Aaron Conant  0:18

Happy Thursday, everybody. My name is Aaron Conant, I'm the co founder Managing Director here at BWG Connect. We're a giant networking and knowledge sharing group with 1000s of brands who do exactly that we network and knowledge share together to stay on top of the newest trends, strategies, pain points, whatever it is that shaping digital growth. Today, I spend the majority of my time talking with brands 20 to 30 a week, that startup the fortune 100 up every vertical, to try to stay on top of what those trends are. And just kind of, you know, serve as kind of a head point for the network as a whole. When the same topics come up over and over again. And those conversations, that's how we get the topics for these events, we're going to do I don't know close to 250, probably virtual like this, and over 100 in person events. So if you're interested in any other ones, just let us know. Just like to grow the network. week over week here. We're about five years and about 1000 brands. And so a couple housekeeping items as we get started. Number one, if you have any questions along the way, we want this to be as educational and informational as possible. At any point in time, you can drop questions in the chat or into the q&a, you can always email me Aaron Aaron@bwgconnect.com. The other thing is just in regards to time, we're starting this at three to four minutes after the hour. And we're also going to wrap up with three to four minutes left in the hour as well, we're gonna give you plenty of time to get on to your next meeting without being late. And so at that really want to kick off the conversation around loyalty. It's something that's been top of people's minds, customer acquisition costs going through the roof. You know, overall website traffic been down a little bit since around June just huge focus on loyalty as a whole. And so we've got some great friends, partners, supporters of the network over at Epsilon over at Adobe, and they've agreed to jump on today and kind of walk through what they're seeing and best practices in the space. And so I'm going to kick it over. You know, Brad, if you want to do a brief intro on yourself. And Epsilon, it'll be awesome that we can kick it over to Ashley, and we can kick it over to Michael sound good?

Brad Macdonald  2:15

Yeah, yeah. Happy to be here and talk to all of you today. So my name is Brad Macdonald, with Epsilon for about eight years now. And I currently work on our loyalty solutions and coming up with a lot of the strategy behind what we do for loyalty. And just a little background on Epsilon. So Epsilon is a we're a software and services company focused on one to one personalization through our identity products are loyalty products and our other customer solutions. And, you know, loyalty is one of those things that we do. And, you know, we've got loyalty technology as well as services. I'm happy to talk to anybody about that if they want to. But anyway, nice to meet all of you, Ashley.

Ashley Lockridge  3:02

Great. Hi, everyone. I'm Ashley Lockridge, and I am the Vice President of retail strategic consulting here at Epsilon. I've been in the space for roughly 15 years. So worked with a lot of enterprise level and mid tier clients as well, just helping them work through both CRM and loyalty solutions. So very happy to speak with you guys today and really think about how we can take take the reigns right now as we are experiencing this influx of new loyalty enrollees. And as you guys are hopefully seeing a wonderful retail holiday season, and really talking about how we can leverage that into the new year and really make the most out of these enrollees.

Michael Klein  3:44

Good morning. Good afternoon, everybody. I'm Michael Klein. I'm the Global Director of industry strategy marketing for the consumer Industries at Adobe retail, travel and CG. I'm responsible for Adobe's point of view and messaging in those industries, and previously spent quite a bit of time with a variety of brands as a merchant marketer with Williams Sonoma wine.com. Louis Vuitton group. I'd like to assume that most of you are familiar with Adobe. We're not only the Photoshop team and provider and InDesign but we also have a very robust suite of digital experience tools based on our experience, cloud and platform for optimizing all of your digital properties and really being able to drive personalization at scale. And as Ashley and Brad, mentioned, we're we're really here today to try to help you understand what you need to think about, as you see new customers as you get new enrollees, and what that looks like going into 2023 and really making sure that you get the most out of those dollars that you're spending for customer acquisition here in the fourth quarter. So with that, we'd like to start off with a poll, we really want to understand where you are in your journey when it comes to loyalty program loyalty platform. So, Aaron, if you can just pop that poll question in terms of what are your plans for loyalty in the new year, looking to update not satisfied planning to launch? We don't have and don't have plans in the next 12 months. So we'll just take a few seconds to let everyone respond to that. And then we'll share those results and move on with today's presentation in conversation.

Aaron Conant  5:39

Yeah, so just a quick reminder to everyone as well, if you have questions along the way, don't hesitate to drop them in the chat or the q&a. And we'll try to get those answered real time as we go. But let this go for about, I don't know, maybe another 10 seconds or so. And we just end up sharing the results. So everybody wants to jump in there really quick. We got about, I don't know, another five seconds, and we'll wrap this poll up

