Loyalty Stories 09: Props and Credits to You – David Slavick

This time on Antavo’s Loyalty Stories video podcast we welcome David Slavick who explains the benefits of credit card reward programs

Antavo’s cover for its Loyalty Stories video podcast with David Slavick

WHERE TO LISTEN:

In the ninth episode of our Loyalty Stories podcast, we welcome David Slavick, Co-founder & Partner at Ascendant Loyalty Marketing.

The interview for this podcast has been a valuable source for Antavo’s Global Customer Loyalty Report 2024. Make sure to download it for over 30 statistics on loyalty program trends. 

In today’s episode, we discuss David’s favorite loyalty programs (credit card enthusiasts, listen up!) and then explore the trend of paid programs and Amazon’s dominance. We also talk about the secret magical ingredient airlines and cruise lines learned from casinos, and why companies need to be careful about choosing the right mission and messaging for their brand (reflected in their loyalty programs as well).

Highlights from our conversation with David:

  • How credit card reward programs elevate the customer experience, with examples of United Airlines, Verizon, and rue21
  • Who has the biggest impact on the success of a loyalty program
  • Why providing a roadmap for clients is so incredibly important
  • The difference between loyalty programs in North America and Europe

Learn more:

Podcast Transcription
Michelle

Hi, welcome to Antavo Loyalty Stories. I’m Michelle Ellicott-Taylor. I’m heading up the partnership team at Antavo. Antavo is a technology platform supporting loyalty programs around the world, including for brands like KFC, BMW and Benefit Cosmetics. In our Loyalty Stories, we’re diving into customer trends in the industry and looking at what’s working in loyalty. And we’re getting to speak to experts in this field. And today’s expert is David Slavick.

He’s from Ascendant Loyalty, a consulting firm working with global clients. David, welcome to the program.

David

Thanks for having me, Michelle. I’m really looking forward to today’s dialogue.

Michelle

Thanks so much for joining us. I don’t know if you just want to start off by giving us a little bit more information around Ascendant Loyalty and what you do.

David

Sure. We’re based here in North America, but we have an ascendant global network, which is a network of agencies, Middle East, Eastern,- Western Europe, Africa, Oceania as well. And it’s really exciting to visit with you today as we are deep into CRM and loyalty, helping clients really with a big four consulting approach to strategic assessment., program design, strategy, operating model. 

Clients ask us to evaluate companies like Antavo as a platform provider as well. And so we cover the entire scope of the space and we’re specialized in it and have been trained in this space for over 25 years.

Michelle

Yeah, I mean, there’s so much experience you’ve got to bring to the table. So I’m really excited today to discuss these areas with you and see what you’ve got to share. So just think you’re going to be brilliant. And I’d just like to say, actually, you know, we’ve obviously had your colleague, Jay, take part in this too. So we really appreciate Ascendant Loyalty taking the time to share your insights and experience with us. So thank you for that.

David

I’m going to do my very best, I promise.

Michelle

So just think you’re going to be brilliant. And I’d just like to say, actually, you know, we’ve obviously had your colleague, Jay, take part in this too. So we really appreciate Ascendant Loyalty taking the time to share your insights and experience with us. So thank you for that.

David

Well, it’s important. This whole space is so complex. And at the same time, when you’re working with clients, you want to try making it easy. And when you can work with clients and you have the expertise and the experience in this space, you’ve seen it all across retail, specialty retail, pure play, e-commerce. 

And having a track record of success in so many different categories and working with so many well-established technology companies and then a company like Antavo that’s really breaking the ceiling and doing so many innovative things out there and you’re providing some fantastic content on an ongoing basis. 

So, offering this report on an ongoing continuous basis and understanding the pulse and the trends and where the innovation is in the space, that’s what this category needs is inspiration and innovation.

Michelle

That’s great. Thanks for that feedback. And we’re so excited to be able to speak with people like yourselves to help us with seeing these insights and trends and looking at what’s happened already in the past. 

And what can people be looking at for the future? So just thinking about the types of programs that people are working with and obviously with your expertise in this space. What’s something that’s in the loyalty space that has been a big impact on you in the last year? What’s your favorite loyalty program?

