• The Loylogic Podcast: Navigating New Horizons – the Evolution of Travel Loyalty Programs Man seated in airport looking out of the window at a plane taking off

    The latest episode of the Loylogic Group Podcast brings together two experts to delve into the evolving landscape of airline and hotel loyalty programs.

  • The Loylogic Podcast: Navigating New Horizons – the Evolution of Travel Loyalty Programs Man seated in airport looking out of the window at a plane taking off

    The latest episode of the Loylogic Group Podcast brings together two experts to delve into the evolving landscape of airline and hotel loyalty programs.

  • Irish Life extends partnership with Loylogic to further promote and reward health and wellbeing

    Irish Life and Loylogic have agreed a multi-year extension to their partnership that will see the two organizations further develop the successful MyLife health and wellbeing program.

  • Irish Life extends partnership with Loylogic to further promote and reward health and wellbeing

    Irish Life and Loylogic have agreed a multi-year extension to their partnership that will see the two organizations further develop the successful MyLife health and wellbeing program.

  • Loylogic appoints Samir Skif to lead exciting new rewards and recognition program

    Loylogic, the global loyalty and rewards engagement specialist, has appointed Samir Skif as the Head of Ultimate, its all new motivational rewards and recognition currency.

  • Loylogic appoints Samir Skif to lead exciting new rewards and recognition program

    Loylogic, the global loyalty and rewards engagement specialist, has appointed Samir Skif as the Head of Ultimate, its all new motivational rewards and recognition currency.

  • Nescafé Dolce Gusto and Loylogic extend PREMIO consumer engagement program partnership Screen shot of Nescafe Dolce Gusto Premio website showing coffee machine and welcome message

    Nescafé Dolce Gusto multi-beverage system and Loylogic, the global loyalty and rewards engagement technology specialist, have extended their collaboration on the successful PREMIO loyalty program for a further five years.

  • Nescafé Dolce Gusto and Loylogic extend PREMIO consumer engagement program partnership Screen shot of Nescafe Dolce Gusto Premio website showing coffee machine and welcome message

    Nescafé Dolce Gusto multi-beverage system and Loylogic, the global loyalty and rewards engagement technology specialist, have extended their collaboration on the successful PREMIO loyalty program for a further five years.

  • Loylogic appoints Emma Shakespeare as Global Head of Sales

    Loylogic, the global loyalty and rewards engagement technology specialist, has appointed Emma Shakespeare as Head of Global Sales.

    In her role, Emma will be responsible for driving Loylogic’s ambitious ‘Brands 2 Communities’ growth strategy, which aims to build direct relationships between 1,000 brands and at least 100 million loyalty and rewards program members, driving significant revenues to these brands. Emma will focus on driving strategic and structural change, building internal processes within Loylogic that allow the business to scale up its customer facing teams and significantly increase the number of collaboration opportunities with loyalty partners.

    Over the last 16 years, Emma has held various senior sales roles across a range of technology focused organizations, including SAP and SAS, not only delivering sales growth but turning customers into advocates of the brands. This extensive enterprise sales leadership experience will enable Emma to nurture existing customers and identify new business channels in order for more companies to benefit from Loylogic’s expertise.

    “It’s incredibly exciting to be joining Loylogic as the business embarks on a new phase in its growth,” said Emma. “Our clear strategy that focuses on connecting Brands 2 Communities provides us with a compelling value proposition into our key verticals of FMCG, travel and hospitality, and finance. The organizations I’ve worked for have enjoyed exponential growth and I’ll be bringing know how from my time at those to scale and build out a sales culture with processes that fully support the customer journey.”

    Gabi Kool, CEO of Loylogic, added: “We’re thrilled to bring Emma on board at such a pivotal time in Loylogic’s journey. She brings a wealth of experience and expertise to the role and will play a key part in delivering on our ambitious growth strategy, as we continue to enhance our offer to the market.

    “We continue to invest in adding new brands and categories to our portfolio, while also building direct brand relationships with the biggest, most desirable brands in the world. This is enabling us to deliver the reward shops of the future and introduce a branded shop-in-shop concept that will help both brands and loyalty programs build revenue and stand out from their competition. To have Emma on board at this time, to help as many organizations as possible benefit from our solutions, is truly exciting.”

    To talk to Emma about how your organization can benefit from Loylogic's solutions, contact us by clicking here.

  • Loylogic appoints Emma Shakespeare as Global Head of Sales

    Loylogic, the global loyalty and rewards engagement technology specialist, has appointed Emma Shakespeare as Head of Global Sales.

    In her role, Emma will be responsible for driving Loylogic’s ambitious ‘Brands 2 Communities’ growth strategy, which aims to build direct relationships between 1,000 brands and at least 100 million loyalty and rewards program members, driving significant revenues to these brands. Emma will focus on driving strategic and structural change, building internal processes within Loylogic that allow the business to scale up its customer facing teams and significantly increase the number of collaboration opportunities with loyalty partners.

    Over the last 16 years, Emma has held various senior sales roles across a range of technology focused organizations, including SAP and SAS, not only delivering sales growth but turning customers into advocates of the brands. This extensive enterprise sales leadership experience will enable Emma to nurture existing customers and identify new business channels in order for more companies to benefit from Loylogic’s expertise.

    “It’s incredibly exciting to be joining Loylogic as the business embarks on a new phase in its growth,” said Emma. “Our clear strategy that focuses on connecting Brands 2 Communities provides us with a compelling value proposition into our key verticals of FMCG, travel and hospitality, and finance. The organizations I’ve worked for have enjoyed exponential growth and I’ll be bringing know how from my time at those to scale and build out a sales culture with processes that fully support the customer journey.”

    Gabi Kool, CEO of Loylogic, added: “We’re thrilled to bring Emma on board at such a pivotal time in Loylogic’s journey. She brings a wealth of experience and expertise to the role and will play a key part in delivering on our ambitious growth strategy, as we continue to enhance our offer to the market.

    “We continue to invest in adding new brands and categories to our portfolio, while also building direct brand relationships with the biggest, most desirable brands in the world. This is enabling us to deliver the reward shops of the future and introduce a branded shop-in-shop concept that will help both brands and loyalty programs build revenue and stand out from their competition. To have Emma on board at this time, to help as many organizations as possible benefit from our solutions, is truly exciting.”

    To talk to Emma about how your organization can benefit from Loylogic's solutions, contact us by clicking here.

  • The Loylogic Podcast: How African Bank is rewarding the unrewarded Small pot filled with money and young shoots of a plant growing out

    We find out how African Bank’s Audacious Rewards program is incentivizing positive financial behavior for all customers.

  • The Loylogic Podcast: How African Bank is rewarding the unrewarded Small pot filled with money and young shoots of a plant growing out

    We find out how African Bank’s Audacious Rewards program is incentivizing positive financial behavior for all customers.

  • Six ways to navigate the future of fuel loyalty programs

    For a recent episode of the Loylogic Podcast, Olivier Martinet, CEO of Posidonia Consulting and former Vice President of Marketing at BP, joined us to discuss the future of large-scale fuel and mobility rewards programs.

    The conversation focused on the evolution of loyalty strategies in the fuel industry, driven by digitalization, the shift towards electric vehicles, and the transformation of fuel companies into energy providers and mobility hubs, and much more.

    To listen to the podcast in full, simply click below. Six key route markers that will help loyalty programs navigate the changing fuel loyalty landscape can be found below.

    1. There’s no one-size-fits-all approach: Olivier challenged the notion of a universal best-in-class fuel rewards program, emphasizing that success is highly dependent on the alignment between the program, company strategy, and readiness for implementation. He did, however, introduce four pillars that loyalty program owners should consider that will drive success, namely: ease of participation, relevance, personalization, and profitability. By focusing on these four elements, companies can find the right balance between customer advantage and strategic adaptability.

    2. Loyalty strategies need to be tailored to company size and scope: The level of focus on the four pillars needs to vary depending on the company's size and global reach. For example, larger organizations tend to have a greater need to balance customer advantage and brand consistency, reflecting a more comprehensive approach to loyalty programs that considers both local and global factors.

    3. The shift to electric vehicles will have a profound impact on loyalty: Olivier highlighted the impact of the increasing adoption of electric vehicles on how customers interact with brands – and therefore loyalty. Consumer interaction will change and loyalty programs must adapt to this new behavior.

    4. Fuel companies transforming into energy providers: Major fuel companies are repositioning themselves as energy providers, with collaborations and investments in alternative energy sources already underway. This shift suggests a future of potential joint ventures and partnerships, reflecting a broader transformation within the energy sector. This needs to be factored into thinking around loyalty and how both earn and burn of points or miles happens.

    5. Extended dwell times and mobility hubs: The rise of ‘mobility hubs’ is impacting loyalty offers. Longer customer dwell times due to electric vehicle charging present new challenges and opportunities for loyalty programs. Companies need to rethink their strategies to engage customers during extended on-site interactions and integrate these experiences with home charging behavior.

    6. Personalization beyond marketing: All loyalty programs, regardless of sector, should go beyond marketing and engage in strategic decision-making. Olivier emphasized the wider range of use cases that arise from privileged customer data, including category management, pricing policies and assortment range. As a result, loyalty schemes should be considered as long-term strategic tools that have a seat at the boardroom table.

    In conclusion, the future of fuel rewards programs is dynamic and requires companies to adapt to digitalization, changing consumer behaviors, and the broader energy landscape. Success lies in a personalized and adaptable approach that considers both customer needs and long-term strategic goals. As fuel companies transition into energy providers, collaboration and innovative loyalty strategies will play a crucial role in shaping the industry's future.

  • Six ways to navigate the future of fuel loyalty programs

    For a recent episode of the Loylogic Podcast, Olivier Martinet, CEO of Posidonia Consulting and former Vice President of Marketing at BP, joined us to discuss the future of large-scale fuel and mobility rewards programs.

    The conversation focused on the evolution of loyalty strategies in the fuel industry, driven by digitalization, the shift towards electric vehicles, and the transformation of fuel companies into energy providers and mobility hubs, and much more.

    To listen to the podcast in full, simply click below. Six key route markers that will help loyalty programs navigate the changing fuel loyalty landscape can be found below.

    1. There’s no one-size-fits-all approach: Olivier challenged the notion of a universal best-in-class fuel rewards program, emphasizing that success is highly dependent on the alignment between the program, company strategy, and readiness for implementation. He did, however, introduce four pillars that loyalty program owners should consider that will drive success, namely: ease of participation, relevance, personalization, and profitability. By focusing on these four elements, companies can find the right balance between customer advantage and strategic adaptability.

    2. Loyalty strategies need to be tailored to company size and scope: The level of focus on the four pillars needs to vary depending on the company's size and global reach. For example, larger organizations tend to have a greater need to balance customer advantage and brand consistency, reflecting a more comprehensive approach to loyalty programs that considers both local and global factors.

    3. The shift to electric vehicles will have a profound impact on loyalty: Olivier highlighted the impact of the increasing adoption of electric vehicles on how customers interact with brands – and therefore loyalty. Consumer interaction will change and loyalty programs must adapt to this new behavior.

    4. Fuel companies transforming into energy providers: Major fuel companies are repositioning themselves as energy providers, with collaborations and investments in alternative energy sources already underway. This shift suggests a future of potential joint ventures and partnerships, reflecting a broader transformation within the energy sector. This needs to be factored into thinking around loyalty and how both earn and burn of points or miles happens.

    5. Extended dwell times and mobility hubs: The rise of ‘mobility hubs’ is impacting loyalty offers. Longer customer dwell times due to electric vehicle charging present new challenges and opportunities for loyalty programs. Companies need to rethink their strategies to engage customers during extended on-site interactions and integrate these experiences with home charging behavior.

    6. Personalization beyond marketing: All loyalty programs, regardless of sector, should go beyond marketing and engage in strategic decision-making. Olivier emphasized the wider range of use cases that arise from privileged customer data, including category management, pricing policies and assortment range. As a result, loyalty schemes should be considered as long-term strategic tools that have a seat at the boardroom table.

    In conclusion, the future of fuel rewards programs is dynamic and requires companies to adapt to digitalization, changing consumer behaviors, and the broader energy landscape. Success lies in a personalized and adaptable approach that considers both customer needs and long-term strategic goals. As fuel companies transition into energy providers, collaboration and innovative loyalty strategies will play a crucial role in shaping the industry's future.

  • Gaining Altitude: Unpacking airBaltic's Web3 Loyalty Strategy Photo of airBaltic CEO MArtinGauss sitting next to a model airplane in airBaltic livery

    Join us for the latest episode of the Loylogic Podcast as we explore airBaltic's pioneering entry into Web3 with NFTs in their airBaltic Club loyalty program.

  • Gaining Altitude: Unpacking airBaltic's Web3 Loyalty Strategy Photo of airBaltic CEO MArtinGauss sitting next to a model airplane in airBaltic livery

    Join us for the latest episode of the Loylogic Podcast as we explore airBaltic's pioneering entry into Web3 with NFTs in their airBaltic Club loyalty program.

  • The Loylogic Podcast: airBaltic's Web3 loyalty and engagement strategy

    In the latest episode of the Loylogic Podcast, we’re joined by Martin Gauss, CEO of airBaltic, a true pioneer in the airline industry's adoption of Web3 technologies, and Rob Clements, Lead Consultant at Loylogic and Web3 loyalty strategy expert.

  • The Loylogic Podcast - Fueling the future: The changing world of fuel rewards programs Electraic charging cable inserted into electric vehicle

    What’s fueling the future of large scale fuel rewards programs?

    For this episode of the Loylogic Podcast, Olivier Martinet, CEO of Posidonia Consulting and former Vice President of marketing at BP, joins us to discuss fuel loyalty programs and what’s driving any rethinking of customer retention, revenue generation and incentivized engagement strategies.

    In this discussion, Olivier emphasizes the importance of tailoring fuel rewards propositions to fit each company's strategy and customer engagement capabilities. Key talking points include:

    - Instead of searching for a universal best-in-class program, he suggests evaluating programs based on four lenses: ease to participate, relevance, personalization, and profitability.

    - The level of focus on these lenses varies based on the company size and scope, with global organizations showing a greater inclination towards balancing customer advantage and brand consistency.

    - How the increasing digitalization and shift towards electric vehicles in the fuel industry are driving organizations to rethink their loyalty strategies, recognizing that a loyalty scheme is not just a marketing tool but also a privileged data provider for long-term strategic adaptation.

    - Why, as the industry moves towards becoming energy providers, the evolving landscape of mobility hubs and electric vehicles will impact loyalty offers, requiring companies to adjust to longer customer dwell times and the integration of home charging behavior.

    - Why major fuel companies are indeed repositioning themselves as energy providers, and collaborations with other energy companies and investments in alternative energy sources are already taking place, signifying a shift towards a future of potential joint ventures and partnerships.

    - Why loyalty program owners should keep earn simple but creative with the burn side, with the differentiator coming in terms of personalization, and how customer data is handled.

    To hear Olivier’s thoughts on these topics and much more, listen using the link below, or read on for the full transcript.

    (1:27) Olivier, in your opinion, what are currently the best in class fuel rewards propositions around the world? And what is setting them apart?

    Olivier Martinet: "That's a good question. And maybe I won't answer that directly, because at the end of the day, there's one thing I really don't believe in is that there's a best in class program. Basically, all programs, or success of a program, is very much dependant on the fit between the program as it is with the company, the company strategy, but also the readiness of a company to be using it. To some extent, the best in class aspect is having the right program for the company, for the company's targets and what that company is able to do with engaging customers. Okay, so it's probably not directly answering your question, but I guess it's a key feature of the thinking and how I've been approaching loyalty schemes for about 30 years."