Michael Klein  6:00

was interested to see what Okay, well, there we go. Well, we have what 50% Looking at update and optimize. So that's I think Ashley and Brad, you know, you're in the trenches with your customers that seems to be consistent with what we've talked about, right in terms of not everybody's, you know, status quo, they're looking to make updates and optimize what they're doing with their customers. And then well, I guess planning to launch means you don't have one today. So that's, that's also another interesting number. Because as we look across some of our landscape, we're seeing a high penetration of loyalty, but I'm sure we have folks out there that are looking to get involved. And then we do have 20% that. So you know, thanks for being here. Even though maybe this, you know, we'll we'll talk a lot about what loyalty means without a program as well. But we are going to be focused a bit today on the loyalty platform and the program itself, which is the partnership, the strong partnership that Adobe and Epsilon have is helping drive those loyalty programs and platform. So that's gonna close that down. And I'm gonna, I'm going to kind of set the stage with Brad and Ashley being the true experts of loyalty programs of what are we going to see and what have we seen in the past year and in the coming months. So if you aren't aware, Adobe publishes the holiday forecast, and recap report. In the month of November, October, November, we start to build our forecast out and then NRF in January will actually publish the results. The good news here is that this is still a very large piece of the pie $209 billion of eCommerce revenue is what we're projecting for the month of November and December, here in the United States. And because we had such a huge acceleration in 2020, and 2021, as you can see from the chart on the bottom left, 33% and 9%, we're only projecting 2.5%. This year, there's a variety of factors that are involved. And you may be seeing this yourself in terms of the size of the growth, whether it be we're really looking at trying to comp already a very big number of over 200 billion in eCommerce revenue, we have consumer confidence issues, grocery and fuel are not part of the digital economy as much as consumer electronics, apparel and other industries. So some of these factors contribute to this load single digit increase that we see year over year, but nonetheless $209 billion of revenue is significant for eCommerce. And of course, as the NRF has also published, we're gonna see four or five 6% increase offline as well, and that that contributes to all of the great growth, that's going to happen, but consumers are concerned and their behavior is really putting a strain on loyalty.

Aaron Conant  9:28

It really quick, just just on that 209 Just because a question came in, is that broken up between online stores, you know, so a direct consumer and Amazon or is that collectively are one or the other?

Michael Klein  9:39

So we do not, we're not allowed to publish who's included in our sample, but Adobe Analytics does measure 80% of the internet retailer 100 So, you know, we're looking at a trillions of visits millions of SKUs and we are a Pretty much the authority so to speak on eCommerce revenue and statistics. So I can't I can't specifically name who's in that sample, but it is a very statistically confident sample that Adobe has. Yeah.

Aaron Conant  10:15

The next really quick question is this year's growth adjusted for inflation.

Michael Klein  10:19

That growth is not adjusted for inflation, we do publish the digital economy index. And we have seen, again, because the digital economy has a very small portion of grocery and zero fuel in it. We are seeing deflation happen in the digital economy over the past few months, and we can we expect that to happen with the discounting that you're seeing here on this slide? For the next couple of months, so Oh, perfectly that Yes. While inflation was certainly impacting us, in the digital economy, up until the summertime, we are seeing categories like consumer electronics and apparel, which have a lion's share of the digital economy start to deflate versus inflate. So hopefully, that helps. And Brad are Ashley any any thoughts in terms of the customers that you've been working with on the numbers we shared? And does that resonate with? What you're hearing in the field?

Ashley Lockridge  11:23

Yeah, yeah, absolutely. And actually, one of the things that I was just thinking about as you pulled up this slide, and we're taking a look at the deep discounting that happens, kind of that broad Friday timeframe, which we all know and love and expect, but then throughout December as well, is that a lot of the tactics that we'll be talking about today of how to activate your loyalty members will be kind of surrounding collecting data, understanding those transactions, understanding preferences. And with that data, we can actually become very specific about how much we have to offer to a consumer to get them back in the door. And so whenever you're planning out your holiday strategy, one important piece is to actually take a look at the value and the potential value of that customer, do we really have to give that 32% off to every single person on your file to get them to come in for Black Friday, or for some of your best and most loyal customers? Are they going to come in anyway, but we're going to get them the carrot to help kind of get them over that threshold and get them to increase their frequency. So I think there's just an A very important nuance to this where yes, the customer expectation is that they will receive a discount. But how much that discount needs to be is really up to you and your analytics team to really do that, that analysis. And we love doing that here. We call it our value attrition risk and potential value analysis to really understand how much margin you have to give up in order to give them that carrot to get them back in the door. So just an important piece of that puzzle.

Brad Macdonald  12:52

And I'll just add one thing to that is that we also see a lot of our loyalty customers see huge influxes in people joining the program, I think, because of what you're showing here, Michael, that they want these discounts. And a lot of times they have to join the program to get it. So I always see a huge influx and loyal people joining loyalty programs during these months so they can get to these kinds of discounts.

