Latest / Leaders in Customer Loyalty, Powered by Loyalty360 / #420: Leaders in Customer Loyalty: Industry Voices: Don Smith, Chief Consulting Officer at Capillary

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#420: Leaders in Customer Loyalty: Industry Voices: Don Smith, Chief Consulting Officer at Capillary · Leaders in Customer Loyalty, Powered by Loyalty360

• 0:04
  Speaker 1: Good afternoon.
• 0:04
  Speaker 2: Good morning.
• 0:05
  Speaker 2: This is Mark.
• 0:05
  Speaker 1: Johnson from Loyalty360.
• 0:06
  Speaker 1: I hope everyone's happy, safe and well.
• 0:08
  Speaker 1: I want to welcome you to a new podcast series.
• 0:11
  Speaker 1: We have our Leaders in Customer Loyalty Industry Voices Podcast.
• 0:15
  Speaker 1: This is the first episode in this new series, which will replace the Loyalty Live series.
• 0:20
  Speaker 1: In this series, we spotlight innovation in customer loyalty through insights from leading consultants, agencies and technology providers.
• 0:29
  Speaker 1: Our guests share expertise on emerging trends, solutions and best practices that help brands navigate the current market challenges they may face.
• 0:38
  Speaker 1: Today we're going to be exploring key trends and strategies shaping customer loyalty in 2025.
• 0:44
  Speaker 1: Don Smith, the Chief Consulting Officer at Capillary, is going to join this inaugural edition, so looking forward to discussing more with him on the trends and strategies that are shaping customer loyalty in 2025.
• 0:58
  Speaker 1: Don, thank you very much for taking the time to join us.
• 1:00
  Speaker 1: Looking forward to kicking this new series off with you.
• 1:02
  Speaker 1: How are you I'm doing?
• 1:04
  Speaker 2: well, mark, thanks for having me.
• 1:06
  Speaker 1: Absolutely In hindsight, what predictions about customer loyalty in 2024 that you thought would come into fruition you believe turned out to be accurate, and how have those accurate assessments impacted brands' customer loyalty strategies?
• 1:23
  Speaker 2: Yeah, you know what?
• 1:23
  Speaker 2: There were some predictions that came true, and I think the major one was we knew we were sort of coming out of COVID, we were seeing a recalibration of business models and consumer needs state and that many of the major loyalty programs were going to need to do some dramatic recalibrations of their structures to make them more profitable, to get their balancing under control and to be more efficient.
• 1:47
  Speaker 2: And we absolutely saw that.
• 1:49
  Speaker 2: I think case in point is what happened with the airlines and those programs.
• 1:53
  Speaker 2: We saw a lot of them start to change the mechanic for how you qualify for tiers.
• 1:58
  Speaker 2: They made it more spend-based, introduced loyalty points and those types of analogs, but at the same time they were able to sweeten the pot for the member experience and bring in a new constellation of, quite frankly, better partner benefits that feel a little more authentic to the needs of travelers.
• 2:16
  Speaker 2: And so I think we did see that absolute balancing take place and we continue to see it across many major programs.
• 2:23
  Speaker 2: They're going in, they're fixing it and the focus that we predicted and others predicted was really lean into high perceived value benefits and perks to make the program more attractive, but get the customer value proposition, the CVP, under control Because, of course, all of the things that you do affect revenue recognition and profitability and that balancing and recalibration is going to continue and it's just it's going to be repackaged in a way that makes it look like it's better for the consumer, and in some respects it will be, and in other respects they're going to have to change it up to do what brands need to do to be profitable.
• 3:01
  Speaker 2: So all of that happened.
• 3:03
  Speaker 2: But, mark, if we talked about that and said what trends came true, we should also ask were there predictions that really didn't come to fruition?
• 3:10
  Speaker 2: Is that the next question?
• 3:12
  Speaker 1: Yes, that'd be great.
• 3:13
  Speaker 2: Yeah, yeah.
• 3:14
  Speaker 2: And so I think, like everyone, myself included said, 2024 was going to be the year of hyper-personalization at scale, like it was absolutely going to happen, and there have been advances in it.
• 3:26
  Speaker 2: For sure, we've had some successes, but I will have to tell you, if I look at the marketing landscape and the loyalty landscape in its totality, hyper-personalization simply became more hyper.
• 3:38
  Speaker 2: I didn't see the personalized.
• 3:40
  Speaker 2: What I saw was even more emails, even more communications, and even if those were somehow enabled by AI and leveraged customer-centric data points, the sheer amount of volume in the personalization stack looks much more spray and pray now than it ever did.
• 3:59
  Speaker 2: That speaks to consumers at a one-to-moment point in time or to a consumer need state hasn't really happened and we still look to seeing more of that come to play in the years ahead.
• 4:15
  Speaker 2: And the other prediction I predicted that this was going to be the year of clienteling informed by data and that brands were going to make everyone's trying to save their brick and mortar right, or at least their profitable brick and mortar stores and retail.
