How Loyalty Can Drive a Customer Engagement Strategy

Tim: Welcome back to another Cheetah Digital session. This one is entitled How Loyalty Can Drive a Customer Engagement Strategy and before we dig in, I wanted to let you know, as the head of content here at Cheetah, we make a ton of content and resources for you. So please get to cheetahdigital. com/ resources in the top navigation, webinars, client success stories, all types of things, whether you're the CMO, chief customer officer, chief technology officer or you're a practitioner, using platforms and technology, we have something for everyone so please go check out all the sessions that we create constantly and subscribe to our mailing list on our homepage. You'll get all the stuff in your inbox. Today, in this session, we're going to bring you several brand marketers focused on either delivering loyalty solutions or running their own consumer programs and platforms. We invited them to talk about some of the biggest challenges creating and delivering the next best loyalty solution for consumers. Now, this includes the idea that an amazing customer engagement strategy involves more than just a loyalty offering. I mean, loyalty really is a mentality that should be integrated across all of your consumer touchpoints rather live in a silo. That means it permeates all channels such as email, SMS, point of sale and beyond. We also discuss in this session, why you need to build a loyalty first culture in your organization so that multiple departments and stakeholders are all aligned on providing that value for customers first and foremost. A culture that is customer obsessed is one that will have the best customer retention rates and we all know, getting revenue from an existing customer is easier and probably less expensive than acquiring a new one but you have to do both and loyalty can help there. To that point, a program also has to be easy and valuable for both existing and new customers. Some of our guest will share their tactics in those areas as well. One thing is for sure, no matter where you are in your journey right now, with your customer engagement strategy, we'll have something insightful for you today. So, who are our guest? All right, well, one is a good friend and our partner at Loyalty360, Mark Johnson. Mark is the CEO and he's built an amazing resource for global brands. In fact, I think Loyalty360 is the largest collection of loyalty experts on the planet and it delivers amazing content and services for its members. If you are not a member of Loyalty360, you should definitely check them out. We also have loyalty legend, Mike Ribero, has been a key architect to some of the most popular loyalty programs out there, including the long standing, Hilton Honors Program and currently is the founder and CEO of REACH, that's both a platform and a marketplace, connecting brands and consumers with an eye on value exchange and empowering customers that actually becomes brand activist. Finally, we also have Brad Bissonnette who's the VP of marketing at COBS Bread, a baked goods company with over 100 locations in Canada. He also recently rolled out a revamp loyalty program COBS Club with us here at Cheetah Digital, on the customer engagement suite. Before we dig right in, I wanted to share a few quick stats that prove that this conversation is relevant. After all, some of you already have successful loyalty programs. Some maybe exploring maybe a reboot of your existing offering and some of you are just starting your research and maybe scoping out or building an initial loyalty strategy. So what are some of the most compelling stats from consumers that should guide all of us through this landscape of customer engagement. Well, let's look at some from our 2021 consumer trends index. These are figures that were published earlier this year. These stats are based on responses from over 5, 000 consumers across six countries in all age groups. You can actually download this full report simply by scanning the QR code on screen or scrolling down a page here where we suggest other content. By the way, we'll be bringing the 2022 Consumer Trends Index in early 2022. So another reason to follow our content, but here we go, here's a stat for you, 83% of consumers have a favorite brand as it provides a consistent customer experience. We'll explore why loyalty as a silo can be a pain point for consumers and truly integrated program delivers on that consumer expectation of consistency across their journey in all of the channels with your brand. Another stat for you, 64% of consumers are prepared to pay more to purchase from a trusted brand. Building trust is key and your loyalty program must consider how, when and where you're collecting data and then using that customer data, buying a loyalty platform off of a shelf isn't always putting your data and relationship first. Building unique programs on flexible technology allows you to prioritize your data needs, meet the customers where, when, how they like and give them that level of comfort that's going to build trust. One more stat, 29% of consumers say they are not loyal to any particular brand. How will your programs stand out? Points and rewards are a given when talking about loyalty, and we'll get to that, but what will make your customers come back again and again, while possibly even going the extra mile to do business with you? Brad Bissonnette has some really good ideas here. One more stat for you, 24% of consumers are not loyal to a given brand because the brand did nothing to encourage their loyalty, even though they are a frequent shopper. I mean, this is a sleeper stat in my opinion, just because someone may buy from you again and again and again, it doesn't mean that they're necessarily loyal. You may look at their data and identify them as a repeat customer and think, " I got them, they're on the hook," but are you really recognizing them for their loyalty? Do you provide value beyond the product or service that they're just buying the transaction? Don't assume that a repeat customer is a loyal one and certainly don't mistake the lack of loyalty or customer engagement strategy at your brand as something you can just shrug off. You can't, you got to do it right. So don't forget to download the Consumer Trends Index report. It's a giant PDF. It's full of stats in other areas as well, zero party data, messaging trends, email, SMS, when to send, et cetera. It also comes with an executive summary and also examples of how to get ahead of these consumer trends. Okay, so let's get to our guests. For the next 13 minutes or so, I'm going to turn it over to Mark Johnson, the CEO at Loyalty360 and share his conversation with Karen Szarvas, who's the Senior Director of customer loyalty and partnerships at the Vitamin Shoppe. In this section of our session, she shares her thoughts why loyalty programs should not be run in separate silos, why giving customers flexibility in your program is critical to success and how the Vitamin Shoppe revamped their program recently. Take it away Mark.