Michael Klein  13:14

Yeah, and we're in a much different place than we were last year. Right. Last year, we were having a supply chain issue. There were railroad cars, shipping containers lined up at the depot's, which we're not seeing this year. And if I were to go back a year, we had an average of we had declined overall discount in 2021, down to less than 10% across the season. So if you look at this today, because there's surplus in many of these categories, we're going to see discounting and it's already started, as Ashley mentioned, Black Friday is still very important, but isn't as important as it may have been in prior years. And we're seeing black friday advertising has been going on already since Prime Day on October 11. So there's a lot of external factors that contribute to what's going to happen over the next couple of months or the next six weeks now that we're already a week away from Thanksgiving. We know that that consumers are online and offline and that also contributes to how am I really driving a great customer journey. But we also know that again, whether it's price, whether it's convenience, whether its supply chain and having that item on the shelf, consumers are very willing to switch brands. Consumers have told us that those that have nine out of 10 that have already switched brands are going to continue to explore. So maintaining loyalty is more challenging than ever before because of all these external factors. And there is a bit of stress that happening because consumers, they are looking for loyalty programs to deliver that stickiness. While there, they could be very fickle, they are one of the primary criteria on top of price discount, convenience, security, privacy, all of these are now the criteria that go into a purchase decision. But having a good loyalty program is also going to help that purchase decision and that stickiness that you may have with the brand, or 70% are more likely to recommend a brand if they have a good loyalty program. They're gonna engage more with the brand when they're register, and 15 to 20% annual boost in revenue from those customers who are redeeming, but there are challenges with the loyalty programs 50%, one out of two consumers don't think they're getting the value that they should. So I think when we go back to that original poem, you probably are recognizing that when you look at your data, that you have a lot of unredeemed points within the platforms that you're using to measure and to deliver the earn and burn rewards. And that you know that one out of two of your customers may not be happy with what you're delivering. So you're looking to optimize and tweak and update that program. 80% of brands, as we've seen, which is higher than what we saw in our original poll, are looking to increase their investments in customer loyalty over the next three years when we talk to brands across the landscape. Before we I hand it back over to Brad and Ashley, we want you to think about these four key pillars when it comes to building out a loyalty program. And as I mentioned also, at the beginning, as of when we saw the poll, not everybody's interested in investing in a loyalty platform or program, per se, a rewards program, because it does cost money there is an expense associated to it. And building that ROI is very important. So first and foremost, we want you to be a loyalty company, not a company with a loyalty program. Because there are many different ways of building loyalty. And having a program or a platform is not the only way it is an very important piece. But it isn't the only piece. Lead with strategy. Don't just do it for the sake of doing it because that's what you feel you need to be doing it data. Ashley's already talked about this on how you can tap into data in order to be able to really understand where you give those discounts. What is that trigger that a customer needs in order to continue to transact with you. And it's not just about the technology and the data. It's also people in process, we know that those are the key elements to driving anything that's great in the world of technology and personalization is technology is an enabler, but you need the people in the process to make that happen. And then of course, continue to innovate. Don't just rest on your laurels laurels of what has worked in the past, because as new demographics come into the play and into the mix, you will need to innovate, to make sure that you address all of the different demographics that are coming to your business into your brand. So I'm going to hand things off and over to Brad, I'm going to stop sharing. And I think, Brad, over to you.

Brad Macdonald  18:35

Yeah, yeah. So thanks, Michael, we I think Michael did a great job of painting this picture of what's going on right now. So you know, holiday season, all expecting big results, for those of us running loyalty programs, expecting lots of people to join and get those benefits. And they're expecting a lot out of programs. But it seems like there's a gap between, you know, what the customers are expecting to get out of a program, and what they feel like they're actually getting out of the program. And Michael shared some stats about, you know, that they say they're not seeing the value that they think they should out of a program or they're leaving their points on the table. They're not even using them after they earn them. Or that, you know, brands aren't adapting fast enough. So I think all of that paints this picture of where there's an opportunity for loyalty as we go into 2023. And as we, as the three of us kind of brainstormed around, like, what is where is this opportunity, this idea of taking those members and activating them. So getting all those people that have joined our program during the holiday season and prior? How do we get them more engaged? How do we get them to see more value out of the programs that they're joining? So I want to share a quick view here of something that we've seen In with some of our clients. So the big graph on this represents some work that we did with one of our major retail clients. And, you know, if you start on the left of this thing, you've got all these people who enroll in the program, about 90% of them end up having a purchase. And that's because they're probably in the store or online making a transaction at the time they enroll. So most of them are going to have that first purchase, about 10% Don't and there's some, there's some reasons for that. But the bigger issue here is that after that first purchase, when they joined the loyalty program, we only see about half of them coming back for a second purchase. So as you can imagine, this is a huge problem, right? You spend all this time and money and effort to enroll these people in your program. And then you just don't see them come back again. You know, we like to refer to these as one and done customers. And you know, it's a, as we've worked with different clients, we've seen the same thing happen over and over again. And it's about the same amount, right? It's about 50% of customers who joined the program and have that initial transaction, we don't see them come back for a second transaction. So to us, this represents a huge opportunity. And hopefully, for the rest of you, you know, this might be something that is a big opportunity for you as well. So we got another poll question, because we're curious, how many of you see something like this with your own brands?

Aaron Conant  21:35

So I just launched the poll, if people want to jump in what percent of new loyalty and really Rowleys never come back for a second purchase?

Brad Macdonald  21:42

We realize you may not know the exact amount, but if you just if you have an estimate of kind of what range Do you think your brand is in if you have a program?

