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Improving Customer Loyalty: A Q&A with Subway on the Launch of the New MVP Rewards Program · Leaders in Customer Loyalty, Powered by Loyalty360

• 0:05
  Mark Johnson: Good afternoon, good morning.
• 0:06
  Mark Johnson: It's Mark Johnson from Loyalty 360.
• 0:07
  Mark Johnson: Hope everyone's happy, safe and well.
• 0:09
  Mark Johnson: I want to welcome you to another edition of our Leaders in Customer Loyalty series, where we speak with leading brands about what they are seeing and hearing on the front lines of customer channel and brand loyalty.
• 0:19
  Mark Johnson: Today, we have the pleasure of speaking with Mike Kappitt.
• 0:22
  Mark Johnson: He's the Chief Operating Officer at Subway.
• 0:24
  Mark Johnson: Thank you very much for taking the time to speak with us today, Mike.
• 0:26
  Mark Johnson: How are you?
• 0:27
  Mark Johnson: Yeah, it's my pleasure.
• 0:28
  Mark Johnson: Thanks for having us Absolutely First off, we'd like to start these on a more personal level, so we'd love to know a little bit more about yourself, your role at Subway and maybe a little bit of your history before, and also we'd love to get a fun fact or a passion you have outside of work.
• 0:45
  Mike Kappitt: Okay, so I started my career in the car rental business.
• 0:48
  Mike Kappitt: I was at Alamo National Car Rental for about 13 years, made my way to Burger King.
• 0:54
  Mike Kappitt: That was the first time I came into the restaurant industry and I've never left since.
• 0:58
  Mike Kappitt: When I left Burger King, I was the Chief Marketing Officer of North America.
• 1:02
  Mike Kappitt: I went to from there, had the great opportunity to go up the street from Miami to Tampa and become the Chief Marketing Officer at Outback Steakhouse.
• 1:10
  Mike Kappitt: So I was at Bloomin Brands for about nine years, became the Chief Marketing Officer of all of Bloomin Brands where we introduced, I would think, probably the first cross-concept loyalty program in full service and fine dining.
• 1:24
  Mike Kappitt: I then had the great opportunity to be the President of Carrabba's Italian Grill, where I was until I had this tremendous opportunity to come to one of the largest restaurant companies in the world at Subway.
• 1:37
  Mike Kappitt: And I came in and still am the Chief Operating and Insights Officer responsible for a pulpory of functions, including personalization and loyalty.
• 1:48
  Mike Kappitt: And a fun fact I guess I would say a fun fact about me is and Brad, I think, knows this I am a reality TV junkie.
• 2:00
  Mark Johnson: Okay, what's
• 2:04
  Mike Kappitt: You know I'm a big bravo guy.
• 2:10
  Mike Kappitt: I was thinking about BravoCon this year.
• 2:12
  Mike Kappitt: So I like Summer House, winter House, Vanderpump Rules.
• 2:17
  Mike Kappitt: You know I binge on 90 Day Fiancé, so I am right there and, like I said, I'm not ashamed.
• 2:25
  Mark Johnson: Brad: No he's not.
• 2:26
  Mark Johnson: He could have pulled a number of them.
• 2:27
  Mark Johnson: Yeah, yeah, that's good yeah.
• 2:29
  Mark Johnson: Which one was gonna be.
• 2:30
  Mark Johnson: Mark: The only one I'm familiar with is 90 Day Fiancé.
• 2:32
  Mark Johnson: I've watched that.
• 2:34
  Mark Johnson: Last year on my Daughter was getting ready to touring the country for her college choice to play soccer, so I got familiar with that.
• 2:43
  Mark Johnson: It was a little addictive.
• 2:43
  Mark Johnson: But then the next one wasn't as good.
• 2:45
  Mike Kappitt: So serious it's it's hit or miss.
• 2:50
  Mark Johnson: Okay, so your MVP rewards program.
• 2:54
  Mark Johnson: Can you give us a brief overview of that, how the program works, how the members engage with the program?
• 2:58
  Mark Johnson: You know what are the benefits are being a member.
• 3:01
  Mike Kappitt: Yeah, so it's a point-based program that has three tiers pro-captain and all-stars so we give our guests the opportunity to level up and unlock more benefits as they increase their spend and we can talk more about what some of those benefits are.
• 3:18
  Mike Kappitt: It's a pretty rich program, you know.
• 3:21
  Mike Kappitt: It replaces a prior program and this is greatly improved improved in our opinion and and the early read from our guests, as they agree.