Mark Johnson: Today, we have Karen Szarvas who's the Senior Director of customer loyalty and partnerships at the Vitamin Shoppe. How are you, Karen?

Karen Szarvas: I'm great, Mark, how are you?

Mark Johnson: Good. Thank you. Thank you for taking the time to talk with us today. I want to ask a couple questions around customer loyalty. How do you and how does Vitamin Shoppe define customer loyalty?

Karen Szarvas: So customer loyalty is at the cornerstone of our organization. So the Vitamin Shoppe is really focused on nurturing the hearts, minds and bodies of those on a quest to take control of their well being. So our primary goal is to help people become their best selves, however they define it. We do this by providing innovative high quality brands and products and trusted solutions to millions of wellness seekers. So the products we sell are very personal, so by nature of what we do, building those strong relationships and creating an exceptional customer experience is essential for us. So within our stores, our health enthusiast or with our customers 100% on their journey to their best selves, they work side by side with the customers really getting to know them, understanding what their struggles are, their challenges, offering encouragement and guidance to really help them fund the best products to meet those personal wellness goals. Then across the digital channels, we continue to build this community by offering really rich content and services to help inspire more connections.

Mark Johnson: Okay, great. When you look at companies, sometimes they kind of treat loyalty as a silo, why should companies avoid treating loyalty as a silo and what kind of customer loyalty programs contribute to the business beyond encouraging purchases with discounts?

Karen Szarvas: So at the Vitamin Shoppe, in the past, when our program really did set separately, it wasn't as successful. So I think it's essential that loyalty must work hand in hand with the brand to be successful. Using points alone to retain your customers is not enough, so it really has to be about creating that deeper brand and customer experience to create that long lasting connection. From a loyalty perspective, I mean, everybody knows programs can really drive retention, drive significant sales to your business, but beyond that what loyalty can do is really build those brand advocates. It's a great way to drive referrals. It can help you build brand awareness, so as you build more advocates, you have more people talking about your brand, whether on social media or other channels. It helps drive more awareness to your brands and what you stand for. Then overall, of course, from a retention standpoint. The other piece I think is really important that loyalty can deliver is it brings a platform to you, to really help build business intelligence about your customers. A customer that's invested in your brand, invested in the program, they're a little bit more willing to share information about themselves. So it's a great way for you to learn more about your customers and then really capitalize on that data and use it to potentially drive new products, potentially services, personalize your communications. So I think that's one of the really great benefits of loyalty is really building and learning much more about your customer base to deepen those relationships.

Mark Johnson: Okay. There's a belief that implementing a culture of loyalty is very important. As you mentioned, having it holistically integrated into your organization is very important. Can you give us an overview of how your customer loyalty program started?

Karen Szarvas: Yeah, so I've been with the company about three years, and the loyalty program which is called Healthy Awards had been in existence for many years, but it was a flat monetary based program, had very little bells and whistles attached to it. So in 2019, we really wanted to redesign it so that we could deliver more value and create just a more personal relationship with our customers by celebrating, recognizing and rewarding them. So we really went from shifting away from the pure transactional, to create something that was much more human. As you know, loyalty is really a two way street, so now, our program delivers that. It brings greater value, it gives those customers some exclusive perks. We talk to them differently. We treat them differently, and we also have flexible rewards, which was a big pain point for our old program. It didn't offer any flexibility, which was the challenge and one of our biggest customer complaints. Additionally, I think it's important that you really thread the program throughout your brand and culture, which again, goes back to your previous question, if you keep it separate, it's never really going to be part of who the brand stands for and now, Healthy Awards is that. It's in all of our channels. It's through all of our touch points. So it really is a part of the brand itself and an important element to the overall sales of the brand.

Mark Johnson: Absolutely. How have you encouraged a culture within your brand that is focused on customer loyalty and customer experience?

Karen Szarvas: So I think it really happened when we internally... I would say it happened when we decided to redesign it. It was a big decision that the leadership made that they wanted to really take this program to a different level. Beyond the financial investment, there was a lot of resources required a lot of cross team support, a lot of IT development that had to take place. It hit all our channels, right, and especially from our store side. So we really wanted to make sure it became part of the brand and part of the culture. So I think that shifted when we made the decision to revamp the program and we continue to work towards that, to make sure that now that the program has been revamped, a few years now, that it continues to really have that same life and energy that it did when we launched the program. So we're actually going through right now, kind of a refresh for our store teams to continue to help keep them educated. Obviously, there's always retention issues with some stores. So you just want to make sure that all the internal resources, understand the value that the program brings, and that they can really explain it and sell it through to customers so that customers then feel that the value and why they would want to join the program.