David

United Airlines is one of my favorites. They personalize their communication to me. They’re always asking me to fill out surveys and indicate my future travel plans. The communications are always custom-based. They always put in something of a stretch. So even if I haven’t said that I’m interested in traveling to Vietnam and Cambodia and Thailand, they’ll suggest some kind of a promotional offer that’s associated with it.

I’m very loyal to the United MileagePlus card. They did a brilliant job even during the pandemic where people slowed down their use of their credit and then went more aggressive to offer incremental benefits in using the card. It’s the only card that I pay a fee for because my points don’t expire. So when you weren’t flying, you didn’t have to worry about your points expiring. That was a smart move.

And I live in Chicago, and I’m only 45 minutes from O’Hare. So naturally United is my preferred airline. I don’t go super out of my way to always fly United for particular trips. Actually, I’ve used American more often, and sure enough, they picked up on that and just upgraded me to gold status, and they ran a really cool promotion to go with it. But United and American were the first companies that did a loyalty program.

So right after SNH Greenstamps here in the States, where you purchase from department stores and then you put the little stamps on the booklets and then you got dollar savings as a result because technology wasn’t supporting it, really American and United were the first ones to create a program tied to their credit card. And it’s amazingly profitable for them with partners as well. So that creates preference for me with their hotel partner.

I’m very loyal to Hertz as a result of my affinity to United, and they even have cruise line partners and so on. So they’re doing it right. It’s headed up by a gentleman by the name of Luc Bondar, that has been on the supplier side of the space, and he’s got a great team working with him here in Chicago.

Michelle

I think that’s really interesting what you’ve just said about the wider network with it as well, so how it’s bringing other partners into the programme and, yeah, like you’re mentioning there, how you become loyal to those partners as well as the airline in the first place.

David

Well, you know, money is dear to you. And you have an affinity. And at the same time, you’re a fan of the brand. So you know, you tell people. I mean, I’m not sitting there sending messages to my family members saying you should sign up for the card. I’m never going to do that. Credit card sign up is, people are particular with that with their credit profile. But nevertheless, having a constant affinity, they can always count on me to be you know, a loyal, have an emotional bond as well. 

You know, they’re not doing a lot for me, other than giving me a, you know, a free check bag, and then I typically get a nice seat, and those particular type of preferences, but they always treat me well. The other program that I absolutely adore is Verizon, which is the mobile carrier, and I have their Visa card. Both cards, by the way, are issued by Chase.

And their call centers are very good in servicing you as a customer. And the value proposition is tremendous, but it’s a closed loop value proposition. You use the Visa card, you spend with the Visa card, and 100% of your stored value goes towards accessories and a future phone. So you don’t burn it on anything other than back at Verizon. It’s very smart.

And the package that they used was this amazing black box. And it was a full reveal. It was probably as cool as the way people were getting all excited in the way that Apple would package up the new iPhone each year, but even better. 

So the designers were brilliant. The look and feel of a black box against their red logo was brilliant. It showed high quality. And the card is fantastic. It’s like a platinum kind of a card. In its consistency you feel it and it’s a heavy card. It’s not a 30 mil card. So it feels with a high quality. It’s very smart.

Michelle

Oh, it’s got a nice quality. Yeah, the whole box and that. Yeah, that kind of thing where someone’s feeling that they’ve got something that is a exclusive, special, tactile. Yeah.

David

It’s tactile. It’s smart. It goes right into your head. So the credit card companies, they want you to have their card in your primary wallet, as opposed to your second or third purse, where you’re not using those cards as often. So in the US, we like to use our credit cards. In Canada, they don’t use credit cards. They use debit cards. And then in other parts of the world, it all depends. But most people try to go and leverage it against hotel or airline.

Michelle

Yeah. Okay. So there’s some two really nice examples there of loyalty programs that have made an impact on you. And then just thinking about, I guess, the brands you’ve actually worked on. So what would you say is the brand that you’re most proud of with the loyalty program and the concepts that you’ve worked on with them?

David

Oh gosh, I have to be careful there because I have one that’s gonna be introduced in January of 2024. And so we’re actually most excited about that one in the footwear category, where it’s a combination of both hard and soft benefits, experiences, virality social integration, all of those aspects and best practices that are really driving the market today. 