• 4:28
  Speaker 2: And this should have been the year where folks were like how do I drive footfall in store in a way that builds my brand and balances the offline to online channel distribution and arming store associates and human agents with better information about customers and next best actions and affording them opportunities to sweeten the pot or improve the member experience.
• 4:52
  Speaker 2: That hasn't happened as much as we thought it would and it remains low-hanging fruit.
• 4:57
  Speaker 2: I think in the loyalty journey is part of the promise of AI has to be to build clienteling and let humans serve other humans in a better way.
• 5:06
  Speaker 1: Yeah, it's interesting you say that, because one of the things that we see right now with regard to AI in customer loyalty from our growing brand membership, is that there's definitely an interest, right, but they're not necessarily looking or nor do they trust it in the right manner, right.
• 5:19
  Speaker 1: So I liken it to kind of autonomous vehicles.
• 5:22
  Speaker 1: There's been four or five deaths in autonomous vehicles total in four or five years.
• 5:27
  Speaker 1: Right, and they're very flashy, they get a lot of credit, but there's 13,000 car accidents in the US a day.
• 5:32
  Speaker 1: 13,000, four deaths.
• 5:34
  Speaker 1: So it's the same thing.
• 5:35
  Speaker 1: So people bring in this AI platform and they staff around it.
• 5:37
  Speaker 1: They bring in a hundred different people exaggeration 10 people, 5 people to monitor all the segmentation, the cadence of the personalization that you talked about, right?
• 5:47
  Speaker 1: So instead of making it more seamless, they make it more difficult and if AI will happen to make a mistake, they don't feel it meets the mission of the brand, kind of the field, the demographic appeal they kind of pull back from it, right.
• 5:59
  Speaker 1: So it's kind of the same thing.
• 6:02
  Speaker 1: They want to do it, but they have these huge teams right now that are watching it and invariably you're going to get an email from a brand that's messed up, dear X, we saw you.
• 6:11
  Speaker 1: You know it's wrong, but it's going to happen.
• 6:13
  Speaker 1: But if AI makes that same mistake, the kind of the threshold for confidence going forward is definitely significantly greater or heightened.
• 6:20
  Speaker 1: Do you see that as well?
• 6:22
  Speaker 2: Absolutely.
• 6:22
  Speaker 2: I mean, I think this is interesting, like AI done correctly, and you know, forrester had a comment in their latest report too that they saw these AI agents, you know are certainly proliferating and their take was when it's being done.
• 6:36
  Speaker 2: Well, the AI agents aren't replacing human agents, they're augmenting the experience and empowering the human agents, and I think that that's pretty astute.
• 6:47
  Speaker 2: And one of the things that we're advocating is look, if you're talking to a customer service agent, if AI can at least curate and find most relevant data points here's a problem the customer had.
• 6:58
  Speaker 2: Here was their last purchase.
• 6:59
  Speaker 2: Here's a reward that they're sitting on.
• 7:01
  Speaker 2: Here's a maintenance service that they're overdue on, reward that they're sitting on.
• 7:05
  Speaker 2: Here's a maintenance service that they're overdue on and it's served up in a way that is personalized, that reflects the contract of collecting first and zero party data from consumers.
• 7:13
  Speaker 2: I think it becomes more win-win and I hope that's the direction.
• 7:16
  Speaker 2: We hear all about automation and job loss and we know some of that's going to happen with AI.
• 7:20
  Speaker 2: But if that happens and it's minimized, because we're actually just empowering people to do a better job serving other people and we're creating a better customer experience, I think that's the right path forward.
• 7:33
  Speaker 2: But what you can't just do is go hey, ai set it and forget it, and it solves world hunger.
• 7:38
  Speaker 2: It does no such thing without an underlying strategy.
• 7:43
  Speaker 1: And one of the things that we talked about as we kind of prepped for this call.
• 7:45
  Speaker 1: We talked about partnerships.
• 7:46
  Speaker 1: Coalition, coalition Light brands are looking for a way to have more effective partnerships.
• 7:52
  Speaker 1: They don't want the affiliate-based partnerships, they want them differentiated, which creates a challenge, as you know, for making sure that there's alignment between the customers and making sure there's alignment between marketing entities that they can co-market effectively.
• 8:04
  Speaker 1: So there's a great opportunity around partnerships, but they're challenging or they're challenged for a number of reasons.
• 8:10
  Speaker 1: You know, what do you see in 2025 regarding brand partnerships and beyond?
• 8:15
  Speaker 1: Are brands going to focus more on this?
• 8:17
  Speaker 1: How are they going to do it?
• 8:18
  Speaker 2: if they do so, yeah, it's a good question and I think the answer is are we going to see more partnership marketing?
• 8:27
  Speaker 2: Yes, and are we already seeing smarter partnership marketing?
• 8:29
  Speaker 2: Absolutely, and, Mark, that really is.
• 8:31
  Speaker 2: The litmus test for when you think about a partnership strategy is can you find a way to offer relevant, authentic, adjacent benefits with something that's non-competitive with your own brand but maps to the need state of a customer?