Mark Johnson: Okay, when you look at getting started, very important for people or brand should I say, who are looking to start a customer loyalty program, if someone is starting out implementing a customer loyalty program or upgrading an older program, what are some of the lessons you could share getting buy in from all levels of the organization, especially in the C suite.

Karen Szarvas: So yeah, so loyalty program should strengthen your customer relationships but it definitely needs to be a program that's mutually beneficial. So it needs to bring value to the brand but it also needs to bring value to a customer for it to be successful. So I think the first step is for the brand to understand like who their customer is, what are their needs, what values are important to them, what are some of the incentives and perks that could be most meaningful to them? So we did a tremendous amount of customer research to really understand what would matter most to our customer base when we revamp our program. Personalization is key, so wherever you can create those personalized moments, whether it's in perks you deliver, whether it's in communications or experiences, I think that's essential and something that more and more customers are looking for and truly expecting from a loyalty program. Everybody can get points, so you really have to think about what can my brand deliver that's going to be unique to my brand, what's going to be a differentiator for me? So I think that that's really important. As far as the buying goes, I think you should lean in on the customer retention piece, right, because everybody understands how difficult customer retention can be, but how critical it is. We all know acquiring new customers is much more costly. So an effective program can really give you that edge against your competitors. So I think if you can get the buy in from the leadership and treat it as a priority from the top down, you'll find it to be successful. I was fortunate to have that when we decided to revamp the program. So it came from the top down, so everybody was onboard with it, and that consistency and priority remained throughout all of the development of the program and I think that really helped us succeed.

Mark Johnson: Okay, and implementation can be a big challenge for brands, we continue to hear about kinds of challenges or opportunities to make that a little more seamless or a little easier, what are some challenges that you saw when you relaunched your customer loyalty program? What were they and how as a brand, did you address them? Were they technology issues, integration, employee training? How did you address those challenges that may have popped up?

Karen Szarvas: Yeah, I would say we were very fortunate, as I mentioned just before, because we did have the full support of our leadership team, including our CEO. So we had a full project management support. So everything was very structured and tight, which was incredible. We also had an executive sponsor, so we had a leadership member who was overseeing the program and really our support system to make sure that things were moving ahead. We had a steering committee. We had business leads, SMEs, like it was a very structured launch. With all that, we also did have obviously issues with I would say, technology was probably the biggest challenge, we faced. Just delays with technology, a lot of integration had happened with some of our third party partners. So some of that was delayed, so I would say the technology side was probably the piece that we did hit some hurdles, but I think overall, again, from a buy in perspective, and from it being a priority for the organization, allowed us to really hit our deadlines on time, because we had so many cross teams supporting the initiative, which again, you need if you're going to really roll this out across your entire brand but because again, it was deemed a top priority for the organization, we really did get the support and resources, we needed to be dedicated to the project.

Mark Johnson: Great. What advice would you give to others who may be embarking on a similar project, an upgrade or program relaunch, what advice would you give to them with some things that you saw?

Karen Szarvas: Yeah, I think it's just again, understanding what you think your customer is looking for. I think there's, in my past life, other programs I've managed. Sometimes you put too much into the program, you try to have too many bells and whistles, too many different perks. So I think it's really just important to understand what your customer's needs are and again, how you can differentiate your program because I think those are the things that are going to make it unique for your customer. If they're already loyal to you, they're already a customer of yours, they're going to just want to be part of the brand more, to feel more recognized, to feel more valued and appreciated. So I think you just have to hone in on what are ways in which we can deliver that? It's obviously really difficult to do it one to one, but how do you make it so that you are creating a more personalized offering and experience for the customers, I think is the goal. I think sometimes you can almost want to try to bring too many elements in and then, I think the customer can sort of lose focus or interest, if it has too many things added in at once. I've found sometimes it's great to just phase things in, so that you're continuing to refresh and bring new perks and offerings as the program evolves, versus trying to offer too many things upon launch.

Mark Johnson: Okay. When you look at measurement, measurement is obviously very important to the success, the efficacy of a customer loyalty program, how are you defining and measuring success for your customer loyalty and customer experience efforts?

