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#453: Leaders in Customer Loyalty: The CEO's Desk · Leaders in Customer Loyalty, Powered by Loyalty360

• 0:05
  Speaker 1: Hello everyone out there and welcome to Leaders in Customer Loyalty.
• 0:08
  Speaker 1: The CEO's Desk, a Loyalty360 podcast series where we sit down with our very own CEO, mark Johnson, to hear directly from the top about the direction of customer loyalty, brand engagement and what matters most right now.
• 0:22
  Speaker 1: In every episode, mark will be sharing rare executive vantage points, connecting the insights from our Loyalty360 advisory board, our member conversations and Loyalty Expo sessions into one focused discussion on the trends that are shaping our industry.
• 0:37
  Speaker 1: Mark, it's always great to hear from you.
• 0:40
  Speaker 1: On the CEO's desk.
• 0:41
  Speaker 1: Welcome, thank you very much.
• 0:42
  Speaker 1: Looking forward to this discussion, for sure.
• 0:44
  Speaker 1: On the CEO's desk Welcome, thank you very much.
• 0:47
  Speaker 1: Looking forward to this discussion, for sure.
• 0:48
  Speaker 1: Awesome.
• 0:51
  Speaker 1: Well, coming out of the Loyalty Expo, one of the things that Loyalty360 does every year is sit down with the advisory board to talk about what's going on in loyalty from a big picture perspective and what are the trends we're seeing in the industry.
• 0:59
  Speaker 1: So would you want to explain a little bit about what you take away from those discussions and how we compile this list?
• 1:05
  Speaker 1: Yeah, absolutely.
• 1:07
  Speaker 2: So every year for the past three years we have met with our advisory board, which we spun up kind of a year or two after COVID.
• 1:14
  Speaker 2: The goal of the advisory board is really to elevate customer loyalty within kind of all industries right.
• 1:20
  Speaker 2: So it's a very diverse board.
• 1:22
  Speaker 2: We meet the first day of the conference and just have an open discussion.
• 1:25
  Speaker 2: We go around the room I think this time there are about 30 different advisors and people who are on committees within the Lothi 360 that we ask them what were the challenges or opportunities they see for their program.
• 1:37
  Speaker 2: And I think there's 11 this year, last year there were seven, so a little bit different.
• 1:40
  Speaker 2: But the big trends we saw again very qualitative, bit different, but the big trends we saw, again very qualitative and we'll get into this a little bit more on each topic individually.
• 1:49
  Speaker 2: But organizational alignment is very important right now for brands.
• 1:52
  Speaker 2: There's a big push for substantiating and reinforcing the program and the program value.
• 1:57
  Speaker 2: Obviously customer focus, especially in these kind of challenging economic times, is front and center.
• 2:03
  Speaker 2: Prioritization of the program is another one and it kind of goes hand in hand with substantiating and reinforcing the value Push to simplify the program and optimize the program.
• 2:13
  Speaker 2: Obviously those not necessarily aren't always mutually exclusive.
• 2:18
  Speaker 2: Navigating this economic environment that I mentioned a little bit earlier, it's very challenging for brands right now.
• 2:22
  Speaker 2: They may not have the right product in store, they might not have the right product online.
• 2:27
  Speaker 2: So navigating some of the tariffs no tariffs, travel, no travel has been a pretty significant challenge for brands, especially in the hotel and our entertainment industries.
• 2:38
  Speaker 2: Partnerships are another area that have kind of a growing focus.
• 2:43
  Speaker 2: Brands have moved away, as as we know, over the last couple years, from affiliate based partnerships to more one-to-one partnerships, but that comes with a series of challenges as well.
• 2:54
  Speaker 2: To making sure there's alignment Technology, understanding technology, getting it right within their technology stack, ai challenges everyone's talking about AI, but within the customer loyalty arena, except for, maybe, measurement and offer optimization or offer segmentation, it's not really being used to its fullest.
• 3:11
  Speaker 2: There's some consternations there.
• 3:13
  Speaker 2: And then, lastly, as always, this big push for metrics and data that you can use and number the other top 10 to reinforce, substantiate or create alignment around.