• 8:47
  Speaker 2: Like, if you're in the travel vertical, find ways to find partners that you know.
• 8:51
  Speaker 2: If you have a rental car, have a hotel partner, have you know, have a ride share partner, have an airline partner those things make a lot of sense and there's an authenticity there in a way that I think original.
• 9:06
  Speaker 2: What used to be the case was affiliate marketing right, and we would see lots of this almost hey, click this box and we'll take whatever offer some partner wants to put out there and monetize the revenue stream.
• 9:17
  Speaker 2: And we know for a fact consumers hate to get like if they're transacting on their car service.
• 9:24
  Speaker 2: They really don't want a Starbucks gift card or something like that.
• 9:28
  Speaker 2: They want something that feels authentic to the mission and the need state, and the goal behind partnership marketing is to let it be an enhancement, an augmentation, but to also protect and defend your own brand equity as you're building out your program.
• 9:42
  Speaker 2: And so 2024 saw some very good partnership programs.
• 9:46
  Speaker 2: The airlines did a better job of that with milestone bonuses and mapping things in.
• 9:51
  Speaker 2: Like I loved I got second to top tier status in a major rental car company just for hitting a milestone with my airline partner, and I love that.
• 10:02
  Speaker 2: That felt authentic and it absolutely gave me a reason to shift share, you know, and it felt good.
• 10:07
  Speaker 2: I think, like some of the things that we've even seen with paid membership, like Walmart Plus has been really smart as well, you know, in bringing those things in.
• 10:17
  Speaker 2: They got a Burger King benefit and a Paramount benefit and free ship, you know, like that constellation, I think, was carefully researched enough to know what a lot of those consumers wanted and saw value in, and that's really the goal for marketing.
• 10:30
  Speaker 2: Does the rising tide of partnership marketing lift all partner boats?
• 10:34
  Speaker 2: If so, do it.
• 10:36
  Speaker 2: If not, be very, very careful because you will have an asymmetry that's probably hard to recalibrate.
• 10:44
  Speaker 1: Yep, absolutely, have an asymmetry that's probably hard to recalibrate.
• 10:47
  Speaker 1: Yep, absolutely.
• 10:47
  Speaker 1: Uh, we talked about this a little bit, about clienteling and being able to, uh, you know, allow a better clienteling experience.
• 10:52
  Speaker 1: Uh, so, when you look, at the digital, physical channels.
• 10:56
  Speaker 1: Uh, you know how should loyalty programs look at considerations for integrating both in-store and online experience to make it a more seamless and cohesive customer experience and a more of a seamless journey for that customer?
• 11:09
  Speaker 2: Yeah, I think it's a good question.
• 11:11
  Speaker 2: It really comes down to this notion of O2O strategy or what I like to call O2O strategy right Online to offline and vice versa, and what it really needs to happen is you need to understand your business theory and your program action theory and how you make money and what your constellation of desired behaviors are, and figure out where it makes sense.
• 11:35
  Speaker 2: I think it depends on how brands really balance their brick and mortar to online strategy and what makes sense for them.
• 11:42
  Speaker 2: But figure that out and if you see, for example, higher attached sales in a clientele model where you're interacting with a person in a physical environment, you can absolutely find ways to sweeten the pot for an online-only shopper and bring them in and increase footfall.
• 11:59
  Speaker 2: Do a try-on bonus hey, come in and try this on and get these bonus points.
• 12:03
  Speaker 2: Or do an in-store special and find a way to get that sales associate involved in the experience in a way that's really good for the consumer and that should be a win-win solution.
• 12:15
  Speaker 2: But you know what, if your brand is we've all seen what happened to Joanne recently right, I mean, they're in chapter 11 for a reason.
• 12:22
  Speaker 2: They didn't close any underperforming stores and that has put them behind a chapter 11 eight ball, and I think many retailers are having to take a very careful look right now and go look, I've got underperforming stores.
• 12:34
  Speaker 2: I'm likely to close them, and the most important strategy that they can think about is where am I going to close stores, who are my affected consumers and how do I find a way to seamlessly get them online if they're not close to a physical store?
• 12:48
  Speaker 2: And that's how they were shopping and they need to proactively start doing that and grease those skids a little bit, I think, as they do it, and I may have touched on part of the answer to your question, but I think, when you just think about, what you're really asking is how do I integrate all of these touch points right into a seamless customer experience mobile, you know the website, the in-store experience, all of it and for us, our answer usually comes down to customer experience journey mapping with KISS, k-i-s-s.
• 13:22
  Speaker 2: Keep it simple, silly, right, if you follow responsive design principles and think about how a customer prefers to interact with your brand.
• 13:32
  Speaker 2: Do they open email or not?
• 13:34
  Speaker 2: Do they prefer to just be on the app?
• 13:36
  Speaker 2: Do they like SMS?
• 13:37
  Speaker 2: Which channel are they responding to and engaging in?
• 13:40
  Speaker 2: And doggone it.
