me the stand-outs from our conversation are:

  1. Ensure your loyalty program delivers for every party involved.
  2. Slow down and stay focused on fewer bigger better things rather than everything. 
  3. Be agile and open to change as the program needs to evolve to changing member needs and business requirements.
  4. Understand the purpose of your program so that you stay on-course when new and shiny things come along (This is my interpretation of a range of thoughts Aussie shared).

Have a happy loyalty day!

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A fascinating interview with Christian McGilloway
Chief Technical and Innovation Officer – Retail Zoo

(Retail Zoo brands – Boost Juice, CIBO, Betty’s Burgers and Salsa’s with more than 700 stores nationally and internationally)

When you live and love loyalty (be it a program or an outcome), it’s an absolute delight to find a person with an intense obsession to understand customers, to drive loyalty outcomes and whom believes in the asset of program!

I found all the above when I met with Christian for a chat. Truth be told, his Irish accent made me lean forward and listen very carefully.

He shared his views on telling a story to capture your customers heart, customer loyalty (what it’s not), loyalty programs, gamification and the amazing results his team has driven at Retail Zoo, specifically with Boost Vibe Club.

Just a few facts he shared (more context later) about Boost Vibe Club and APP innovation which amazed me and which did not happen by Irish luck!

  • The program has been going for 18 years
  • 1.9 million members
  • 1,000,000 app downloads
  • One of the first QSR programs to integrate an APP and online ordering
  • Gamification innovation with ‘free the fruit’ back in 2016 that had an average member engagement of 179 minutes (that’s nearly 3 hours with the brand) and more than 255 minutes (almost 4 hours) with their second game 'find the fruit' in 2018 (more about this later).

Facts are facts...but stories are remembered (sorry I cannot remember or find the original quote for attribution) and this was so true for me when I asked Christian about his background.

1. Who are you Christian?

I was born in Ireland (obviously) and after school completed a degree and Masters in Design Communication. It covered a broad base of advertising, design, animation, web and app development.

It was during my studies that my imagination was captured by the famous BMW Film series of 2001 when BMW decided to take its $30 million advertising budget and spent it on producing five ‘mini’ feature films working with luminary directors and producers, such as Ang Lee, Guy Richie, John Woo, Ridley and Tony Scott. The star-studded line-up of actors included Clive Owen, Madonna, Don Cheadle, Mickey Rourke, Gary Oldman and Forest Whitaker… !

(Christian spoke about this with great passion and admiration).

At that time these had a defining impact on me as they were about stories and a new way of advertising (long before content was cool) to inspire and engage an audience, rather than purely sell a product.

Customers actively looked for the brand to engage with their 15 minute movies instead of passively consuming their traditional 15 second tvc’s.

Fast forward to today and I have been at Retail Zoo for the past five and half years, innovating “any screen” that our customers interact with – instore digital screens, media boards and mobile.

2. Let’s talk about loyalty

Ok, so to be clear, for me loyalty is not a program (I did not feed him this line).

I believe we have a rewards program that we are continuously working with to drive ‘loyalty’ outcomes, be it spend or frequency and members sharing and telling others about whatever we are offering or asking them to engage with.

We do realise rewards are needed however it does not stop there for us. It goes back to the BMW films…how can we inspire, engage, educate and interact with our members beyond the product (see gamification).

3. More about Boost Vibe Club (Rewards Program)

We now have a huge asset to communicate directly with (1.9 million members). Ideally, we would love them all to have the Boost APP as members with the APP provide the greatest opportunity to be more relevant in real-time, increase engagement and customisation.

They also prove to have a higher ATV and frequency of visit.

We do understand not everyone wants to engage with the brand via the APP platform, so we also give members the option of a loyalty card as well to ensure there is something that suits every customer.

4. What’s your play with gamification?

It all goes back to the BMW movies! It’s because we want to engage and interact in a fun and irreverent way and games just make what we do real and human, quite simply we are all wired to play!

For our first game ‘Free the Fruit’ we were amazed at when our members engaged with the game…most on the way to work and then at bedtime!

We found an average of 179 minutes of game play across 380,000 users in just 8 weeks.

With this first game we provided rewards and prizes within the program for members to redeem in-store.  

In our second edition ‘Find the Fruit, we revealed their prizes in-store – the classic surprise and delight. Incredibly, the average game-play has increased to 4 hours and 15 minutes.

This has been an overwhelming success for us and an area we never stop learning from.