So you’re just going to have to stay tuned to learn more about it through my LinkedIn posts and once the client is okay with us sharing. But that’s the one that we’re most excited with because the client has a very passionate customer base. You know, they have a good footprint with physical stores as well as online.

You know, they’re fashion forward. It’s all about sustainability as well. So the key theme is there. So we really dug into it and we’re really thrilled to go and work with that particular client. So that’s what we’re really most proud of over the last five years. 

Then there’s other programs that we’ve done where a company was in bankruptcy, came out of bankruptcy and has completely overachieved against its membership and that’s rue21 out of Pittsburgh.

They’re good friends of mine from working together at American Eagle where I ran CRM and loyalty on the client side, so I was on that side of the desk. They brought us in at Route 21 and said, we need a program. What we had done before wasn’t well constructed. It said, here’s your reward and you have to come in within three weeks to burn your reward. 

Well, you just spent at the store on jeans and tops and jackets and belts and accessories and so on, why are you forcing me to redeem this? So really, you should be offering choice. And so that program that we designed for rue21 has gone exceptionally well. It completely overachieved against the financial metrics. 

We helped them with introductions to a credit card issuer and they issued a credit card about a year and a half after launching just a white label program and it’s really kept the brand front and center in a tough competitive category against my friends at American Eagle and Hollister and Abercrombie and Fitch and so on.

Michelle

Oh, nice. So there’s a program that you’ve worked on that’s fantastic, and then we’ve got one to watch out for. And well, it will be like 2024. So yeah, maybe we’ll have to have another podcast with you to talk about that one. 

David

There you go.

Michelle

Yeah, that would be great. And then I’m looking at, I guess, the last couple of years, what would you say are the big changes that have happened in the loyalty industry?

David

I would say experiential is really where people are trying to step it up. Everyone always deals with the whole concept of points on our points meet too and should we offer a reward, shouldn’t we offer a reward, should we just use CRM to demonstrate that customers are valued. And trying to go and do things that more support the brand and the brand image and create affinity to the brand and loyalty is just part of that entire equation. 

I think that’s where things have really moved forward. I think that so many companies look at what Amazon has done with content and Amazon Prime and just making that wonderful convenience to just bring the product right to your door just after you thought about having it. And you get it within 12 hours, 8 hours, 6 hours or 24 hours or less.

Then all of a sudden people are going and doing paid programs like lululemon, but they’re offering specialized product. Now people weren’t doing specialized products 10 years ago that are unique for the customer. So if you’re going to pay $130 for a membership with Lulu and you love wearing their clothes and showing off their logo and feeling good about yourself and wearing their tops and and bottoms and so on, that has put an incremental demand on the merchant and design organization to do unique releases of products. We didn’t have that ten years ago either. 

And then the newest trend is actually something that’s unique that’s just happening, which is companies are pulling back on the value proposition. They’re actually giving less.

And so, you know, they’re looking at their economics. You have certain parts of the world, like in Germany, that have been in recession for two quarters. And they’re saying, you know, where can we cut back? Where can we do things differently? There’s demand that’s already there, or demand is soft. Why are we giving out 10 percent back for particular behavior? 

And so you know be careful what you wish for because consumers understand the value proposition and they feel that when they’re spending their money they should be treated especially and if they’re showing affinity they should also be treated well and of late even in the travel industry we’re seeing that some are actually pulling back. 

I’m sure you read what Delta did. I don’t think they did a very good job of that introduction of the new design. But I think in the end, they decided that it needed to be a new construct to create the kind of true value differentiation with their flyers, frequent flyers that is more special and more required. So it’s interesting to see. 

And then I would say status match was a concept that was quite valid in the casino industry. So, and also in the cruise line industry. So if I’m cruising with Norwegian Cruise Line and I cruise with them three times a year and I have this affinity with them, I’m gonna wind up being in a crappy cabin the first time I cruise with MSC cruises or Royal Caribbean or Holland America. 

So status match allows me, if I prove that I have you know, high status in the program with Norwegian. And I share that with Royal Caribbean. They say, well, oh, you’re a frequent cruiser. Okay, we will take care of you and give you the really nice cabin with the balcony and the hot tub, right? 