    (2:28) So your approach there is very much steering away from a one-size-fits-all strategy and instead looking at a case-by-case basis?

    Olivier: "Yes, absolutely. The KPIs I'm looking into, to decide what is where we should go. The first one is around ease to participate. And when I'm saying this, it's ease to participate on both sides, from the consumer angle, but also from a retailer or partner point of view.

    "The second one, the second lens is on the relevance. How relevant is a program as a consumer on the receiving end, but also how relevant is this program to my strategy to be engaging customers going forward?

    "The third lens is personalization. And when I'm saying personalization, what is the right level of personalization? And are we talking to groups? Are we talking to a segment of one? And this is very highly dependant on the capabilities you have as a company, in terms of what you are going to be doing with the data? How are you going to be engaging the customers? How far have you gone on the digitalization journey? And how smart are you with analyzing the data of your customer base.

    "The last dimension I'm looking into is the profitability. When saying this I'm more thinking of financial sustainability of the scheme, because one thing is, you are not as a company entering into loyalty for the next two weeks, this is for the long run, so you bloody need to make sure that you can sustain this financially in the long run, and not going to be forced to deceive your customers, you know, 5/6/7 years down the road by decreasing the advantage you've been giving them.

    "These are four lenses, I'm always looking into to try to find the right balance between customer advantage and what the company or my clients can do with that scheme and how far we can push the personalization journey."

    (4:27) How common is it that you come across an organization, a brand company, whatever you want to call it, that shares that vision that that is able to look at its loyalty and rewards through those same lenses?

    Olivier: "To some extent, it depends on the company you're talking to. If you're talking about a company who is in one market, covering one, it's very infrequent that you would be looking into these four lenses because basically very often, you find those really focusing on how relevant the offer can be for customers and how much digitalization you can put in your system. But, if you start getting into some other companies who are managing schemes across the globe, 20 different countries, or more four or five different continents, that's where often you can find some of this approach. This was where you need to balance how much you're giving to customers, to your targets, in terms of personalization, but also managing some kind of consistency in the approach for your brand."

    (5:43) My logical next question there is, you've got these four lenses, and what challenges are rewards loyalty program owners facing? What's driving any rethinks of the strategy? And how are people going to regard and look at their loyalty programs?

    Olivier: "Very often, what is forcing the rethinking is the digitalization of it, coming in with a mobile application and then kind of suddenly saying, here is the 'ta-da' moment for customers. You start realizing that to be getting there, you need to be upgrading your IT, you need to be making sure you're going to be dealing with your consumer data. What are you going to be doing it? And what is the analytical solution you're going to be applying to it? And then, what are the use cases you're going to be applying to it?

    "Very often, what I see is that companies would go through part of his process, and we'll start getting into, "Okay, my use case for this, obviously, is I need to talk to my customers, I'm going to be communicating to my customers, because that's a marketing tool, I need to do this". Very often, what I see missing is that comms or marketing, even on a segment of one, is only one part of a value, which a loyalty scheme can generate. The number of use cases which can come from the data arising from your privileged customer base is much wider. And it can go into various strategic things like category management, if you're a retailer, what are your pricing policies, where are you going to be investing, what is the range of your assortment you're going to be offering to customers in what sites etc etc., which are much, I would say, wider use cases, than only looking at the marketing side.

    "Obviously the marketing side, to some extent, is the bread and butter, because that is what makes sure your customer base keeps coming back, keeps generating the income, but also keeps generating the data you're after. A loyalty scheme is not only a marketing tool, it's also a privileged data provider for companies to be adapting their strategy in the long term."

    (8:31) So it's fair to say that it is more than marketing?

    Olivier: Yeah, absolutely. As anyone who has known me for some time will know, I always say that your loyalty scheme shouldn't be left only to loyalty managers. It should be sitting on a boardroom table. It's where we honestly should be sitting, not so much the engagement or marketing part, but for all of the rest, which is getting into the long term benefits of launching and participating into a loyalty scheme."

    (9:06) One question I've got to ask you, given we're talking about fuel, is where does the shift to electric vehicles come into play?

    Olivier: "I guess it's an indirect impact. The shift to EVs is a strategic shift for fuel retail, for networks, and we see, not all, but most of the companies working on shifting on moving away from being a fuel or let's say a fuel provider, to becoming an energy provider. So that's a fundamental strategic shift, which is happening to most of the fuel retailers. To some extent, that's the driver. That means, though, that there is going to be some adaptation required to the loyalty, so it's more of a consequence of the strategic shift, which needs to happen and obviously will need to be impacting via schemes at some point in future."

    (10:06) Okay, so in London, as in many other cities around the world, we're seeing the creation of mobility hubs that are about more than fuel. It's about enjoying time out of good cup of coffee and maybe do some shopping. So how is that impacting fuel loyalty?

    Olivier: "It will impact the overall offer to the consumer, so it will need to impact loyalty. Basically, there's a fundamental shift here, which is to say, in the past, you had customers coming to fill up with a get me in, get me out as quickly as possible, and by the way, as cheaply as possible, attitude. And if on my way, in and out, you can sell some other stuff, you know, being impulse items, coffee, fine.

    "There are two ways which I would say the EV will impact loyalty. The first one is, it will force customers to stay longer on the forecourt, because there's a charging time, which means it's less of loyalty. You then get into how, I can make sure as a customer when I'm getting to a site, I will be able to charge, I will be able to get some coffee or make sure that the 10/15/20 minutes I'm going to be there are also going to be very valuable. That's one thing.

    "The second thing is, how does this relate to me charging my EV when I'm home, because at the end of the day, for an EV to be financially attractive to customers, one of the big underlying thing is that a big share of the charging should happen at your own house. And to some extent, that's where the impact of loyalty schemes is going. How do you deal with customers staying longer on the forecourt? Then, what is the kind of behavior you want to reward? And the second thing is, how do you relate that on-site interaction with what is happening when customers are filling up at home?”

    (12:09) Do you therefore see fuel companies becoming energy companies?

    Olivier: "So that's what they are claiming. Look into what BP or Shell are claiming, Total is doing the same thing. They are very much claiming to be a future energy company, energy provider for mobility.

    (12:29) Is there a case there that we'll see more collaboration between fuel companies and other energy providers?

    Olivier: "You can see already things happening. You can see already partnerships happening between electric companies, oil companies, energy companies. You can see also that BP and Shell and Total are investing highly in alternative energy, be it solar, wind, etc, etc. And to some extent that's something which is already happening. Whether then you are going to see some of the big companies joining up in future in the long term, probably yes. Is it happening? Is it going to happen in the short term? Honestly, I have no clue. I would suspect not. Because you still have the weight of the oil production and distribution, which is still driving significant value for shareholders. So it's not in the short term. But in the long term. You know, probably yes. That's me guessing, you know, it's probably more for an evening, you know, a beer conversation!"

    (13:41) If only we knew Olivier will be richer than we are now! Does this changing landscape of loyalty, and you've touched on it a little bit earlier, does it require more personalization of rewards now, as well as greater choice of rewards?

    Olivier: "There's a long term trend anyway, which is for hyper personalization or on getting to segment of one. And obviously, you know, digitalization is forcing this into a conversation. So, yes, you're aware, but at the same time, there is also a very clear thing to say, don't make it too complicated for customers. So, probably, if you're on your earn side, you know, keep it as simple as possible, make it very understandable for customers. You don't need to start creating tiers to achieve something, which only complicates the conversation.

    "Probably focus more on the burn part, on giving a wide choice of options for customers. And that's where, to some extent, the attractiveness of a scheme is happening. How big is the choice? To some extent, give the customer the choice of how they want to burn and don't force them to do it in a limited way.

    "Talking about the key features of a scheme, that's probably where I would focus. On top of burning, how much more are you offering to customers? If you're part of a loyalty scheme, your customer journey on site is going to be much more simplified, you have privileged access to a cashier, quick in and out. Starbucks is one of these examples. Money can't buy experiences, etc, etc. Earn and burn being the traditional thing, but how much more can you personalize to the customer's aspirational lifestyle, in terms of getting rewarded or getting some kind of benefits or recognition of participating into a scheme?”

    (15:57) Does that then also bring into play the possibility for programs to look at profit margins use innovative ways to burn points through raffles, the play model, etc?

    Olivier: "To some extent, the worst thing for a loyalty scheme is to have customers sitting on a big amount of points, or value or currency, whatever it is, basically, and not being very clear about what we're going to be doing with it. That's, to some extent, the worst of what you can do. And therefore, you know, there is always a balance to be done in terms of, yes, obviously, I need as a brand to have part of my customers come back to me to get rewarded, which needs options for the customers in terms of freedom of burning, or using the currency. And that's where you will have some customers say, you know, absolutely, to have a partnership with a supermarket. Others will say yeah, you know, I love gamification, while some of us say, I want to pick from my computer the reward I've been always dreaming and want this to be delivered to my home. You have all of these options, which needs to be offered to the consumers."

    (17:37) So coming back to the whole development of thinking around electric vehicles, are there any regions or brands that you think could go first in this transition, or any leading the way?

    Olivier: "It's the usual suspects, obviously, you're going to have Europe, UK, parts of the US, because to some extent, legislation is forcing the OEMs to electrify cars. Basically, if you're talking about, by 2035, to only sell electric cars, for example, which is, you know, part of what we've seen in UK or in Europe, this means that adaptation will need to happen quickly. I would say, look into wherever legislation is pushing the most. And then you will very quickly find where this EV shift will impact the market."

    (18:34) So wrapping things up, what are the key takeaways for from this conversation for anybody involved in fuel loyalty, looking to adapt to current trends? And what recommendations can you give to those looking to set up new loyalty rewards engagement programs in this changing landscape?

    Olivier: "Three things. The first one is make it simple for your customer base to participate, you're only one out of X number of schemes in the market. So make it simple for them, because we shouldn't be spending the next 25 hours reading into what can I get out of it, understanding it.

    "The second thing is make it attractive to customers. And when I'm saying attractive, it's probably not so much on your own. It's more of a Burnside make it relevant to him. But these are hygiene factors.”

    "The differentiator will come in terms of personalization, and how you're dealing with consumer data, what you're going to be doing with consumer data, that's probably wherever focus should be. This means quite a dramatic shift in terms of teams capability in terms of data analytics. How do you make decisions? That's where the value is going to be going forward."


     Like this? Then don't miss other episodes in the Loylogic Podcast...

     

  • The Loylogic Podcast - Fueling the future: The changing world of fuel rewards programs Electraic charging cable inserted into electric vehicle

    What’s fueling the future of large scale fuel rewards programs?

    For this episode of the Loylogic Podcast, Olivier Martinet, CEO of Posidonia Consulting and ex Vice President of marketing at BP, joins us to discuss fuel loyalty programs and what’s driving any rethinking of customer retention, revenue generation and incentivized engagement strategies.

    In this discussion, Olivier emphasizes the importance of tailoring fuel rewards propositions to fit each company's strategy and customer engagement capabilities. Key talking points include:

    - Instead of searching for a universal best-in-class program, he suggests evaluating programs based on four lenses: ease to participate, relevance, personalization, and profitability.

    - The level of focus on these lenses varies based on the company size and scope, with global organizations showing a greater inclination towards balancing customer advantage and brand consistency.

    - How the increasing digitalization and shift towards electric vehicles in the fuel industry are driving organizations to rethink their loyalty strategies, recognizing that a loyalty scheme is not just a marketing tool but also a privileged data provider for long-term strategic adaptation.

    - Why, as the industry moves towards becoming energy providers, the evolving landscape of mobility hubs and electric vehicles will impact loyalty offers, requiring companies to adjust to longer customer dwell times and the integration of home charging behavior.

    - Why major fuel companies are indeed repositioning themselves as energy providers, and collaborations with other energy companies and investments in alternative energy sources are already taking place, signifying a shift towards a future of potential joint ventures and partnerships.

    - Why loyalty program owners should keep earn simple but creative with the burn side, with the differentiator coming in terms of personalization, and how customer data is handled.

    To hear Olivier’s thoughts on these topics and much more, listen using the link below, or read on for the full transcript.

    (1:27) Olivier, in your opinion, what are currently the best in class fuel rewards propositions around the world? And what is setting them apart?

    Olivier Martinet: "That's a good question. And maybe I won't answer that directly, because at the end of the day, there's one thing I really don't believe in is that there's a best in class program. Basically, all programs, or success of a program, is very much dependant on the fit between the program as it is with the company, the company strategy, but also the readiness of a company to be using it. To some extent, the best in class aspect is having the right program for the company, for the company's targets and what that company is able to do with engaging customers. Okay, so it's probably not directly answering your question, but I guess it's a key feature of the thinking and how I've been approaching loyalty schemes for about 30 years."

    (2:28) So your approach there is very much steering away from a one-size-fits-all strategy and instead looking at a case-by-case basis?

    Olivier: "Yes, absolutely. The KPIs I'm looking into, to decide what is where we should go. The first one is around ease to participate. And when I'm saying this, it's ease to participate on both sides, from the consumer angle, but also from a retailer or partner point of view.

    "The second one, the second lens is on the relevance. How relevant is a program as a consumer on the receiving end, but also how relevant is this program to my strategy to be engaging customers going forward?

    "The third lens is personalization. And when I'm saying personalization, what is the right level of personalization? And are we talking to groups? Are we talking to a segment of one? And this is very highly dependant on the capabilities you have as a company, in terms of what you are going to be doing with the data? How are you going to be engaging the customers? How far have you gone on the digitalization journey? And how smart are you with analyzing the data of your customer base.

    "The last dimension I'm looking into is the profitability. When saying this I'm more thinking of financial sustainability of the scheme, because one thing is, you are not as a company entering into loyalty for the next two weeks, this is for the long run, so you bloody need to make sure that you can sustain this financially in the long run, and not going to be forced to deceive your customers, you know, 5/6/7 years down the road by decreasing the advantage you've been giving them.

    "These are four lenses, I'm always looking into to try to find the right balance between customer advantage and what the company or my clients can do with that scheme and how far we can push the personalization journey."

    (4:27) How common is it that you come across an organization, a brand company, whatever you want to call it, that shares that vision that that is able to look at its loyalty and rewards through those same lenses?

    Olivier: "To some extent, it depends on the company you're talking to. If you're talking about a company who is in one market, covering one, it's very infrequent that you would be looking into these four lenses because basically very often, you find those really focusing on how relevant the offer can be for customers and how much digitalization you can put in your system. But, if you start getting into some other companies who are managing schemes across the globe, 20 different countries, or more four or five different continents, that's where often you can find some of this approach. This was where you need to balance how much you're giving to customers, to your targets, in terms of personalization, but also managing some kind of consistency in the approach for your brand."

    (5:43) My logical next question there is, you've got these four lenses, and what challenges are rewards loyalty program owners facing? What's driving any rethinks of the strategy? And how are people going to regard and look at their loyalty programs?

    Olivier: "Very often, what is forcing the rethinking is the digitalization of it, coming in with a mobile application and then kind of suddenly saying, here is the 'ta-da' moment for customers. You start realizing that to be getting there, you need to be upgrading your IT, you need to be making sure you're going to be dealing with your consumer data. What are you going to be doing it? And what is the analytical solution you're going to be applying to it? And then, what are the use cases you're going to be applying to it?