• 3:29
  Mike Kappitt: As I said, it's a very intuitive program, easy to use for our guests, for our sandwich artists, easy to join, earn and redeem, and so yeah, so we're really proud of this new program.
• 3:41
  Mike Kappitt: Again, it's early days.
• 3:42
  Mike Kappitt: We just we just launched at the beginning of September, but we like what we see so far.
• 3:47
  Mark Johnson: Congrats on launching the new program.
• 3:48
  Mark Johnson: We were talking a little bit to start this about some of the changes you made to the my Reward program, to you know, into into the new offering of the MVP rewards program.
• 3:58
  Mark Johnson: How did you about making those changes?
• 4:00
  Mark Johnson: Because brands they want to simplify their program, they want to have it more personalized, but many brands struggle to be able to do that at scale and in some of the early results that you mentioned it seemed to be quite compelling.
• 4:10
  Mark Johnson: How do people about making those changes.
• 4:13
  Mike Kappitt: Yeah, so you know, for us the guest is at the center of everything we do.
• 4:16
  Mike Kappitt: And you know, even though we had an existing program and you said it right, it was the my Rewards program it we knew that it had opportunities, just from what intuition, but also things we heard when we were out in the field.
• 4:31
  Mike Kappitt: And so we spent a lot of time with our guests understanding what they liked about the current program, what they didn't like, what they liked about competitors programs and even programs not within our industry, within QSR or the restaurant industry.
• 4:44
  Mike Kappitt: And then we talked to our franchisees, our sandwich artists and some of our own folks and that was really informative in to the construct of the new program.
• 4:54
  Mike Kappitt: And so you know, some of the big changes I think relate to.
• 4:59
  Mike Kappitt: You know, we were a badge based program with the old program, which was very difficult for our guests to understand.
• 5:05
  Mike Kappitt: You kind of needed a decoder ring to understand how you earned badges.
• 5:08
  Mike Kappitt: It was incredibly difficult for our sandwich artists, particularly with the turnover that you have at the sandwich artist level, to really have well trained, well, you know, informed sandwich artists that understood the program.
• 5:20
  Mike Kappitt: And so sandwich artists were scared to death that a guest was going to ask them how the program worked, because they didn't understand it either, and so it was incumbent upon us to create a much more intuitive point space program.
• 5:32
  Mike Kappitt: You know it's a very common format, and so that's where we went.
• 5:36
  Mike Kappitt: As I said, we also introduced tiers, so we gave our guests the ability to move up throughout the tiers and unlock additional benefits.
• 5:45
  Mike Kappitt: We made it, as I said, easier to join and redeem, and so just a much simpler program, but that has a lot more bells and whistles.
• 5:53
  Mike Kappitt: At the end of the day, Excellent.
• 5:56
  Mark Johnson: The my The My Way rewards program before transitioned into a vastly improved MVP reward program.
• 6:03
  Mark Johnson: How did employee engagement and training play a role in the smooth transition?
• 6:09
  Mark Johnson: Mentioned high turnover you have in the QSR industry.
• 6:12
  Mark Johnson: How did you engage your employees to help in that transition?
• 6:19
  Mike Kappitt: Yeah, well, as you can imagine, I mean, this is a big shift this year and so you know we have a very good process for training in new stuff, whether it be new menu items, new programs.
• 6:34
  Mike Kappitt: It helps when whatever we're introducing is easy to understand and I think this program, versus the older program, was much easier for us to train in.
• 6:46
  Mike Kappitt: But we have seed training.
• 6:49
  Mike Kappitt: We bring in our field teams and train them on how to basically train the trainers, and we created videos and we have a subway university and we used every tool at our disposal to really ensure that our sandwich artists understood this program and we're seeing it in our results, I think again early days, but it seems to be doing the trick in terms of a sandwich artists having the confidence to explain what the program is and how it works to our guests and so, yeah, so you know, as you would imagine, all of the bells and whistles that you would have in a system this size for training.
• 7:28
  Mike Kappitt: We have and we deployed Excellent.
• 7:32
  Mark Johnson: You talked about some of the enhancements you made to the program more perks, higher earning power and potential, the new status tiers.
• 7:39
  Mark Johnson: How did you decide on the structure of the program?
• 7:42
  Mark Johnson: What was the process that you engaged with?
• 7:45
  Mark Johnson: To kind of look at that old program and you figure out what the new program should look like.
• 7:50
  Mark Johnson: Well, how did that work?