That only existed in the airline category and now it’s moved into cruise, but it’s always been in place with casino because, you know, a blackjack table is a blackjack table. The craps table is the craps table. So if you’re highly affinity to Caesars, and then the competitor wants to get you to stay at their hotel and give you an upgrade to a suite or a fabulous room, you just show them that you have this platinum status with one and they’ll match you with the other. And so the status match aspect when you have a tiered base program, I think is something that’s evolving as well over time.

Michelle

Yeah, that’s really interesting because I was looking at the changes that you’ve seen, I guess, in the last few years, but you’ve also mentioned about new trends coming. And that was something I’d wanted to look at as well, because there’s so many people I’ve spoken with and there’s like the ESG side of things, there’s sustainability, there’s non-transactional versus transactional, emotional loyalty, all these things and gamification is coming up quite a lot as well. 

So with the trends for the next, you know, say 18 months, 24 months, what do you see as the real, I guess, highlights here that people are going to be looking to move forward with?

David

So many of those things are me too. You’ve got to be really careful. You know, our client in the footwear category, sustainability is what it’s all about because it’s primary to the product that they’re producing. Ok? 

If you’re in a different category, you wind up going and taking it on to say, send us your used clothing or other gear that you’ve bought from us, so REI did this, and then they evaluate it, and they say it’s heavily worn and we’re going to give you a low credit, or it’s medium worn and we’ll give you a medium credit, or it’s barely worn or barely used and it’s not soiled and it’s in really good shape and we can resell it, well, then you’re passing it along and then you’re not using as many materials and you’re being responsible and so on. 

So if it works for your business model, okay but don’t force it, okay? Because people can go and smell that. And then on the other hand, if it looks like you really don’t have a stronger commitment, like Target Corporation, okay?  It’s a department store, all right? They have people on the backend at Target or at Best Buy as an example. I’m using North American companies, but I’m sure it applies to department stores in Europe and across the globe.

Is sustainability really part of what they’re all about, or is it offering choice to customers and great customer service and excellent pricing and so on? And so you’ve got to be really careful. If you jump on that train, you have to have a long-term commitment. You have to have people on staff, that’s all they think about.

They actually represent the brand and talk about it, and there’s believability that’s associated with it, and it’s inspiring. So a perfect example of that is a current client of ours, which is Orvis, which is outdoor gear, and also Canine Health. And they sell dog beds and leashes and all sorts of things for their dog. So it’s not cats. It’s just dogs.

But they also sell fishing, fly fishing equipment, and they’re the best fly fishing rods in the world. And Custom Mane is just amazing. We went to their manufacturing plant in Vermont. It’s a company that’s privately held. And you know, they believe in the outdoors. They run events where you take care of the environment and all the people come together at particular shops that sell their goods and then there are outfitters that take you out on streams and lakes and so on to enjoy the outdoors and to go fishing and use their gear and so on. 

So, there’s a commitment there as well with 5% giving back to the environment and to canine health. They’ve had that in place before anybody was really ever talking about it. That’s part of their DNA. So if it’s not part of your DNA, you need to be really careful about it. There’s sincerity that’s associated with it. So that’s my high horse on that. 

And the other is paid programs. So, you know, more and more people do the subscriptions. And then there are companies that come out and say, hey, we could provide a service and remind you of all the different recurring charges that you have. And you’ve taken on way too many subscriptions and you’re spending too much and you need to cancel some of them because you’re not saving any money anymore. 

So people lose track. So, you know, there’s the yin and the yang that’s associated with all of these different trends and components. But I would say data, analytics, modeling, segmentation, personalization still is key. Treating me like you know me. 

Demonstrate that you know me is still and should be all the number one areas to concentrate on. So if you have a great platform provider like an Antavo that has wonderful feature functionality and can do both the transactional and the social and can support you with your modeling and your analytics and has great reporting suite and you have a commitment to leveraging that data with an in-house core of excellence or an outside vendor. CDP, DMP capability. 

That’s really where things can get pushed, things can get innovated, more innovative, and that’s really a continuing trend, and that’s where the primary focus should be, and continues to be.