    "Very often, what I see is that companies would go through part of his process, and we'll start getting into, "Okay, my use case for this, obviously, is I need to talk to my customers, I'm going to be communicating to my customers, because that's a marketing tool, I need to do this". Very often, what I see missing is that comms or marketing, even on a segment of one, is only one part of a value, which a loyalty scheme can generate. The number of use cases which can come from the data arising from your privileged customer base is much wider. And it can go into various strategic things like category management, if you're a retailer, what are your pricing policies, where are you going to be investing, what is the range of your assortment you're going to be offering to customers in what sites etc etc., which are much, I would say, wider use cases, than only looking at the marketing side.

    "Obviously the marketing side, to some extent, is the bread and butter, because that is what makes sure your customer base keeps coming back, keeps generating the income, but also keeps generating the data you're after. A loyalty scheme is not only a marketing tool, it's also a privileged data provider for companies to be adapting their strategy in the long term."

    (8:31) So it's fair to say that it is more than marketing?

    Olivier: Yeah, absolutely. As anyone who has known me for some time will know, I always say that your loyalty scheme shouldn't be left only to loyalty managers. It should be sitting on a boardroom table. It's where we honestly should be sitting, not so much the engagement or marketing part, but for all of the rest, which is getting into the long term benefits of launching and participating into a loyalty scheme."

    (9:06) One question I've got to ask you, given we're talking about fuel, is where does the shift to electric vehicles come into play?

    Olivier: "I guess it's an indirect impact. The shift to EVs is a strategic shift for fuel retail, for networks, and we see, not all, but most of the companies working on shifting on moving away from being a fuel or let's say a fuel provider, to becoming an energy provider. So that's a fundamental strategic shift, which is happening to most of the fuel retailers. To some extent, that's the driver. That means, though, that there is going to be some adaptation required to the loyalty, so it's more of a consequence of the strategic shift, which needs to happen and obviously will need to be impacting via schemes at some point in future."

    (10:06) Okay, so in London, as in many other cities around the world, we're seeing the creation of mobility hubs that are about more than fuel. It's about enjoying time out of good cup of coffee and maybe do some shopping. So how is that impacting fuel loyalty?

    Olivier: "It will impact the overall offer to the consumer, so it will need to impact loyalty. Basically, there's a fundamental shift here, which is to say, in the past, you had customers coming to fill up with a get me in, get me out as quickly as possible, and by the way, as cheaply as possible, attitude. And if on my way, in and out, you can sell some other stuff, you know, being impulse items, coffee, fine.

    "There are two ways which I would say the EV will impact loyalty. The first one is, it will force customers to stay longer on the forecourt, because there's a charging time, which means it's less of loyalty. You then get into how, I can make sure as a customer when I'm getting to a site, I will be able to charge, I will be able to get some coffee or make sure that the 10/15/20 minutes I'm going to be there are also going to be very valuable. That's one thing.

    "The second thing is, how does this relate to me charging my EV when I'm home, because at the end of the day, for an EV to be financially attractive to customers, one of the big underlying thing is that a big share of the charging should happen at your own house. And to some extent, that's where the impact of loyalty schemes is going. How do you deal with customers staying longer on the forecourt? Then, what is the kind of behavior you want to reward? And the second thing is, how do you relate that on-site interaction with what is happening when customers are filling up at home?”

    (12:09) Do you therefore see fuel companies becoming energy companies?

    Olivier: "So that's what they are claiming. Look into what BP or Shell are claiming, Total is doing the same thing. They are very much claiming to be a future energy company, energy provider for mobility.

    (12:29) Is there a case there that we'll see more collaboration between fuel companies and other energy providers?

    Olivier: "You can see already things happening. You can see already partnerships happening between electric companies, oil companies, energy companies. You can see also that BP and Shell and Total are investing highly in alternative energy, be it solar, wind, etc, etc. And to some extent that's something which is already happening. Whether then you are going to see some of the big companies joining up in future in the long term, probably yes. Is it happening? Is it going to happen in the short term? Honestly, I have no clue. I would suspect not. Because you still have the weight of the oil production and distribution, which is still driving significant value for shareholders. So it's not in the short term. But in the long term. You know, probably yes. That's me guessing, you know, it's probably more for an evening, you know, a beer conversation!"

    (13:41) If only we knew Olivier will be richer than we are now! Does this changing landscape of loyalty, and you've touched on it a little bit earlier, does it require more personalization of rewards now, as well as greater choice of rewards?

    Olivier: "There's a long term trend anyway, which is for hyper personalization or on getting to segment of one. And obviously, you know, digitalization is forcing this into a conversation. So, yes, you're aware, but at the same time, there is also a very clear thing to say, don't make it too complicated for customers. So, probably, if you're on your earn side, you know, keep it as simple as possible, make it very understandable for customers. You don't need to start creating tiers to achieve something, which only complicates the conversation.

    "Probably focus more on the burn part, on giving a wide choice of options for customers. And that's where, to some extent, the attractiveness of a scheme is happening. How big is the choice? To some extent, give the customer the choice of how they want to burn and don't force them to do it in a limited way.

    "Talking about the key features of a scheme, that's probably where I would focus. On top of burning, how much more are you offering to customers? If you're part of a loyalty scheme, your customer journey on site is going to be much more simplified, you have privileged access to a cashier, quick in and out. Starbucks is one of these examples. Money can't buy experiences, etc, etc. Earn and burn being the traditional thing, but how much more can you personalize to the customer's aspirational lifestyle, in terms of getting rewarded or getting some kind of benefits or recognition of participating into a scheme?”

    (15:57) Does that then also bring into play the possibility for programs to look at profit margins use innovative ways to burn points through raffles, the play model, etc?

    Olivier: "To some extent, the worst thing for a loyalty scheme is to have customers sitting on a big amount of points, or value or currency, whatever it is, basically, and not being very clear about what we're going to be doing with it. That's, to some extent, the worst of what you can do. And therefore, you know, there is always a balance to be done in terms of, yes, obviously, I need as a brand to have part of my customers come back to me to get rewarded, which needs options for the customers in terms of freedom of burning, or using the currency. And that's where you will have some customers say, you know, absolutely, to have a partnership with a supermarket. Others will say yeah, you know, I love gamification, while some of us say, I want to pick from my computer the reward I've been always dreaming and want this to be delivered to my home. You have all of these options, which needs to be offered to the consumers."

    (17:37) So coming back to the whole development of thinking around electric vehicles, are there any regions or brands that you think could go first in this transition, or any leading the way?

    Olivier: "It's the usual suspects, obviously, you're going to have Europe, UK, parts of the US, because to some extent, legislation is forcing the OEMs to electrify cars. Basically, if you're talking about, by 2035, to only sell electric cars, for example, which is, you know, part of what we've seen in UK or in Europe, this means that adaptation will need to happen quickly. I would say, look into wherever legislation is pushing the most. And then you will very quickly find where this EV shift will impact the market."

    (18:34) So wrapping things up, what are the key takeaways for from this conversation for anybody involved in fuel loyalty, looking to adapt to current trends? And what recommendations can you give to those looking to set up new loyalty rewards engagement programs in this changing landscape?

    Olivier: "Three things. The first one is make it simple for your customer base to participate, you're only one out of X number of schemes in the market. So make it simple for them, because we shouldn't be spending the next 25 hours reading into what can I get out of it, understanding it.

    "The second thing is make it attractive to customers. And when I'm saying attractive, it's probably not so much on your own. It's more of a Burnside make it relevant to him. But these are hygiene factors.”

    "The differentiator will come in terms of personalization, and how you're dealing with consumer data, what you're going to be doing with consumer data, that's probably wherever focus should be. This means quite a dramatic shift in terms of teams capability in terms of data analytics. How do you make decisions? That's where the value is going to be going forward."


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    Local trends and opportunities


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    Chapter 1: Past stories: two decades of airline loyalty development (1:44 to 7:44)

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    Chapter 2: Present perception: lucrative assets, but still more potential? (7:45 to 20:06)

    - Thinking about where airline loyalty is at today, it’s clear that loyalty programs are some of the most lucrative assets on airlines’ balance sheets and their sheer scalability, controllability and profitability make them stand-out in an operating environment that is perpetually challenging. Does this mean that programs are no longer flying under the radar like they once were?

    - Program valuation is clearly extremely important when it comes to collateralizing airline loyalty programs and enabling attractive financing structures – how can programs ensure they have an accurate valuation?

    - How can programs be used as part of capital allocation strategies, along the lines of a recent example such as the Apollo – Air France / KLM transaction related to Flying Blue?

    - Where does profit and loss come into play? How can programs deliver higher operating margins?

    - Are there any lessons that we can learn from high-achievers within airline loyalty?

    Chapter 3: Future thinking: what next for frequent flyer programs and airline loyalty? (20:07 to 29:56)

    - Looking to the future, what’s next for airline loyalty? Are we on the cusp of a new era in airline loyalty as organisations look to unlock the full potential? Are we going to see more adoptions of popular airline loyalty currencies by other airlines, like the recent examples of Finnair and Qatar adopting AVIOS?

    - What opportunities are there for airlines to develop structures that will deliver ongoing growth?

    - How do you see rewards developing over time?

    - What headwinds will programs face and how can program managers overcome them?

    The podcast transcript

    (1:44): Evert and Gabi, you've worked with each other for longer than you probably care to remember, and have no doubt seen many changes in the airline loyalty world over the years. How was airline loyalty perceived two decades ago and how has this developed over the years?

    Evert: "You're right. It is quite some time ago that I first met Gabi. In fact, he was my first boss who hired me in my first role at KLM Royal Dutch Airlines in Amsterdam, in 2000. I think on the one side, lots of things have changed. On the other side, some things are still the same. I do think that the program structures and the supporting organizational designs have changed a lot. And I think the programs are essentially more effectively run with stronger designs. And that's all for the better.

    "When I joined KLM, back then, the department we worked for was called loyalty marketing. And I think, although in itself, it's a pretty good name, loyalty programs or loyalty strategy goes way beyond just the marketing component of it. It's something that we've witnessed over the last, let's say 10 years, with elements of economics and finance, and more behavioral economics and the whole psychological aspect of it coming into play.

    "Back in 2001 or 2002, we were working on a potential merger between KLM and Northwest, who had launched the first transatlantic joint venture. As part of that project, it was considered to essential to combine the programs of KLM and Northwest. In the end, it didn't happen for a lot of reasons. But if we fast forward almost 25 years and see what's happening in the industry, now, with consolidation and sort of consolidation of loyalty currencies, it's interesting to see that the industry is still facing similar challenges, but at the same time, it's coming up with solutions for them."

    Gabi: "Of course I have very fond memories of those 20 years ago when we were still young and innocent and full of ambition to make an impact on the world, which has been fun! I also recall from that time, you had to, as a loyalty marketer, really try to pull out all the stops to get it on the Board's agenda. Nowadays, of course, the asset value is so clear to the airline boards that the dynamic has completely changed.

    "I remember that that we had one of the pioneers in the industry, Randy Petersen, who a lot of people will know well from Inside Flyer and the awards that he runs every year. I remember that we brought him over to talk to the KLM board and share, from an external point of view, the 10 recommendations that the airline should consider while thinking about loyalty strategies and its frequent flyer program. One of them was actually separating the state from the church argument that he used at the time, which basically meant considering running the loyalty program as a standalone business, spun out of the airline and treated as its own independent entity in the in the airline group. That was, in those days, a very early and challenging recommendation to make. Fast forward 20 years and you will see that, of course, a lot of different models have evolved in that space."

    Evert: "If I can just pick up on Gabi's use of the term loyalty marketeer. I agree that it's a good term, but at the same time I sometimes warn my clients and colleagues, don't position yourself as a loyalty marketeer because it goes way beyond just the marketing aspect of it. In reality, it's a very interesting crossroads of all sorts of disciplines, including data analytics, operations, research, breakage, and liability management, financial optimization. I feel that we're kind of shortchanging ourselves if we call ourselves loyalty marketers, because it goes way beyond just the marketing aspect of it."

    Gabi: "That's a very fair point. I think those kind of terms like member equity, the collective sum of the expected future profits of these kinds of customers. If you think about it in that way, then you also start thinking very differently in the boardroom about how do you grow that kind of significant assets of that consumer base across all your kind of touch points and businesses that you run as an airline can improve?

    (7:45): What you're saying there leads us nicely into the discussion around the present perceptions and the fact that if we think about where airline loyalty is at today, it's clear that loyalty programs are some of the most lucrative assets on airline balance sheets, and their sheer scalability, controllability and profitability make them stand out in an operating environment that is perpetually challenging. Does this mean that programs are no longer flying under the radar like they once were? And how have perceptions changed?

    Evert: "It's a fair statement, although I would put some nuances on it. Again, if we were to go back in time, 20 or 25 years, and I'm speaking not just about KLM but aviation or airlines in general, if you were to go to members of the board, or even the CFO or CEO of a large and medium sized airline and ask them, 'What is the value of the loyalty program? How much profit is it making?', I think they would struggle to give you a meaningful number. And the same goes for many of the shareholders and investors and analysts looking at airlines. Today, I think the picture has completely changed.

    “To some extent, that is thanks to what happened during COVID-19. With all the collateralization and increased level of reporting done by airlines. So yes, that has completely changed. However, I would say that being aware of it, and doing the right thing are two separate things. If we were to ask that same question to the board or the CEO and the CFO today, I think a lot of them would have an increased knowledge and appreciation of the potential profitability of the program. But that's not to say that they have a full understanding of the drivers of profitability and the levers that they have at their disposal. Awareness, yes, but actually turning that into meaningful actions and, you know, implementing the correct strategy and organizational structure, I still think we have some ways to go."

    Gabi: "Yeah, I would fully echo that. I think while airline CEOs or the boardroom know the value, of course of those FFP departments, I still see very often that they are somewhat hampered in the being a true kind of marketing company as well, to really kind of create the full value of what these FFP departments can unlock for an airline.

    "Governance is key, because there are still many airlines where it's extremely hard for the people running FFP departments to be true partners to their non-air partners in the schemes. A lot of partners would sometimes struggle with limited exposure to the database, or the marketing that they can send out via the programs. There's always this kind of trade-off between how much do we communicate to a member? How do we communicate about airline related matters and offers? And how do you basically enable a structure whereby the FFP department can be a marketing bureau for the partners and the benefit of the members? That comes with elements like setting up the right opt-in and opt-out type structures for members. Rather than having one opt out for any communication that goes out for both the airline and the frequent flyer program, and for the members, you need to put a different kind of infrastructure in place, that so if somebody decides that they do not want to get more offers or content from that particular program, that they are not lost to the larger airline group. And so there are certain elements that that often hamper the true potential of the commercial elements of what such an airline loyalty business really can be."

    Evert: "Just to add to that, I think you would be surprised about the number of airlines that we encounter, where revenue management still considers reward travel as non-revenue. So they put it in the same bucket together with travel agents or other incentive categories, and essentially don't attach any monetary value to miles being redeemed, which, in our view, doesn't make any sense. But that's just one sort of very tactical example. I think there's lots of headroom to grow and fully appreciate the value and then institutionalize that appreciation in the actual algorithms and financial reporting, and not completely disregard it."

    (12:35) Related to that is program valuation, which is clearly extremely important when it comes to collateralizing airline loyalty programs, and enabling attractive financing structures. How can programs ensure they have an accurate valuation?