Karen Szarvas: So, probably similar to many other programs out there, we look at KPIs. For us, we look at attached sales, which is where we look at the sales that are attached to an award or certificate, we look at total redemptions, the redemption rate, our retention rate, obviously very important and then from an engagement perspective, we're always really looking at tier migration rates and growth there. We want to make sure that the way we establish the brands and the thresholds we set for people to reach those tiers are achievable and attainable. So we'd like to make sure we're hitting those tier migration goals. Then the last piece is from a private label perspective or private brand side, we like to look at the penetration there. A lot of what we try to bring through, our Healthy Awards program is more interest and awareness around our private brands. So we're always looking to see if we're increasing the private brand penetration through the program. Then, I would just say outside of the KPIs more, looking just more holistically at the customer, right, because it's more than just about KPIs. It's about the whole relationship and experience for the customer. So, we're trying to look more closely at what other services are these customers taking advantage of, are they using our curbside pickup or bogus? Are they downloading our app and shopping through the app? Are they leveraging our what's good blog content or engaging with us through social media. So we're trying to really look more holistically at the customer outside of just the transaction to really understand which of those customers really are our most valued customers, and where are there opportunities to potentially cross sell, upsell or introduce them to some of those other services?

Mark Johnson: Okay, great. Well, Karen, thank you very much for taking the time to talk to us today. Great answers, and I look forward to talking again soon.

Karen Szarvas: You're very welcome. Thank you for having me.

Tim: Again, Mark is a great partner here at Cheetah Digital and you have to check out loyalty360. com, their content is amazing, become a partner. Next up, we sat down with loyalty legend, Mike Ribero to help us understand how loyalty programs have evolved, where they really began and some of his sage advice for marketers building customer engagement strategies. Now, Mike has held senior positions at many brands. If you really want to be impressed, check out his LinkedIn profile, and you'll totally see why he was a must have for this session. He recently founded REACH, a marketplace and platform connecting consumers with brands while putting a real value exchange at the center of that relationship. REACH is a unique offering for brands and brands should consider it, whether they need to augment or create a loyalty program. You have to check it out. Our CMO, Richard Jones sat with Mike earlier this year and discussed the entire REACH platform and why they decided to build it on the Cheetah Digital Customer Engagement Suite. You should watch that full session. Scan this QR code now on the screen or go again, cheetahdigital. com at the top navigation and under the resources tab, you can visit webinars, you can search the word Reach or Mike Ribero, it'll come right up. This session is titled, Challenging The Loyalty Paradigm with Industry Veteran Mike Ribero. So let's dig into it. The first question we put to Mike for this session was how loyalty programs started? Mike was around in the 80s when Eastern Airlines rolled out their program. He later became the chief architect behind the Hilton Honors, which is still one of the largest most successful loyalty programs ever built. He was the perfect guy to ask this question. So Mike, where did loyalty really get it start?

Mike Ribero: I actually have a view about this because I was one of the original architects of what you might consider the modern day loyalty program. I was fortunate enough to be... lead one of the teams that created the continental and at the time, Eastern Continental One Pass Program, which is now part of Mileage Plus, and then was hired by Hilton, who didn't have a loyalty program at the time that I became their chief marketing officer to create Hilton Honors. That post its own challenges because unlike the airlines, hotels don't own all their properties, unlike the airlines who own all their airplanes, so you had to create a very different economic model to make it work for all the various hotel owners in a way that built business but still had the economic wherewithal to kind of sustain the test of time. It's interesting, because back then, our focus was to build a stronger relationship with the brand's best customers, understanding that the 80/ 20 rule that oftentimes 20% of your customers account for a much... maybe not 80% of your business, but a significant part of that business, and it was always about not just providing a reward mechanism that created the opportunity cost, it was about forging a personal relationship with those people, so they felt like they were being treated like the customers they were and the importance they represented to the brand. Unfortunately, I think a lot of that has been lost, and in many cases... It's interesting, because if you think about what happened, loyalty programs were so successful for airlines and hotels that other industries rush to emulate them. What they did was instead of thinking about what would work best for their industry, they simply copied the structure. In many cases, it didn't work and that's why today, you have a lot of loyalty programs, which are simply discount programs in disguise. I think the industry would do very well to go back to its roots and think about what's important, what are we trying to accomplish with the loyalty program? Because a loyalty program isn't kind of a marketing Swiss army knife. It has specific purpose and it has to be part of an overall marketing mix to effectively manage a customer relationship over its lifetime. So, while it's an important tool, I think it needs to be rethought, and I think it needs to be deployed in the context of all the other tools, brands have available to them in order to drive and create the kind of bond between a customer that withstands the test of time.

Tim: Okay, so it only made sense for us to continue the conversation with Mike, by posing this question, how has loyalty evolved over the last few years and where does it stand today?