Michelle

Yeah, and that’s interesting you saying that because I was thinking about like from a platform perspective, obviously, and you’re mentioning there about CDPs and marketing automation and you know, loyalty isn’t on its own, it has to work with all these other elements of the I guess the marketing suite. But when you’re talking, when you’re coming up with your ideas and your strategy and your concepts, etc. 

How front of mind and with the capabilities on the platform, like what is front of mind there? So are you as the consultant thinking about how omnichannel is, the integration, implementation, ease of use, and how’s that translating to the end brand making their decision as well?

David

Sure. Well, we always start when we just have completed three RFIs and RFPs for clients in the last six months. They bring us in for that because we know the full scope. So, Forrester Report, Mary Pilecki and Emily Collins, you know, they do great work and do an excellent job of understanding what’s out there. 

Knowing the strengths and the weaknesses of the different solutions. And I kind of think of the different solutions that are out there is like, you know, tier one, tier two and tier three. There are some at one tier that are all integrated and reliant on the information coming from Shopify that can support stores, that can support online. There’s templates, it’s easy, you can get it up, it’s small business, it’s medium-sized business. But if the client is committed to Shopify and they want to do a reward program, there’s a limited number of companies in that space that are aligned with Shopify. 

If you’re doing a program and you’re designing that program and you have certain customer journeys and you have certain customer use cases and you have certain feature functionality in terms of how the rules work, and you want to do segmented offers and you want to do private access and you want to do private tiers so that you could do test and learn.

If all of those things, currency or not currency, a paid program as part of it, a premium sort of a concept as well, there’s a credit card involved so you could do an incremental benefit to the credit card customer, all those various components, that’s what we take into account with our loyalty leaders methodology. And then when we talk to companies like Antavo, we say, here’s what the program is all about. We reveal it. We share with you.

What we’re trying to accomplish, our primary objective is to get a customer from a first time buyer to a second time buyer. Our primary objective is to solve the leaky bucket. We’re losing customers faster than we’re gaining new opt-ins and there’s a problem with attrition. Ultimately, we need to provide a rich benefit to the customer and we need to do a better job of efficiency with our digital communications. 

We need you to help us to support real-time recognition, reward, and personalization on our website. You mentioned gamification to the extent that you actually have creative capabilities to help us to do gamified experiences or you work with a JeBit who’s an excellent company in the space and we find out who your partners are. So are you integrated with certain point of sale partners? Are you integrated at the oil and gas at the pump?

All of those particular criteria help us to decide if we have a good match or we don’t have a good match. You don’t want to spend the time pursuing it if you’re not a good match, but if you are, then you’re a very significant company for us to evaluate as a potential partner for this client because you’re matching up to all of our use cases, all of our envisioned journeys, etc.

Michelle

Yeah, exactly. I think that’s, you know, it’s important because someone like yourself, you’re educating the end brand with these things, because they’ve got to understand that their concept matches the capabilities of said platform. And it’s really important if they’re looking for that omnichannel ability that platform can support that.

David

Right. The one thing I’ll add that a lot of companies in the space don’t share, but you guys do, is what your roadmap is. So your future state evolution of the platform, that you have a commitment to continue to evolve the platform and its capabilities. So when you’re talking to folks and saying, so what’s in the future, maybe you’ve thought of it, and maybe you haven’t thought of it. 

But now, you can actually take the time and your product development team can add those additional capabilities, those additional functionalities to then put you at an advantage versus your competition and the client isn’t funding it. You’re self-funding it, but it’s actually giving you an advantage in the marketplace. 

So not a lot of companies talk about what their roadmap is. Most because they don’t want it to get out to the competition, right? But when you’re in dialogue with different companies and you’re both, you know, controlled by a mutual non-disclosure agreement, the client should ask the technology company, what is on your roadmap? Where are you taking your platform? Am I just going to be stuck in version 12 or is there going to be a version 13 and a version 14 and what are you envisioning to incorporate there?

So you’re servicing existing clients, and then you’re continuing to evolve the platform. That’s one of our top criteria, is the stability of the company, but also the commitment to continue to expand and evolve the solution, adding services, et cetera. Because there are companies out there that do email, and SMS, and gamification, analytics. They’ll have strategic consulting services like us. So theoretically, they would compete with us on that staff. 