    Evert: "I agree with what you said, and valuations are important. And clearly they play an important role in any potential collateralization. However, I think they are one piece of the puzzle. I think the bigger puzzle is around understanding what is the value expressed as a P&L and then have control over it? How do we influence that P&L? Then I can take the P&L and apply it in my capital allocation optimization strategy. Getting the valuation right is important, but probably even more important is understanding, okay, what's the opportunity? What levers can I pull or push to influence the performance of that segment? What are the underlying trade-offs?

    "Collateralizing is basically using the program as collateral to raise financing. That's one thing that you can do, but there's other avenues as well. But if you don't have the full overview of the landscape, you'll never be in a position to judge the competing alternatives. So we say first, establish a proper view of how is the business or the segment or the unit performing today, and how could it perform in the future? And what are the underlying trade-offs that you are faced with?"

    (14:04) How can programs be used as part of capital allocation strategies, along the lines of a recent example of the Apollo Air France KLM transaction related to Flying Blue?

    Evert: "I think, basically, if you have a well run program, it's an asset within your toolbox that you can use to raise financing. The Air-France KLM example is indeed a very recent one, where basically they got an external investor to buy bonds on their separated loyalty business, and that allows them to treat it as equity under French IFRS rules. Well, clearly, I am no expert on French IFRS rules but from what they have disclosed, that seems like a good solution for their problem.

    "I think if we go back in time, Avianca first used this tactic whereby they used the loyalty program to raise financing instead of the airline. And by doing so they were able to exploit much favorable terms of credit. In other words, the coupon or the interest they have to pay on the on the loan was much less than if they had used the airline. The model is out there. It's tried and tested.

    "I guess the bigger picture here is that airlines continuously need to raise finance. And because of the different characteristics that a loyalty business represents, if there is an efficient degree of separation, you can exploit some of those characteristics to your benefit, and basically run a more effective capital strategy."

    (15:55) Gabi, if I could bring you in here, where does profit and loss come into play? And how can programs deliver higher operating margins?

    Gabi: "If you've got to break down a P&L in a simple way, you would sell miles at a certain price to non-air partners at a certain rate per point. On the other hand, you've got a cost per point when the actual redemptions are taking place. So if you can, in a very simplistic way, think about how you can increase that spread by also, for example, lowering the cost per point on the redemption side, then by definition, you will increase your operating margins.

    "There's an interesting trend that we foresee around quick micro redemption options. For example, if you think about using your miles or your points for sweepstakes or raffles at a much lower cost per point, but still do it in a way that members enjoy and find fun, then you can drive a certain portion of the miles redemption into that redemption bucket, that could have an impact on the overall weighted cost per point, i.e. a lower weighted cost per point, which of course would improve your operating margins, and also technically allow you to reclassify your outstanding points liability against that lower weighted cost per point across all redemption categories.

    "There are all kinds of levers to play with. But what is often forgotten somehow is the impact that redemption cost can have in this whole mix, because that's still where 70% of all the costs are sitting in these kinds of programs. When we look at the P&L side, that would be an area of focus for me."

    (17:41) Are there any lessons we can learn from the high achievers within airline loyalty?

    Evert: "Ultimately, what drives success? If we have to boil it down, it's utility in the currency, meaning it's easy to earn, there are no complex terms or conditions. It's intuitive. It makes sense, members get it and will go out of their way to get their hands on the points or miles or whatever.

    "I think a program can achieve that when the program can move with speed and precision. And what I mean by speed and precision is that you run a loyalty business that puts out an attractive currency, effective partnerships, it can move rapidly, it's not bogged down by IT issues. Precision is important because it implies having control over the performance of the business if I pull this lever, this is what will happen to my yields. If I pull that lever, this is what will happen to my cost per point to my breakage. If we look at programs, or loyalty companies that we think are very successful, I think these are the common characteristics."

    Gabi: "I think to build on Evert there, we are talking about currencies here, airline miles are currencies. Every currency lives or dies with trust in that particular currency. The predictability and not a lot of unexpected devaluations all the time of that currency and the fact that members and partners can rely on the airline program as a reliable partner who will do anything to try to protect, within the economic kind of environment, the value of the currency, that is also a very important element in my view."

    (20:07) If we look to the future, what's next for airline loyalty? Are we on the cusp of a new era in loyalty as organizations look to unlock the full potential, are we going to see more adoptions and kind of popular airline loyalty currencies been picked up by by other airlines such as the recent examples of Finnair and Qatar adopting Avios?

    Evert: "As you rightly point out, Finnair and Qatar Airways are adopting or have adopted Avios as their currency whilst retaining their own program. I think this is a great example of showcasing or demonstrating, again, the utility in the currency. I would speculate that these airlines considered the various alternatives and ultimately made a decision to join a very strong currency that offers a lot of utility. So I think that makes total sense.

    "Coming back to my earlier point, building on the increased awareness across all the different stakeholders and constituents in the system, I think airlines will continue to come up with better strategies and stronger content for their programs. I think IAG is an interesting one. They talk a lot about IAG loyalty, they've set it up as a separate segment. And they're really trying to educate the market and the analysts about how this is a very exciting business that we have here. It wouldn't surprise me if, at their upcoming capital markets day, they will talk a little bit more again about their loyalty business. And I think others are sitting up and considering, 'Hey, you know, what should we be doing? Should we be looking at a P&L? What is our P&L? How do we optimize it? And then if you have the P&L, how do we then communicate that to the market?' I think there's lots of interesting things that will happen in years to come."

    (21:57): Gabi, what opportunities are there for airlines to develop structures that will deliver ongoing growth?

    Gabi: "I expect the largest growth is in the space of the frequent flyer programs being present in the daily online shopping lives of their members. If you look at the P&L of frequent flyer programs, co-branded credit cards have counted for ages as the most important accrual partner in the program. I do think there's a similarly large opportunity existing in the space of affiliate marketing connected to the online spend of the members, but not in a way that it has been done for the past two decades.

    "Affiliate marketing, as a customer journey, has always been extremely clunky, I would say, for users to go to an airline loyalty website, click on a link, go from there to kind of a shopping portal or a website and then basically wait six weeks before their points or miles were credited. And of course, nobody shops that way. I'm predicting that if you look at a program Flying Blue, and we are involved as Pointspay as the Loylogic Group to help them with their new venture of Flying Blue plus, which is entering into the affiliate payments space, by having their own payment button implemented on leading websites in France and the Netherlands in this particular case. I think there's an enormous amount of accrual Income to be generated there for the airline. At the same time a lot of value can be created for those online merchants by connecting them to this affluent consumer base."

    (23:34) Gabi, sticking with you, it would be wrong to not discuss rewards in more detail here. So how would you see rewards developing over time?

    Gabi: "I think it has been a quiet, kind of stable base for a lot of programs, but there's an opportunity to reimagine how these rewards shops should look and the content that they should offer.

    "Coming out of COVID-19, a lot of load factors are higher, airlines have rationalized their capacity, and as a result, reward seats are harder to get than prior to COVID. And you see some kind of pushback in the media, either in Australia or in in the US last week with Delta, you see kind of a lot of stress in the system on the flight-related reward. So, I think non-air rewards have to play a more significant role.

    "Now, the question is, how do you structure that in a way that the cost per point, if this means cash going outside the ecosystem of the airline groups into third party type rewards offerings, in such a way that if that cash out happens that you benefit from that as airline loyalty program with a lower weighted cost per point? I think the rewards require a lot more imagination, having different brand partnerships in place to have unique content in the reward shop, which might not be easily found elsewhere, like early access to new releases or unique offers, but also presented in a much more memorable user experience than what it has been for the last few decades.

    "If you look at loyalty programs in the fast moving consumer goods industry, they are very often run by very brand focused marketeers, I would say, and you will see that rewards shops are truly an extension of the actual brand positioning of that particular brand. I think it might be interesting for frequent flyer programs to also really think through what should such a brand extension mean, in light of my brand, what I stand for. We've also chasing a new dynamic around sustainability, so what kind of brand extension would you like that reward shop to be? So I do foresee that it's time to reimagine that part.

    "Another element that could be interesting to think about is cash as a redemption offer, which of course, has always been popular in any kind of loyalty offering. Traditionally, airlines have been quite reserved in offering that, but we do think that there's probably a space for having virtual rewards cards as an alternative to gift cards that can be then embedded in Apple Pay or Google Pay or Samsung Pay wallet. But again, at the lower kind of cost repoint compared to the regular rewards, the flight rewards. And this probably would not be something that I would let loose on the entire FFP database. I more see this as an extra benefit for elite members who will redeem their miles anyway. And then you might want to position that more virtual cash element only for that segment. So these are just some of the hypotheses were having what we might see in that space."

    (26:49) To wrap up the discussion, what key takeaways can you give anybody looking to maximize the potential of their airline loyalty program?

    Evert: "I think I'll repeat myself when I say that, in order to truly benefit from the potential value that a loyalty program can bring, it's critical that you understand how it's performing and what are the levers that you have at your disposal to influence that performance? I think that's critical.

    "I do want to mention two headwinds that I think are important to talk about. The first one is kind of building on what Gabi said, increased pressure in the system on award availability. I think that's true. And I think, you know, the most successful programs will develop this skill to optimize or revenue manage access and pricing to rewards. In other words, you need to have a strategy that determines who gets access to what flight rewards at what price, and basically make sure that that's done in a in a smart way. So your best members get the best value. And yes, there is a role to be played for non-air because it can bring down cost per point, as well as act as a release mechanism for built up pressure.

    "The other thing that I think it's important to mention as well, is that I think we're going to see increased regulation and legislation around loyalty programs, specifically in Europe. I think frequent flyer programs, that name itself, is enough to attract a lot of attention in the very near future. And I suspect that more and more regulators and legislators will turn their attention to it. I think it's inevitable, and it's up to the industry to come up with an appropriate response that makes sense for all involved stakeholders."

    Gabi: "I think another potential headwind to be mindful of, is the continued pressure on interchange remains a risk for the frequent flyer business model. So again, diversification, or by focusing on tapping into, for example, online commerce might be an appropriate strategy.

    "To wrap up this call, I would urge everybody to reimagine what the future could look like, taking all of these macro factors into play, but also making sure that the FFP department is truly positioned and enabled to function as a real marketing company for its partners within the airline ecosystem. I think that's a key takeaway for from my side, talking to a lot of FFP managers lately.”

  • The Loylogic Podcast: Taking airline loyalty to new heights

    In this latest episode of the Loylogic podcast, Evert De Boer, CEO and co-founder of Fidivio, and Managing Partner at On Point Loyalty, joins Gabi Kool, CEO of Loylogic, to discuss how the full potential of airline loyalty can be realized.

    In this entertaining and insightful conversation, Evert and Gabi discuss how loyalty programs, once the best kept secret of the airline industry, have stepped into centre stage of global airline economics. They delve into past stories about the development of airline loyalty, talk about present perceptions and how loyalty programs have become lucrative assets…and detail how the untapped potential of these programs can be unlocked.

    Finally, Evert and Gabi look to the future and what they think the future holds for frequent flyers and airline loyalty.

    Questions answered in this not-to-be-missed podcast include:

    Chapter 1: Past stories: two decades of airline loyalty development (1:44 to 7:44)

    - How was airline loyalty perceived two decades ago and how has this developed over the years?

    Chapter 2: Present perception: lucrative assets, but still more potential? (7:45 to 20:06)

    - Thinking about where airline loyalty is at today, it’s clear that loyalty programs are some of the most lucrative assets on airlines’ balance sheets and their sheer scalability, controllability and profitability make them stand-out in an operating environment that is perpetually challenging. Does this mean that programs are no longer flying under the radar like they once were?

    - Program valuation is clearly extremely important when it comes to collateralizing airline loyalty programs and enabling attractive financing structures – how can programs ensure they have an accurate valuation?

    - How can programs be used as part of capital allocation strategies, along the lines of a recent example such as the Apollo – Air France / KLM transaction related to Flying Blue?

    - Where does profit and loss come into play? How can programs deliver higher operating margins?

    - Are there any lessons that we can learn from high-achievers within airline loyalty?

    Chapter 3: Future thinking: what next for frequent flyer programs and airline loyalty? (20:07 to 29:56)

    - Looking to the future, what’s next for airline loyalty? Are we on the cusp of a new era in airline loyalty as organisations look to unlock the full potential? Are we going to see more adoptions of popular airline loyalty currencies by other airlines, like the recent examples of Finnair and Qatar adopting AVIOS?

    - What opportunities are there for airlines to develop structures that will deliver ongoing growth?

    - How do you see rewards developing over time?

    - What headwinds will programs face and how can program managers overcome them?

    The podcast transcript

    (1:44): Evert and Gabi, you've worked with each other for longer than you probably care to remember, and have no doubt seen many changes in the airline loyalty world over the years. How was airline loyalty perceived two decades ago and how has this developed over the years?

    Evert: "You're right. It is quite some time ago that I first met Gabi. In fact, he was my first boss who hired me in my first role at KLM Royal Dutch Airlines in Amsterdam, in 2000. I think on the one side, lots of things have changed. On the other side, some things are still the same. I do think that the program structures and the supporting organizational designs have changed a lot. And I think the programs are essentially more effectively run with stronger designs. And that's all for the better.

    "When I joined KLM, back then, the department we worked for was called loyalty marketing. And I think, although in itself, it's a pretty good name, loyalty programs or loyalty strategy goes way beyond just the marketing component of it. It's something that we've witnessed over the last, let's say 10 years, with elements of economics and finance, and more behavioral economics and the whole psychological aspect of it coming into play.

    "Back in 2001 or 2002, we were working on a potential merger between KLM and Northwest, who had launched the first transatlantic joint venture. As part of that project, it was considered to essential to combine the programs of KLM and Northwest. In the end, it didn't happen for a lot of reasons. But if we fast forward almost 25 years and see what's happening in the industry, now, with consolidation and sort of consolidation of loyalty currencies, it's interesting to see that the industry is still facing similar challenges, but at the same time, it's coming up with solutions for them."

    Gabi: "Of course I have very fond memories of those 20 years ago when we were still young and innocent and full of ambition to make an impact on the world, which has been fun! I also recall from that time, you had to, as a loyalty marketer, really try to pull out all the stops to get it on the Board's agenda. Nowadays, of course, the asset value is so clear to the airline boards that the dynamic has completely changed.

    "I remember that that we had one of the pioneers in the industry, Randy Petersen, who a lot of people will know well from Inside Flyer and the awards that he runs every year. I remember that we brought him over to talk to the KLM board and share, from an external point of view, the 10 recommendations that the airline should consider while thinking about loyalty strategies and its frequent flyer program. One of them was actually separating the state from the church argument that he used at the time, which basically meant considering running the loyalty program as a standalone business, spun out of the airline and treated as its own independent entity in the in the airline group. That was, in those days, a very early and challenging recommendation to make. Fast forward 20 years and you will see that, of course, a lot of different models have evolved in that space."

    Evert: "If I can just pick up on Gabi's use of the term loyalty marketeer. I agree that it's a good term, but at the same time I sometimes warn my clients and colleagues, don't position yourself as a loyalty marketeer because it goes way beyond just the marketing aspect of it. In reality, it's a very interesting crossroads of all sorts of disciplines, including data analytics, operations, research, breakage, and liability management, financial optimization. I feel that we're kind of shortchanging ourselves if we call ourselves loyalty marketers, because it goes way beyond just the marketing aspect of it."

    Gabi: "That's a very fair point. I think those kind of terms like member equity, the collective sum of the expected future profits of these kinds of customers. If you think about it in that way, then you also start thinking very differently in the boardroom about how do you grow that kind of significant assets of that consumer base across all your kind of touch points and businesses that you run as an airline can improve?

