The Loyalty People, headed by Tom Peace, has joined Loylogic’s innovation focused INLEAGUE channel partner program.

The Loyalty People, headed by Tom Peace, has joined Loylogic’s innovation focused INLEAGUE channel partner program.

 In this episode of the Loylogic Podcast, we welcome Ozan Yagci, co-founder of one of Loylogic’s INLEAGUE channel partners, Apex Loyalty, to dive into the world of retailer B2B loyalty best practice to find out what's driving successful B2B programs.

 In this episode of the Loylogic Podcast, we welcome Ozan Yagci, co-founder of one of Loylogic’s INLEAGUE channel partners, Apex Loyalty, to dive into the world of retailer B2B loyalty best practice, to find out what is driving successful enagement and rewards programs.

In the world of ever-evolving technologies and digital ecosystems, Web3 has the potential to revolutionize the way we interact and engage online. At the heart of this transformation lies the concept of community building, which has been amplified and invigorated by the integration of digital assets. These digital assets have given rise to new possibilities, particularly in the realm of loyalty programs, where brands and organizations can enhance customer engagement, foster long-term relationships, and create thriving communities like never before.

In the world of ever-evolving technologies and digital ecosystems, Web3 has the potential to revolutionize the way we interact and engage online. At the heart of this transformation lies the concept of community building, which has been amplified and invigorated by the integration of digital assets. These digital assets have given rise to new possibilities, particularly in the realm of loyalty programs, where brands and organizations can enhance customer engagement, foster long-term relationships, and create thriving communities like never before.

Loyalty Lab, the loyalty consultancy founded by Vicky Elliot, a hotel industry professional with over 25 years of marketing experience in the luxury travel industry, has joined Loylogic’s rapidly growing INLEAGUE partner program as a strategic consultant.

Loyalty Lab, the loyalty consultancy founded by Vicky Elliot, a hotel industry professional with over 25 years of marketing experience in the luxury travel industry, has joined Loylogic’s rapidly growing INLEAGUE partner program as a strategic consultant.

Apex Loyalty, the pioneer of an award-winning B2B customer engagement and loyalty solutions platform, has joined INLEAGUE, Loylogic’s rapidly growing partner program.

Apex Loyalty, the pioneer of an award-winning B2B customer engagement and loyalty solutions platform, has joined INLEAGUE, Loylogic’s rapidly growing partner program.

For the fourth episode of Loylogic’s podcast, we’re joined by David Slavick, Co-Founder and Partner of Ascendant Loyalty, to discuss innovation in iGaming and Casino loyalty.

In a recent 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.

The banking industry in the United Arab Emirates (UAE) and Saudi Arabia is witnessing a significant shift in customer loyalty trends. Not only are bank loyalty programs becoming increasingly prevalent, financial institutions are also looking to be increasingly innovative when it comes to their loyalty programs, moving towards more comprehensive loyalty initiatives.

This article, based on a recent episode of The Loylogic Podcast where Paul Wallis, Director of Growth at loyalty specialist Epsilon, explores the emerging trends, local opportunities, and the future of bank loyalty programs in the region (click here to listen to the podcast in full).

The shift towards loyalty programs

 
The interest in loyalty programs within the financial sector is rising rapidly. While loyalty programs were initially focused on retail, banks are now recognizing the importance of fostering genuine loyalty among their customers. This shift is evident across the region, particularly in Saudi Arabia, where significant growth is accelerating. The UAE, although relatively stable, has also witnessed the rise of digital banks, adding to the demand for loyalty programs.

Local trends and opportunities

Digital transformation is a predominant trend across the UAE and Saudi Arabia. Banks are actively embracing this transformation by incorporating super apps, partnering with fintechs, and exploring initiatives such as Web3.

Personalization has also become a crucial factor as banks aim to cater to the diverse demographics of their customer base. The younger, digitally savvy population, especially in Saudi Arabia, desires gamification and Web3 experiences. However, it is essential to align these initiatives with Sharia compliance and Islamic finance principles, respecting the cultural nuances of the region.

The future outlook for bank loyalty

The future of bank loyalty – and loyalty across all sectors – in the region looks promising. There’s a unique situation as certain families own multiple businesses, meaning there is a unique opportunity to create loyalty apps that touch various aspects of people's lives.