• 7:51
  Mike Kappitt: Yeah, well, again, I mean we talked to the guests a lot to understand what they were looking for and then you bumped that up against what you think you can afford.
• 7:59
  Mike Kappitt: That's a big part of this.
• 8:00
  Mike Kappitt: And so the way that we knew that one of the opportunities in the old program was we didn't offer enough value to our guests versus the competitive landscape candidly.
• 8:13
  Mike Kappitt: And so we and they kind of informed how we created the tiers and how the bump up in the tiers work for how you earn points.
• 8:23
  Mike Kappitt: We modeled it out financially and got to a place where I think we hit the sweet spot between what the guests wanted and what we thought we could afford or franchisees could afford, and that's how we landed where we're at.
• 8:36
  Mark Johnson: Excellent.
• 8:36
  Mark Johnson: Are there some key elements or benefits to the program that you're most excited for, and what do you think makes them unique?
• 8:44
  Mike Kappitt: Yeah, well, I think one of the things I was most excited about was introducing tiers.
• 8:51
  Mike Kappitt: That really, because when you bring a guest or a consumer into a loyalty program, you obviously want to see their frequency change and the more mechanics you have that are easy to understand but that help do that are great and our tiers, we think, do that.
• 9:05
  Mike Kappitt: So if you come into the program as a new user, you come in as a pro.
• 9:09
  Mike Kappitt: You earn 10 points for every dollar.
• 9:11
  Mike Kappitt: You get a certain set of benefits when you spend $200 or more a year, you then unlock the captain tier and then you earn faster.
• 9:21
  Mike Kappitt: So you earn 11 points for every dollar.
• 9:23
  Mike Kappitt: You get access to a very exclusive Subway swag store where you can go in and see Subway swag.
• 9:30
  Mike Kappitt: If you spend $400 a year or more, you become an All Star and that's the top of the heap for us in our program and you earn 12 points for every dollar.
• 9:39
  Mike Kappitt: You get free chips on Fridays with a purchase.
• 9:43
  Mike Kappitt: You get more bonus point days, more surprises and delights, as we like to say, and one of the things that's really kind of cool about us and the scale that we have and the marketing budget that we have, is we're able to unlock a lot of benefits because of the relationships that we have that we're going to deploy through this program to our most frequent users.
• 10:08
  Mark Johnson: Okay, and as part of the program launch, you had a way to challenge your most loyal fans.
• 10:14
  Mark Johnson: Alaska Challenge allowed them the opportunity to potentially travel to the most northern most city in the US.
• 10:22
  Mark Johnson: 10 fans earned a million points as part of this contest.
• 10:26
  Mark Johnson: Can you talk to us about how you constructed that challenge, how it worked and what you sell as the result?
• 10:35
  Mike Kappitt: Yeah, so, and I'll give you a little bit of a background before I talk about that one specifically you know we've created this knack for and it's really my team I just get to represent the work of a lot of great people in this particular instance, and they've had this unique ability to create, basically, pr activations that really have guests demonstrate their extreme love for subway, whether it's getting a foot long subway tattoo, which we had somebody do that for real whether it's changing your name to subway, whether it's going up in a subway blimp.
• 11:13
  Mike Kappitt: And this was just the latest well, actually, not even the latest, but maybe the one on right before the latest stunts that we did.
• 11:21
  Mike Kappitt: Where we did, we challenged guests to raise their hand to go to the most northern part of the world, so we had 6,000 folks enter and we selected from those entrants a couple of winners, and the reality of it is it's, you know, we're approaching the time of year when it's quite dangerous in the most northern part of our country, in Alaska, and so we we didn't actually have anybody do it, but we definitely had the offer out there and we're ready to do it Okay, excellent, when you look at that very robust challenge, very unique challenge, great PR opportunities, but the one that was you just did that I think it'll even more unique, especially for industry.
• 12:10
  Mark Johnson: It might have come from your time in the automobile industry, your program matching opportunity.
• 12:15
  Mark Johnson: Can you tell us a little bit more about that, how that came to be and what you saw in that program?
• 12:20
  Mark Johnson: Yeah, again, yeah, it's a great question.
• 12:23
  Mike Kappitt: Again, I give the team a lot of credit, and maybe it's the environment and the culture we create here, because they're constantly swinging for the fences and I always tell them their job is to make me nervous and they do a pretty good job of that.
• 12:34
  Mike Kappitt: So one of the things that we did for National Sandwich Day just a week ago or so, november 3rd was we offered consumers the ability to join our program and if they took a screenshot of another competitor's program, we would match points up to 5000 points per consumer, and we had great participation in that.