• 3:23
  Speaker 2: So brands are still looking for industry wide metrics and data.
• 3:27
  Speaker 2: So those are the top 11.
• 3:29
  Speaker 2: Awesome.
• 3:31
  Speaker 1: Well, let's dive in and kind of talk about each of these 11 things in a little more detail, and I guess we'll start at the top of the list with organizational alignment.
• 3:39
  Speaker 1: I know from your seat you're constantly hearing how challenging it is for brands to get internal teams aligned around loyalty.
• 3:47
  Speaker 1: What do you think is the core breakdown happening here, and how can loyalty leaders really earn buy-in across all departments more effectively?
• 3:55
  Speaker 2: Yeah, there's a significant challenge with regard to organization alignment, both initially and ongoing.
• 3:59
  Speaker 2: But I think brands that do it well realize that it's a constant right.
• 4:05
  Speaker 2: They have to keep a constant pulse of the organization, understanding what those within the organization understand and know about the program and address any misconceptions that may exist.
• 4:15
  Speaker 2: You know we're fortunate enough again the advisory board.
• 4:18
  Speaker 2: We actually meet throughout the year on weekly sessions and talk about different facets of customer loyalty.
• 4:23
  Speaker 2: But this whole idea of understanding the organization's perspective on customer loyalty and how to elevate it is pretty consistent.
• 4:30
  Speaker 1: Yeah, so in these large organizations that have really long approval cycles, what have you seen work well for people when it comes to getting that momentum and operationalizing loyalty programs in their companies?
• 4:42
  Speaker 2: We'll talk about this in a little bit.
• 4:43
  Speaker 2: There's kind of a bifurcation right now within the industry of those brands who view customer loyalty as kind of a cost and those who view it as an investment.
• 4:52
  Speaker 2: And also when those who look at investment in and around customer loyalty, they have a more customer-centric perspective.
• 4:59
  Speaker 2: So they're open to looking at new technologies, they're open to redoing their organizational staff.
• 5:06
  Speaker 2: Maybe they have a pod structure that kind of reinforces the value of the customer loyalty program.
• 5:11
  Speaker 2: But you're right on, from a technology perspective, getting the technology in the queue and we'll hear, with partnerships as well can be kind of an arduous process.
• 5:21
  Speaker 2: Kind of an arduous process and those who view it as a cost, especially in this challenging economic environment, it can be very, very difficult to sustain organizational alignment going forward because oftentimes the customer loyalty program, the rewards, the incentives, the baseline earning structures can be cut or changed in a way that can create some confusion or consternation for the customers.
• 5:43
  Speaker 1: Yeah, well, and that really leads to the next trend that you heard about from the advisory board the substantiating and reinforcing that program value.
• 5:50
  Speaker 1: You know it was one of the strongest messages we heard coming out of this year's Loyalty Expo advisory sessions is the need to prove that loyalty is a strategic asset.
• 5:58
  Speaker 1: You know everybody's got a CFO that they answer to.
• 6:01
  Speaker 1: So how do successful programs elevate loyalty to be part of their broader business strategy?
• 6:08
  Speaker 2: Yeah, again, getting to that bifurcation, those brands who view customer loyalty as an asset.
• 6:12
  Speaker 2: They are the ones that can take risks, they can make investments, they can try things a little different.
• 6:17
  Speaker 2: But you know what we're seeing right now, especially in this challenging economic environment brands are going all in.
• 6:24
  Speaker 2: The successful brands are going all in and we saw that in the rewards programs as well, in some of the presentations that they are viewing the customer loyalty program as kind of their database, right With walled gardens and some challenges with regard to measurement from more traditional CPM type acquisition models.
• 6:44
  Speaker 2: Brands are really focused on leveraging the customer loyalty data.
• 6:47
  Speaker 2: So if you have one to five five being your most loyal customers, how do I move that four to a five?
• 6:51
  Speaker 2: How do I move that three to a four?
• 6:53
  Speaker 2: Because, in understanding what's going to drive that behavior, is it a discount?
• 6:59
  Speaker 2: Do you need 50% off Dick's to purchase a used sweater?
• 7:03
  Speaker 2: Do I need 5%?