• 13:41
  Speaker 2: Take those declared data points from your customers and map them to the customer and change up how you communicate so you're not spamming unnecessarily across channels and you're showing respect for how that customer prefers to interact with you and you do it.
• 13:57
  Speaker 2: But make sure across the board that the same types of messages look good, follow best-in-class responsive design principles and factor that in at the customer level.
• 14:08
  Speaker 2: And that's really what we need to be doing is keeping it simple, making it look good and empower consumers how they want to be empowered and in the channels in which they want to be empowered.
• 14:20
  Speaker 1: What are the most common reasons that loyalty programs fail to meet their goals?
• 14:24
  Speaker 1: How can brands address these?
• 14:25
  Speaker 1: There's been a clarion call recently for simplicity for the programs that make it easier to understand, but what are you seeing as the most common reason?
• 14:34
  Speaker 1: Loyalty programs fail to meet their goals.
• 14:37
  Speaker 2: Yeah, it's a good question.
• 14:38
  Speaker 2: I think there's two real root causes for this.
• 14:41
  Speaker 2: About half of the business we do in our consulting practice is folks who have a loyalty program that come to us and say I've got this.
• 14:49
  Speaker 2: We're not sure if it's working or we feel like it.
• 14:51
  Speaker 2: We started out gangbusters and it started to become stale and collect dust and we're not even sure if we're getting incremental revenue or if it's just become a cost center, and so we'll go in and take a look under the hood and do deep dive analyses of those programs.
• 15:06
  Speaker 2: But it usually comes down to one of two things, and the first one is poor financial engineering of the program, rich of rewards or just too many ways to get rewards and earn, and they're not ready for the deluge of rewards and liability that impacts revenue recognition that hits them.
• 15:31
  Speaker 2: I mean there is careful financial modeling that has to go into building a value proposition and a lot of the time that we spend with folks going wow, you've got a 10% value proposition which was too rich relative to your margin, and you've got these subclubs which are further diluting the proposition, and people have figured out how to double and triple dip and really game the mechanic, and not necessarily in a good way, from a flow through to margin perspective, and so that's where you've got to go in and recalibrate.
• 16:00
  Speaker 2: But if it had been designed carefully, with a good financial model and simulations around what could happen, you can put guardrails against that.
• 16:08
  Speaker 2: So that's number one.
• 16:09
  Speaker 2: But I think the second one is a well-engineered program with a good customer value proposition can also fail.
• 16:17
  Speaker 2: If all it is is a well-engineered loyalty program with a good value proposition, do this, get this?
• 16:24
  Speaker 2: That's not enough in the age of the consumer.
• 16:27
  Speaker 2: It might work out of the gate, but customers are expecting us to take these myriad data points that we're collecting from loyalty and do something with them.
• 16:36
  Speaker 2: Further personalize this, serve up a rotating constellation of new benefits, perks, experiences, keeping it fresh, keeping it fun, engaging the customer.
• 16:47
  Speaker 2: And that willingness to reinvent instead of just hide behind a static CVP that follows one lane of traffic is also behind why programs start to lose their luster, especially if you've got competitors who are killing it and doing cool things.
• 17:05
  Speaker 1: Absolutely.
• 17:05
  Speaker 1: You know, loyalty programs, as we've mentioned, are becoming more data dependent.
• 17:09
  Speaker 1: But being able to get them in a CDP that allows them to take disparate data points hopefully it's PII correctly so they can effectively integrate it and analyze the customer data, what are?
• 17:21
  Speaker 1: You know?
• 17:22
  Speaker 1: Some things that brands should be considering?
• 17:24
  Speaker 1: Is it a CDP?
• 17:25
  Speaker 1: How do they, you know, effectively actualize on the disparate data they have to make it more personalized, to make it more effective.
• 17:33
  Speaker 2: Yeah, you know what thinking through it's a good question, has a lot of answers, but thinking through the desired member experiences and things that would help members navigate their need state and navigate the program and just their shopping experience is where it starts.
• 17:51
  Speaker 2: And so I think all of this comes back to, first and foremost, for us at Capillary, it's voice of customer, voice of member listening, and you have to be doing it.
• 18:00
  Speaker 2: We can sit and theorize all the things that we should introduce into a mix, but there is absolutely no substitute for continually listening and adapting to the needs of the consumer.
• 18:12
  Speaker 2: I mean that voice of research needs to go well beyond net promoter score.
• 18:15
  Speaker 2: If all you're doing is sending out a survey on net promoter after someone shops, you're missing the boat.
• 18:20
  Speaker 2: You need to be asking questions about the emotional connection, how well the program is helping facilitate the experience of shopping or transacting or solving problems, and get that candid feedback about the program and its planned innovations and let the journeys that are top of mind, that facilitate desired behaviors for your brand.
• 18:41
  Speaker 2: Let the consumers help tell you what those are and as you develop hypotheses about those missions, put them in front of your customers.
• 18:49
  Speaker 2: They will absolutely share their feedback and help validate that, in fact, the things we think are going to be meaningful will in fact come to fruition from a value prop.