I don’t think they’re as good as us, but that’s okay. And so offering that combination of services is also important for some clients that actually are looking for it all in one place because it’s easier to manage. There’s efficiencies that are associated with it. And so we look at that as well.

Michelle

Yeah, and it’s interesting what you’ve just said there about roadmap, because that is something we share, but and obviously other companies do as well. But I think, you know, when someone’s looking at loyalty, they aren’t just looking at something for 12 months, 24 months, you know, it’s a longterm investment for them, you know, it’s a significant part of that whole digital transformation. 

So understanding what they need to start with for their loyalty concept and then where they’re wanting to evolve it to. Yeah, it’s really important for them to understand where that platform is moving to as well.

So you mentioned earlier something about different territories and how different regions might respond to different things. So have you seen that because obviously you’re a global company? Do you see that there are certain trends in loyalty, for instance, in North America versus Western Europe?

David

Well, I think that in North America, they are much more reliant on the credit card relationship to differentiate and provide incremental value to the cardholder of a Visa or a MasterCard, an Amex or in some cases a DiscoverCard. I see in North America a much heavier reliance on partnerships and exploration of partnerships.

I see in Europe much more emphasis on status match and personalized service and also offering more choice for the program member and that they make an even stronger commitment relative to ESG and do it in a very sincere way. 

As opposed to North Americans, they kind of hit you over the head with a hammer, shout out from the rooftops, hey, we’re doing this, and then don’t necessarily follow through the way some companies do. So there’s some differentiation there. I would say that in North America, it’s more mass offers and mass sales and not as much exclusive offers and exclusive sales for program members, in North America they tie into particular holidays and events, and they drive towards being more mass merchant oriented then segmented.

Where in Europe or in Oceania they will try to go and get new category or new sector purchases. So if I’m buying in one particular area of the store or in one particular area of the chain to try getting more cross shopping, they’ll rely on the analytics to an even greater extent to try growing the absolute market share or lift the average transaction value.

They’re actually overseas, quote unquote, versus in North America. I think they leverage their analytics to an even greater extent and improve their overall offer management and merchandising strategy. 

It’s only in the grocery category here in the U.S. where many grocery companies rely on Dunhumbi out of the U.K. and it’s called I think 8451 in partnership. It started with Kroger to understand the market basket and leverage that information to make the shopping experience in the store more successful, to offer digital coupons that are matched to your profile, more effective to ultimately drive cross shopping. So it’s really in the grocery category, where that happens as opposed to in the department store category or other specialty retail.

Michelle

Yeah. Oh, thanks for sharing that because you’ve got that insight on a global basis. And then I know I’m going to have to wrap up soon. I’ve got so many questions I want to ask you, but I wanted to look at when you’re getting the assignments for the loyalty concepts, who’s driving those? Is it just from the loyalty team at the brand? Is it from CRM? 

Is it from CEOs, head of digital? Are you seeing a difference with the number of people involved, in giving you these assignments?

David

I would say that the majority is from the program owner and the chief marketing officer. They’re the ones that are looking at program performance and they want to refresh their program which is our improving loyalty approach as part of our loyalty leaders consulting practice.

So a program refresh is something that we’re putting a new push on because there are a lot of programs in retail that are kind of tired and worn out and they need an inspiration. And the reason for the inspiration is because enrollment is slowing down, redemptions are slowing down, they’re not seeing a higher average transaction from a redemption, they’re not hitting their financial projections which supported the business case. Many, many reasons. 

They haven’t done a refresh with their employees. They’ve turned over post pandemic 50% of their employees and 50% of the employees aren’t trained in the program or they don’t even allow the associates to participate in the program. Now might be a time to take a look at it. So we’re getting outreach from clients where they have a basic program, more and more involved program. 

They might have secured software that was integrated with the point of sale company. And so it’s a separate siloed license solution. They may be in the food and beverage category and they’re doing mobile only and working with a company that provides pretty basic feature functionality, not anything close to what we’re talking about or what Antavo offers.

And so now they’re saying, you know what, we’re limited by what that software can do. There, the technology company is doing a fine job. It’s just, it’s not, we’re not achieving what we can achieve. We’re not maximizing our potential here. And so we’re limited as a result as to what we can do. And when you realize those limitations, then you do an outreach.