    (7:45): What you're saying there leads us nicely into the discussion around the present perceptions and the fact that if we think about where airline loyalty is at today, it's clear that loyalty programs are some of the most lucrative assets on airline balance sheets, and their sheer scalability, controllability and profitability make them stand out in an operating environment that is perpetually challenging. Does this mean that programs are no longer flying under the radar like they once were? And how have perceptions changed?

    Evert: "It's a fair statement, although I would put some nuances on it. Again, if we were to go back in time, 20 or 25 years, and I'm speaking not just about KLM but aviation or airlines in general, if you were to go to members of the board, or even the CFO or CEO of a large and medium sized airline and ask them, 'What is the value of the loyalty program? How much profit is it making?', I think they would struggle to give you a meaningful number. And the same goes for many of the shareholders and investors and analysts looking at airlines. Today, I think the picture has completely changed.

    “To some extent, that is thanks to what happened during COVID-19. With all the collateralization and increased level of reporting done by airlines. So yes, that has completely changed. However, I would say that being aware of it, and doing the right thing are two separate things. If we were to ask that same question to the board or the CEO and the CFO today, I think a lot of them would have an increased knowledge and appreciation of the potential profitability of the program. But that's not to say that they have a full understanding of the drivers of profitability and the levers that they have at their disposal. Awareness, yes, but actually turning that into meaningful actions and, you know, implementing the correct strategy and organizational structure, I still think we have some ways to go."

    Gabi: "Yeah, I would fully echo that. I think while airline CEOs or the boardroom know the value, of course of those FFP departments, I still see very often that they are somewhat hampered in the being a true kind of marketing company as well, to really kind of create the full value of what these FFP departments can unlock for an airline.

    "Governance is key, because there are still many airlines where it's extremely hard for the people running FFP departments to be true partners to their non-air partners in the schemes. A lot of partners would sometimes struggle with limited exposure to the database, or the marketing that they can send out via the programs. There's always this kind of trade-off between how much do we communicate to a member? How do we communicate about airline related matters and offers? And how do you basically enable a structure whereby the FFP department can be a marketing bureau for the partners and the benefit of the members? That comes with elements like setting up the right opt-in and opt-out type structures for members. Rather than having one opt out for any communication that goes out for both the airline and the frequent flyer program, and for the members, you need to put a different kind of infrastructure in place, that so if somebody decides that they do not want to get more offers or content from that particular program, that they are not lost to the larger airline group. And so there are certain elements that that often hamper the true potential of the commercial elements of what such an airline loyalty business really can be."

    Evert: "Just to add to that, I think you would be surprised about the number of airlines that we encounter, where revenue management still considers reward travel as non-revenue. So they put it in the same bucket together with travel agents or other incentive categories, and essentially don't attach any monetary value to miles being redeemed, which, in our view, doesn't make any sense. But that's just one sort of very tactical example. I think there's lots of headroom to grow and fully appreciate the value and then institutionalize that appreciation in the actual algorithms and financial reporting, and not completely disregard it."

    (12:35) Related to that is program valuation, which is clearly extremely important when it comes to collateralizing airline loyalty programs, and enabling attractive financing structures. How can programs ensure they have an accurate valuation?

    Evert: "I agree with what you said, and valuations are important. And clearly they play an important role in any potential collateralization. However, I think they are one piece of the puzzle. I think the bigger puzzle is around understanding what is the value expressed as a P&L and then have control over it? How do we influence that P&L? Then I can take the P&L and apply it in my capital allocation optimization strategy. Getting the valuation right is important, but probably even more important is understanding, okay, what's the opportunity? What levers can I pull or push to influence the performance of that segment? What are the underlying trade-offs?

    "Collateralizing is basically using the program as collateral to raise financing. That's one thing that you can do, but there's other avenues as well. But if you don't have the full overview of the landscape, you'll never be in a position to judge the competing alternatives. So we say first, establish a proper view of how is the business or the segment or the unit performing today, and how could it perform in the future? And what are the underlying trade-offs that you are faced with?"

    (14:04) How can programs be used as part of capital allocation strategies, along the lines of a recent example of the Apollo Air France KLM transaction related to Flying Blue?

    Evert: "I think, basically, if you have a well run program, it's an asset within your toolbox that you can use to raise financing. The Air-France KLM example is indeed a very recent one, where basically they got an external investor to buy bonds on their separated loyalty business, and that allows them to treat it as equity under French IFRS rules. Well, clearly, I am no expert on French IFRS rules but from what they have disclosed, that seems like a good solution for their problem.

    "I think if we go back in time, Avianca first used this tactic whereby they used the loyalty program to raise financing instead of the airline. And by doing so they were able to exploit much favorable terms of credit. In other words, the coupon or the interest they have to pay on the on the loan was much less than if they had used the airline. The model is out there. It's tried and tested.

    "I guess the bigger picture here is that airlines continuously need to raise finance. And because of the different characteristics that a loyalty business represents, if there is an efficient degree of separation, you can exploit some of those characteristics to your benefit, and basically run a more effective capital strategy."

    (15:55) Gabi, if I could bring you in here, where does profit and loss come into play? And how can programs deliver higher operating margins?

    Gabi: "If you've got to break down a P&L in a simple way, for our programs, you would sell miles at a certain price to non-air partners at a certain rate per point. On the other hand, you've got a cost per point when the actual redemptions are taking place. So if you can, in a very simplistic way, think about how you can increase that spread by also, for example, lowering the cost per point on the redemption side, then by definition, you will increase your operating margins.

    "There's an interesting trend that we foresee around quick micro redemption options. For example, if you think about using your miles or your points for sweepstakes or raffles at a much lower cost per point, but still do it in a way that members enjoy and find fun, then you can drive a certain portion of the miles redemption into that redemption bucket, that could have an impact on the overall weighted cost per point, i.e. a lower weighted cost per point, which of course would improve your operating margins, and also technically allow you to reclassify your outstanding points liability against that lower weighted cost per point across all redemption categories.

    "There are all kinds of levers to play with. But what is often forgotten somehow is the impact that redemption cost can have in this whole mix, because that's still where 70% of all the costs are sitting in these kinds of programs. When we look at the P&L side, that would be an area of focus for me."

    (17:41) Are there any lessons we can learn from the high achievers within airline loyalty?

    Evert: "Ultimately, what drives success? If we have to boil it down, it's utility in the currency, meaning it's easy to earn, there are no complex terms or conditions. It's intuitive. It makes sense, members get it and will go out of their way to get their hands on the points or miles or whatever.

    "I think a program can achieve that when the program can move with speed and precision. And what I mean by speed and precision is that you run a loyalty business that puts out an attractive currency, effective partnerships, it can move rapidly, it's not bogged down by IT issues. Precision is important because it implies having control over the performance of the business if I pull this lever, this is what will happen to my yields. If I pull that lever, this is what will happen to my cost per point to my breakage. If we look at programs, or loyalty companies that we think are very successful, I think these are the common characteristics."

    Gabi: "I think to build on Evert there, we are talking about currencies here, airline miles are currencies. Every currency lives or dies with trust in that particular currency. The predictability and not a lot of unexpected devaluations all the time of that currency and the fact that members and partners can rely on the airline program as a reliable partner who will do anything to try to protect, within the economic kind of environment, the value of the currency, that is also a very important element in my view."

    (20:07) If we look to the future, what's next for airline loyalty? Are we on the cusp of a new era in loyalty as organizations look to unlock the full potential, are we going to see more adoptions and kind of popular airline loyalty currencies been picked up by by other airlines such as the recent examples of Finnair and Qatar adopting Avios?

    Evert: "As you rightly point out, Finnair and Qatar Airways are adopting or have adopted Avios as their currency whilst retaining their own program. I think this is a great example of showcasing or demonstrating, again, the utility in the currency. I would speculate that these airlines considered the various alternatives and ultimately made a decision to join a very strong currency that offers a lot of utility. So I think that makes total sense.

    "Coming back to my earlier point, building on the increased awareness across all the different stakeholders and constituents in the system, I think airlines will continue to come up with better strategies and stronger content for their programs. I think IAG is an interesting one. They talk a lot about IAG loyalty, they've set it up as a separate segment. And they're really trying to educate the market and the analysts about how this is a very exciting business that we have here. It wouldn't surprise me if, at their upcoming capital markets day, they will talk a little bit more again about their loyalty business. And I think others are sitting up and considering, 'Hey, you know, what should we be doing? Should we be looking at a P&L? What is our P&L? How do we optimize it? And then if you have the P&L, how do we then communicate that to the market?' I think there's lots of interesting things that will happen in years to come."

    (21:57): Gabi, what opportunities are there for airlines to develop structures that will deliver ongoing growth?

    Gabi: "I expect the largest growth is in the space of the frequent flyer programs being present in the daily online shopping lives of their members. If you look at the P&L of frequent flyer programs, co-branded credit cards have counted for ages as the most important accrual partner in the program. I do think there's a similarly large opportunity existing in the space of affiliate marketing connected to the online spend of the members, but not in a way that it has been done for the past two decades.

    "Affiliate marketing, as a customer journey, has always been extremely clunky, I would say, for users to go to an airline loyalty website, click on a link, go from there to kind of a shopping portal or a website and then basically wait six weeks before their points or miles were credited. And of course, nobody shops that way. I'm predicting that if you look at a program Flying Blue, and we are involved as Pointspay as the Loylogic Group to help them with their new venture of Flying Blue plus, which is entering into the affiliate payments space, by having their own payment button implemented on leading websites in France and the Netherlands in this particular case. I think there's an enormous amount of accrual Income to be generated there for the airline. At the same time a lot of value can be created for those online merchants by connecting them to this affluent consumer base."

    (23:34) Gabi, sticking with you, it would be wrong to not discuss rewards in more detail here. So how would you see rewards developing over time?

    Gabi: "I think it has been a quiet, stable base for a lot of kind of programs, but there's a lot of opportunity to reimagine how these rewards shops should look and the content that they should offer.

    "Coming out of COVID-19, a lot of load factors are higher, airlines have rationalized their capacity, and as a result, reward seats are harder to get than prior to COVID. And you see some kind of pushback in the media, either in Australia or in in the US last week with Delta, you see kind of a lot of stress in the system on the flight-related reward. So, I think non-air rewards have to play a more significant role.

    "Now, the question is, how do you structure that in a way that the cost per point, if this means cash going outside the ecosystem of the airline groups into third party type rewards offerings, in such a way that if that cash out happens that you benefit from that as airline loyalty program with a lower weighted cost per point? I think the rewards require a lot more imagination, having different brand partnerships in place to have unique content in the reward shop, which might not be easily found elsewhere, like early access to new releases or unique offers, but also presented in a much more memorable user experience than what it has been for the last few decades.

    "If you look at loyalty programs in the fast moving consumer goods industry, they are very often run by very brand focused marketeers, I would say, and you will see that rewards shops are truly an extension of the actual brand positioning of that particular brand. I think it might be interesting for frequent flyer programs to also really think through what should such a brand extension mean, in light of my brand, what I stand for. We've also chasing a new dynamic around sustainability, so what kind of brand extension would you like that reward shop to be? So I do foresee that it's time to reimagine that part.

    "Another element that could be interesting to think about is cash as a redemption offer, which of course, has always been popular in any kind of loyalty offering. Traditionally, airlines have been quite reserved in offering that, but we do think that there's probably a space for having virtual rewards cards as an alternative to gift cards that can be then embedded in Apple Pay or Google Pay or Samsung Pay wallet. But again, at the lower kind of cost repoint compared to the regular rewards, the flight rewards. And this probably would not be something that I would let loose on the entire FFP database. I more see this as an extra benefit for elite members who will redeem their miles anyway. And then you might want to position that more virtual cash element only for that segment. So these are just some of the hypotheses were having what we might see in that space."

    (26:49) To wrap up the discussion, what key takeaways can you give anybody looking to maximize the potential of their airline loyalty program?

    Evert: "I think I'll repeat myself when I say that, in order to truly benefit from the potential value that a loyalty program can bring, it's critical that you understand how it's performing and what are the levers that you have at your disposal to influence that performance? I think that's critical.

    "I do want to mention two headwinds that I think are important to talk about. The first one is kind of building on what Gabi said, increased pressure in the system on award availability. I think that's true. And I think, you know, the most successful programs will develop this skill to optimize or revenue manage access and pricing to rewards. In other words, you need to have a strategy that determines who gets access to what flight rewards at what price, and basically make sure that that's done in a in a smart way. So your best members get the best value. And yes, there is a role to be played for non-air because it can bring down cost per point, as well as act as a release mechanism for built up pressure.

    "The other thing that I think it's important to mention as well, is that I think we're going to see increased regulation and legislation around loyalty programs, specifically in Europe. I think frequent flyer programs, that name itself, is enough to attract a lot of attention in the very near future. And I suspect that more and more regulators and legislators will turn their attention to it. I think it's inevitable, and it's up to the industry to come up with an appropriate response that makes sense for all involved stakeholders."

    Gabi: "I think another potential headwind to be mindful of, is the continued pressure on interchange remains a risk for the frequent flyer business model. So again, diversification, or by focusing on tapping into, for example, online commerce might be an appropriate strategy.

    "To wrap up this call, I would urge everybody to reimagine what the future could look like, taking all of these macro factors into play, but also making sure that the FFP department is truly positioned and enabled to function as a real marketing company for its partners within the airline ecosystem. I think that's a key takeaway for from my side, talking to a lot of FFP managers lately.”

  • The Loylogic Podcast - How banks can unlock the multiple benefits of loyalty programs

    Bank loyalty programs are crucial business tools that can drive customer engagement and revenue, and also enhance customer lifetime value. Yet, there remains masses of untapped potential for banks to exploit, especially around the use of data and personalization.

    For this episode of the Loylogic Podcast, we are joined by Paul Wallis, Director of Growth at Epsilon, to explore the benefits that loyalty and rewards programs – when done well – can deliver for banks and how program leaders can overcome the challenges of delivering effective whole bank loyalty programs.

    Key topics discussed include:

    1. Bank loyalty programs today (2:05 to 8:10)

    • Why bank loyalty is still in its infancy, the need for much greater personalization in loyalty and rewards, especially given the huge volume of data banks posses.
    • Global trends in banking and why this is driving the ever-greater need for effective loyalty programs.
    • What the best bank loyalty programs have in common.

    2. Attracting and retaining customers with loyalty programs (8:11 to 15:42)

    • How banks – or any financial institution for that matter – can ensure they’re developing the right loyalty program strategy for their business to meet customer demand for innovative loyalty schemes.
    • Overcoming the main operational challenges brands face while executing their loyalty programmes.
    • The big talking point…data…and why effective use of the information that banks hold on their customers is the best way forward for any loyalty platform to power engagement.
    • How does this effective use of data play into the cost centre vs revenue generation debate?

    3. Bank loyalty programs in UAE & Saudi Arabia (15:43 to 19:48)

    • How global trends in bank loyalty are playing out across UAE and the Kingdom of Saudi Arabia
    • The region-specific factors loyalty program managers need to consider while implementing loyalty programs in the region.
    • The regulations, issues and requirements loyalty program managers need to consider when implementing loyalty programs in this region.

    Listen now...or read below

    The podcast can be enjoyed here, or by heading to the Loylogic Podcast channels on SpotifyApple Podcasts and wherever else you listen to your favourite shows. A transcription of this latest epiosde can also be found below.