Aaron Conant  21:49

Yeah, I mean, there's a lot of IR and I'll publish them, we'll go another 30 seconds, we'll let it hang out there for about a minute or so. But what I've seen across the board is, you know, when COVID hit originally, a lot of people scrambled on the digital side to put everything in place, right? They did the digital checkbox, right? I've got SMS, I've got email marketing, and one of those was the loyalty program. And so when you put up the 80%, or the 60%, we had in the poll earlier, around, you know, looking for pee pee or looking to, you know, increase the effectiveness of it or revamp it. It's basically we're hitting this time where there's a little bit of a breather, digital teams can go back and now reevaluate and say, Okay, I put a loyalty program in place, like, but how well did it work? And what can I do, we finally have some time to actually go tackle it. So I'm going to end the poll here. And I'll share the results.

Michael Klein  22:43

You know, Aaron, we also have some interesting nuances between sub industries, because we've done some research around that, especially coming out of COVID. Because the recency frequency model is wildly different from one sub industry to another, if you think about grocery, and the 2.2 times that you go into a grocery store and what they had to do, many of them had loyalty, but many of them also didn't have digital in place, where on the other side of the spectrum, you see somebody that might be in general merchandise or department store, and they were much more digitally mature. But they were also trying to make sure they were getting the most out of their optimization, because, you know, I may not be buying a new overcoat or new jacket or furniture every 12 months. So there's a lot of interesting nuances as we start to dig into the sub industries within retail. Sure.

Aaron Conant  23:41

Yeah, Brad, you can see these here, right?

Brad Macdonald  23:43

Yeah, yeah, I can see those results. So it looks like a lot of you might not know. So a lot of you might not know whether customers are coming back out, you know, for that second visit or not, you know, highly recommend getting visibility to that, if it's something you don't have visibility to. But for the rest of you, you know, it looks like it's somewhere in that 26 to 50% range as well. Some even lower, but, you know, to me this, this is kind of a personal thing to me like this is it kind of bothers me that you would have somebody who's, who takes the effort to join a loyalty program. You know, they're, they're probably intending on coming back for multiple visits in the future. Otherwise, why would they have joined? But you just don't see them again. And there's lots of reasons for that. But this one just kind of bothers me like, why is this happening? But we know it's a big problem. And I just wanted to share a couple more stats about, you know, what we're seeing. So, you know, one thing that we're seeing is that 28% of consumers are bad abandoning loyalty programs without ever redeeming any points. And Michael had a stat about this as well, where members are earning the points and they're leaving them on the table. They're just not even using them. And this could be for multiple reasons, but huge opportunity We're also saying that, you know, the reason that we want people to use those points is when they do, they become more valuable. So members who have earned redeem rewards, we see that they're using some of our benchmark data that we have, from programs that we work with, we see members who redeem being 2.8 times more valuable than members who don't redeem their points. Another thing that we're seeing that might be a cause of this reason why why they're not coming back and why they're not using their points is because as we work with different programs, we see that a lot of times one of the problems they have is that it takes like six months, on average, to earn a reward of any sort. So going back to what Michaels stats about, they're just not seeing value in the program, the value might be there, but it just takes too long to get there. And some of the programs that we looked at, we even saw it be as high as like 16 months for somebody on average, to get to their first value that they're getting out of the program.

Ashley Lockridge  26:01

And actually said to Michael's point earlier about the seven industries, you know, you may not have to work as hard if you are a grocery store to try to get that upfront value as early. But if you're a luxury brand, especially if your consumer traditionally doesn't come in more than once a year, it is extremely important to try to get that first reward in their hands earlier than normal, because that's going to generate that next action. And it's going to really shrink that time between purchases. And just simply doing that can make such a huge difference for your overall income of the year. I mean, that's, that's where you're going to have the biggest bang for your buck.

Brad Macdonald  26:38

Yeah, that the metric that we we usually refer to this as earn velocity is what we call it. And it's just, you know, how long does it take to get to that first record? Or that first value that you're getting out of the program?

Michael Klein  26:53

But I have a question for you on this one. When I see sometimes and would love your opinion is a does a poor job, so to speak of the brand's really communicating the value and not being able to really let the customer know, why should they get to the next year. And it's up to the consumer sometimes to figure that out. And I think brands need to do a better job, in my opinion of communicating the value and why you want to try to get to the next year and redeem.

Brad Macdonald  27:27

Yeah. And actually I prepared some examples of this actually, that will show little later on. But the best brands that are the ones that have a mixture of easily attainable rewards that are very obvious, that are easy to communicate. But then they also have a mixture of that with some maybe longer term aspirational rewards that you could work towards. Whether that's, you know, a larger reward or the benefits from attaining a higher tier or something like that. But it's having that mixture of kind of like, what's the immediate benefit? What do I get right away? As well as what are my aspirational goals within the program? I could work towards? That, yeah, communication of it is a huge deal, right? Like a lot of programs that have great rewards and great value they're providing that they don't tell the members what it is or how to get it. And just one last stat, which is that 70% of consumers, they abandon their loyalty rewards, because it takes more than six months to accumulate them. So the six months that I showed on the previous screen, it's a real problem, right? 70% of people who don't get to that first reward within six months, they'll just leave. And so, you know, hopefully this gives you an idea of kind of why are some of these customers joining the program transacting for that first time, but not coming back? And we think it's because of a few different things, actually. You know, we think it's because we haven't created that meaningful moment of personalization or the communication. We don't think that members are getting to the value fast enough. And we don't think there's enough visibility or relevance around those rewards.