Mike Ribero: I think customer loyalty is critically important, but it's definition is evolving and that's I think, the most important facet of loyalty today. If you think about customer loyalty and the loyalty programs that support it, many or most, I should say, are based on models that were developed almost 40 years ago, when the airlines and hotels first launched their programs, which really define what you might call the modern day loyalty program. Those programs, which were incredibly effective at the time, were developed at a time where there was no social media, very little technology in between the customer and the brand. The relationships were almost always personal in nature, a kind of human being to human being so to speak. For the time, they worked extremely well. They were based on two... kind of three basic factors. Being able to answer the question, what do I get for doing business with this brand? Answering the question, how do I feel about doing business with this brand? How does this brand make me feel and then, creating an opportunity cost for non- exclusive use of the brand, that is, if every time I don't buy this brand, I feel a little bit of pain, because I'm missing out on something that the loyalty program was providing. That's just not enough anymore, in my opinion. Today, you have technology that dominates, as a matter of fact, you could argue that millennials today have never had the kind of personal contact with the brand that older consumers have, because they basically have interface with technology as a primary force or form of contact with the brand, and they have the benefit of social media, so they have that 360 degree perspective of the brand, that older consumers simply didn't have at the time. So I think the definition of loyalty has to be kind of re- contemplated in the context of where we are today, and I think true loyalty, requires some kind of better alignment or understanding between the brand and the customer. So their interests are aligned and so the effort that the customer puts into helping a brand build its business is reciprocated in some way. I think that's where loyalty programs fall short today.

Tim: Now, when you hear the word loyalty, most marketers think about points and rewards. That's definitely a component of almost every rewards program in some way, but how did we get there? We asked Mike, why that was the basis for so many programs for so long?

Mike Ribero: That's a really good question because points or reward systems are not universally... cannot be universally applied or they're not a cure all, for the customer relationship challenges most brands face. As a matter of fact, I would suggest that some of the most powerful loyalty platforms out there have nothing to do with points or miles or anything like that. Let me give you a good example, in the insurance industry, because it's based on such precise actuarial tables, a traditional reward based loyalty program simply wouldn't work, so the industry back then, and I actually participated in this, came up with something that created an opportunity cost, but in a very unique way. That's when they came up with vanishing deductible. If you think about vanishing deductible, every year, you have a policy, they reduce your deductible by$ 100. So if you have a$ 500 deductible, after five years, your deductible goes to zero. So what that means is if you decide to go to a different insurance company, somewhere down the line, you're going to go back to that$ 500 deductible, and so that becomes a real hook and if it's followed with really good service, it provides kind of the perfect environment for the kind of loyalty that provides that kind of balance between tangible benefit and emotional satisfaction and I think that's why I think focusing narrowly on reward structures that are points or miles based is myopic in today's marketplace.

Tim: Well, it was also only natural to ask Mike how loyalty programs can contribute to a business beyond encouraging just purchase and discounts. How does the emotional aspect of consumers' perception of your brand contribute to the larger customer engagement strategy?

Mike Ribero: That's a critical question and the reason being is consumers today, can wield a lot more power than they did 20 years ago, 15 years ago and that's because they can actually influence a brand indirectly as much as they can build... to help build the brand directly. Let me explain that. Today most loyalty programs are driven by purchases, the more you purchase, the more you get. It has nothing to do with loyalty in fact, because you could be giving just as much, if not, more to a competitor and still be a very big consumer and be perceived as the highest level within a particular brand's loyalty program. Where I think loyalty programs today are missing an opportunity is in the holistic value of a customer, their ability to not only generate purchases, but their ability to influence others to make purchases. When you think about it, instead of defining the value of a customer as the average revenue they generate, what brands should be thinking about is how much can a customer generate themselves, and how much of an influence do they have on others, which could be order of magnitude greater than what they can do as an individual. So if you have somebody out there who's influencing others, if you have somebody out there that has a very large following in social media, they can actually generate more indirect revenue than they could ever generate by themselves, simply by buying the product and I think that's where loyalty programs or loyalty strategies need to focus, and it really talks about the definition of loyalty. Today, loyalty... the standard for loyalty is you want to turn your customers into advocates, right? That's kind of the standard. I would suggest that the new standard should be turning customers into activists, those that not only talk the talk, but walk the walk, those that are actually proactively working to help a brand grow for their benefit, as well as the brands. I think that's kind of how we need to start thinking and defining kind of the next generation of loyalty, so it appeals to the current, kind of a younger consumer audience.

Tim: Now that we know emotional loyalty is a crucial component to a successful program, we asked Mike, how you can actually engage and reward customers beyond points or your basic offerings? After all, why giveaway something a consumer plans to buy from you in the future already? This is exactly why Mike created the REACH platform. Here he explains how you go beyond transactions to create more value with your customers.

Mike Ribero: I think that is the seminal issue is, is how do you go beyond transactions, to get a customer to engage with you in ways that can add value to your brand. When it comes to REACH, when we talk to a brand, we ask a question, a very simple question to start, why would you simply focus on rewarding purchases when there's so much more, your customers can do that has been proven to add value to your brand today? So, when you think about it, a loyalty strategy today has to encompass all the value a customer can add to a brand and develop reward mechanisms, both rational and emotional, that helps sustain or encourage that kind of behavior. So it's not just about making purchases, it's experiences that the brand can offer. It's driving those indirect... the ability of that customer to drive indirect revenues through their ability to influence other, writing reviews. It's as simple as getting them to join a loyalty program or getting them to download the brand's mobile app, which a lot of brands struggle with. There are so many ways that a customer can help a brand today, in I think ways that will continue to evolve. It's interesting, but a lot of people don't know that some of the most knowledgeable people or brand experts aren't within the company, they're outside the company. They're operating in forums on a freelance basis, but have amassed knowledge about a particular brand over 20, 25 years and get satisfaction over helping others or giving advice because that's how they build their own social currency. So harnessing some of that power, and some of that expertise is another way that brands can extend the value of a loyalty platform in ways that simply isn't being done today.