    (2:05): How are banks across the world currently using loyalty programs as a strategic tool to drive success?

    From what I see, I think bank loyalty is in its relative infancy. And I see that across the world, not just in the Middle East. When I see the amount of data a bank has about me, it knows my spending habits, it knows an awful lot more than most people do, probably than my family, I still see that I'm not receiving personalized offers, and rewards live statically on web pages. I don't see that engagement yet.

    Typically, I'm not changing my bank every week. I've got this automatic loyalty there. And I think there's a real opportunity for banks to tap into that loyalty and be able to cross-sell and upsell me lots of different things. I never understand why I've got my current account in one place, I've got a car loan somewhere else, a mortgage with somebody else. I think, if banks get it right, there's a real opportunity.

    I feel that some banks are doing a particularly good job, but then there are others that really need to play catch up. When I've spoken to people, they've got their own challenges internally, but I do think if you can break those internal challenges, there's a really good opportunity for the banking world.

    (4:04): I guess what you're saying there is all the more important given that the banking landscape has changed dramatically since COVID. What are the global trends that are really driving the need for loyalty?

    Obviously COVID drove the change towards digital banking. And then of course, because everything's going digital, fintechs are seeing opportunities to offer more user-friendly banking. Then we've got the open banking adoption coming in. So, you're seeing a lot more use of data, data and AI, to reduce fraud and improve customer experience. You've got new asset classes coming into the business as trends to explore and the blockchain and crypto central banks are exploring digital currency to make transacting more efficient, as well.

    I think all of these trends are really dramatically changing the banking from a physical, quite slow process with expensive charges, to ones where banks are really going to need to be sharp in terms of what they offer to their customers to retain their business.

    (5:25): That makes sense, and therefore, are we seeing more banks turning to loyalty programs? And if so, what benefits are they hoping to extract from them?

    For me, whenever I've done banking loyalty programs in the past, or some sort of reward platform, the key drivers have been banks always wanting more transactions, and obviously being able to gain from cross border FX when people are traveling. But really, when I talk to banks now around loyalty, they're looking for better retention, and they're looking for more engagement with their customers.

    Key to that is the ability to cross-sell other banking products, it's not just about running a current account anymore, really, the bank should be able to own the household finance. We see the super apps coming along as well to also disrupt that business, simple buy now, pay later, modules that plug into shopping platforms are all taking away from these banks. I think, if banks can control it from the data that they have, again, I think that's one of the reasons they can turn to loyalty programs. I for one don't need to sign up as my bank has already got me as a customer. It'd be very easy to switch me on to my bank to be loyal if there was another incentive there.

    (6:47) So we're talking very much about kind of whole of bank loyalty here? And are there any examples of banks who are doing this well?

    Looking around, I think I've seen a few examples of where loyalty is used quite well in the banking industry. One of them is Citibank, and the other one is JP Morgan. They kind of have a fairly common practice, but it seems to be working well for those guys. Their rewards enable points earning across a range of banking services, which can be turned into cash or redeemed at participating merchants. It's quite simple and straightforward, but of course, you're earning points whenever you do something at the bank, which can be exchanged into real money. So, I think as a start point, what those guys are doing is really good.

    I think Citibank, when I last checked, they've got 23 million members on their rewards platform across the world. Of course, it's in multiple locations and of course, it's a large base of people. But 23 million people enjoying the platform is not to be sniffed at. And then moving from there, I think you can bring a lot more of the new technologies in to drive loyalty even further, but I like what they're doing as a start point, they're doing some good stuff.

    (8:11): That leads us nicely on to the kind of next chapter it really of today's discussion. And I'll start by kind of sharing that the findings of a KPMG study that reported that 61% of customers found it extremely important or very important for their bank to focus on coming up with more innovative ways of rewarding loyal customers. Given this, how can banks or any financial institution or brand for that matter, ensure they're developing the right loyalty program strategy for their business?

    Again, it comes down to the fact that they're blessed with data if they want to make their rewards for their loyal customers truly rewarding. They know for me, if they look at my profile, I like cars, I like golf. If they just offered me those things, I would do as much as I could, in order to make my lifestyle more fun, more enjoyable.

    I was talking to a couple of the card issuers and they're going down the experiential route, in terms of what they want to offer for their customers and, and there's a whole big piece around money can't buy rewards. Some of the banks and financial institutions sponsor big events, so they can get you into places. I think Marriott do it quite well with their Bonvoy reward platform. You can go to see Manchester United play or the Formula One.

    I think banks need to really focus on doing things that are ultra personal to the individual, but also bring in some of the experiential stuff. They've got these massive sponsorship deals around the world and so can leverage their relationships to provide some of their customers with true money can't buy experiences. I think that's where that's where they should be going, and they can really win from that type of customer engagement.

    (10:04) I think you could probably argue that people would pay you to go and watch Man United at the moment! Moving swiftly on, what are the main operational challenges that the brands face while executing their loyalty programs?

    For me, the competitive landscape of loyalty now is crazy. Everywhere you go, there's a loyalty platform or some scheme in place, whether it be at brand level, bank level, or shopping mall level, and people get confused. They've got points going all over the place, they've got app fatigue, as well. With all of this confusion in the actual sort of loyalty marketplace, engagement becomes difficult. And then, of course, all of these other challenges around the data management, the tech integration, the education of the team, building personalization, communication, running costs of the business, potential fraud, fraudulent activities, they exist on platforms. There are heaps of operational challenges, and loyalty shouldn't be taken on lightly, because you're trying to build that relationship with a customer over the long term.

    So, whenever you enter into the space, you've got to do it right. Otherwise, it can take years to recover from these things. It's a big thing to embark on, if you're going to do it properly. And often, people miss out those things, going for the simplest way, if somebody downloads, I'll give them a simple reward per transaction and things like that. Loyalty needs to be really well thought through and driven, with the right strategy built at the front end of what people want to achieve, what KPIs they need to measure against, in order to build the platform.

    (12:14): I want to pick up on one of one of the areas that you've mentioned there, which is data. Data management is a hot topic, so how can any loyalty program manager ensure that the data has been managed in the right way?

    As we move forwards in the world, I think as we see cookie deprecation, and all of these things, and the influx of Web3, and things like that, data is going to become more in the control of the individual, as opposed to just being used across the board by anyone and everyone. Data control, coming back into the hands of the individual, will be a good thing.

    And then I think it will be down to the brands to ensure that they're able to build a trusting relationship with their clients, that clients will hand over their data to them, because they know the brand or institution that they're dealing with is actually giving them value back. Where I work now in Epsilon, we truly believe in value-led loyalty as a way forward. And of course, that includes Data Trust, as well as one of those things.

    (13:30): Taking that to the next stage, the ability to deliver those personalized golden moments through rewards, helps to build that trust and show that it's an intelligent use of data?

    Exactly, yes. If you personalize properly, you'll be receiving things that are relevant to you, and not just receiving emails and pressing delete. Brands spend a lot of money sending out hundreds or thousands of emails and to have 2% open rates. It doesn't it doesn't make any sense, right? It's just a waste of everybody's time. So as soon as this can happen, I believe that better for everybody.

    (14:09): The next question on data is how does the effective use of data play into the whole cost center versus revenue generation debate?

    If you get your data strategy right, and I'd always encourage people before they embark on loyalty to ensure that they've first got the data part right, their data pools under control, if you wish, because so many times people will start trying to build programs using fragmented data, and it creates all sorts of headaches. So, even before you start to do your loyalty strategy, it's always good to get your house of data in order if you wish.

    But, of course, there's an upfront cost associated with building your data strategy. But once you've got it, there's plenty of ways in which you can start building in monetization off the back of the of the data, and that's both from an internal efficiency perspective, based on the insights that you have known how to adapt the program, knowing what type of rewards to do, and then being able to use that data to the benefit of the customers. And then, you've got a pool for the cross-sell and upsell of the business, which then is a contributing factor to the ROI of your loyalty program.

    Loyalty is not built overnight. So those ROI calculations need to stretch over, you know, a good three years, but good loyalty programs will run into multiple years of engagement, if done well and data is used correctly, of course.

    (15:43): So, Paul, you have extensive experience of delivering successful loyalty programs in markets such as the UAE and Saudi Arabia and I want to focus on that region for a few minutes. How are global trends in bank loyalty playing out across the region? And is there a move towards loyalty program adoption?

    There is. Publicis acquired the Epsilon platform in 2019, came to the UAE, really, in 2020, and since we've seen a huge increase in enquiries for loyalty programs in the financial sector. Typically, before, it was very heavily driven on retail. But now we're seeing a move away with banks from a traditional 'just give him rewards' to actual loyalty. That goes across most of the region, and especially in the Kingdom, where there's a lot of growth accelerating. UAE has been fairly stable for a long time. But that being said, there's a lot of digital banks that have come in as well. So yeah, there's lots of new and exciting opportunities across the region.

    (17:00): What are the local trends and opportunities?

    On the large scale, we're seeing huge trends in digital transformation. This has taken a massive hold in most of the regions, and certainly from the consultative side of the business. They're driving forwards a lot. And people want to transform with super apps, they want to bring in fintechs to their business. They want to do so many things, Web3, there's so many new digital initiatives. On a country level, they're embracing digital transformation as well. And to that extent, you know, personalization is becoming very important.

    It's really interesting to look at the mix of people in a region like Dubai, or the change in population demographics. In Saudi, 65% of the population that are Gen Z. So, you've got a very young audience, digital savvy, and they want things like gamification and Web3. In the region, everybody loves exclusive rewards, the VIP treatment and all of those things, but then we have to bear in mind that we need to keep it aligned with Sharia compliance, and Islamic finance and things like that. We have all these different cultural pockets that we need to be respectful of, but the trends are there, the mobile wallet integrations, AI and chatbots etc. It's really exciting. And you know, of course, we've got an audience that's wanting to embrace the technology changes.

    (18:48): Excellent. So where do you see the future of bank loyalty across the region?

    I think we'll see some of the best loyalty programs come out. There are some pretty unique things in regions here, where you see families that own multiple businesses, so shopping malls, car dealers, banks, everything, real estate, all falls under one umbrella, you know, whilst their individual brands and P&L is on their own. Ultimately, they report up into big family conglomerates. They're in a unique position to create apps that go across or touch all different parts of people's lives. So, from there, they're able to build ultimate loyalty. And if they do it well. they'll keep customers within their ecosystem. If I was one of those companies, I'd really be embracing what I could do with loyalty.

    (19:49): To conclude our discussion, what key takeaways can you share that would provide bank loyalty program managers the best insights from what we've discussed today?

    From my perspective, there's a shortlist. I like to think of it as bullet points. So, the first thing when you come to the region, and you get involved in loyalty, cultural sensitivity, important understanding of all the local regulations, because they differ by country, although you might be doing Middle East wide programs.

    Localization is the key, being able to localize like in the television industry. I refer to that because I used to work in it. But when I see the international platforms that come here, versus the local platforms that have set up, the local platforms are doing and performing better, because it's localized content. And people like to work in places they're familiar with. Then there's the personalization, ensuring everybody has a unique tailored experience. Data security, payment, diversity, collaboration with partners. You're not just in one ecosystem, you're able to use your points as a currency in in many partners. Exceptional customer service and feedback is critical. And of course, keeping an eye on the competition.

    For me, in summary, when I talk about loyalty, especially under the Epsilon umbrella, our remit is that we always want to capture a share of a customer's heart, a share of mind, and of course, a share of wallet. And we think if we can capture those three things, we can build the best loyalty programs.

  • The Loylogic Podcast - How banks can unlock the multiple benefits of loyalty programs

    Bank loyalty programs are crucial business tools that can drive customer engagement and revenue, and also enhance customer lifetime value. Yet, there remains masses of untapped potential for banks to exploit, especially around the use of data and personalization.

    For this episode of the Loylogic Podcast, we are joined by Paul Wallis, Director of Growth at Epsilon, to explore the benefits that loyalty and rewards programs – when done well – can deliver for banks and how program leaders can overcome the challenges of delivering effective whole bank loyalty programs.

    Key topics discussed include:

    1. Bank loyalty programs today (2:05 to 8:10)

    • Why bank loyalty is still in its infancy, the need for much greater personalization in loyalty and rewards, especially given the huge volume of data banks posses.
    • Global trends in banking and why this is driving the ever-greater need for effective loyalty programs.
    • What the best bank loyalty programs have in common.

    2. Attracting and retaining customers with loyalty programs (8:11 to 15:42)

    • How banks – or any financial institution for that matter – can ensure they’re developing the right loyalty program strategy for their business to meet customer demand for innovative loyalty schemes.
    • Overcoming the main operational challenges brands face while executing their loyalty programmes.
    • The big talking point…data…and why effective use of the information that banks hold on their customers is the best way forward for any loyalty platform to power engagement.
    • How does this effective use of data play into the cost centre vs revenue generation debate?

    3. Bank loyalty programs in UAE & Saudi Arabia (15:43 to 19:48)

    • How global trends in bank loyalty are playing out across UAE and the Kingdom of Saudi Arabia
    • The region-specific factors loyalty program managers need to consider while implementing loyalty programs in the region.
    • The regulations, issues and requirements loyalty program managers need to consider when implementing loyalty programs in this region.

    Listen now...or read below

    The podcast can be enjoyed here, or by heading to the Loylogic Podcast channels on SpotifyApple Podcasts and wherever else you listen to your favourite shows. A transcription of this latest epiosde can also be found below.

    (2:05): How are banks across the world currently using loyalty programs as a strategic tool to drive success?

    From what I see, I think bank loyalty is in its relative infancy. And I see that across the world, not just in the Middle East. When I see the amount of data a bank has about me, it knows my spending habits, it knows an awful lot more than most people do, probably than my family, I still see that I'm not receiving personalized offers, and rewards live statically on web pages. I don't see that engagement yet.

    Typically, I'm not changing my bank every week. I've got this automatic loyalty there. And I think there's a real opportunity for banks to tap into that loyalty and be able to cross-sell and upsell me lots of different things. I never understand why I've got my current account in one place, I've got a car loan somewhere else, a mortgage with somebody else. I think, if banks get it right, there's a real opportunity.

    I feel that some banks are doing a particularly good job, but then there are others that really need to play catch up. When I've spoken to people, they've got their own challenges internally, but I do think if you can break those internal challenges, there's a really good opportunity for the banking world.

    (4:04): I guess what you're saying there is all the more important given that the banking landscape has changed dramatically since COVID. What are the global trends that are really driving the need for loyalty?

    Obviously COVID drove the change towards digital banking. And then of course, because everything's going digital, fintechs are seeing opportunities to offer more user-friendly banking. Then we've got the open banking adoption coming in. So, you're seeing a lot more use of data, data and AI, to reduce fraud and improve customer experience. You've got new asset classes coming into the business as trends to explore and the blockchain and crypto central banks are exploring digital currency to make transacting more efficient, as well.

    I think all of these trends are really dramatically changing the banking from a physical, quite slow process with expensive charges, to ones where banks are really going to need to be sharp in terms of what they offer to their customers to retain their business.

    (5:25): That makes sense, and therefore, are we seeing more banks turning to loyalty programs? And if so, what benefits are they hoping to extract from them?

    For me, whenever I've done banking loyalty programs in the past, or some sort of reward platform, the key drivers have been banks always wanting more transactions, and obviously being able to gain from cross border FX when people are traveling. But really, when I talk to banks now around loyalty, they're looking for better retention, and they're looking for more engagement with their customers.