Ashley Lockridge  29:13

Yeah, and I'd love to dive into a couple of those types of brands that we're seeing doing it right. So the second part of this conversation is really going to be geared towards that we'd love to to open this up as well to any questions that you may have any examples that you've seen work what you all have seen work in your own industry. So as we go through this, you know, please chime in and and let us know what your thoughts are. Okay, so let's maybe talk to one of the very first examples that you and I brainstorm, Brad, if you want to flip to the next slide. Yeah.

Aaron Conant  29:52

Really quick a question that comes in. How much do you think it's about customers abusing loyalty rewards for a new account instead of using existing accounts?

Ashley Lockridge  30:00

That's such a good one. So. So I'll have Brad chime in on this as well. You know, we do see that that fraud is a big challenge. I'm actually going to show an example here in a bit that will showcase how to combat that in a few different ways. Oftentimes, we see that like an initial reward is very enticing to get that that first carrot that we were talking about. You can combat that a bit by having that initial reward delayed by a few days that you can't just immediately get a reward, spend it sign up again, immediately get it spend it. But Brad, what are your thoughts there with regard to fraud?

Brad Macdonald  30:40

It definitely, it's a it's a thing, right? It happens, it's hard to quantify, because it's hard to know that the person signing up with a different email address is the same person who has signed up before. And I would hesitate to call that fraud even because it's, I don't know that they're doing anything. I mean, it's, it's sort of our fault, maybe for not structuring it to prevent that kind of thing from happening. But we do see that happen. But we do also see, you know, kind of real fraud, where sometimes we'll have you know, an employee will sign up for a customer. Because they want to sign up and get the points and put them into their own account. So we do see that kind of thing happening. We try as hard as we can, with our customers to prevent that. And we have some automation built in that will help identify whether that's a repeat customer or not, if we can do it. And it will try to identify where there might be abuse happening where maybe the employee is signing up with their own account. So there are some of those things that we can catch, but we can't catch all of it. But it does happen. But I don't think that's the major cause of what's why we're seeing such a drop off between first and second purchase. I think that might explain 10% of it maybe if that but I think the majority of it is that we're just not showing the value to the customers or not explaining how to get that value.

Aaron Conant  32:09

Another quick question that comes in for the brands that do get it right, how quickly do they issue rewards?

Brad Macdonald  32:17

That's a good question. And I think it depends on the type of business you're in. Right? We've talked about, you know, there are some high frequency businesses like a coffee shop or a grocery store, where you could potentially get to a reward within just a couple of visits. But there are other ones that I think have longer time between purchases, like we have some jewelry clients where the average purchase cycle is I think it's like a year and a half between purchases on average. And that's hard, right? That's hard to manage, you know, getting members involved right away and earning rewards. So, you know, we have some good examples that we can show here. But, you know, an example might be like a gap or coals that they issue like, a cash reward right away, actually. And so the ones that are doing it, well, they usually offer some sort of member on the incentive that you can get right away. Or that you can get very easily by performing some task. So I think that a best in class example, you know, they're usually getting you some sort of value or giving you the potential to earn value immediately, right, within within days of joining the program, they give you an opportunity to get to some sort of value. And it may not be as big as a traditional reward, you know, that you earn all the way up to but it might be some sort of hook to get you engaged in the program so that you can earn towards the bigger rewards.

Ashley Lockridge  33:45

Yeah, and I think the key with that example that you just mentioned about the, I think the Kohl's cash, or I think we have another sample later on in this deck about Old Navy cache is that you are rewarded. But you have to make another purchase to get that reward. So you can't just come in and pick up a pair of Free Socks, you come in, and you actually have to spend at a certain threshold in order to actually utilize that reward that's available to you. And that's a perfect example of where you can use the loyalty program to make that kind of trigger that dopamine reaction, right, like, Oh, I'm getting something. But in reality, once you're in the store, you must take another action. So it builds basket size, it builds frequency, and you have that wonderful loyalty building moment. So I think that it's kind of the triple effect of having an immediate type of reward. Okay, all right. So unless there's any further questions, we wanted to kind of touch on this first topic of really creating meaningful moments with personalization. So it's holiday season right now we're in the thick of it. If you don't already have something like this, that's okay. This is something that you can build into any moment within the lifecycle communication journey of your customers, but it's Usually most effective when you take it off at the very beginning of a loyalty enrollment, Home Depot does a really phenomenal job of saying, Alright, we have several different types of customers several different personas of individuals that come into through our front door. And when someone enrolls in loyalty, they know that and they recognize that you can have different meaningful moments for your own personal lifestyle, whether it be gardening like me or lawn care, like my husband and do it DIY activities like my husband. But they actually prompt you to fill out your preferences and have kind of a fun quiz like manner with photos. And what's probably most important about this whole experience is that it's followed up with an email campaign that specifically caters to that particular action that I just took. Even more meaningful is that throughout every single Bau touchpoint business, as usual promotion that I received moving forward, those categories that I selected are almost ever present. And that's really the key, right? So the whole purpose of loyalty is not necessarily to live over here in a silo, which for many organizations, it is they have a CRM program, they have a loyalty program, and when I see a hand, they have loyalty program, and they kind of live in their own little world. But the beauty of this is that you can combine the two, so that with every touchpoint, you have the ability to speak to that person on a one to one level. And I'll just kind of finish this thought by saying, you know, you know more than anybody else, that your customers do not open your emails every single day, no matter if you send once a week, or seven times a week, or 14 times a week. But you want to make sure that that one touch point that they do open is meaningful and magical for them. So this kind of initial structure really helps with that.