• 12:59
  Mike Kappitt: We're really proud of that.
• 13:01
  Mark Johnson: Okay, when you look at personalization very important for Brands today we have a growing member community.
• 13:07
  Mark Johnson: We meet on different topics on a weekly basis and we actually just had a meeting led by another brand on personalization what they're doing, what's working.
• 13:14
  Mark Johnson: It can be a challenge, especially to be able to do it at scale, and it seems like with the tiers and some of the new things that you brought to the program, there's great opportunity for that.
• 13:23
  Mark Johnson: So what does personalization mean to the new subway loyalty program?
• 13:29
  Mike Kappitt: Yeah well, personalization is a big topic around here.
• 13:34
  Mike Kappitt: We've spent the last year really investing in our personalization capabilities.
• 13:39
  Mike Kappitt: Obviously and you know this better than anybody loyalty with a loyalty program comes very robust consumer data, and that data is almost as valuable as the visits that we get through the program as well.
• 13:53
  Mike Kappitt: And so, for us to be perfectly candid, we were behind for a brand as big a subway, and so we've spent the last year trying to catch up.
• 14:05
  Mike Kappitt: So we've implemented a proper marketing tech stack that helps us leverage the data, deploy personalized emails, informs our media campaigns whether it be paid media or what we do with our CRM efforts.
• 14:23
  Mike Kappitt: And so we are.
• 14:25
  Mike Kappitt: I would say we're probably in the second inning of that game, but we already see the fruits of what that data can bear with the proper team structure.
• 14:36
  Mike Kappitt: So we had to build the organization, we're building our tech capabilities and we're in there playing a lot with this guest data and seeing some really encouraging early results from personalization efforts.
• 14:49
  Mike Kappitt: Okay, excellent.
• 14:50
  Mark Johnson: That's great to hear.
• 14:50
  Mark Johnson: When you look at other programs from a customer loyalty perspective, are there other programs that you admire, that that you think do a great job of creating customer great customer experience and engagement, and did you model some of those into your new program?
• 15:09
  Mike Kappitt: Well, I think, yeah, I mean, look, we were clearly inspired by other programs, you know, particularly in the travel industry.
• 15:17
  Mike Kappitt: You know, I think there are many things about our program that resemble some travel, some travel industry programs.
• 15:24
  Mike Kappitt: You know, whether it be tiers or how we unlock benefits as you move through the tiers.
• 15:29
  Mike Kappitt: Even you know our VIP experiences that we're working on resemble.
• 15:35
  Mike Kappitt: You know, one of the programs I admire a lot is American Express.
• 15:39
  Mike Kappitt: I am a happy participant in their program and you know, one of the things that I really like about programs like that is their lifestyle programs.
• 15:46
  Mike Kappitt: I'm not, you know, I get more benefit than just from the brand that I'm participating with and you know and we look to do that with like our VIP experiences we're very focused on experience, whether it be the guest experience in our restaurant, out of our restaurant, when they interact with our brand, but also outside of our brand, and trying to provide those experiences and be a part of that within the life of a consumer is something we found inspiration and other programs from Excellent, great to hear being able to share.
• 16:15
  Mark Johnson: I think that's one of the things that we see within the industry, too is even with our community, that there's a willingness to share best practices, what's working, what's not working, and it's not necessarily vertically specific anymore.
• 16:27
  Mark Johnson: Right To your point, something that can work in the travel industry, in the hospitality industry, can work with QSR or even in fuel.
• 16:33
  Mark Johnson: So exactly that you looked outside.
• 16:37
  Mike Kappitt: Yeah, and we're working.
• 16:38
  Mike Kappitt: You know I can't give too much away because we haven't quite unveiled it, but we are working with, you know, other partners from other categories to be a part of our program and potentially for us to be a part of their program.
• 16:50
  Mark Johnson: Yeah, partnerships are big opportunities as well.
• 16:52
  Mark Johnson: It's great to hear that you're, you know, focused on that, especially when you can get them aligned in a manner that is conducive and beneficial to both programs.
• 17:00
  Mike Kappitt: Yeah, I mean, if you think about it again, I'll try not to tip my hand too much, but if you think about it, we have.
• 17:05
  Mike Kappitt: You know we have over 20,000 restaurants in the US, right, and so we have thousands of restaurants inside of service stations.
• 17:12
  Mike Kappitt: You know whether it be truck stops, gas stations, and so there's.