    Key to that is the ability to cross-sell other banking products, it's not just about running a current account anymore, really, the bank should be able to own the household finance. We see the super apps coming along as well to also disrupt that business, simple buy now, pay later, modules that plug into shopping platforms are all taking away from these banks. I think, if banks can control it from the data that they have, again, I think that's one of the reasons they can turn to loyalty programs. I for one don't need to sign up as my bank has already got me as a customer. It'd be very easy to switch me on to my bank to be loyal if there was another incentive there.

    (6:47) So we're talking very much about kind of whole of bank loyalty here? And are there any examples of banks who are doing this well?

    Looking around, I think I've seen a few examples of where loyalty is used quite well in the banking industry. One of them is Citibank, and the other one is JP Morgan. They kind of have a fairly common practice, but it seems to be working well for those guys. Their rewards enable points earning across a range of banking services, which can be turned into cash or redeemed at participating merchants. It's quite simple and straightforward, but of course, you're earning points whenever you do something at the bank, which can be exchanged into real money. So, I think as a start point, what those guys are doing is really good.

    I think Citibank, when I last checked, they've got 23 million members on their rewards platform across the world. Of course, it's in multiple locations and of course, it's a large base of people. But 23 million people enjoying the platform is not to be sniffed at. And then moving from there, I think you can bring a lot more of the new technologies in to drive loyalty even further, but I like what they're doing as a start point, they're doing some good stuff.

    (8:11): That leads us nicely on to the kind of next chapter it really of today's discussion. And I'll start by kind of sharing that the findings of a KPMG study that reported that 61% of customers found it extremely important or very important for their bank to focus on coming up with more innovative ways of rewarding loyal customers. Given this, how can banks or any financial institution or brand for that matter, ensure they're developing the right loyalty program strategy for their business?

    Again, it comes down to the fact that they're blessed with data if they want to make their rewards for their loyal customers truly rewarding. They know for me, if they look at my profile, I like cars, I like golf. If they just offered me those things, I would do as much as I could, in order to make my lifestyle more fun, more enjoyable.

    I was talking to a couple of the card issuers and they're going down the experiential route, in terms of what they want to offer for their customers and, and there's a whole big piece around money can't buy rewards. Some of the banks and financial institutions sponsor big events, so they can get you into places. I think Marriott do it quite well with their Bonvoy reward platform. You can go to see Manchester United play or the Formula One.

    I think banks need to really focus on doing things that are ultra personal to the individual, but also bring in some of the experiential stuff. They've got these massive sponsorship deals around the world and so can leverage their relationships to provide some of their customers with true money can't buy experiences. I think that's where that's where they should be going, and they can really win from that type of customer engagement.

    (10:04) I think you could probably argue that people would pay you to go and watch Man United at the moment! Moving swiftly on, what are the main operational challenges that the brands face while executing their loyalty programs?

    For me, the competitive landscape of loyalty now is crazy. Everywhere you go, there's a loyalty platform or some scheme in place, whether it be at brand level, bank level, or shopping mall level, and people get confused. They've got points going all over the place, they've got app fatigue, as well. With all of this confusion in the actual sort of loyalty marketplace, engagement becomes difficult. And then, of course, all of these other challenges around the data management, the tech integration, the education of the team, building personalization, communication, running costs of the business, potential fraud, fraudulent activities, they exist on platforms. There are heaps of operational challenges, and loyalty shouldn't be taken on lightly, because you're trying to build that relationship with a customer over the long term.

    So, whenever you enter into the space, you've got to do it right. Otherwise, it can take years to recover from these things. It's a big thing to embark on, if you're going to do it properly. And often, people miss out those things, going for the simplest way, if somebody downloads, I'll give them a simple reward per transaction and things like that. Loyalty needs to be really well thought through and driven, with the right strategy built at the front end of what people want to achieve, what KPIs they need to measure against, in order to build the platform.

    (12:14): I want to pick up on one of one of the areas that you've mentioned there, which is data. Data management is a hot topic, so how can any loyalty program manager ensure that the data has been managed in the right way?

    As we move forwards in the world, I think as we see cookie deprecation, and all of these things, and the influx of Web3, and things like that, data is going to become more in the control of the individual, as opposed to just being used across the board by anyone and everyone. Data control, coming back into the hands of the individual, will be a good thing.

    And then I think it will be down to the brands to ensure that they're able to build a trusting relationship with their clients, that clients will hand over their data to them, because they know the brand or institution that they're dealing with is actually giving them value back. Where I work now in Epsilon, we truly believe in value-led loyalty as a way forward. And of course, that includes Data Trust, as well as one of those things.

    (13:30): Taking that to the next stage, the ability to deliver those personalized golden moments through rewards, helps to build that trust and show that it's an intelligent use of data?

    Exactly, yes. If you personalize properly, you'll be receiving things that are relevant to you, and not just receiving emails and pressing delete. Brands spend a lot of money sending out hundreds or thousands of emails and to have 2% open rates. It doesn't it doesn't make any sense, right? It's just a waste of everybody's time. So as soon as this can happen, I believe that better for everybody.

    (14:09): The next question on data is how does the effective use of data play into the whole cost center versus revenue generation debate?

    If you get your data strategy right, and I'd always encourage people before they embark on loyalty to ensure that they've first got the data part right, their data pools under control, if you wish, because so many times people will start trying to build programs using fragmented data, and it creates all sorts of headaches. So, even before you start to do your loyalty strategy, it's always good to get your house of data in order if you wish.

    But, of course, there's an upfront cost associated with building your data strategy. But once you've got it, there's plenty of ways in which you can start building in monetization off the back of the of the data, and that's both from an internal efficiency perspective, based on the insights that you have known how to adapt the program, knowing what type of rewards to do, and then being able to use that data to the benefit of the customers. And then, you've got a pool for the cross-sell and upsell of the business, which then is a contributing factor to the ROI of your loyalty program.

    Loyalty is not built overnight. So those ROI calculations need to stretch over, you know, a good three years, but good loyalty programs will run into multiple years of engagement, if done well and data is used correctly, of course.

    (15:43): So, Paul, you have extensive experience of delivering successful loyalty programs in markets such as the UAE and Saudi Arabia and I want to focus on that region for a few minutes. How are global trends in bank loyalty playing out across the region? And is there a move towards loyalty program adoption?

    There is. Publicis acquired the Epsilon platform in 2019, came to the UAE, really, in 2020, and since we've seen a huge increase in enquiries for loyalty programs in the financial sector. Typically, before, it was very heavily driven on retail. But now we're seeing a move away with banks from a traditional 'just give him rewards' to actual loyalty. That goes across most of the region, and especially in the Kingdom, where there's a lot of growth accelerating. UAE has been fairly stable for a long time. But that being said, there's a lot of digital banks that have come in as well. So yeah, there's lots of new and exciting opportunities across the region.

    (17:00): What are the local trends and opportunities?

    On the large scale, we're seeing huge trends in digital transformation. This has taken a massive hold in most of the regions, and certainly from the consultative side of the business. They're driving forwards a lot. And people want to transform with super apps, they want to bring in fintechs to their business. They want to do so many things, Web3, there's so many new digital initiatives. On a country level, they're embracing digital transformation as well. And to that extent, you know, personalization is becoming very important.

    It's really interesting to look at the mix of people in a region like Dubai, or the change in population demographics. In Saudi, 65% of the population that are Gen Z. So, you've got a very young audience, digital savvy, and they want things like gamification and Web3. In the region, everybody loves exclusive rewards, the VIP treatment and all of those things, but then we have to bear in mind that we need to keep it aligned with Sharia compliance, and Islamic finance and things like that. We have all these different cultural pockets that we need to be respectful of, but the trends are there, the mobile wallet integrations, AI and chatbots etc. It's really exciting. And you know, of course, we've got an audience that's wanting to embrace the technology changes.

    (18:48): Excellent. So where do you see the future of bank loyalty across the region?

    I think we'll see some of the best loyalty programs come out. There are some pretty unique things in regions here, where you see families that own multiple businesses, so shopping malls, car dealers, banks, everything, real estate, all falls under one umbrella, you know, whilst their individual brands and P&L is on their own. Ultimately, they report up into big family conglomerates. They're in a unique position to create apps that go across or touch all different parts of people's lives. So, from there, they're able to build ultimate loyalty. And if they do it well. they'll keep customers within their ecosystem. If I was one of those companies, I'd really be embracing what I could do with loyalty.

    (19:49): To conclude our discussion, what key takeaways can you share that would provide bank loyalty program managers the best insights from what we've discussed today?

    From my perspective, there's a shortlist. I like to think of it as bullet points. So, the first thing when you come to the region, and you get involved in loyalty, cultural sensitivity, important understanding of all the local regulations, because they differ by country, although you might be doing Middle East wide programs.

    Localization is the key, being able to localize like in the television industry. I refer to that because I used to work in it. But when I see the international platforms that come here, versus the local platforms that have set up, the local platforms are doing and performing better, because it's localized content. And people like to work in places they're familiar with. Then there's the personalization, ensuring everybody has a unique tailored experience. Data security, payment, diversity, collaboration with partners. You're not just in one ecosystem, you're able to use your points as a currency in in many partners. Exceptional customer service and feedback is critical. And of course, keeping an eye on the competition.

    For me, in summary, when I talk about loyalty, especially under the Epsilon umbrella, our remit is that we always want to capture a share of a customer's heart, a share of mind, and of course, a share of wallet. And we think if we can capture those three things, we can build the best loyalty programs.

  • The Loylogic Podcast - From Risk to Opportunity: Empowering Loyalty Program Directors to Demonstrate Program Value

    In today's challenging economic environment, loyalty programs have become a crucial tool for businesses to engage customers, drive revenue and enhance customer lifetime value (CLV). However, loyalty program owners often face a significant challenge in managing program costs, particularly the cost of rewards which is typically their largest expense and heavily scrutinized.

    In this episode of the Loylogic Podcast, we're joined by Rob Clements, Lead Consultant at Loylogic, to discuss how loyalty program owners can use rewards as an opportunity, not a risk. Chapters and key topics include:

    1. Managing risk and profitability(01:41 to 04:43)

    - The guiding principles that should we be using to establish a budget for rewards and how to strike a balance between incentivizing customers and maintaining a solid bottom line.

    - As loyalty programs evolve and costs fluctuate, we look at how program owners can stay one step ahead and effectively anticipate these changes and safeguard against unexpected financial challenges.

    2. Rewards, redemption and resource management(04:43 to 11:54)

    - Redemption rates of loyalty points or miles can have a significant impact on a program's finances. How can program owners forecast these rates accurately and control them strategically? Can you share some insights on maintaining the equilibrium between customer satisfaction and business viability?"

    - The liability associated with loyalty points and miles and how program owners can effectively manage this while ensuring that the program remains appealing to the customers.

    - How various types of rewards might offer different levels of cost-effectiveness and strategies for allocating resources optimally across diverse reward types.

    3. Metrics and program management(11:54 to 14:12)

    - The key metrics or KPIs that program owners should focus on to effectively evaluate the financial performance of their loyalty program

    - How these metrics should be interpreted to make informed decisions about the program's future direction.

    Listen now...or read below

    The podcast can be enjoyed here, or by heading to the Loylogic Podcast channels on Spotify, Apple Podcasts and wherever else you listen to your favourite shows. A transcription of this latest epiosde can also be found below.



    (1:41): When thinking about the financial blueprints of a loyalty program, what guiding principles should we be using to establish a budget for awards? And how do you strike a balance between incentivizing customers and maintaining a solid bottom line?

    That is a really cutting question that I think touches right at the core of loyalty program management. When setting a budget for awards, you need to try shifting your perspective and view it more as an investment rather than merely an expense.

    Looking at the top loyalty programs, they're allocating a substantial part of their revenue, sometimes up to 15%, for rewards. And it might seem a bit high. But if you can share the value of those investments to your business, it can be actually quite a logical decision.

    If we look at some of the more lagging programs, often they're struggling to allocate their budgets. And that often means they're not really seeing the right results and sometimes deliver a really poor rewards experience. So although that approach may save some money in the short term, it really does risk losing customers and losing that engagement. So, ultimately, the aim is to strike a perfect balance between incentivizing your customers and making a robust bottom line.

    (2:43): In order to achieve that perfect balance, there's always going to be an issue where costs fluctuate, especially as programs evolve. So how can program owners stay one step ahead and effectively anticipate these changes? We'd all love to have a crystal ball, ultimately, at the end of the day, but what strategies have you seen that help to safeguard against unexpected financial challenges?

    You've touched on an essential aspect of how you manage a program and that's around the adaptability. So often, as programs evolve and grow, costs inevitably fluctuate. But the key really is managing these changes. And that really lies in understanding how that program is performing, understanding the financial forecasts, and any of those scenarios that you need to plan for. So often, it's the crucial part of the financial planning.

    Looking at leading programs, again, I think you can see that they're the ones conducting rigorous financial forecasting and scenario analysis, they're really able to anticipate those costs. And it's really some of the average and lagging programs that fail to have a more structured approach to that, which really means that they're unable to project their costs out into year two, year three and beyond.

    That lack of financial stability really limits their adaptability for the program and means that they're not really looking at it as an investment, but very much as a cost. They're not able to say, well, if I put this amount of funding behind it, we can expect this sort of return.

    (4:08): How far ahead can programs predict? How far ahead should they be looking?

    I think there are a few different horizons that you may want to look at, depending on exactly the maturity of your program. I think a good a good idea would be looking at the profitability maybe of your customers over a two year timeframe. But possibly, you know, you may want to take a wider lens, if you know that there are more technical costs that need to be incorporated. So possibly a five year view may be better.

    (4:41): The redemption rates of loyalty points or miles can clearly have a significant impact on a program's finances. So as a program owner, how would you recommend they forecast these rates accurately and control them strategically?

    Redemption rates can be a bit of a challenging aspect within the program. Often, program managers and program directors really want to see their customers redeeming, but maybe other parts of the business see that purely as a cost. So there are certainly financial implications there. But without redemption costs, you're not really going to be seeing that customer satisfaction, you're not really going to see them engaging in the program.

    Ultimately, I think that if you can prove the link between redemptions and the future value of those customers, and how that levels up to your overall program, then businesses are really viewing those redemptions as a good sign of a healthy program. And not just a cost.

    (5:37): You mentioned leading programs there. What are the leading programs doing to maintain the equilibrium between satisfaction and business viability?

    I think it starts with the data, I think you have an accurate understanding of how your customers are behaving, and understanding of how you can forecast those redemption trends, and certain predictive tools that are really able to guide your strategy. But, of course, you need to make sure you're engaging those members, and using your personalization capabilities, using your media in ways that really engage your customers.

    Of course, you can't do that in isolation. I think you need to keep a really close eye on your program, and understand any of those changes. So, if your customers are maybe finding certain redemption options more attractive, or maybe they're, you know, moving into new markets, different redemption ranges become important.

    (6:36): I apologize in advance for this. But I've got to bring up the elephant in the room, which is the liability associated with loyalty points in miles. Now, how can a program owner effectively manage this while ensuring the program remains appealing to customers, which ultimately is kind of what they live and die on?

    Yeah, it's really good you brought this up. I think, frankly, it's one of the aspects that businesses overlook, and they don't really understand it until it becomes a problem. The opportunity for programs is to be more proactive. Probably behavior is more reactive at the moment, I think. The leading programs really understand that it's something that needs to be managed actively. And it's not something that is going to work out well for the for the business if it's not really proactively managed.

