Loyalty Stories 15: Take it to Heart – James Baker

Michelle

Hi, welcome to Loyalty Stories. I’m Michelle Ellicott-Taylor, Head of Global Partnerships at Antavo. And we’re a tech vendor providing loyalty platform for our brands, working with lots of global brands, including KFC, Benefit Cosmetics, and many other fashion and retail brands. In our Loyalty Stories, we’re running a podcast where we dive into trends in the customer loyalty space, and we talk to industry experts.

And I’m really excited today that we have James Baker joining us. James, thanks for joining. Would you like to introduce yourself?

James

Thanks, Michelle. And thanks so much for having me today. So I’m James, I’ve been very fortunate to work on a number of loyalty propositions over the years. And it’s an area that is particularly of interest to me, based on sort of the changing economic environment that we’re seeing, user behavior, and also just the actual experience I myself as an individual have with some of these brands and organizations.

Michelle

Now that’s great and I think that’s why we’re so excited to talk with you today because of all of that experience that you have and I guess it’s always a good place to start with the million dollar question what’s your favorite loyalty program and why and can you share anything about the brand but yeah it’d be really nice to get some input there.

James

I mean, there are so many fantastic loyalty programs across a variety of different industries. I’m going to be cheeky and choose two. And both of these more because they have a particular relevance for me as an individual. So the first that is Nike. And so I’m a big running fan. I do a sort of, I go for runs four or five times a week. And the trainers themselves are fantastic as are many other brands. It’s not, it’s not just Nike. And, but I think.

The way in which they leverage their loyalty program to provide transactional benefits, but also have that more emotional and relational experience with users is really, really valuable. And they do that seamlessly. I mean, it’s, I, it’s also my birthday this month and, straight away they give you 25% off, within your birthday month. I utilize that on the, on the, on the first day. So again, they’re, they’re very clever around how they personalize the experience and they really invested on that personalization piece. 

Again, I think there’s room to work when it comes to how they connect that with the physical experience and really personalizing that. But in general, it’s a fantastic loyalty program that again, touches on a number of different areas from a mechanics perspective. 

And the other one is, I mean, it’s not formally a loyalty program, but I think the customer loyalty that they have is almost as high as anyone and that’s Apple. I mean, everybody knows who they are. Everybody’s used their products. And the fantastic thing around it is that they are built around sort of seamless connection between the physical and digital space and intuition. I think anyone can pick up one of their products and instantly understand what the purpose of it is, why it provides them value and how it connects with the other sort of products that they’re using.

I mean, whether they are young, old, it’s built, for the user experience. And I think they’ve just done that really well. And the loyalty that they’ve been able to generate as a brand is really clear from those products.

Michelle

Yeah, I mean, that’s a really strong one Apple, isn’t it? Like you say, it’s just that loyalty is there. People know it, people know what they do. And yeah, like you say, it’s a very strong name. But the Nike one is interesting too, with those touch points with the birthday messages and thinking about like the personalization that’s involved with loyalty as well and having those touch points with your customers.

So great, that’s really good to know. Now I wanted to get a bit more of an idea about the ones that you’ve worked on. So you’ve obviously spoken about those two, but I guess from a customer perspective, but brands you’ve actually worked on, what’s been something really exciting there that you’ve seen with loyalty?

James

I’m not too sure about naming companies themselves. I should have probably checked that in advance, but there’s one which is, a big toy manufacturer and they, they had a really strong loyalty proposition for a number of years, but it actually, as things change, the environment changed, their user groups, sort of user base changed. It became a little bit redundant from its original purpose. 

It was very much focused on the higher affinity users and they were already at a customer lifetime value that wasn’t really going to increase. And although it was very valuable for them, they started to think, how can we make this more accessible for a larger population of individuals? So many of whom actually get to experience this, this the brand’s products and also the digital propositions that they launched to market as well. 

And again, they’ve got everything from sort of training events. They have physical spaces as well as stores, and they also have a lot of a big community. There’s a lot of people who are really fans of the organization. And what we started helping them on with is, how do we start creating more of a connected experience across the digital and physical experiences that they had, ultimately to increase their customer base, and then start to build greater connections with them? 

And I think one of the things we’ve seen a lot in the last couple of years is the, the sort of move away from just talking around loyalty and moving more towards membership. And although they are very much dependent on one another, I often think of loyalty as a little bit more of a transactional process, whereas membership is that more sort of experiential and emotional connection that individuals have with a brand or a company. And I think what they really wanted to start doing was connecting the two. 