• 17:16
  Mike Kappitt: You know there's natural synergies with because our brand travels so well and we have such a big non-traditional business, you know, the C-stores, walmart's we have.
• 17:25
  Mike Kappitt: We have almost 1500 subways inside of Walmart's.
• 17:28
  Mike Kappitt: There's natural synergies that we can unlock for our guests with partners that we already do business with.
• 17:32
  Mike Kappitt: Absolutely.
• 17:34
  Mike Kappitt: Yeah, that's good to hear.
• 17:36
  Mark Johnson: Last question we have is before the quick fire questions, that is, you know, what can Loyalty 360 do to help you and your team with your customer loyalty journey?
• 17:47
  Mike Kappitt: Well, I think you, I think you just being a venue and a platform that helps facilitate sharing, you know best practices, you know and, honestly, in preparation for for this, I listened to about I don't know seven or eight of your podcasts and I learned a lot just listening to those and was sending notes to the team, and so I think you guys, continuing to be the voice of consumer loyalty and what works and what doesn't work, I think is invaluable for brands like us.
• 18:20
  Mark Johnson: Excellent, Great Well, thank you for that compliment.
• 18:22
  Mark Johnson: And now the fun quick fire questions.
• 18:25
  Mark Johnson: But I could limit these to a word or a short phrase, or my PR team gets into, they got me.
• 18:30
  Mark Johnson: I'm just kidding.
• 18:32
  Mark Johnson: What's your favorite word?
• 18:35
  Mike Kappitt: Why?
• 18:38
  Mark Johnson: What is your least favorite word Mike: Can't.
• 18:40
  Mark Johnson: Mark: What excites you?
• 18:45
  Mike Kappitt: Getting up every day and coming to Subway.
• 18:47
  Mark Johnson: Excellent.
• 18:48
  Mark Johnson: What do you find tiresome?
• 18:51
  Mike Kappitt: What do I find tiresome?
• 18:52
  Mike Kappitt: People that say no and people that say can't.
• 18:58
  Mark Johnson: Excellent.
• 18:58
  Mark Johnson: What is your favorite subway sandwich?
• 19:03
  Mike Kappitt: A BMT, Lettuce tomato, onion oil, vinegar, salt pepper.
• 19:07
  Mike Kappitt: Okay, what?
• 19:09
  Mike Kappitt: What profession.
• 19:12
  Mark Johnson: that's good, yeah.
• 19:13
  Mark Johnson: And what a BMT?
• 19:14
  Mark Johnson: Mike: Bmt, the Italian, Okay, Okay, yeah, I'm pretty pretty basic.
• 19:20
  Mark Johnson: The turkey guy myself.
• 19:21
  Mark Johnson: What's the most popular?
• 19:23
  Mark Johnson: Is it yet Turkey?
• 19:27
  Mark Johnson: What?
• 19:27
  Mark Johnson: What profession other than what you have now would you would you like to attempt?
• 19:32
  Mike Kappitt: Oh, wow, I think I'd like to be a rock star.
• 19:38
  Mark Johnson: Okay, what profession do you avoid?
• 19:40
  Mark Johnson: Mike: Mortician.
• 19:42
  Mark Johnson: Mark: Who inspired you to become the person you are today.
• 19:47
  Mike Kappitt: You know, I've been blessed with lots of, with lots of great mentors, guardian angels, and so I I think I'm a composition of a lot of people and, and and I don't think I can point to just one- Mark: Okay, what do you typically think about at the end of the day?
• 20:01
  Mike Kappitt: Mike: My people.
• 20:06
  Mark Johnson: Excellent.
• 20:06
  Mark Johnson: And then?
• 20:06
  Mark Johnson: And how do you want to be remembered by your friends and family?
• 20:11
  Mike Kappitt: I'd like to be remembered as you know someone, someone who cared, someone who is of service.
• 20:22
  Mark Johnson: That's awesome.
• 20:22
  Mark Johnson: Well, thank you for those those great responses, and thank you for taking the time to talk to us about the new program, how you evolved it and how you see the program going forward.
• 20:32
  Mark Johnson: It was great to meet you and it was great to get an update on Subway and guys are doing some cool things, so keep up with the great work.
• 20:37
  Mark Johnson: Yeah, thank you, mark, we really appreciate it Absolutely, and thank you everyone else for taking the time to listen.
• 20:42
  Mark Johnson: Make sure you check back for another edition of our leaders and customer loyalty series soon and until then, have a wonderful day.