5. How do you stay fresh?

Nothing beats listening to and understanding our customers, however I also:

1. Look beyond the QSR sector to see what’s working (or not)

2. Go to conferences such as SXSW

3. Listen to podcasts and read blogs

4. Develop our teams desire to suggest, try and if it works, keep going!

One idea that came to fruition was a Facebook Messenger BOTS campaign to ‘talk to a fruit and marry one’!

We had over 100,000 members talk to a BOT, pretending to be a fruit, pretending to be a person for an average of 12 days (ridiculous) and one person married a coconut in Japan (nuts!).

6. What do you think are the three opportunities for rewards programs to focus on?

1. Be more relevant! Use the data you have and go deep to see who your customer is.

2. Be as generous as you can be.

3. Don’t devalue your brand or cheapen yourself by trying to be everything to everyone.

The forth one is be a ‘Purple Cow’ with your program - with reference to Seth Godin’s brilliant book ‘Purple Cow – transform your business by being remarkable’!

7. What do think are the three challenges for rewards programs to focus on?

1. Data security should be a priority, but also data integrity. Don’t inflate your database with contact details from prize promotions who won’t convert into loyal customers and the data you are collecting on your customers, protect it. Data is a privilege not a right for brands.

2. Channel Fatigue is extremely worrying. By relying too much on one major communication platform (eg email) is risky as it places all your eggs in one channel’s basket!

3. Lewis Platt said “Whatever made you successful in the past won’t in the future” and I believe this can be applied to most loyalty programs. There are so many competitors to your brand now so you need to continuously challenge your program’s success factors.

Another basic element is to ensure the earn to redeem rate is achievable. With online calculators it’s too easy to see under the covers of programs that offer 0.5%. If you want to change habit you have to reward with something of value.

8. If you could start Boost Vibe Club again – what would you do differently?

….(a long pause)…nothing! Janine (Janine Allis – founder of Boost Juice) has created an amazing brand and the program is the size it is because Boost has been constantly innovating at all the right times.

As an example, Boost jumped onto email and magstripe cards in the very beginning. We have over a decade of customer data and contact details which helps making decisions a lot easier. I am just bolstering new innovation on an already great program.

9. What do you think is creeping up on rewards programs for better or for worse?

From a brand’s perspective the mobile wallet options for members to ‘store’ or create a digital card are taking members into an aggregated platform providing less opportunity for brands to have a direct and controlled communication channel with their members.

This could be a huge disruption for brands, unless brands innovate to find more reasons for customers to download their apps, they will inevitably lose their mobile channel and have to ‘pay to play’ in the not too distant future.

From a member’s point of view these wallets help them to reduce card clutter and add convenience.

It should always be about the user and these apps make it easier for the user. People will no longer have 50+ apps on their phone and the users will only have the apps of the brand they are truly loyal too.  

10. Finally, do you believe in the ‘luck of the Irish’?

No, instead of ‘luck’ I prefer the word ‘fortunate’ as I have been working with the team and brands that I do. I don’t believe luck just happens…

Summary

Christian is a fascinating person with real stories and results to back them up and the interview could have gone in many directions and for hours.

However, for me the standout insights were:

  1. Stories are the foundation for successful customer interaction with or without a program.
  2. If you have a program, protect the asset.
  3. The data you gather through a program is a privilege (not a right) .
  4. Make your program worth remarking on (with thanks to Seth Godin).
  5. Games make a massive difference to brand engagement (time with the brand).

Have a happy loyalty day!

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An interview with Phil Hawkins Head of Loyalty Operations at flybuys

I had the pleasure of meeting up with Phil to chat about his experience over the past 26 years in the world of loyalty programs.

It was a privilege for me to listen to his wisdom and views on the past, present and future of flybuys as well as the challenges and opportunities for loyalty programs in general.

1. How did your loyalty program life begin?

My first exposure to loyalty programs was in 1993 when I was in retail marketing at Shell and was approached to join a project team (with three others) to look at a ‘loyalty program’ opportunity with the then Coles Myer group.

Australian households’ main reference point for loyalty programs at that time were the Qantas (1987) and Ansett frequent flyer programs which were the domain of genuine frequent flyers; there was no credit card connection then.

As we embarked on this new loyalty program strategy, we held some focus groups with consumers and while they knew a little of ‘coupon collecting for rewards’, you could see their frequent flyer envy as well as the belief that ‘these where only for business travellers’.

When we put the proposition of earning points or rewards for their daily shopping to redeem them for flights, ’their eyes lit up’.

Eighteen months later in 1994 we launched flybuys.