These conglomerates can build ultimate loyalty by offering seamless experiences across different sectors, thereby keeping customers within their ecosystem. The future will likely witness the emergence of innovative loyalty programs that leverage these advantages to enhance customer engagement and retention.

Key takeaways for bank loyalty program managers

1. Cultural Sensitivity and Regulatory Compliance: Understanding local regulations and cultural sensitivities is crucial when designing loyalty programs that span across the Middle East. Each country may have specific regulations that need to be considered.

2. Localization and Personalization: Tailoring loyalty programs to the local market and individual preferences is key to success. Local platforms that offer localized content tend to perform better, as customers prefer familiar experiences.

3. Data Security and Payment Integration: Ensuring robust data security measures and seamless payment integration are essential for building trust and convenience for customers.

4. Collaboration with Partners: Enabling customers to use loyalty points as a currency across various partner businesses enhances the value proposition and expands the reach of loyalty programs.

5. Exceptional Customer Service and Feedback: Prioritizing exceptional customer service and actively seeking feedback enables continuous improvement and customer satisfaction.

6. Competitive Analysis: Keeping an eye on the competition helps banks stay innovative and stay ahead in the loyalty program landscape.

The UAE and Saudi Arabia are witnessing a significant shift in bank loyalty trends, with a move towards comprehensive loyalty programs. The future holds exciting opportunities for banks to capture customers' hearts, minds, and wallets by creating unique and personalized loyalty experiences. By understanding local regulations, embracing localization, and fostering collaboration, banks can build loyalty programs that resonate with customers and drive long-term engagement and retention.

The banking industry in the United Arab Emirates (UAE) and Saudi Arabia is witnessing a significant shift in customer loyalty trends. Not only are bank loyalty programs becoming increasingly prevalent, financial institutions are also looking to be increasingly innovative when it comes to their loyalty programs, moving towards more comprehensive loyalty initiatives.

This article, based on a recent episode of The Loylogic Podcast where Paul Wallis, Director of Growth at loyalty specialist Epsilon, explores the emerging trends, local opportunities, and the future of bank loyalty programs in the region (click here to listen to the podcast in full).

The shift towards loyalty programs

 
The interest in loyalty programs within the financial sector is rising rapidly. While loyalty programs were initially focused on retail, banks are now recognizing the importance of fostering genuine loyalty among their customers. This shift is evident across the region, particularly in Saudi Arabia, where significant growth is accelerating. The UAE, although relatively stable, has also witnessed the rise of digital banks, adding to the demand for loyalty programs.

Local trends and opportunities

Digital transformation is a predominant trend across the UAE and Saudi Arabia. Banks are actively embracing this transformation by incorporating super apps, partnering with fintechs, and exploring initiatives such as Web3.

Personalization has also become a crucial factor as banks aim to cater to the diverse demographics of their customer base. The younger, digitally savvy population, especially in Saudi Arabia, desires gamification and Web3 experiences. However, it is essential to align these initiatives with Sharia compliance and Islamic finance principles, respecting the cultural nuances of the region.

The future outlook for bank loyalty

The future of bank loyalty – and loyalty across all sectors – in the region looks promising. There’s a unique situation as certain families own multiple businesses, meaning there is a unique opportunity to create loyalty apps that touch various aspects of people's lives.

These conglomerates can build ultimate loyalty by offering seamless experiences across different sectors, thereby keeping customers within their ecosystem. The future will likely witness the emergence of innovative loyalty programs that leverage these advantages to enhance customer engagement and retention.

Key takeaways for bank loyalty program managers

1. Cultural Sensitivity and Regulatory Compliance: Understanding local regulations and cultural sensitivities is crucial when designing loyalty programs that span across the Middle East. Each country may have specific regulations that need to be considered.

2. Localization and Personalization: Tailoring loyalty programs to the local market and individual preferences is key to success. Local platforms that offer localized content tend to perform better, as customers prefer familiar experiences.

3. Data Security and Payment Integration: Ensuring robust data security measures and seamless payment integration are essential for building trust and convenience for customers.

4. Collaboration with Partners: Enabling customers to use loyalty points as a currency across various partner businesses enhances the value proposition and expands the reach of loyalty programs.

5. Exceptional Customer Service and Feedback: Prioritizing exceptional customer service and actively seeking feedback enables continuous improvement and customer satisfaction.

6. Competitive Analysis: Keeping an eye on the competition helps banks stay innovative and stay ahead in the loyalty program landscape.