How do we leverage the quite transactional focused proposition that they had, and make it more of an emotional connection just because of the nature of the products that they sold and also the digital experiences that they offered. And over sort of a 12 to 18 month period, we really helped them redefine what that concept should be based on their sort of wider strategic objectives. 

And then think around not only the value proposition that they wanted to take to market, where we did a lot of testing with users, both from a quantitative and from a qualitative perspective to refine what that proposition could look like, the types of mechanics that it would offer. But also we started thinking around the operational side of it. 

What is that cost-benefit analysis? What mechanics actually can we afford as an organization to offer to our customers? Because it’s not always that you can just give them absolutely everything. There has to be a value exchange, which is mutually beneficial for both company and user. And finding that line can sometimes be quite tough. 

And I think the key thing that they really started to think around and I think is a fantastic way of utilizing loyalty is it being sort of the single gateway to the experience that you have with the brand. I don’t think loyalty anymore can be thought of as a nice to have. I think if companies want loyalty programs, they really need to put them at the heart of the business and really think around how do they connect their physical, digital or both in terms of propositions and use loyalty as that sort of single way of getting into a, to a brand and really maximizing the value and the exchanges that you have.

Michelle

Yeah, and I think all of that you’re saying there and the loyalty and the membership scenario ties in with something you said earlier about community. I mean, that’s a big thing, isn’t it? Bringing it into that feeling that you’re in this special community and you’re part of something.

James

Yeah, it’s a really great one. But I suppose slightly contradictory to that. When we do a lot of our analysis, sort of when we use MaxDiff or, or Conjoint style analysis, people sometimes actually put communities down lower than we might think, as you can imagine, transactional benefits often come up quite high. And I think that’s because people immediately understand them. We’ve all had a, or sort of made a payment or purchase something and either got points or free delivery or, or a free gift, for instance.

But some of those more emotional and community focused experiences, if you haven’t had them with a brand before, you don’t necessarily know what’s on offer. So again, I think those communities are really invaluable when done right. 

But I think companies can’t just sort of say, hey, you’re going to be able to connect with other people who are like-minded. They need to provide the environment that people can really do that and think that through just as much as they would sort of any transactional benefit that they might be offering.

Michelle

Yeah, you can’t just automatically create a community, can you? That’s going to come with time and it’s the membership, you know, that’s, that’s a, I guess, not compared in the same way to say some of the supermarket trends with the loyalty expectation on the points and the earn and burn. But membership is like, you’re going to be part of something, you’re going to feel something, you’re going to get that non-transactional benefit and yeah, the emotional loyalty there. So, yeah, that’s really interesting. Thank you.

And I guess in recent years, I mean, you’ve touched on a few things already, but what do you see have been like main changes in regard to Loyalty? Like, is it about moving towards membership or, yeah, how do you feel about that?

James

Again, I think it depends on the sector. I think certain sectors that earn and burn typical transactional loyalty programs are still very much the prominent ones there. I think everyone is keeping in the back of their mind that because of some of the leading companies that we’ve already mentioned as well as some of the other big global leaders, the Amazons and so on in this world have really started to increase the personalization that individuals get, and this was heightened even more so through the, the COVID situation where a lot of us were at home. We were unable to leave our houses, meet people the way that we typically would. 

And we went to the digital world to have some of those experiences, whether it was phone calls and video calls with our friends and loved ones, or whether it was how we purchased our food, our clothes, whatever it might be. And I think there were some companies that were already very well set to do that and there were others that had to very quickly deviate from their current strategy and push towards that. 

And so I think because of what we saw within COVID, there was this massive shift towards digital. And now I think the big thing coming out of the back of this is that everyone wants to go and have those physical experiences again. And I think one of the big challenges is how do we recreate the personalized experience that can more easily be done through the digital space, 

and recreate that in a physical space. 

So if I go online and I’ve recently purchased something, it might, a particular program might recommend something else that complements that. When I go into the store, even though I’ve got my phone in my pocket, maybe my particular card for that brand, no one knows who I am. 

How do I start to think around personalizing that experience? So they pick up on it as soon as I go in there and I don’t have to go in and ask them or tell them about the products that they have, they just know. And I think that’s something that, if people can start getting right, it’s gonna be hugely powerful to building that relationship in those physical experiences that people are really starting to look for again.

Michelle

Yeah, I guess everything you’re saying there is about the changes that are happening. And you’ve touched on a lot of points that are very interesting. Are there maybe like moving forward, like what we’ve seen, obviously, changing already and since the pandemic, but are there maybe two main trends that you see coming in the next, I don’t know, 12 months? I mean, there’s going to be many, but are there some key ones that you’re seeing?