• 19:00
  Speaker 2: I think I answered half of your question, mark, because the other half was kind of around.
• 19:04
  Speaker 2: How do you take data points right?
• 19:10
  Speaker 1: How do you actually actualize these disparate data points?
• 19:14
  Speaker 1: Should I say to make sure that you have the most effective data set?
• 19:20
  Speaker 2: Yeah and look, we believe we champion a process called data audition at Capillary and one of the things we spend a lot of time.
• 19:28
  Speaker 2: Let's say, we get a new online channel and finally we got all our quick stream data in one place and we can tie it to the customer and we're legal, we can map it back to the customer.
• 19:38
  Speaker 2: Do in that point is realize that when you bring on a new data source whether it's a social media channel, whether it's clickstream data, mobile data it's some open source data that you're getting from another repository.
• 19:51
  Speaker 2: Whatever the case may be, customer service agents logs, the list goes on.
• 19:55
  Speaker 2: Usually there's more data than there is useful data and what happens is I think too many brands try to go I need a 360 degree view of the customer and they try to boil the ocean with that 360 degree view going.
• 20:12
  Speaker 2: I'm going to get every data point and I'm going to put it into the repository.
• 20:15
  Speaker 2: Well, guess what?
• 20:16
  Speaker 2: You're not going to do anything but clog the arteries of your database and your ETL.
• 20:20
  Speaker 2: But if you can take a new data source that comes online and say a priori I would like business case to drive the scenario of what data to bring in and we like to.
• 20:33
  Speaker 2: We refer to it as the sushi buffet model.
• 20:36
  Speaker 2: Right, if you go to a nice sushi restaurant, that's all you can eat.
• 20:39
  Speaker 2: And some might say, hey, nice sushi restaurant, all you can eat.
• 20:43
  Speaker 2: That's a contradiction in terms.
• 20:44
  Speaker 2: I don't think so.
• 20:46
  Speaker 2: But the good ones will be like you know, take all that you want and enjoy it, but they actually charge you for leaving sushi on your plate right and not consuming it.
• 20:55
  Speaker 2: And I think that's the same model that ought to inform our data incorporation strategies for new data sources and loyalty, and so what we will do is take a new data source and go all right, let's look at all the fields that are available.
• 21:07
  Speaker 2: Let's start testing them.
• 21:09
  Speaker 2: Can any of these help the goodness of fit of a predictive model we have in market?
• 21:15
  Speaker 2: Let's test them and try to find out what's useful and what's not.
• 21:18
  Speaker 2: Could any of these help an agent better speak to a customer if she or he were online or in the call center?
• 21:24
  Speaker 2: If so, let's figure out what those are.
• 21:26
  Speaker 2: Can any of these help us plan new journeys or new campaigns that will feel more authentic, you know, and help be more personalized?
• 21:33
  Speaker 2: And if so and you can answer those questions, yes, they pass the audition.
• 21:37
  Speaker 2: Bring those fields in, but jettison everything else that you don't need, because there's a lot of flotsam and jetsam out there and if the data is not actionable, you don't need that data.
• 21:48
  Speaker 2: And if you can come up with an aggregation strategy for these new data sources, you will be best friends with IT because they will be on board with you.
• 21:57
  Speaker 2: But if you say I just need everything and I'll figure out what to do with it later, that is a recipe for disaster.
• 22:04
  Speaker 1: Absolutely.
• 22:05
  Speaker 1: You talked about metrics a little bit.
• 22:06
  Speaker 1: What do you feel are the most critical metrics brands should be tracking to measure the success and efficacy of their loyalty programs in 2025?
• 22:15
  Speaker 2: Yeah, I think there's several and I'll rattle off a list, but the top ones.
• 22:19
  Speaker 2: There's some basic blocking and tackling metrics I have to know for every program we've won.
• 22:23
  Speaker 2: I want to know tracked sales penetration for sure, the percentage of transactions or spend that are tied to membership in the program, because it speaks to relevance, it speaks to ease of enrollment and ease of participation, and the higher that number, generally speaking, the better.
• 22:40
  Speaker 2: And the second step relate to the structure of the program.
• 22:44
  Speaker 2: Not all loyalty programs have a currency or have earned rewards, but for those that do, or whatever, their analog in the program theory of action is you want to be looking at it.
• 22:54
  Speaker 2: So if you're offering rewards, I want to know what percentage of customers qualified for a reward or a benefit and, more importantly, I want to know the percentage of those that are redeeming for that as well.
• 23:05
  Speaker 2: Because if you've got tons of people swinging and missing or not attaining the rewards or really experiencing the golden moment of the program, you have a problem.
• 23:14
  Speaker 2: So earning and redemption are critical.
• 23:17
  Speaker 2: And then I think the other metrics are related to that.
• 23:20
  Speaker 2: You need to look at accrual stretch and redemption stretch and understand what's happening on those transactions differently as well and see if you're driving desired behaviors that way.
• 23:32
  Speaker 2: Great part of redemption transactions do not need to be dilutive, contrary to popular belief.