Tim: Well, clearly Mike thinks of loyalty as a larger customer relationship strategy. It goes beyond the points, it goes beyond the transactions, but how about the culture? How about the data needed to power that relationship effectively for both the brand and the consumer? How should marketers be thinking about these things when building out their programs.

Mike Ribero: That's relatively straightforward. I think customer loyalty oftentimes is a catch all, that people throw, that says, I've got a rewards program or a points program. Oftentimes points and reward programs are basically ineffective. What people need to start thinking about is, how can I get maximum value out of each and every one of my customers in a way that is as beneficial to them as it is, to me as a brand? That's the question that brands mean by asking themselves and in a world where now privacy has become paramount, it's now in... every consumer out there is getting educated on how brands are using their data, the lack of control they have over it and there's legislation now that it's making it far more difficult for brands to get data indirectly about their customers. What that means is, they're going to have to adopt either a first or more, realistically a zero party data strategy, in order for them to get the information they're getting from data brokers and third parties today. Frankly, the information they're getting from those sources is oftentimes very inaccurate and certainly not timely, and in today's market, if you don't have timely data, you might as well not even use it because things are changing so rapidly. So a more holistic relationship and the way to think about a customer relationship strategy is based on how the customer can partner with you to help you build your business, and in doing so, become an extension of the brand. That I think is kind of the goal that every brand should set for itself when developing a customer relationship strategy, not every customer is going to want to proactively help a brand build its business, but many will. Even those that don't, if they at least have a reason to support the brand in their own way or simply as a loyal customer, that goes a long way in building the totality of support that a brand needs from its entire customer base to be successful.

Tim: Well, Mike Ribero has been doing this for quite a while. I mean, that's apparent. So we wanted to know Mike's advice for you. Someone who may be looking to create or reboot a program and needs to go get buy in from the entire organization or even just your boss. We ask Mike, where should you focus on your journey to get that buy in?

Mike Ribero: I think it starts with the customer because every role within a brand or an organization today touches the customer in some way, whether it's customer service, manufacturing, operations, they are all centered on the customer and customer satisfaction. One of the things that we've lost to technology recently, is kind of being able to have a much tighter pulse on the end to end customer experience. So much of that customer experience today is automated or driven by technology, that we as brand managers or company managers have lost our... not only our awareness, but our sensitivity of the opportunities we have to create what Jan Carlzon the former CEO of a scandinavian service called Moments of Truth, where throughout the customer experience, you have an opportunity to build a relationship for life based on the your ability to solve a problem or exploit an opportunity on behalf of the customer in a very unique way. I think it starts by understanding the organization, where every place the organization touches the customer, and using those touch points to build consensus around the departments that those touch points represent in building an overall strategy because the one thing that all those departments have in common is their contact with the customer. It may be at the point of sale. It may be in customer service after the sale. It may be in marketing before the sale but they all share that one thing in common and that's the customer and if brands pivoted around that central kind of factor, that they're all kind of working to help build, improve and grow their customer and their customer base. I think that's where you kind of create the rallying point within an organization, then it's all about just basically showing them data that can clearly demonstrate the value of the right kind of loyalty strategy in not only improving or increasing the average revenue that customer generates, but their influence in building business or influencing the business of others. Once you're able to show that getting buy in throughout an organization is relatively easy. What challenges a lot of brands is making the economics work. Frankly, that's one of the reasons why REACH isn't a loyalty program, it's a marketplace because we basically harness the power of many non- competitive brands to create incentives that no single brand could ever afford or be able to offer on their own.

Tim: Okay, so you've gotten buy in from your entire organization or at least your boss. How do we get the toughest hurdle tackle, and that's budget? Mike, how do we get this budget approved?

Mike Ribero: It's all about ROI and again, in today's world, CFOs are as much a part of the marketing mix as the CMO and in order to get funding for programs like this, you have to show an economic case that that shows a strong return on investment, loyalty programs, the right kind of... I shouldn't say loyalty programs, the right loyalty strategy, can have a very strong return on investment, especially if structured correctly, because if you do this right, and if you have the right kind of information, ROI can be guaranteed, because most can be structured on a pay for performance basis, where the customer isn't rewarded until value has been delivered, and the rewards needs to be proportional to the value created by that customer, either in the immediate term or longer term. That's where brands have to be disciplined, in order not to kind of mortgage the present for... or the future against the present. That is recognizing that they have to balance short term gain with long term gain, because long term gain is where they're going to get maximum lifetime value and value for their investment. Again, it really is about having an understanding. One of the problems with loyalty programs today is that the estimates are... that brands are paying for somewhere between 75 and 85% of the business generated through loyalty programs would have taken place anyway, even without the program, that is that they're not paying for incrementality, they're paying for behavior the customer would have had anyway. So, the question really is, number one, do brands really know how loyal their customers are and I would suggest to you, they don't because unless they have a... specifically understand what their share of wallet is not on a stated basis, but based on actual spending, they don't know how loyal their customers are. So that gets back to why that zero party data strategy is so critical, because unless they know definitively what their share of wallet is, and how to build that share of wallet and increase it, they really can't get to the heart of how much incremental behavior am I generating as a result of whatever strategy I implement.