    Some of these leading programs are using actuarial models, and employing robust forecasting techniques, that really gives them the ability to understand their liability today, and also what they expect it to be in the future. Often those liabilities can be understated, sometimes they can be overstated. And both of those can represent real challenges for businesses.

    (7:45): Is this where smart cost per point management comes into play?

    I think that's a really important weapon in the arsenal of programs. Understanding that by taking an active view on what the average cost per point is, they can look to lower it over time, which ultimately drops more profit to the bottom line.

    (8:04): What advice would you give to a program director when it comes to optimizing costs without negatively affecting the customer proposition? What are the trade-offs to consider? How do they strike the right balance?

    It's absolutely striking the right balance, it's making sure that you're delivering value for customers. And that balance with a cost really makes it more of an art for program managers. They need to understand that it's something that you can't really compromise for customers. It's really important to get that balance, right, in terms of the cost invested. And I think, if you're looking at some of the weaker programs out there, they're more likely to overlook the importance of cost optimization. They've probably had a budget that's been in place for years on end. And a manager just signs that off, and does that every year.

    What we tend to see is those programs missing the opportunity, because they're not really looking at what would their program would be like if they increased their budget. And not really understanding what the profit opportunity would be for making some of the cost savings as well.

    (9:19): To make those necessary changes, do you need a mindset shift?

    Yeah, it's about providing the best value for your customers, but also about recognizing that reward budget is an opportunity for investment. It's an opportunity to drive deeper loyalty for your customers and an opportunity to drive greater profit for your program, but also maybe optimize certain elements in the program that you haven't looked at for, you know, maybe up to the last five years.

    (9:52): Within the constraints of a budget, various types of rewards might offer different levels of cost effectiveness. How should program managers assess and compare these?

    Reward cost effectiveness is an essential factor. I think it's about providing value for your customers. Without overstepping that budget, I think customers really want more and more over time and I think programs have felt the pressure of needing to cut back. And really the only strategy that has been working for those programs is A/B testing for the rewards, getting that customer feedback, and seeing where there's an opportunity to leverage data to optimize rewards, which ultimately leads to the larger bang for buck.

    (10:39): We talk a lot about golden reward moments and diverse reward types. So how does that come into play here? How are the leading programs that you talk about devising strategies to maximize the potential of both global and local reward types?

    It starts with understanding what rewards your customers are going to be most interested in. Programs are able to access better data now than they were before. Understanding what those members want is not quite the challenge it used to be. The challenge now is how do they get it to those members at a price that the program's happy with, and the price that maybe the wider businesses is happy with, as well.

    I think you need to look rewards sourcing operations, you also need to look at the types of product ranges that maybe have margins that are more attractive for your business, and bringing that all together, to really ensure that on one side, you're driving that customer satisfaction. But on the other side, you're also ensuring the long term sustainability of your program.

    (11:49): In your opinion, given everything that you've said, what are the key metrics or KPIs that program owners should focus on to effectively evaluate the financial performance of their program?

    It's a really good question. I'm not sure there's ever one magic metric out there. I think certainly, depending on the industry you're in, and maybe depending on the education and loyalty that you've had, you may gravitate towards one more than the other. But I think you can probably handpick a few that are the ones that are going to drive you in the right direction. And one that's very common is understanding the revenue per member. It's vital to understand the customer lifetime value (CLV) of a member, understanding how profitable those customers are going to be across a period of time. And, of course, understanding that your program is an asset. Understanding the level of profitability of that program, the total level is really something that you can use to strategically guide the business.

    (12:54): To wrap up this episode, could you summarize our discussion or provide listeners with a few key takeaways?

    At the heart of a successful program is considering the reward budget as a deliberate investment designed to nurture customer relationships, but at the same time aligning that with business strategy, making sure that you're staying nimble and adjusting to any trends. So if there are any changes in the environment, you're able to safeguard your loyalty program, and ensure you're meeting those new and emerging trends.

    As well as that, optimizing your award budget, not necessarily thinking that the amount that you had last year is going to be suitable for this year, is key. Really being proactive and understanding that for each dollar that's invested, what the return is, so you're really maximizing that opportunity. Above all that, it means looking at your global loyalty program as a strategic asset, and not merely as a as a cost center.

  • The Loylogic Podcast - From Risk to Opportunity: Empowering Loyalty Program Directors to Demonstrate Program Value

    In today's challenging economic environment, loyalty programs have become a crucial tool for businesses to engage customers, drive revenue and enhance customer lifetime value (CLV). However, loyalty program owners often face a significant challenge in managing program costs, particularly the cost of rewards which is typically their largest expense and heavily scrutinized.

    In this episode of the Loylogic Podcast, we're joined by Rob Clements, Lead Consultant at Loylogic, to discuss how loyalty program owners can use rewards as an opportunity, not a risk. Chapters and key topics include:

    1. Managing risk and profitability(01:41 to 04:43)

    - The guiding principles that should we be using to establish a budget for rewards and how to strike a balance between incentivizing customers and maintaining a solid bottom line.

    - As loyalty programs evolve and costs fluctuate, we look at how program owners can stay one step ahead and effectively anticipate these changes and safeguard against unexpected financial challenges.

    2. Rewards, redemption and resource management(04:43 to 11:54)

    - Redemption rates of loyalty points or miles can have a significant impact on a program's finances. How can program owners forecast these rates accurately and control them strategically? Can you share some insights on maintaining the equilibrium between customer satisfaction and business viability?"

    - The liability associated with loyalty points and miles and how program owners can effectively manage this while ensuring that the program remains appealing to the customers.

    - How various types of rewards might offer different levels of cost-effectiveness and strategies for allocating resources optimally across diverse reward types.

    3. Metrics and program management(11:54 to 14:12)

    - The key metrics or KPIs that program owners should focus on to effectively evaluate the financial performance of their loyalty program

    - How these metrics should be interpreted to make informed decisions about the program's future direction.

    Listen now...or read below

    The podcast can be enjoyed here, or by heading to the Loylogic Podcast channels on Spotify, Apple Podcasts and wherever else you listen to your favourite shows. A transcription of this latest epiosde can also be found below.


     
     

    (1:41): When thinking about the financial blueprints of a loyalty program, what guiding principles should we be using to establish a budget for awards? And how do you strike a balance between incentivizing customers and maintaining a solid bottom line?

    That is a really cutting question that I think touches right at the core of loyalty program management. When setting a budget for awards, you need to try shifting your perspective and view it more as an investment rather than merely an expense.

    Looking at the top loyalty programs, they're allocating a substantial part of their revenue, sometimes up to 15%, for rewards. And it might seem a bit high. But if you can share the value of those investments to your business, it can be actually quite a logical decision.

    If we look at some of the more lagging programs, often they're struggling to allocate their budgets. And that often means they're not really seeing the right results and sometimes deliver a really poor rewards experience. So although that approach may save some money in the short term, it really does risk losing customers and losing that engagement. So, ultimately, the aim is to strike a perfect balance between incentivizing your customers and making a robust bottom line.

    (2:43): In order to achieve that perfect balance, there's always going to be an issue where costs fluctuate, especially as programs evolve. So how can program owners stay one step ahead and effectively anticipate these changes? We'd all love to have a crystal ball, ultimately, at the end of the day, but what strategies have you seen that help to safeguard against unexpected financial challenges?

    You've touched on an essential aspect of how you manage a program and that's around the adaptability. So often, as programs evolve and grow, costs inevitably fluctuate. But the key really is managing these changes. And that really lies in understanding how that program is performing, understanding the financial forecasts, and any of those scenarios that you need to plan for. So often, it's the crucial part of the financial planning.

    Looking at leading programs, again, I think you can see that they're the ones conducting rigorous financial forecasting and scenario analysis, they're really able to anticipate those costs. And it's really some of the average and lagging programs that fail to have a more structured approach to that, which really means that they're unable to project their costs out into year two, year three and beyond.

    That lack of financial stability really limits their adaptability for the program and means that they're not really looking at it as an investment, but very much as a cost. They're not able to say, well, if I put this amount of funding behind it, we can expect this sort of return.

    (4:08): How far ahead can programs predict? How far ahead should they be looking?

    I think there are a few different horizons that you may want to look at, depending on exactly the maturity of your program. I think a good a good idea would be looking at the profitability maybe of your customers over a two year timeframe. But possibly, you know, you may want to take a wider lens, if you know that there are more technical costs that need to be incorporated. So possibly a five year view may be better.

    (4:41): The redemption rates of loyalty points or miles can clearly have a significant impact on a program's finances. So as a program owner, how would you recommend they forecast these rates accurately and control them strategically?

    Redemption rates can be a bit of a challenging aspect within the program. Often, program managers and program directors really want to see their customers redeeming, but maybe other parts of the business see that purely as a cost. So there are certainly financial implications there. But without redemption costs, you're not really going to be seeing that customer satisfaction, you're not really going to see them engaging in the program.

    Ultimately, I think that if you can prove the link between redemptions and the future value of those customers, and how that levels up to your overall program, then businesses are really viewing those redemptions as a good sign of a healthy program. And not just a cost.

    (5:37): You mentioned leading programs there. What are the leading programs doing to maintain the equilibrium between satisfaction and business viability?

    I think it starts with the data, I think you have an accurate understanding of how your customers are behaving, and understanding of how you can forecast those redemption trends, and certain predictive tools that are really able to guide your strategy. But, of course, you need to make sure you're engaging those members, and using your personalization capabilities, using your media in ways that really engage your customers.

    Of course, you can't do that in isolation. I think you need to keep a really close eye on your program, and understand any of those changes. So, if your customers are maybe finding certain redemption options more attractive, or maybe they're, you know, moving into new markets, different redemption ranges become important.

    (6:36): I apologize in advance for this. But I've got to bring up the elephant in the room, which is the liability associated with loyalty points in miles. Now, how can a program owner effectively manage this while ensuring the program remains appealing to customers, which ultimately is kind of what they live and die on?

    Yeah, it's really good you brought this up. I think, frankly, it's one of the aspects that businesses overlook, and they don't really understand it until it becomes a problem. The opportunity for programs is to be more proactive. Probably behavior is more reactive at the moment, I think. The leading programs really understand that it's something that needs to be managed actively. And it's not something that is going to work out well for the for the business if it's not really proactively managed.

    Some of these leading programs are using actuarial models, and employing robust forecasting techniques, that really gives them the ability to understand their liability today, and also what they expect it to be in the future. Often those liabilities can be understated, sometimes they can be overstated. And both of those can represent real challenges for businesses.

    (7:45): Is this where smart cost per point management comes into play?

    I think that's a really important weapon in the arsenal of programs. Understanding that by taking an active view on what the average cost per point is, they can look to lower it over time, which ultimately drops more profit to the bottom line.

    (8:04): What advice would you give to a program director when it comes to optimizing costs without negatively affecting the customer proposition? What are the trade-offs to consider? How do they strike the right balance?

    It's absolutely striking the right balance, it's making sure that you're delivering value for customers. And that balance with a cost really makes it more of an art for program managers. They need to understand that it's something that you can't really compromise for customers. It's really important to get that balance, right, in terms of the cost invested. And I think, if you're looking at some of the weaker programs out there, they're more likely to overlook the importance of cost optimization. They've probably had a budget that's been in place for years on end. And a manager just signs that off, and does that every year.

    What we tend to see is those programs missing the opportunity, because they're not really looking at what would their program would be like if they increased their budget. And not really understanding what the profit opportunity would be for making some of the cost savings as well.

    (9:19): To make those necessary changes, do you need a mindset shift?

    Yeah, it's about providing the best value for your customers, but also about recognizing that reward budget is an opportunity for investment. It's an opportunity to drive deeper loyalty for your customers and an opportunity to drive greater profit for your program, but also maybe optimize certain elements in the program that you haven't looked at for, you know, maybe up to the last five years.

    (9:52): Within the constraints of a budget, various types of rewards might offer different levels of cost effectiveness. How should program managers assess and compare these?

    Reward cost effectiveness is an essential factor. I think it's about providing value for your customers. Without overstepping that budget, I think customers really want more and more over time and I think programs have felt the pressure of needing to cut back. And really the only strategy that has been working for those programs is A/B testing for the rewards, getting that customer feedback, and seeing where there's an opportunity to leverage data to optimize rewards, which ultimately leads to the larger bang for buck.

    (10:39): We talk a lot about golden reward moments and diverse reward types. So how does that come into play here? How are the leading programs that you talk about devising strategies to maximize the potential of both global and local reward types?

    It starts with understanding what rewards your customers are going to be most interested in. Programs are able to access better data now than they were before. Understanding what those members want is not quite the challenge it used to be. The challenge now is how do they get it to those members at a price that the program's happy with, and the price that maybe the wider businesses is happy with, as well.

    I think you need to look rewards sourcing operations, you also need to look at the types of product ranges that maybe have margins that are more attractive for your business, and bringing that all together, to really ensure that on one side, you're driving that customer satisfaction. But on the other side, you're also ensuring the long term sustainability of your program.

    (11:49): In your opinion, given everything that you've said, what are the key metrics or KPIs that program owners should focus on to effectively evaluate the financial performance of their program?

    It's a really good question. I'm not sure there's ever one magic metric out there. I think certainly, depending on the industry you're in, and maybe depending on the education and loyalty that you've had, you may gravitate towards one more than the other. But I think you can probably handpick a few that are the ones that are going to drive you in the right direction. And one that's very common is understanding the revenue per member. It's vital to understand the customer lifetime value (CLV) of a member, understanding how profitable those customers are going to be across a period of time. And, of course, understanding that your program is an asset. Understanding the level of profitability of that program, the total level is really something that you can use to strategically guide the business.

    (12:54): To wrap up this episode, could you summarize our discussion or provide listeners with a few key takeaways?

    At the heart of a successful program is considering the reward budget as a deliberate investment designed to nurture customer relationships, but at the same time aligning that with business strategy, making sure that you're staying nimble and adjusting to any trends. So if there are any changes in the environment, you're able to safeguard your loyalty program, and ensure you're meeting those new and emerging trends.

    As well as that, optimizing your award budget, not necessarily thinking that the amount that you had last year is going to be suitable for this year, is key. Really being proactive and understanding that for each dollar that's invested, what the return is, so you're really maximizing that opportunity. Above all that, it means looking at your global loyalty program as a strategic asset, and not merely as a as a cost center.


     If you like this, then don't miss Gabi Kool, CEO at Loylogic, explaining why Loylogic is constantly pushing the boundaries of global rewards solutions through innovative incentives and experiences: click here to read more.

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    Ethan & Alice Marketing has become Loylogic’s newest INLEAGUE partner to deliver high performance customer loyalty and engagement across APAC.

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    Ethan & Alice Marketing has become Loylogic’s newest INLEAGUE partner, to deliver high performance customer loyalty and engagement across APAC.

  • From Risk to Opportunity: Empowering Loyalty Program Directors to Demonstrate Program Value

    In this episode of the Loylogic Podcast, Rob Clements, Lead Consultant at Loylogic, joins us to discuss how loyalty program owners can effectively measure and demonstrate loyalty program value, shifting thinking away from risk to opportunity.

  • From Risk to Opportunity: Empowering Loyalty Program Directors to Demonstrate Program Value

    In this episode of the Loylogic Podcast, Rob Clements, Lead Consultant at Loylogic, joins us to discuss how loyalty program owners can effectively measure and demonstrate loyalty program value, shifting thinking away from risk to opportunity.

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