• 23:38
  Speaker 2: We're always trying to find new ways to get additional stretch on the redemption transaction in a win-win solution.
• 23:45
  Speaker 2: Two more metrics that you need you need an acquisition to attrition ratio to understand the health of your membership.
• 23:52
  Speaker 2: Are you acquiring more members than you're losing due to attrition and, more importantly, are they the right members?
• 23:59
  Speaker 2: Are they shopping more often, spending more, buying the highest margin products?
• 24:02
  Speaker 2: All of that's very important and I think the most underutilized behavioral metric in first-party data is understanding retained member velocity.
• 24:13
  Speaker 2: It's not enough just to look at your retention rate year over year or quarter over quarter.
• 24:18
  Speaker 2: You need to understand that those customers that you are retaining are you growing them?
• 24:23
  Speaker 2: Are they doing more?
• 24:24
  Speaker 2: Are you stimulating share shift, moving them into new categories for breadth and depth?
• 24:28
  Speaker 2: Those are the things that you really have to look at.
• 24:32
  Speaker 1: Excellent, that's great, definitely great.
• 24:33
  Speaker 1: Max, a very holistic, I think, your perspective on not just are you keeping them or are you growing them?
• 24:39
  Speaker 1: Especially from a market share perspective right Vis-a-vis.
• 24:42
  Speaker 1: If the market's down and you still can get some growth, that's very important as well.
• 24:46
  Speaker 1: But being able to look at it and leverage insight that you have that help them see more holistically what their share is and how they can grow that I think that's one of the more important ones that brands tend to overlook.
• 24:57
  Speaker 2: Yeah, you know there's others that they overlook too.
• 25:00
  Speaker 2: I mean, I think everyone talks about emotional loyalty, mark.
• 25:11
  Speaker 2: I mean, am I right?
• 25:11
  Speaker 2: Everyone has an emotional loyalty strategy or aspiration, but I bet that most brands are not looking at it holistically.
• 25:14
  Speaker 2: I think people are still addicted to net promoter score, and it's not a bad measure, it's just remarkably limited.
• 25:19
  Speaker 2: And so having a full set of emotional loyalty battery metrics and doing it regularly and continuously is essential to understanding how your program and how your brand's resonating with your customers.
• 25:33
  Speaker 2: And I think that brands also need to really be focused on going.
• 25:37
  Speaker 2: What are the most desired behaviors that I'm trying to create and am I attaining them and just really creating report cards around that?
• 25:45
  Speaker 2: And a final note would be what's a metric that everyone overlooks?
• 25:50
  Speaker 2: Well, roi, because it's possibly the hardest one to calculate.
• 25:54
  Speaker 2: It takes a lot of work, but it's incredibly important to be chipping away at that no-transcript.
• 26:35
  Speaker 1: So ROI, customer lifetime value, doing holdouts and doing a kind of continued holdout, that kind of transitions, is a big challenge for many brands, as you know right.
• 26:41
  Speaker 1: Well, I'm going to hold out this group for my marketing.
• 26:43
  Speaker 1: Why would I ever want to do that?
• 26:44
  Speaker 1: Well, you want to be able to see the efficacy of the program correct.
• 26:48
  Speaker 2: That's right, and it is an ongoing battle and that tension between finance and marketing in that regard is always present, and the reality is there's no magic bullet for it.
• 26:59
  Speaker 2: Well, it's easier to calculate at the campaign level to get to ROI if you have some discipline around the design process, but program-wide it's tricky and you're going to have to try to skin the cat more than one way, and that's absolutely.
• 27:12
  Speaker 2: Our approach is triangulate your measurement, be open and honest about it, and there are many different ways that you can get at it, but you have to work diligently.
• 27:21
  Speaker 2: You have to work diligently and the programs and the brands we work with that are the best at ROI are the ones that have built enduring relationship with their finance and treasury teams and given them a seat at the table in that process.
• 27:33
  Speaker 2: That's absolutely right.
• 27:35
  Speaker 1: So last question what do you think the next big thing is for customer loyalty?
• 27:38
  Speaker 1: Is it hyper-personalization?
• 27:40
  Speaker 1: Does that come back to being more personalized versus hyper?
• 27:43
  Speaker 1: You know what's the next big thing for customer loyalty?
• 27:47
  Speaker 2: Well, certainly, hyper personalization is going to happen, but I think that if I depict one really big thing, it's choice, like I mean just capital letters choice, and the choice is made by the member and by the consumer.
• 27:59
  Speaker 2: You know it's already underway and we're seeing more of it, but in sort of subtle ways, like the airlines have given us these great milestone benefits hey, you're at 75,000, pick one of these and there's a choice aspect that wasn't there before, but expect this to be much, much bigger in the future.
• 28:18
  Speaker 2: Partner benefits are happening, but I think the next wave of design innovation really involves placing members at the decisional hub of how they earn, burn or otherwise tailor program perks and benefits to their experiences, and what I mean by that.
• 28:37
  Speaker 2: Imagine we all know that point.