James

So I think outside of the one that I sort of just mentioned, which is more that sort of, how do you recreate the personalization from the digital sphere into the physical one? I think for me, gamification, I think the rise of gaming in general as an industry is really accelerated over the last few years. And that’s across all age groups as well. It’s not just sort of the younger generation. There’s a lot of sort of more adult and older group focused games, which are really getting a lot of momentum, a lot of engagement at the moment. 

So I think gamification and getting that embedded into a loyalty program, and again, starting to think around how you can use that as an anchor for people to want to build up their credibility or their sort of status within a brand. Again, I think, again, people are quite innately competitive, even though they might not admit to it. 

I think people generally like that sometimes to build up, who they are and what they do and maybe the amazing things that they build or what they wear and how it demonstrates who they are as an individual. So the gamification and embedding that into a proposition I think is a trend that we’ve started to see and I think is gonna continue for a while. 

I think the other one is around sustainability. And again, it’s been a topic that’s been very prevalent now for a number of years. And I think what we’ve seen this year with some of the weather globally is really starting to pull it back to the forefront of, we need to start making a change. 

And I think there are a number of brands who are starting to think, how do I embed this into my propositions? And H&M for instance, is a really good example of where you can take back your clothes and earn points as a result. And I think brands that can naturally start to demonstrate to their users that they are offering them a really valuable exchange, but also thinking around the wider society when they do it.

It’s just going to build that emotional connection and make it even stronger. And again, people value that organization beyond just the transactional or even experiential moment that they have in a particular instance.

Michelle

Yeah, I think that links in with, like you say, the sustainability, the ESG side of things, like people who are working in conservation, you know, like certain clothing lines, where they will give a charitable donation towards the conservation of the beach and things like that, or the litter picking and getting involved with that kind of thing. So it’s definitely that, but also something you mentioned about the generations as well and how everyone was made to go digital. 

So there’s an older generation who are much more tech savvy now, and like you said, with the gamification and the immersive experiences for them, as well as the Millennials and the Gen Zs. Yeah, excellent. Okay, and then I guess looking at the work that you’re doing and from a consultancy perspective and thinking about what the end brand is going to need, when you’re looking at the choices on a loyalty platform.

What are the things that you see are a key that capability-wise should be providing? So thinking about like the gamification you’ve mentioned or integrations, those sort of things. What are the things you’re looking at there and advising on?

James

Yeah, I think ease of implementation, ease of use, both for the organization, as well as the end user are essential. And I think whenever we start talking around technology and data, investment is always required. And they are not simple things. They are time consuming from a organizational perspective. Which one do I choose? How do I embed it within the organization and what is the cost, the upskilling as well? 

It’s not as simple as just acquiring something and embedding it in. It’s then how you use that moving forward. And I think for any sort of technical solution, it really needs to drive towards the purpose of the value proposition that you’re delivering. If you want something that really needs to be personalized in order for it to work, then you need to have the platforms that enable you to collect the data in the right way, that enables you to use it to deliver that personalized experience. So I think ease of implementation is really key. 

And then I think around customization. So again, the loyalty proposition that you define and launch in its first state might not be the final one that’s still there in five years time. You want that flexibility to continue evolving that solution so that it can naturally, align to whatever the customer trends might be at the time. 

And again, I think from a technology perspective and a personalization perspective, Amazon are doing it really well. And they’re also thinking then around how do I bolt on some of the other things that maybe aren’t already within the, prime sphere, but that would sort of persuade people to continue the value exchange as we slowly increase the amount that we’re spending. 

So bolting on sort of maybe some of the video or audio offerings that they have as part of membership, suddenly that value exchange becomes more beneficial. So again, being able to customize over time and build new propositions or combine other propositions from your portfolio, I think enhances the value of whatever technical solution it is that you’re investing in.

Michelle

Yeah, and I think as well with the thinking about the capabilities, like obviously there’s lots of things that people want to achieve when they’re, getting advice on the strategy and what’s realistic for 12, 18 months going on to 24, 36 months. 

What are they doing to stage that and have a roadmap on that? So capability wise, are people looking at the longer term with this? Are people looking for short term fixes? Are people really investing in this that they’re seeing loyalty as a proper consideration now that they need to build into their long term program?

James

Yeah, I think as with everything, it depends. I think those who are doing it best are thinking around the longterm. Because again, when we talk around technology, when we talk around data and what that ultimately means around personalization, it takes time. 

You can’t just understand your consumers on day one. You need to collect the data. You need to then hopefully provide something to them that then enables you to learn more about them and you want them to continuously come back to your site or your store, so that you can collect more data on whatever their spending or habits are. 