Michael Klein  36:46

If I just want to add, I love that example, Ashley, because we were talking a lot about zero party data. And the preference centers that like you've shown from Home Depot, have such rich data to really build out that unified customer profile and being able to really understand what is a customer and they're willing to share it when they're willing to share that information. And we think about privacy and governance and security that consumers are hearing about and thinking about to in terms of what are they willing to share with a customer, those are great mechanisms to capture that data, and then also be able to deliver a better experience because they're willing to share that. Yeah, I love that Home Depot example in the preference center, that we see so many brands trying to execute on.

Ashley Lockridge  37:36

Yeah, and you know, one other point to that I think someone else wrote about question, you know, hey, we're not necessarily ready to jump into a loyalty platform just yet. So how do we achieve kind of creating loyalty? Or how do we roll it out without having to roll it back? Right. And this is actually something that's just should be part and parcel of any loyalty, loyalty, thought process, right. So as an organization, you are trying to build loyalty with your customers. In order to do that, whether or not you have a loyalty program, you should absolutely have something like this a preference center data collection points throughout the customer journey. And we'll we'll talk more with Brad about the four in a moment who does a phenomenal job of this. But gaining that data collection continuously allows you to be able to speak to a consumer in a very personalized way. And you don't need loyalty for that, that in itself will help really move your maturity level up the pipeline in terms of getting people engaged and back in your door.

Brad Macdonald  38:36

One thing I'll add to this, I love this, this conversation, because I think a lot of it's a big opportunity that isn't really that hard to do. But we did some research for an airline client recently, where they wanted to know how they were doing with onboarding their new customers compared to their competitors. And it was really eye opening, you know, so we, our team went and joined every one of the competitor programs just to see what what's that new member experience look like? And there were there were, there were maybe one or two that did well, and the rest of them, it was pretty amazing how you joined the program, and it was just silence, you know, no email, no communication for several weeks. And then finally, you got to communication that says, hey, come buy something from us. And the ones that did it well, you know, they had things like Home Depot where they reached out and said, hey, we'd love to get to know you more like, like, tell us more about you. And so it's not just the value you're getting from that zero party data that helps you personalize the experience. It's just it's a communication touch point. You're you're saying hey, I want to be your friend. I want to talk to you. I want to build this relationship. And I think back goes a long way as well. And again, not a lot of effort to put something like that in place.

Ashley Lockridge  39:54

Yeah. Well, and you can do it. I'm sorry, I was just gonna

Aaron Conant  39:59

And then we have a question that comes in. But no.

Ashley Lockridge  40:02

Yeah. So one last point on that, you know, we, we were talking about the companies that do it right, because everyone asks that right, who's the best in class. So not only home depot here. I think I mentioned Sephora earlier. The reason I love them, and I'm not even that into makeup is the fact that they, they recognize that everyone's skin type and beauty care program is different, right? So they have everything from skincare, find your quizzes that they incorporate, how to find your appropriate Foundation, even when you're online, and you're not able to go in store me that blew up during COVID, right, like everybody's still wanting to wear makeup occasionally. You know, I'm not like a zombie all the time. But what I found so interesting is that they kind of launched into the digital space with the ability to kind of pick and choose what your skin looks like, what shade you wear, what conditions you have, that we also saw that crossing over into the physical world, right, so you go into a physical store, and you actually have these virtual kiosks that will allow you to interact and kind of find that perfect shade. And so the one thing I wanted to pull up here is that that in itself is a loyalty, building opportunity, when we have these physical kiosks, to making sure that you're giving that customer the opportunity to log in with their loyalty ID, and then themselves personal beauty tips, care opportunities for their skin type, for their style for whatever your particular industry is, and making sure that you're connecting the dots. That's where the value is. And again, it opens up that communication opportunity to Brad's point, where would then we can get in front of them with the appropriate offer the appropriate content, the appropriate reward that makes sense for them. So it's really important to connect across in store, online and otherwise..

Aaron Conant  41:49

Awesome. So as we build our program, we're asking whether we make a small reward something that is transparently earned or a surprise and delight that we use surgically to tip conversion to customers, or with customers, do you like one better than the other?