• 28:40
  Speaker 2: Liability affects revenue recognition.
• 28:43
  Speaker 2: This is a very persistent concern for brands and they're always trying to find ways to get this under control.
• 28:49
  Speaker 2: And one of the neat things that we can do is expect brands to start experimenting and to allow some of their members to say you know what I choose, how I'm going to play in this program and I actually don't want to accrue points or miles as a currency.
• 29:05
  Speaker 2: I'm willing to forego that in exchange for something else, and maybe it's a special benefit or a special set of perks that were previously tied to tier, and I'll just get there quicker and I'll just do the loyalty program my way, and one flavor may not fit everyone, and I think that we're going to start to see more of that.
• 29:26
  Speaker 2: The challenge I think people will trade a constellation of benefits for a traditional earning mechanic.
• 29:31
  Speaker 2: The challenge in this is how to make that simple for the consumer without looking too complicated, because, as we all know, we spend a lot of time engineering loyalty programs, but the member who participates in those programs is not thinking about the programs as much as we are.
• 29:48
  Speaker 2: They need it to be quick and simple and I think it's just getting that consumer-facing choice in front of the customer in a friendly way that isn't intimidating.
• 29:57
  Speaker 2: And as we see more of that, you're going to start to see programs rise up and the consumer is going to be in control of how she or he chooses to earn, burn or otherwise participate in the program.
• 30:10
  Speaker 1: Absolutely Well, great.
• 30:12
  Speaker 1: These are very solid answers.
• 30:13
  Speaker 1: You always have a great perspective, very powerful perspective, because you're running programs not only in the US but internationally.
• 30:20
  Speaker 1: So it allows you to kind of amalgamate some very kind of eclectic thinking, which is what I appreciate about you.
• 30:26
  Speaker 2: Oh, you're very kind.
• 30:28
  Speaker 1: Absolutely.
• 30:29
  Speaker 1: So now we have the wonderful quickfire question.
• 30:32
  Speaker 1: All right, and you're the second one to go through this new set of questions, so I'm nervous, I'm just.
• 30:38
  Speaker 2: You know what.
• 30:39
  Speaker 2: Just hit me with your back shot Do.
• 30:40
  Speaker 1: Pat Benatar, and I have to admit I didn't come up with the first set, but I did come up with the second set.
• 30:45
  Speaker 1: So, but here we go, so we'll try.
• 30:47
  Speaker 1: How would you describe your work life?
• 30:51
  Speaker 2: Becoming increasingly balanced.
• 30:53
  Speaker 2: It's not perfectly balanced, it takes work, but I would say I'm getting better at finding that balance.
• 30:58
  Speaker 1: Excellent.
• 30:58
  Speaker 1: If you have a day off or a week off from work, what are you doing?
• 31:02
  Speaker 2: If I have a day off, honestly I'm playing video games and probably trying to put in a little more time at the gym.
• 31:08
  Speaker 2: If I have a week off, I'm almost absolutely traveling and preferably hiking.
• 31:12
  Speaker 2: That's awesome.
• 31:14
  Speaker 1: What are your New Year's resolutions?
• 31:16
  Speaker 2: Lose weight, build strength, personal things, but also travel more, and I want to help my clients achieve more for their customers professionally.
• 31:25
  Speaker 1: That's awesome.
• 31:25
  Speaker 1: If you could live in any city, country, any city or country, where would you live, you?
• 31:30
  Speaker 2: know I'd probably pick somewhere in Colorado or any place with the Rocky Mountains or the Grand Tetons.
• 31:35
  Speaker 2: I love mountains, I love hiking and ideally I'd like to be there where I could enjoy the great outdoors and the great views.
• 31:41
  Speaker 2: That's awesome.
• 31:42
  Speaker 1: If you could go back to school, what would you study?
• 31:44
  Speaker 1: Economics the great outdoors and the great views, that's awesome.
• 31:47
  Speaker 1: If you could go back to school, what would you study?
• 31:48
  Speaker 1: Economics Excellent, same Behavioral economics, the facet of your job that you would like to know a little more about.
• 31:54
  Speaker 2: You know what it's, the automation solutions, but especially it's the new open source tools that are so available.
• 32:00
  Speaker 2: I mean, we just turn around At first it was R and Python and you start to learn those, and then there's always something new and better and exciting popping up and it's tough to keep track of those and if I had unlimited time I would learn all of them.
• 32:14
  Speaker 1: What fast-setter job would you like to know less about?
• 32:17
  Speaker 2: Revenue recognition point liability accounting principles it's a necessary evil.
• 32:22
  Speaker 2: It's not super sexy, but I certainly don't ignore it.
• 32:24
  Speaker 1: Principles it's a necessary evil.
• 32:26
  Speaker 1: It's not super sexy, but I certainly don't ignore it.
• 32:27
  Speaker 1: Okay, what motivates?
• 32:28
  Speaker 2: you when tackling a challenge at Capilator.
• 32:30
  Speaker 2: I love any kind of intellectual puzzle.