And so I think that’s really important that they think about it from a long-term perspective. That said, companies that already have a loyalty program in place and are just sort of incrementally improving it, I think there is more value in looking at the attribution. 

What am I currently spending on and what value am I getting from it? And how do I then think to maximise that investment further?

Can I just make small tweaks to the value proposition? Can I speak to a few users and understand maybe why they’re only focusing on one or two parts of what I offer rather than the other three and four? So there are different strategies. And again, I think it depends on the maturity of the organization when it thinks around loyalty. 

But for anyone thinking of launching a new proposition or fundamentally evolving the solution and proposition they currently have, I think you need to consider three to five year horizons, but also quite carefully do that return on investment idea. 

Because whenever going to a CFO or, or equivalent, you have to really have that rigor that says, I need a significant amount of investment, but here’s why it’s worthwhile. And I think whether that’s with loyalty or any other part of business, that, that return on investment, the cost benefit analysis, it’s, it’s really key. 

And it’s something that we always try to support our, our clients with is thinking not only around the, the user experience they’re getting, also thinking around how do we maximise it internally from an operational perspective, make it easy for people to use, make them want it to be a part of the organisation, but also be valuable long-term.

Michelle

Yeah, and I think that answers the question that this is like a serious part of the consideration for someone’s plans now with what they’re doing in digital transformation. It’s not just a nice to have add on is very important part of the whole picture. And I was going to ask you as well, because I know you’re focused on Western Europe, but do you have any insight on whether there are any differences regionally within loyalty programs, are there certain types of programs that you see working better in the US versus the UK? That kind of thing. 

James

Yes, completely. I think there’s always cultural nuance between countries. And I think companies need to be very aware of that when building their loyalty programs, although a lot of the work that we do is, is with brands who are maybe based in Western Europe. 

A lot of the propositions are global, even if they focus on particular markets or particular regions more so. And again, when, when we typically start off our loyalty engagements, we make sure that we do a lot of research.

And I think that that’s one thing that we really feel differentiates that the programs that we create is it’s really focused on our understanding of quantitative and qualitative feedback that we get from users, which gives us an insight into their behaviors. And then when we compare that to what organizations are able to offer, we can then start to make the connections of what is that value exchange and how do we make something that’s really beneficial to both user and organization. But when thinking around the nuances.

I mean, there are always different trends, but even if you think of the UK and US, the way in which we have our coffee, the type of flavors we like, there’s huge differences. The fact that the UK still has pubs and they are so vibrant as they are and the way in which we go and experience them. 

Again, just from those sort of subtle things, the sports that we love, and again, the way in which sport plays a role in life, if you think of it very community driven from a US perspective, look at those, the whole state will be a fan of that same team and they will go to it. Again, those things need to be built in and taken into consideration in any loyalty program that people launch. And I think, again, when we talk around investment and how we make sure it’s worthwhile for the organization, we need to think around what’s the 70, 80% consistency that we can give, and then what’s that 20 to 30% that we can adapt to those local nuances. 

And again, I think digitalization of sort of Asia in particular, the fast moving nature of that market means that the digital experiences are really important. And also status comes out quite a lot in certain markets, being really, really important. Whereas when we were doing some research, Germany came up with a real emphasis around education. 

And so when we were thinking around how we pitched a particular product to that market, we really emphasize those particular mechanics. So although the 10 things that you’re offering might be the same, those that you bubble to the surface might look slightly different in the markets. And again, when we think around personalization, that has to be driven by those cultural and local requirements and nuances of the individuals in that region. 

And again, the companies that have that information and are able to adapt their proposition, albeit keeping it largely the same behind the scenes, means that they get a better return on investment and also build a greater relationship with their user base.

Michelle

Yeah, for brands doing something brilliantly in Asia, that might not work in the US. They’ve really got to understand that market and what’s going to work there. 

James

100%.

Michelle

Yeah. And then just thinking about, I guess, the people that are involved with obviously these huge loyalty programs and digital transformations. So as an agency, like when you’re working with these brands, who is it that’s kind of driving it, like is it always confined to a loyalty team approaching you? You know, is it someone else like head of digital? I know, who’s getting involved?

James

I think it sometimes depends on the maturity of the loyalty proposition. Certain companies have come to us and they don’t have a loyalty team at all. And so it’s actually the sales and or marketing department. And actually I’d say it’s one of the biggest challenges we have when first setting up a loyalty program is where is it going to sit within the organization? Who is going to own it? Because sales typically their KPIs all around revenue. Marketing is often more around reach and engagement.