• 7:04
  Speaker 2: What actually will drive that behavior?
• 7:04
  Speaker 2: And listening to the customers, it's very.
• 7:05
  Speaker 2: Do I need 50% off to purchase a used sweater?
• 7:05
  Speaker 2: Do I need 5%?
• 7:05
  Speaker 2: What actually will drive that behavior?
• 7:07
  Speaker 2: And listening to the customers, it's very important.
• 7:09
  Speaker 2: So there is that kind of bifurcation between, again, the brands that view it as an investment and those who view it as cost.
• 7:18
  Speaker 1: Are there any data points that you are seeing that, really, when people are trying to have this conversation internally, what data points are really moving the needle in terms of validating the impact, the business impact, of a loyalty program?
• 7:32
  Speaker 2: You know it can be very challenging and that's again the last topic we talked about, or at a high level, was metrics and data.
• 7:39
  Speaker 2: But from a qualitative perspective it's how you look at the data, right Realization.
• 7:43
  Speaker 2: You may not have that rich data set and if you have that trust you're getting first party data, transactional data.
• 7:49
  Speaker 2: You're getting zero party data, potentially from quizzes and commerces and surveys that get a deeper understanding of how that customer reacts or what their interests are.
• 7:58
  Speaker 2: It's being able to leverage that data and leverage that insight and, again, understanding that you may only take a 5% discount or you may not even need a discount right.
• 8:09
  Speaker 2: So again, these data points can be challenging.
• 8:13
  Speaker 2: When you're looking at only a finite set of data points, ie discount or margin given away, that can be a very big challenge.
• 8:20
  Speaker 2: And again, some of the brands that presented at the Loyalty Expo they showed that they see pretty significant investment, kind of ROI and, although attribution is challenging, when they're investing in the loyalty program, putting more money into the program, having the right kind of discounts and right offers.
• 8:36
  Speaker 2: But that takes kind of a larger team potentially, it takes a different data type and also the orchestration engines that allow that personalization based on the segmentation of all the data they have.
• 8:49
  Speaker 1: Yeah, I mean, I've heard that a lot over and over at the Expo, people having those same challenges, and I think it keeps coming back to what our next trend was, which is customer focus.
• 8:59
  Speaker 1: Right, the customer lens is always front and center in these most successful programs.
• 9:03
  Speaker 1: But, as you've pointed out, you know, many programs are still falling short in showing customers real differentiated value, like how are the most innovative brands closing the gap between, like the evolving customer needs and desires and what their loyalty program design offers?
• 9:20
  Speaker 2: That can be a big challenge.
• 9:21
  Speaker 2: Many brands traditionally are challenged with regard to listening to and understanding their customers and being able to put yourself in your customers' shoes.
• 9:30
  Speaker 2: Understanding what they find value in the program is very important.
• 9:34
  Speaker 2: So the innovative brands again, they have kind of a unique structure.
• 9:38
  Speaker 2: They are looking at ways the customer engages with the brands.
• 9:43
  Speaker 2: They're listening to them, they have kind of an active feedback loop and when they develop or kind of enhance the program or change the program they try to do it in concert with the customer versus kind of against the customer.
• 9:54
  Speaker 2: Just because there's a challenging economic environment doesn't mean you have to kind of scrape the whole program or denigrate the reward structure in a way that could be deleterious to the customer.
• 10:05
  Speaker 2: So when you look at the brands that do it well, they have a unique organizational alignment.
• 10:11
  Speaker 2: They talk about it differently.
• 10:13
  Speaker 2: They talk about it in their 10Qs and their quarterly reports.
• 10:15
  Speaker 2: You know it's a focus where those brands who view it as a cost, you know they don't talk about it the same way.
• 10:21
  Speaker 2: They have maybe one or two people running the program, traditionally a little more junior, and it just doesn't have that focus within the organization and again, you can see it, culture, I think, is a big piece of this as well.
• 10:37
  Speaker 2: But customer loyalty, that has kind of a seat at the table, that C-suite table, that they can talk about the program, they can make investments and they can also fail at some efforts are the ones that are doing quite well.
• 10:46
  Speaker 1: Yeah, and so, as these brands are evaluating their health of their program, what signs should they be looking for that indicate that their value proposition is losing relevance with their customers?