Tim: All right, well now you know why I said Mike Ribero is a loyalty legend. Maybe he doesn't like that title, but I'm giving it to him. He has awesome advice that you should not ignore, but rather embrace, but let's move on to a loyalty legend in the making. Brad Bissonnette is someone who recently has rolled out an upgrade to the COBS brand loyalty strategy. If you missed his full session during our Signals 21 content event, you can watch that using the QR code right here or visit the Signals on Demand hub at cheetahdigital. com. Again, you can find that in the top web navigation. The session is titled COBS Bread, How Community Commitment and Technology Bake the Perfect Customer Strategy, and it's a delicious episode I might say. So who is COBS Bread? COBS is a well established Canadian bakery with some of the finest pastries you can buy. With over 100 locations, they were looking to engage consumers with surprising delight as well as gather critical product and sentiment data to keep their offerings Top of Mind with consumers and be able to reach them through their own channels when they need them. Their parent company Baker's Delight is a truly global organization and also uses the customer engagement suite here at Cheetah Digital. Brad had the good fortune of actually convincing his senior leadership that their basic points for purchase loyalty program needed an entire overhaul. They came to Cheetah looking to build a unique solution that both engage customers in a new way, but also offered more flexibility across their rewards and fed them with that data I talked about. They needed to optimize and personalize their offers and inform their product and menu items. My first question for Brad revolves around the idea of a loyalty program going beyond points for purchase, and providing more value and convenience for the customer. Here's what he had to say.

Brad Bissonnette: Think of you... I mean, look at loyalty in a silo, you're really missing the larger opportunity with loyalty. As I mentioned, loyalty transcends far more than points, and for our journey, it again is around how do we provide more utility for our customer? How do we make their lives so much easier and that's the journey that we've embarked on. So, for brands that are considering heading down the loyalty channel, I think it's really asking that question to go and say how can I provide more convenience? How can I provide more utility for our customer?

Tim: Well, the COBS Club rewards program rollout happened just a few months ago here, it's October 2021 right now. So I asked, what's the long term vision for the program and how do they balance the multiple stakeholders including their franchisees and their consumers alike.

Brad Bissonnette: I think we've always gone into embracing loyalty as a more holistic approach. Now, we're very early days into our Digital Loyalty Platform COBS Club, and they're initial offering is all around points, but the ultimate vision is to deliver a customer experience, a digital customer experience that cannot be matched, and this will transcend far beyond just collecting points, but continuing to add more utility for our customers, and our key to success from the beginning is just ensuring that we've had buy in from our franchise network, the rest of the organization to allow us to continue to embark on that path. So, our network is excited. Our franchisees are excited. We now have COBS Club up and running with customers now collecting points on everything they purchase within bakery. We're looking forward to the next iterations where we get to a single source of truth, the ability to ultimately order online, collect points and everything from stored value and gift cards, so this is just phase one of what will be a multi- year journey to continue to provide more utility and convenience for our customers.

Tim: I also wanted to know from Brad, what kind of loyalty strategy provide back in terms of intelligence or data to the company as a whole, beyond just the marketing function.

Brad Bissonnette: What you will start to unpack is that a digital loyalty platform can help in so many ways, whether that is understanding the financial implications for your finance team, to potentially unlock further growth, moving forward to just getting a better understanding through your customer service team on what you could potentially do to make a customer's life more easy to the operational side of things, and understanding better what's happening within each one of your units. So if you look at it in a silo, and you look at it, just from a marketing perspective, I think you're missing out on all the potential opportunity that a loyalty platform can bring.

Tim: Well, executing a best in class customer engagement strategy takes a village of like minded individuals, all pushing towards that common goal. Brad explains how this permeates their culture at COBS Bread, which was founded in the roots of their parents company, Baker's Delight.

Brad Bissonnette: I think a culture around loyalty, I honestly boil culture and loyalty culture to service and customer service centric focused organization, for us, comes from day one. It comes from the original vision of Roger and Lesley Gillespie, who started the first Baker's Delight in Australia, with a key focus on delivering high quality products and an outstanding customer service environment and supporting the communities and when your DNA has service running all the way through it, it has to have loyalty running all the way through it as well. So, loyalty is just that next phase of ensuring that we can deliver a customer experience that cannot be matched, and by having a loyalty platform, it's also now giving us the data that we so sorely have missed for these number of years, to really get a true sense of what our customer wants, what are they purchasing and how we can facilitate ensuring that we can meet their needs moving forward. So, if you have service in your DNA, you ultimately have to take that next step to delivering our loyalty platform that can allow you to continue to elevate your service levels.