2. In your 26 years of involvement with flybuys – what have been your big moments to remember?

I remember three massive moments

The first was launching the program in 1994, which despite the research we just didn’t know what would happen.

The Sunday night of launch we took over the ad block on the news and had all four ads top to tail – 1. Shell and flybuys, 2. National Australia Bank and flybuys, 3. Myer and flybuys and 4. flybuys…and Australians went crazy!

We signed up over 1,000,000 households in 6 weeks. The card manufacturer ran out of plastic (those were the days) and we had to send out cardboard cards!

The second moment (more than just a moment), I remember a period in 1997 when we had educated our members so well on earning points and had not focused on enough on redeeming them for rewards.

What seemed like a moment of madness (might have been a bit longer) many 1000’s of members suddenly wanted to redeem their rewards at once, sending the call centre into meltdown (online was not an option then).

Finally, for me, the relaunch of flybuys in 2012 was huge (you remember that Adam as you also had the pleasure to participate in that as well).

We revamped the program with more points, more partners, more rewards and mailed nearly every Australian household new cards, the Australia Post trucks were lined up on that weekend for kilometres!

3. Why do you believe flybuys is still thriving in 2019?

Because it is genuinely rewarding.

We have rewarded our members with more points than ever before, more rewards than ever before and continue to add new partners to give more earn and redeem options to our members.

flybuys members collected 24% more points in 2018 than 2017 and redeemed 26% more points over the same period.

flybuys has more than 8.4 million active members, covering about two thirds of Australian households, and has more than 20 major participating partners.

4. Culturally, what keeps your program thriving?

We simply focus on rewarding our members and finding new ways to reward them.

On a weekly basis we celebrate successes and share member feedback (the good, the bad, the not so nice). We recognise our team members who have gone above and beyond to turn unhappy members into delighted customers.

5. What three areas do you think flybuys can continue to improve on?

1. Continue to be relevant and find more ways to engage with our members.

2. Keep refining the experience and reduce the points of friction where it counts. As an example, one of our most popular rewards are flybuys dollars and via the flybuys app we have made it simpler by reducing the steps of redemption from 5 steps to 2.

3. Continue to keep pace with the rapid change in tech and digital interactions.

6. Why do flybuys continue to invest in coupon direct mail?

  • Front page of flybuys direct mail statement

Simply because they continue to be popular with many of our members. We would not keep sending them if no-one used them!

7. In general, what do you think are the opportunities for loyalty/rewards programs to remain meaningful to members and at the same time be a profitable asset?

Better personalised member experience. With so much data collected by programs these days, they are just not using the data to improve the member’s life!

Why? I think they don’t realise how valuable the insights are and hence not resourcing or investing in what they’ve got.

Having said that, I believe that program managers (organisations) need to remain respectful custodians of customer data. The key words here are ‘respectful’ and ‘custodian’.

Programs also need to remove complexity at every opportunity.

8. What advice would you give to any brand or business that has an existing program?

Be rewarding – loyalty is a two-way street. Don’t focus on what’s in it for you. Loyalty programs should never be described as “schemes” – schemes are for scheming.

9. What advice would you give to any brand or business that is planning a new program?

These seem obvious however, they are worth remembering.

Don’t just do it because your competitors do. Consider them carefully…plan, think investment not cost and implement with loyalty professionals by your side.

A poorly constructed program will waste your money and reflect poorly on your brand’s reputation.

A program won’t paint over the cracks of inadequacy of any aspect of your core product or service offering.

10. What do you think is creeping up on Australian programs, that all of a sudden will be a reality?

GDPR type legislation in Australia will be a, when…not if.

Loyalty and payments integration which is already happening however has still not quite hit the majority of programs and hence members.

I wonder if there will be a successful ‘flybuys’ for small business?

Summary

Trying to capture 26 years of Phil's experience into a 50-minute interview was a challenge as there were so many tangents we could have taken and inspiring ideas and views we could have uncovered.

I am grateful to Phil for his 26 years!

Have a happy loyalty day!

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The Point of Loyalty by Wes Towers - 5M ago

One of the most powerful motivators of a tiered loyalty program is what happens “on the other side of the rope”.

Being rewarded with the benefits earned in a higher tier of a loyalty or rewards program creates a sense of:

“I feel special” (exclusivity);

“Look at me” (status) and

“I’ve earned this” (achievement).

The impact of these feelings for the member is heightened when it’s in a public setting, increased by a mix of:

  • Sight (visible signage, banners, carpets, roped off areas, club lounges, VIP parking)
  • Sound (a public announcement calls out first for the higher tiered members) and
  • Saying hello (greeting a higher tiered member has some extra nuances of recognition)

There are also other benefits that are less public which are crafted for higher tiered members.