• 10:57
  Speaker 2: Well, I think we've seen it in a number of brands and discussions had throughout the last year.
• 11:01
  Speaker 2: So there's kind of a tier fatigue that we've heard a great deal about, right Tier fatigue and also being able to differentiate your program, this quote-unquote sea of sameness which is kind of passe now, but when you look at the idea that many brands view their program as very similar to others and if they can't differentiate it it makes it very difficult for customers to buy in, but you'll see kind of a tier malaise or a tier fatigue at some of the higher levels.
• 11:29
  Speaker 2: People at that top tier, the gold tier, that diamond tier, may not be engaging with the brand in the way they used to.
• 11:37
  Speaker 2: So the preferences have changed potentially or how they were brought into the program may be a challenge.
• 11:42
  Speaker 2: It's really looking at kind of all those segments that you have and understanding again what they value.
• 11:48
  Speaker 2: It's not necessarily difficult but making sure you're providing that value in a manner the customer wants and it resonates with.
• 11:57
  Speaker 1: Totally so.
• 11:58
  Speaker 1: With all this talk about how you align internally, you know there's always going to be competition for priority within an organization and we've seen that this is something that folks have come back and said is a trend this year.
• 12:10
  Speaker 1: You know how do you look at loyalty and elevate it when it's one of many initiatives vying for attention within your company.
• 12:19
  Speaker 1: So do you have any advice for loyalty leaders who are trying to rise above the internal noise and keep loyalty top of mind at the executive level in their companies?
• 12:27
  Speaker 2: Yeah, I think we touched on this a little bit.
• 12:29
  Speaker 2: But it's really understanding what the organization knows about the program.
• 12:34
  Speaker 2: We've had, as I mentioned, over the last year, many sessions on this weekly and when a successful program, someone comes into a new program, it's really about getting kind of a temperature within the organization, what the CMO, cfo, the director, who may know about the program right and truly addressing those misperceptions what metrics do you have in place?
• 12:54
  Speaker 2: And being able to kind of foster that relationship with those in the more senior position but also downstream as well, making sure they understand the value of the program.
• 13:03
  Speaker 2: If you have customer service reps at the front line, are they asking you if you're a member?
• 13:08
  Speaker 2: Are they engaging you, Are they getting you into the program?
• 13:11
  Speaker 2: So again, training can be kind of a big piece of that as well.
• 13:16
  Speaker 2: But I think the most important thing we've consistently heard is that understanding what those in the organization know about the program, feel about the program and if there's misconceptions, how do you address them?
• 13:27
  Speaker 2: What metrics do you need to address that within whomever within the organization may have a challenge or misunderstanding, to proactively build and kind of engender focus for the customer mobility program.
• 13:42
  Speaker 1: Awesome.
• 13:42
  Speaker 1: Well, you know, we all know, within an internal discussion you might not get everything that you want, when you could go and ask for some improvements to your program.
• 13:50
  Speaker 1: Have you seen some examples where brands are still able to make meaningful loyalty progress even without having all the internal green lights that they desire?
• 14:00
  Speaker 2: There are some for sure.
• 14:01
  Speaker 2: I mean, again, going back to the conference, those who were there, there were a number of brands, smaller brands, surprisingly enough, that may not have marquee brand, not necessarily a marquee brand name, but they're doing things that are very unique, understanding the customers, understanding where they resonate.
• 14:17
  Speaker 2: We had a brand called Weigel's and they have a very unique focus Tennessee, mostly Tennessee, a little bit Kentucky, you know.
• 14:27
  Speaker 2: But they have NIL programs.
• 14:28
  Speaker 2: They are focused on the customers who primarily reside in SEC country, right, so, understanding the passion that resides within the SEC kind of customers.
• 14:40
  Speaker 2: But the fan base right, they're really doing that to leverage the audience.
• 14:44
  Speaker 2: But the fan base, right, they're really doing that to leverage the audience.
• 14:46
  Speaker 2: And it doesn't necessarily take a lot of investment.
• 14:47
  Speaker 2: If you can structure programs with partners that can help you allay maybe some financial concerns or offer meaningful rewards or kind of incentives to augment your program.