• 32:33
  Speaker 2: I love anything where someone says it's going to be impossible or this is really difficult, and if we can find a challenge that actually solves a problem for our clients and will result in potentially a better customer or member experience, that's a motivator.
• 32:45
  Speaker 1: Awesome, okay, next question what do you draw inspiration from?
• 32:50
  Speaker 1: What lights your fire?
• 32:52
  Speaker 2: Any kind of innovation opportunity.
• 32:54
  Speaker 2: Can I introduce a new product, a new service, solve a problem?
• 32:57
  Speaker 2: That gets me very excited.
• 32:59
  Speaker 2: But I would say at a higher level, at a personal level, we all have heroes.
• 33:03
  Speaker 2: Martin luther king has always been a hero of mine it's an appropriate day to mention that.
• 33:08
  Speaker 2: But I also take a lot of inspiration, I think, regardless of what you thought about his presidency, I think jimmy carter post-presidency is just a living example of how to turn your life into good works and be modest and humble and do something special with what you've been given.
• 33:23
  Speaker 1: Yeah, amazing what he did.
• 33:25
  Speaker 1: You know post-service.
• 33:26
  Speaker 1: He did an amazing job with Habitat and just his kind of humanitarian focus.
• 33:33
  Speaker 1: Yeah, absolutely incredible.
• 33:35
  Speaker 1: What is your favorite sport hobby?
• 33:38
  Speaker 2: College football, but that may change, because I hate the transfer portal.
• 33:41
  Speaker 2: Mark, can we please get rid of that whole thing and this monetization of players?
• 33:45
  Speaker 2: But if I'm not watching college football and I love it, but video games, I love video games I'm not a big fan of the transfer portal.
• 33:55
  Speaker 1: I haven't been through it.
• 33:56
  Speaker 1: The college sport needs a great deal of reformation, but that's a topic that we could discuss for hours, Absolutely.
• 34:03
  Speaker 1: And last question what do you typically think about at the end of the day?
• 34:07
  Speaker 2: I try to do a moment of gratitude, but and you know honestly, when I sit down and go to sleep, I try not to think about anything.
• 34:13
  Speaker 2: At the end of the day, we're actually listening to calming sounds at bedtime.
• 34:18
  Speaker 2: We've got an app that plays those like.
• 34:20
  Speaker 2: Just take time to be present, relax.
• 34:22
  Speaker 2: Don't overload on digital technology right before you try to go to sleep.
• 34:28
  Speaker 2: Try to think about nothing and be refreshed when you wake up the next day.
• 34:31
  Speaker 1: Don, thank you very much for taking the time to speak with us today and kicking off this Leaders in Customer Loyalty podcast series, the Industry Voices podcast.
• 34:39
  Speaker 1: It was great hearing your perspective on the top trends in customer and channel loyalty and we look forward to learning more from you and the team at capillary the remainder of 2025 thank you, mark.
• 34:49
  Speaker 2: It's always.
• 34:49
  Speaker 2: It's always a joy.
• 34:50
  Speaker 2: I love what you're doing and I'm looking forward to, especially to, the next event that'll be in orlando.
• 34:56
  Speaker 2: Uh, but also these podcasts, you know.
• 34:58
  Speaker 2: Keep it coming.
• 34:59
  Speaker 2: Um, loyalty 360 remains a great repository.
• 35:03
  Speaker 2: We we love White Paper Wednesday and we love all of the stuff that you've been adding as far as a repository on the site for all of the different programs that are out there.
• 35:12
  Speaker 2: It's become a go-to resource for us.
• 35:14
  Speaker 1: Yeah, one of the things we're trying to do, as hopefully you know, is we're trying to take more of the brand stuff that we see back to you.
• 35:18
  Speaker 1: So we're doing kind of infographics and others.
• 35:20
  Speaker 1: Hopefully you've received a few of those.
• 35:21
  Speaker 1: You just have them coming up.
• 35:22
  Speaker 1: We're trying to take more of that back to you and kind of get you in front of the brands like we're talking about, right that we have problems, problem solution, problem solution, identifying the problems and being able to take it back to the leaders, like yourself, to truly address them, to elevate this discussion around customer loyalty.
• 35:37
  Speaker 1: That's a big focus.
• 35:38
  Speaker 2: I love it.
• 35:39
  Speaker 2: I love it.
• 35:39
  Speaker 2: Thank you so much for doing this.
• 35:41
  Speaker 1: I also want to thank everyone else for taking the time to join us today on our first episode of the Leaders in Customer Loyalty Industry Voices podcast.
• 35:49
  Speaker 1: Please join us as a let's a pack.
• 35:51
  Speaker 1: The customer success lead at Talon One will join the Industry Voices podcast to continue exploring emerging trends and customer loyalty for 2025.
• 36:00
  Speaker 1: Until then, have a wonderful day.
• 36:01
  Speaker 1: Make sure you subscribe to the podcast and join our YouTube channel as well for updates on all things customer channel and brand loyalty.
• 36:10
  Speaker 1: Have a wonderful day.