And those things sometimes conflict in where your preferences are for the mechanics that you’re selecting and make a part of your proposition. So I think it historically maybe has sat more within the sales side. As we move away from transactional, I think those teams are connecting and often there’s a digital element to it. Again, we’ve spoken a lot around technology and data and if teams have a digital offering capability.

Whether it sits within one of those functions or sits above or alongside, I think it’s bringing those different teams together. But often it is sort of a chief digital officer that will come to us because they own what is that digital experience. But as I said, regardless of who comes to you first, it really needs to be embedded across the organization, even when you then think around the finance team, when you think around the attribution model.

Yeah, precisely. They have to be involved. They have to understand the value of this, otherwise it’s never going to go anywhere.

Michelle

Yeah, and I think you have champions internally, you have influencers, and then you have obviously ultimate decision makers. So, it’s making sure those teams aren’t siloed and bringing them all together.

James

Yes.

Michelle

So, okay. And then just thinking, I know we’ve touched on, I guess, like generations and their interest in loyalty. So thinking about, so this is people who are established in loyalty, you’ve got long, you know, 20, 10 years experience in this. 

And if we’re thinking about all of the new people coming through, like someone who’s in their early 20s now, and they’re a loyalty manager, but they’re aspiring to be one of these heads, one of these decision makers, what kind of advice would you be giving to somebody like that, about what they should be doing with the loyalty programs?

James

I think it’s to really get into the detail across the end to end experience. Again, I think I’ve talked around a lot of the, the end user value that they see, but also then the operational side of it. And I think the heads of loyalty really need to understand both. How do I create that mutual benefit for both? How do I create a virtuous cycle? That means that users get a better experience, more access. They get value from, discounts or anything like that, vouchers and so on.

But also how does it make sense from a cost perspective? How do I continue getting money to invest in the loyalty program and make it bigger and more rewarding for all? So I would say learn the piece that really resonates with users, understand how the product itself comes to life across the physical and digital work with designers, work with strategists really gets a sense of how you, how the best loyalty programs articulated to the market and how they also represent the brand.

Then also think around the people, the process and the technologies that underpin that loyalty program and get a sense of what is it that makes a really viable long-term solution. I think that end-to-end skill set enables people to really thrive but also to enjoy all of the different elements because you often don’t just focus on one, you will straddle across multiple areas.

Michelle

Yeah, and I guess is what we were saying previously, it’s about getting all the other teams on board as well, isn’t it? So you’re learning from different people involved in these decisions and I guess working with the brand and how the brand is, what they want and yeah, what they’re hoping to achieve. 

So, but yeah, it’s great to get that insight. And then I guess as one of the last questions, thinking about how we all like a bit of surprise and delight. I know you’ve spoken about trends and changes and things like that, but has there been anything that’s been, yeah, a bit of a surprise for you with loyalty and has delighted you as well?

James

I mean, in a really simple way, Nike sending me 25% off was a great surprise this month. And I think those.

Michelle

Oh yeah. Yeah, yeah. We keep talking about them.

James

But again, I think being really smart in the small things that actually make a much bigger impact than maybe you realize, I think those soft, personalized things are really great. I think what’s also been great is that, transition back to the physical experiences in North Face and their XPLR Pass that we haven’t really spoken around at all. 

I love that ability to offer things well outside of what you would expect a brand to be giving you, hikes up mountains and so on. I think that’s so clever how they’ve connected those two things. And again, that was a very meaningful decision that they took. How did they differentiate themselves? 

And again, when we look at the market right now, it’s becoming ever more saturated because it is the big, so the focal point, how do I get that long-term revenue generation? How do I get people to subscribe and be loyal customers? I think that was just a really clever tweak of how do I become embedded in the things that they love?

Michelle

Yeah, yeah, that’s great. That sounds great. That’s brilliant. Thank you very much. And I think we’ve covered most of the areas that we wanted to today. So, James, thank you so much for all of your input. There is so much of a wealth of knowledge that you’ve shared there. That’s been really, really great. So thank you.

James

Thank you so much for having me.

Michelle

Yeah, we’d love to do a follow up session. Hopefully this is the first of many. And yeah, wherever you’re listening to this, wherever you’re seeing this, whether it’s on LinkedIn or whichever channel that is, please give us a like, share, and also visit antavo.com to come and find out more about what we do with our customers. 

And if you’ve got anything that you need strategy wise, creative consultancy wise, then please reach out to VML. Please speak to James Baker and he can help you out. And thank you so much, and we look forward to sharing more stories with you soon.