• 14:57
  Speaker 2: That kind of fits in with what the interests they may have being a part of the SEC fan base.
• 15:02
  Speaker 2: So I think brands, again, are looking at it more holistically and there may be challenges internally with technology and, you know, kind of looking at and being able to try things quickly.
• 15:14
  Speaker 2: Again, going back to Weigel's right, they are.
• 15:16
  Speaker 2: I think they're 85, 87 locations.
• 15:18
  Speaker 2: They have their own media network, which you would never expect from an organization that small, but they're doing things that are very, very unique for an organization of that size.
• 15:29
  Speaker 2: But again, they have that organizational commitment and alignment which is sometimes often hard to achieve.
• 15:35
  Speaker 1: Yeah, I think that's a great idea.
• 15:36
  Speaker 1: I mean, that was one of the most impactful stories I heard at Loyalty Expo and it really just came out of having a great creative idea that they knew was going to resonate with the audience and it took very little investment on their side to do something really successful.
• 15:48
  Speaker 1: So I think that's a great example.
• 15:50
  Speaker 1: One of the other topics that we continued to hear about at Loyalty Expo over and over again was simplification and streamlining.
• 15:59
  Speaker 1: I just heard it again in another interview that I did this week with someone who attended.
• 16:05
  Speaker 1: They brought up that topic again as something that they were really looking at for this year.
• 16:09
  Speaker 1: What do you see as the most impactful ways.
• 16:20
  Speaker 2: Brands are simplifying program design or tier structures without compromising on customer motivations.
• 16:23
  Speaker 2: That can be a challenge, especially when you look at kind of malaise that we talked about and the sea of sameness.
• 16:26
  Speaker 2: But again it gets to being able to listen to and understand the customers, understanding what mechanics are important to them.
• 16:33
  Speaker 2: Even Starbucks recently had some changes to the program that were deadpan within the community, and obviously Delta and some of the airlines a year back when they kind of debased the value of the program.
• 16:47
  Speaker 2: So I think you have to be very important to that.
• 16:49
  Speaker 2: Simplification is really getting back to that understanding of the customer they have of the program, but also internally what those in senior positions and those who are on the front lines understand about the program.
• 17:02
  Speaker 2: So some programs are very complex earning mechanism mechanisms.
• 17:08
  Speaker 2: They have tons of partners where the earn and burn ratio can change pretty significantly.
• 17:13
  Speaker 2: So I think it's really just about you know getting listening to the customers and making sure that you can you kind of meet them uh with with the incentives, with the rewards, uh with communication and content that they want.
• 17:26
  Speaker 1: Yeah.
• 17:26
  Speaker 1: Do you have any good examples of how brands can modernize some of those reward mechanics to help keep pace with their customer expectations and not break the bank and keep their program health in check?
• 17:38
  Speaker 2: Yeah, there's a number of different brands that are doing things that are very unique.
• 17:41
  Speaker 2: So gamification is kind of a big push right now.
• 17:44
  Speaker 2: So brands know that the more often you can get a consumer involved with the program, especially if you can bring that first, second, third reward redemption up into kind of the life cycle, the brands will be simply more.
• 17:58
  Speaker 2: The customer should I say, will be significantly more engaged.
• 18:01
  Speaker 2: So I think that's where there's some pretty significant opportunity there is going to bring that up into the life cycle and things quizzes, commerce, game, vacation are very important.
• 18:11
  Speaker 2: Sweepstakes where you can get 100, 1,000, 500 points off the book.
• 18:17
  Speaker 2: They create a very unique engagement paradigm as well because it gives that customer the opportunity to burn some of those points even though they may not win, but it kind of creates that aspirational opportunity for the program.
• 18:32
  Speaker 1: Yeah.
• 18:32
  Speaker 1: So talking about keeping programs you know economically viable, you know our next trend is navigating the current economic environment.
• 18:39
  Speaker 1: You know we've seen that throughout the first half of this year that economic uncertainty continues to shape how brands are thinking about value and about engagement.
• 18:48
  Speaker 1: What strategic shifts are you seeing in how brands adapt loyalty strategies to changing consumer behaviors and these increasing economic pressures?