Brad Macdonald  42:05

I'll take that one. Because there are some brands, I think that are doing the first example really well. And I think that would be my preference is that it would be something that is easy to earn, that you get right away, versus just giving them something as a surprise. The way we think about loyalty is that loyalty is behavior change, that at the end of the day, it's it's either trying to change somebody's behavior or maintain somebody's behavior. And so I believe that the reward should be tied to some sort of behavior change, even if it's a small thing that you're asking them to do, you're still trying to nudge them in the direction you want them to go. Ultimately, there's some great examples of brands that are doing this during the onboarding process, where you can earn points for doing very simple tasks. So things like completing your profile, you get a few more points, download the app, you get a few more points, just answering a poll or a survey gets you a few more points. I'm a huge fan of that kind of activity, because it it creates this conversation that we just talked about, initially. But it also shows that they can earn progress pretty fast. So you know, if a customer was really engaged and did all that stuff, I think it'd be great to get them to a reward as soon as possible. Yeah, and actually, thanks for throwing this up. Ashley, we do have an example of like Tom's that does this very well, right? They have this menu of things that you can do when you join the program, they get you points immediately that get you towards that reward. And so my preference would be to do that, versus just giving them something as a surprise and delight. That's not to say that surprising, like delight doesn't have its place. I think it does. But my preference would be to tie it to some sort of behavior change that you want to get out of the customer.

Ashley Lockridge  43:59

Right. Yeah. And I think I mean, back to that original question that someone posed about, I'm not ready to, you know, necessarily dive into a full program and then roll it back. When you have these types of smaller rewards that again, what is it doing here it is accelerating your opportunity to earn that accelerating earn velocity, it's kind of giving these little small pieces to get you engaged, to get you thoughtful and mindful about the program, and to even introduce, introduced the ways that you're involved in the community. I don't know if it's actually in this example here. Maybe it's the good for good or good. But many organizations today will also give away points and rewards for or allow you to donate your points and rewards. That in itself is something that you can promote as kind of a small little interaction, which then in turn kind of exposes your social responsibility and your your ability to be involved in corporate giving programs and things is of that nature, and then it just kind of levels up that mentality of okay, this is not just an organization or company that you buy from, but it's a company that I want to buy from and want to be involved with. So it's kind of a nice, you know, double edged opportunity there.

Aaron Conant  45:18

One other question that comes in as well, in regards to CCPA, and communications. So, if they opt out with CCPA, right, but don't terminate their membership in the loyalty program, essentially, can you still email them for loyalty purposes? Or, or not? Have you encountered this, and it says, Hey, this, this might not be you necessarily right up your alley. But you know, just in regards to data privacy?

Brad Macdonald  45:50

Well, I get confused with all the regulations that are out there and how they're evolving, they seems like they change every day. If usually, what we see is that when a member doesn't want to have any sort of communication with you, they usually don't also don't want to have any association with your brand and be earning points and rewards, we usually find the opposite that its members want more, they want relevant conversations, they want relevant communications. And that's part of the reason why they join loyalty. And so I'm actually not entirely sure whether illegally you can still include them in your program, I think you have to remove them from your databases altogether. But, you know, we're usually pretty. I don't know, if somebody says they don't want to communicate with you, we honor that. And we, and we recognize that, you know, that's, that's not an opportunity for us right now. And, you know, that's not to say there aren't opportunities to reengage them at some point. But, you know, we, we view it as a relationship. And we've you view it as a value exchange, like, the reason members join loyalty programs is because they want more value from you, they want more communication, they want education, they want emotional experiences, they want all this stuff out of brand. And in return, we have to give something back. So, you know, it's it's a good question. I'm not sure entirely what the exact answer is. But, you know, I would say that if they don't want communication from you, they probably there's something wrong there.