You don’t get the head of store operations suggesting to the CMO, you know, you really should look at a different technology vendor or you really should revise this program because it’s not working for us. It typically, and sometimes it’s the chief financial officer, the CEO or the chief operating officer that’s looking at program performance and then they say to the team, hey, this is, we’re not feeling inspired any longer by the program and we see what our competitors are doing. Why aren’t we doing this and why aren’t we doing that? And they’ve outquicked us. 

It should start with a competitive analysis, both of your direct competitors, as well as your indirect competitors, and see what they’re offering, what they’re doing. And then you can decide with a refresh.or looking at a new technology vendor to help you, what’s possible, how high is up, how you’re gonna differentiate your program design to have a new competitive advantage. 

And by the way, you design something for today with the refresh and you’ve got two steps forward from that in future phases to do things even if the competition matches you, you already got a plan in place for what phase two or phase three is.

So those are the things that we help clients with. We just had a call this week with a company in the food and beverage space. And they’ve got physical stores. They have an online business. They have a business where they’re selling their product through distributors, let’s call it, at retail. It’s on the shelf. They went with something that is point of sale sourced. And they’re limited by it. It isn’t that they drop the ball with them. But it’s not providing them with greater capability because they’ve got a much bigger universe now. 

So they got started with something which probably was very reasonable in its cost, you know, less than $50,000 a year for a platform to service them and transaction-based to support their physical stores and online. But they’ve got bigger goals, bigger expectations. Maybe they bring partners into it, which they could based upon how attractive their target, their customer base is, and they say we need to do better, we need to explore further. 

So in that case, it was the program owner and the CMO that reached out to us and said, tell us about your company and we’d love to learn more and there you go.

Michelle

Okay, now that’s great to get that insight because there’s different people, you know, getting involved but ultimately a CMO needs to be involved with this driving, you know, loyalty program.

David

Most times, I mean, the initial comment that I had with you is it’s all about the brand. So the loyalty program supports the brand. Now in some cases, you look at Sephora, it’s totally integrated. I mean, the program, the beauty insider, they’re one and the same. Or Ulta and Ultimate Rewards, it’s one in the same. Why? 

Because it’s emotion. It’s self-image. It’s.service, its selection, its support, its value. They’re giving that to their customer, male and female, every day. So it becomes one in the same.

Nike, right? You’ve got running clubs. You’ve got direct sales. You can design your own product. There’s exclusive access. But Nike is Nike. I mean, what they do in terms of social outreach and community things along that nature, that’s not overtaking what the swoosh represents and what they’re doing with teams and so on and so forth. Loyalty is just a component part of what they do. 

Adidas is doing some fabulous things with loyalty, right, on a global basis. But Adidas is much bigger than what the loyalty program is. It complements. So there’s Big L and there’s Little L. 

And having a technology partner like Antavo, to help you to achieve either something that makes it big L, which is fantastic, and it all represents what the brand’s all about, and it hugs and nurtures those current customers as well as future customers that you acquire. Fantastic. 

And if it’s little L, well, it’s still enterprise-wide. And so those influencers or the people that are the advocates of the program, we always say it has to come from the top down. The chairman has to be behind the program.

When you bring a program into an enterprise, their job changes. Loyalty all of a sudden becomes part of their job description. It wasn’t in there before. It may say, it’s important for customer acquisition, or it’s important for customer growth, or it’s important for you to look at your analytics and help us drive our business metrics, or it’s important from a store operation standpoint to treat our customers with care and the customer’s always right and satisfy them and so on. 

But the fact of the matter is as soon as you bring the program into that enterprise, their job description changes. Their evaluative criteria when they have their annual review, loyalty actually is one of the criteria that they’re evaluated against. It wasn’t there before, now it is. So it’s so part, it’s not going away. You know, the projection relative to being a $6 billion enterprise, you know, in terms of a business, you know, it’s gonna continue to grow. And that’s part of the reason why venture capital companies are interested in investing in technology because of long-term business relationships and contracts. 

I’ll say one more thing, at least a three-year contract anytime you sign with a technology company, and then you obviously have mutual respect with each other and you meet your SLAs and you perform and all of those terms are in there as well as, you know, quarterly business reviews or every six months business reviews have an open dialogue. How are we doing? How can we improve? 