Tim: Great advice there, stay customer obsessed, but getting buy in isn't always easy as Mike even talked about. Some of you totally know what I'm talking about here, and this is some of Brad's advice for you in that area.

Brad Bissonnette: Some of the lessons to get buy in, when it comes to the implementation of a loyalty program is understand the problem or the challenge that you're trying to solve and ensure that you have a clear vision on where you want to take that platform, and it never hurts to start early. Ensure that you're engaging with multiple stakeholders and getting them involved in the process. Loyalty is not a marketing platform. Loyalty is a business platform, and if you want buy in, you got to start early, engage the right stakeholders and allow them to be a part of the journey moving forward.

Tim: Okay, well, implementation, right? That's a dirty one, someone's got to get their hands dirty here. If you've gotten buy in and you can build out your program, what are some of the thoughts around getting that program off the ground and what support is needed?

Brad Bissonnette: Some of the challenges that we saw during implementation were... I think, first and foremost, one of the challenges that we saw, was just scope creep and trying to ensure that the team was aligned to what we're trying to achieve and ensuring that we could be focused on delivering an MVP and ultimately starting to deal with some other pieces a little bit later on in our journey. If you allow scope creep to continue to run, you run the risk of never rolling anything out. So, it was important that we were able to get through that first phase, get to MVP because, quite frankly, you need to get the product in the market and really start to learn what your customers are saying and what they want to see moving forward as well so that you can continue to iterate moving forward. A second piece that we saw just on the implementation stage is ensuring that you have the right people on the team and going back, I'd really want to take a look at do we truly know and do we truly understand what the platform is you're getting and how to operate it, and do you have the right training and the right people to be able to deliver it moving forward. So getting a little bit deeper on kind of understanding, moving from pilot into implementation and taking on, I guess the overall operations, you really want to do your due diligence to understand that you know what that means and what resources are going to be required to make that happen. I'd say we're little light on the resources required to deliver COBS Club and we'll certainly continue to scale as we move forward here as well.

Tim: Well, measuring success is key to any program or strategy, not just loyalty, but beyond KPIs, what are the phases of intelligence you can glean from your loyalty program and what are the examples of meaningful data the program can provide back to the entire business?

Brad Bissonnette: So first and foremost, we have one target right now. We're six weeks into the rollout of COBS Club. We have one number that we're solely focused on, and that is acquisition and I'll say it again, acquisition acquisition, acquisition. Our goal right now is to acquire as many customers as we can to bring them onto the platform so that we can then start to really truly understand our customer's needs and wants. From there, we'll start to get into some of the other fairly common metrics of sales per transaction, average basket size, average monthly value of the customer, all of that starting to flow through, but if we don't acquire the customers to start off with, we won't know what our active rate is. We won't have a gauge on that, and we're off to great results to start out with. We originally had forecasted in our first year that we would acquire somewhere around 75, 000 to 80 customers out of the gate. We're six weeks in. We just rolled over 100,000 customers and our goal in the first year now is heading towards 200, 250,000 customers. So, while those metrics are all real interesting and they can give us a sense of the health of the program, what I'm really keen to get into in three to six months is that next phase when we start to really, not only know the demographic information, but start to really understand the behavior of our customers like, what is really, truly driving them. So really keen to get into their purchase patterns, really interested and keen to explore what's in their basket and start to really segment along that type of behavior, because I think if we can get into that and really, truly understand those commonalities, we can then start to cater the content that is going to provide incremental value and really, truly take that core metric of active users from 50 to 55, to 60%. So very basic numbers right now. It's all about acquisition and a goal to have the numbers, to really be able to cater that customer experience moving forward.

Tim: Well, listen, this was a jam packed session with true loyalty experts. Loyalty360, you got to go check them out, Mike Ribero and the REACH program, great session at cheetahdigital.com and Brad Bissonnette, he's probably much like a lot of you who are rebooting a program or maybe starting from scratch. So we appreciate you coming. We have tons of quality content and resources for you, whether you're kicking the tires or building out a new strategy, you have to give us a call here at Cheetah Digital. We have an amazing support staff. We have an amazing platform. I'm not going to have any time to talk about it right now but again, cruise around cheetahdigital. com, under resources, tons of things for you to check out and download and take home, and we hope this was helpful. We'll see you at the next session. Check out our podcast, Thinking Caps, myself and our CMO. We do a weekly, it's on LinkedIn. You can find it on Apple iTunes, Thinking Caps, that's why we wear hats. So again, have a great day. We appreciate you coming to the session.