Ashley Lockridge  47:24

Yeah, and the one thing I will say is that in my experience when we've encountered this, and we always say rely on your JIRA legal consultants to give you the final answer, but there are certain scenarios where you have to actually let them know if you're awarding them points or points or expiring because it's transactional focus, and you are legally obligated to send those communications out as well. But there's a very fine line between kind of those surprises and delights and marketing materials versus transactional communications in nature. So definitely consult with your legal team. But that's been my my experience. So with that, I think there's one other really important topic that I want to make sure that we cover. And the concept here is really making sure again, that we're accelerating that earn velocity, but also making communications highly integrated between loyalty and CRM. Because that's such an important piece when you're onboarding these individuals, we have to do it, we have to introduce the benefits of loyalty early, and we have to make sure that we're communicating often. So I'm going to share my screen and just share a couple of examples here. So DSW, oh my gosh, one of my favorite brands when it comes to personalizing in a really meaningful way. This is an example from them, were number one, they combined the signup of an e mail and loyalty into one, which is such a smart move. I know a lot of organizations are really afraid of going on this direction for good reason, they don't want to scare people off for signing up for their CRM program. But in this particular situation, they combined it with signing up for email, because they signed up for email to get a $10 off reward. What I thought was really clever about this particular execution is that the welcome didn't immediately deliver that reward, you actually had to wait a few days to receive that. That's smart for a couple of reasons. Number one, again, as Brad showed in that very first slide, your loyalty member has probably already interacted in purchase with you upon sign up. But number two, it gives them the ability to receive and try on their shoes and then also start kind of having that what I would call the opposite of buyer's remorse. It's actually remorse that you didn't actually buy that second pair of shoes that you were eyeing right? So then you receive your $10 off. So it's that almost instant gratification. And then you receive additional reminders. This is this is email three of I believe five total reminders that you receive over a period of two weeks and That's really smart. And I really encourage that because the more you can remind a customer, that they have a reward available to them, the more they're going to actually realize that they need to go and use that before it expires. On top of that, of course, there's some wonderful personalized recommendations in here. So that actually takes that transactional history that they've gained from you, that you gain from your customers. And it's giving you a reason to come back and actually purchase because it's highly personalized and relevant to you. Now, on top of that, again, the key here is to personalize every interaction. So beyond onboarding like we've, we've gotten through the holiday season, you've on boarded them. Hopefully, in that onboarding process. We kind of skipped through this before, but hopefully, during that onboarding process, you've asked them to create the profile similar to Home Depot. Just a real quick tidbit. 86% of companies don't give you any points for completing your profile. So if you want to immediately provide that kind of surprise and delight, rewarding system, that's a great way to do so. But after you've collected that information, how do we use it? Again, DSW does a phenomenal job of this. They come in immediately they tell me number one, they say hello Ashley, by the way, my name is as HLA why so it's spelled incorrectly on here in case anyone's like this on LinkedIn. It tells me my status, it tells me how much I have to spend to get to my next reward. It reminds me of why I'm even in this rewards program so that I can get 5% back on every purchase. Every single piece of this data are of this email is based on data, they know that I'm cheap, and I spend under $50. For my shoes, they actually call it out up here. They know I've purchased from Lucky Brand before, they know I haven't given my birthday yet. And so they're kind of encouraging me to give my birthday. And they're also encouraging me to shop by size which they can utilize in the future. There are so many pieces here that are rich and good. And if you can just imagine you send out probably multiple emails a week, if you can find ways to utilize that loyalty data, not just an onboarding, but activated across every single touchpoint, you are going to be golden in the eyes of your consumer and really help level up that experience overall.

Aaron Conant  52:14

And I can see we're really getting up on time here. We'd love to just go round table here quick key takeaways. As we wrap up for the next couple minutes here. What should people be thinking about?

Michael Klein  52:24

Who actually want to chime in first, because Michael said to me with when I was listening to both Brad and Ashley today is when we think about loyalty, and in so many ways, not just the program itself, it is about a relationship. And that's the strategy that I think we need to all go into this. And whether it's friend or family, how do we want to create relationships with those people, just as we would with our customers in, you know, you wouldn't go silent for 60 days, but you also wouldn't call them every five minutes and you know, in email or text them, you know, every other hour. So, you know, it's it's really trying to take that mindset of what is it that what type of relationship do you want to build with your customer and building your strategy from that?

Ashley Lockridge  53:25

Actually, I'm gonna pivot off of what you just said, like you don't want to text and email your customers all day long. I will kind of pivot from that and say, one minute, one thing that we forgot to mention was, it is important to make sure that you are offering your customers the opportunity to sign up for rewards notifications via text via app via email, because not every customer interacts with you in the same way. So you want to be cognizant of that and break through the clutter that remains, you know, within their ecosystem, not everyone checks email, so they may not be getting through. And so the main takeaway for my clients is usually show value early with onboarding, often and every single communication everywhere, meaning whatever touch point you're interacting with the thoughtful like Michael said about how they should be communicated with what offers should be sent to them, and how we should really be interacting with that specific person to show value.

Aaron Conant  54:21

Awesome, Brad, we started off with you. But up here too.

Brad Macdonald  54:25

Yeah, just one thing that i i i that the size of the opportunity here is just something that I think is that all loyalty programs have an opportunity to, to tackle. I mean, the fact that 50% Don't come back. It's such a huge number and we've spent so much time to get them into the programs. I just think it should be a priority for every program to try to reduce that number and try to get more people back for that second visit. And one thing that I'll just mentioned, which is like sometimes the most obvious answers are the best ones which is just like, maybe we just need to ask our customers like, Hey, you joined the program? We haven't seen you come back. Why is that? You know, and we think we've given some good tips to try to address some of that. And we think it's probably because they're not getting value, but it's also just kind of another recommendation is that, you know, having that open communication and dialogue with your customers, and just ask him, Why are you coming back? You know, I think is a big takeaway that that I'd like to think about more as I go forward.

Aaron Conant  55:28

Awesome. Well, thanks again, Ashley, Brad, Michael, for your time today. Thanks for being such great friends. Partner Support is the network. anybody on the call today? You have more follow up questions you want to know more more than happy to connect you with anyone on the panel here today. If you have other questions across the digital landscape, don't hesitate to reach out. We'd love to have those conversations with you as well. It's how we get the topics for these and how we say so topical. With that we're gonna wrap it up here. Hope everybody has a fantastic Thursday. Have a great rest of the week. Everybody, take care, stay safe and look forward to having you at a future event. Thanks, Ashley. thanks Brad. Thanks, Michael. It's been a blast. Thanks, everybody.