• 18:57
  Speaker 2: Yeah, it's very interesting.
• 18:59
  Speaker 2: As mentioned, brands are not only tasked to keep their program highly, you know, performing in a high manner, but they're also challenged with navigating the tariffs, pricing.
• 19:11
  Speaker 2: Are they going to have product?
• 19:12
  Speaker 2: And it's interesting, a number of the conversations to brands talked about that at the conference and recently they may.
• 19:19
  Speaker 2: Before they didn't know where some of this product came from.
• 19:22
  Speaker 2: And it may be a product that has a very high emotive appeal.
• 19:25
  Speaker 2: It may be something that is used in kind of the redemption catalog and and if it's something that it is at risk or could be at risk for the program, uh, you know, they have to be cognizant of that.
• 19:35
  Speaker 2: So it really takes some focus away from from brands, um, knowing that the products, the technology, uh, you know, may not be available in a reward catalog, you know, even in store, right.
• 19:49
  Speaker 2: So I think that creates some challenges and it kind of takes away some of the focus from the organization because again, so many people were talking about well, are tariffs going to hit us?
• 19:58
  Speaker 2: Not going to hit us?
• 19:59
  Speaker 2: What are regulations looking at?
• 20:01
  Speaker 2: You know the Credit Card Act that's in the House, I think.
• 20:05
  Speaker 2: Now maybe back to the Senate and some of the other regulations, privacy, virginia sorry Maryland just came out with a new law recently.
• 20:12
  Speaker 2: So did Tennessee and Kentucky, so that creates a lot of dissonance as well and can be quite challenging.
• 20:20
  Speaker 1: Yeah well, are there any particular verticals that stand out as leading examples of loyalty, resilience during all of this?
• 20:28
  Speaker 2: I'm not sure if they're necessarily industries, but again I think restaurants and QSRs, especially those who serve chicken, seem to be doing quite well.
• 20:39
  Speaker 2: I know the restaurant industry as a whole was up about one and a half percent in sales, but those who have chicken fare seem to be doing very, very well and also a lot of grocery programs are doing quite well too.
• 20:51
  Speaker 2: They are leveraging their CPG data, but also the CPG partnerships, to get a kind of more lasered focus on the customer, their needs, their wants and how to drive incentives to actuate around those.
• 21:02
  Speaker 2: So I know that the travel hospitality seem to be still doing quite well.
• 21:07
  Speaker 2: That's what's very unique about being a member of Multi360 and sitting on these advisory calls with the peer groups we have, you kind of get a broad swath of the challenges that exist across industries, from manufacturing to retail, travel, hospitality, and I think there are brands that are doing quite well and managing it.
• 21:29
  Speaker 2: Because even when you look at food retail I think it was the soup company, I'm forgetting to talk about it their release yesterday that kind of the soup business, the more substantial kind of snack business, is kind of dying off.
• 21:42
  Speaker 2: But kind of the soup business, the more substantial, uh, kind of the snack business is kind of dying off, but uh kind of the made at home, uh that that that you know high touch, uh kind of food affair where customers have kind of a an involvement in making the product and then where they kind of feel good about making the product, that's doing quite well.
• 21:59
  Speaker 2: So, um, yeah, I think in retail is is okay, but definitely restaurants, grocery, seem to be doing quite well with regard to kind of keeping economics in check.
• 22:12
  Speaker 1: Well, mark, that brings us about halfway through the trends for this year.
• 22:15
  Speaker 1: This has been really eye opening and I'm really excited to continue learning more about these things and what we've heard and all the great stuff that came out of Loyalty Expo.
• 22:25
  Speaker 1: So we're going to end this episode for today, but make sure you come back in two weeks for the next episode of CEO's Desk, where we're going to drop the second half of this year's top 11 trends.
• 22:38
  Speaker 1: We'll continue diving deep into what we heard from the advisory board and Mark will continue giving you all of the insights you can't get anywhere else but on leaders and customer loyalty.
• 22:47
  Speaker 2: Thanks, Mark, Thanks Ethan, Thanks everyone.
• 22:50
  Speaker 2: Have a great day.