All those things I always encourage, but this is a marathon and not a sprint. And so if you are going to go into this space with a new partner like Antavo, definitely a three-year agreement is the way to go because you’re reconfiguring many things that you’re doing right today, but you’re going to be doing it even better in the future.

Michelle

I think that’s a really nice point. Thanks for that, David, because, you know, people have to have, I guess, their expectations managed. You aren’t going to roll out a loyalty program in three months and have all the results that you want. This is a long-term investment and you want that loyalty program to evolve as you’re learning more about your customers. So, yeah.

David

So an interesting thing, when I started at frequency marketing, which then became Epsilon, that’s where I was empirically trained in this space, okay. I’ll tell you the year, 1997, I’ve been doing this since 1997, kids, okay. Clients would say to us, when am I going to get cash positive with this program? 

So obviously, you put the program in place, you have to build, you have to do the building blocks to get there, right? Staff, capabilities.

training, creative, et cetera, et cetera. You gotta invest in, obviously, technology on a license basis. We would say 18 months. You’re not gonna cross the line for 18 months. So that was the setting of expectation back then. 

Michelle

Yeah, yeah, same.

David

But consumers weren’t necessarily trained to respond to these programs the way that they are today, where they expect to get something from Starbucks. They expect to get great service and great content from Amazon, right? So here you are today, and when clients say, when am I gonna be cash positive? I’d say, let me see what your metrics are. What kind of velocity do you have in your business? How many high value customers do you have? The ones that are high value are the ones that are going to sign up first. They’re no dummies. 

If you’re giving them a program for free, naturally they’re going to go inside up to get more. You know, if you want to do a paid program, well, there’s an investment incremental for that, as I shared, which is bigger overhead. And that’s not going to turn cash positive necessarily right away. But you’re getting that funding of the membership fee. 

But guess what? You need to give back double! If you’re charging $50 or $130 for membership, you need to give $100 or $260 in value back to that member. Cause they’ll sign up for the program for year one, and then they’ll watch to see if they got that $100 in value or that $260 in value. And if they don’t, or if they decide, you know what? The competition offered me something better for year two, they’re not going to renew.So you always have really high expectations to give something back that’s significant. 

But the guideline that I always give clients if they’re interested in is what can you do incrementally to give double whatever it is that you wanna charge. And so that whole aspect relative to when do the lines cross and when are you gonna be cash positive is a function of what their business is all about and what the velocity is all about and how committed store operations is to support it because guess what? 

The number one person relative to loyalty and engendering loyalty is not the marketing person. Who is it?

No, well, yeah, you, because you’re great at what you do. It’s the associate, right? It’s the person behind the cash-in-wrap. It’s the person behind the checkout. It’s the person that’s servicing the customer. It’s the person that’s the advocate of the program. It’s the person that can explain how the program works. 

It’s the person that can look at the point of sale and they’re trained and say, hey, did you know you have a hundred dollar reward that you can use on today? Thank you for being a great customer. Would you like to use it today? Oh my God, I forgot all about it or I didn’t open up my email. That’s so nice of you to just tell me that I had it. Associate.

Michelle

Yeah, exactly. It’s reinforcing what they have, isn’t it? Because so many people are members of so many naughty programs that they forget. And they’ve got these points.

David

36? The average is they’re signed up for 36 programs. They’re only active in seven. Now I would say intensively active in seven.

Michelle 

Yeah, okay. Well, that’s a good stat. And it’s a scary one thinking there’s that many there. But yeah, thank you so much for today, David. What you’ve shared is really insightful. And obviously with your great experience there talking about some of the brands that are getting it right, but also thinking about the trends that people need to be thinking about. And also, you know, how they’re working with this with the consultants as well. So yeah, thank you so much for that. We really, really appreciate it.

And yeah, that’s the end of today’s Loyalty Story with David from Ascendant Loyalty. If you would like to visit our website, antavo.com to find out more about what we’ve got to offer from a loyalty perspective. 

And also you can visit Ascendant Loyalty to hear more from David and his team when you need some consultancy on this topic. Wherever you see this, please give us a like if it’s YouTube or LinkedIn. And we look forward to seeing you on one of the next episodes. So thank you very much.

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