Airline, hotel and loyalty programs most commonly have tiered programs that use a mix of sight, sound and ‘saying hello’ to recognise higher tiered members.

However, there is also an impact on those not receiving the benefits of the higher tiers, especially in a public setting.

It’s called The Bystander Effect

According to the Journal of the Academy of Marketing Science, the research study - “Understanding loyalty program effectiveness: managing target and bystander effects”, highlights that loyalty programs with tiered benefits (“prestigious club benefits”) should also focus on the members who are NOT receiving the higher tiered benefits.

What’s the impact on these “bystanders” or lower tiered members and also non-members when they can see and hear how higher tiered members are being treated?

Thoughts and feelings include - “I’m not special”; “I want what they have - how do I achieve that status to earn those benefits”; “there’s no point in joining as I’ll never get there”.

A program’s blend of benefits needs to consider BOTH sides of the rope

Understanding this mix of negative emotions and acceptance of their earning reality for these “bystanders” when building a program’s blend of benefits, ensures a focus on clearly defining and explaining the rules of reward achievability and program engagement.

While the focus of tiered programs is to influence and reward specific member behaviours (spend more, fly more, stay more), taking a step back to consider the “bystanders”, will give you a greater opportunity to craft your program proposition and communications to alleviate or accentuate their feelings.

On the “side of the rope” where members are enjoying the benefits of the higher status earned, it’s important that program managers also deliver to their expectations.

What “bystander effect” have you experienced – on either side of the rope?

Have a happy loyalty day!

The Point of Loyalty is a customer loyalty marketing and loyalty program consultancy helping business improve the care and currency of existing customers. 

CEO Adam Posner is a loyalty program specialist helping business build thriving programs that are profitable to the business and meaningful to the member.

He is author of the annual customer loyalty and loyalty program research study - For Love or Money, now in its 6th edition.

He has developed the four stage loyalty program methodology - "The DNA to a valuable loyalty and rewards program" to enhance the asset that programs can deliver and has been involved in the design and deployment of loyalty and rewards programs and loyalty research across industries including entertainment, education, pharmacy, hotels, trade, retail (various) and more recently in blockchain based cryptocurrency coalition loyalty programs.

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One of the most powerful motivators of a tiered loyalty program is what happens “on the other side of the rope”.

Being rewarded with the benefits earned in a higher tier of a loyalty or rewards program creates a sense of:

“I feel special” (exclusivity);

“Look at me” (status) and

“I’ve earned this” (achievement).

The impact of these feelings for the member is heightened when it’s in a public setting, increased by a mix of:

  • Sight (visible signage, banners, carpets, roped off areas, club lounges, VIP parking)
  • Sound (a public announcement calls out first for the higher tiered members) and
  • Saying hello (greeting a higher tiered member has some extra nuances of recognition)

There are also other benefits that are less public which are crafted for higher tiered members.

Airline and hotel loyalty programs most commonly have tiered programs that use a mix of sight, sound and ‘saying hello’ to recognise higher tiered members.

However, there is also an impact on those not receiving the benefits of the higher tiers, especially in a public setting.

It’s called The Bystander Effect

According to the Journal of the Academy of Marketing Science, the research study - “Understanding loyalty program effectiveness: managing target and bystander effects”, highlights that loyalty programs with tiered benefits (“prestigious club benefits”) should also focus on the members who are NOT receiving the higher tiered benefits.

What’s the impact on these “bystanders” or lower tiered members and also non-members when they can see and hear how higher tiered members are being treated?

Thoughts and feelings include - “I’m not special”; “I want what they have - how do I achieve that status to earn those benefits”; “there’s no point in joining as I’ll never get there”.

A program’s blend of benefits needs to consider BOTH sides of the rope

Understanding this mix of negative emotions and acceptance of their earning reality for these “bystanders” when building a program’s blend of benefits, ensures a focus on clearly defining and explaining the rules of reward achievability and program engagement.

While the focus of tiered programs is to influence and reward specific member behaviours (spend more, fly more, stay more), taking a step back to consider the “bystanders”, will give you a greater opportunity to craft your program proposition and communications to alleviate or accentuate their feelings.

On the “side of the rope” where members are enjoying the benefits of the higher status earned, it’s important that program managers also deliver to their expectations.

What “bystander effect” have you experienced – on either side of the rope?

Have a happy loyalty day!

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