The UAE and Saudi Arabia are witnessing a significant shift in bank loyalty trends, with a move towards comprehensive loyalty programs. The future holds exciting opportunities for banks to capture customers' hearts, minds, and wallets by creating unique and personalized loyalty experiences. By understanding local regulations, embracing localization, and fostering collaboration, banks can build loyalty programs that resonate with customers and drive long-term engagement and retention.

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, 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.”

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.”

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 Spotify, Apple 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.

Pointspay has announced the launch of a new MarPay™ concept that combines three principles of business; marketing, payments and loyalty. Through this combination, Pointspay gives companies the ability to grow profits in a unique and targeted way by joining loyalty programmes with a global network of advertisers and payment providers.

Pointspay has announced the launch of a new MarPay™ concept that combines three principles of business; marketing, payments and loyalty. Through this combination, Pointspay gives companies the ability to grow profits in a unique and targeted way by joining loyalty programmes with a global network of advertisers and payment providers.

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

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

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.

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.

Dedicated new gift card platform opens up a world of travel and retail rewards options for more Saga Club members.

Dedicated new gift card platform opens up a world of travel and retail rewards options for more Saga Club members.

New loyalty payment platform will offer Flying Blue members a new way to earn and spend Flying Blue Miles

New loyalty payment platform will offer Flying Blue members a new way to earn and spend Flying Blue Miles

Gabi Kool, CEO at Loylogic, explains why Loylogic is constantly pushing the boundaries of global rewards solutions through innovative incentives and experiences.

Ascendant Loyalty has become Loylogic’s newest INLEAGUE partner, combining the organisations’ complementary strengths to supercharge customer loyalty and engagement.

Loylogic has partnered with Visit Oman and ASP Online Software to launch an innovative Points-as-a-Service (PaaS) reward program for international travel trade partners.

Loylogic, the global leader in loyalty and engagement solutions, and Etihad Guest, the award-winning loyalty program of Etihad Airways, have joined forces to launch the next evolution of its Reward Card for Etihad Guest members.

Loylogic, the global leader in loyalty and engagement solutions, and Etihad Guest, the award-winning loyalty program of Etihad Airways, have joined forces to launch the next evolution of its Reward Card for Etihad Guest members.

Loylogic, the global leader in loyalty and engagement solutions, and Etihad Guest, the award-winning loyalty program of Etihad Airways, have joined forces to launch the next evolution of its Reward Card for Etihad Guest members.

Loylogic, the global leader in loyalty and incentivized engagement solutions has partnered with Bits of Stock, the fintech that powers stock rewards programs, to introduce a new and innovative reward offering that allows loyalty program members to turn their points into shares of stocks.

Loylogic, the global leader in loyalty and incentivized engagement solutions has partnered with Bits of Stock, the fintech that powers stock rewards programs, to introduce a new and innovative reward offering that allows loyalty program members to turn their points into shares of stocks.

Earlier this year, Loylogic and Pinnacle Rewards, announced that they have partnered with African Bank to introduce a new industry-leading loyalty program designed to improve the financial wellbeing of customers.

Earlier this year, Loylogic and Pinnacle Rewards, announced that they have partnered with African Bank to introduce a new industry-leading loyalty program designed to improve the financial wellbeing of customers.

African Bank is taking a definitive step towards improving the financial wellbeing of its customers with the introduction of a new, world class, loyalty program, called Audacious Rewards. The new program is being delivered with the support of Loylogic, the global leader in loyalty and engagement solutions, and Pinnacle Rewards, an established loyalty marketing powerhouse.

African Bank is taking a definitive step towards improving the financial wellbeing of its customers with the introduction of a new, world class, loyalty program, called Audacious Rewards. The new program is being delivered with the support of Loylogic, the global leader in loyalty and engagement solutions, and Pinnacle Rewards, an established loyalty marketing powerhouse.

Loylogic, the global leader in loyalty and engagement solutions, and Nescafé Dolce Gusto today announce the launch of the CLUB rewards program in Brazil – a move which signals the partnership’s expanding global footprint and marks Loylogic’s entrance into the Latin American market.

Loylogic, the global leader in loyalty and engagement solutions, and Nescafé Dolce Gusto today announce the launch of the CLUB rewards program in Brazil – a move which signals the partnership’s expanding global footprint and marks Loylogic’s entrance into the Latin American market.

Klarna’s new rewards programme worth watching – article by Gabi Kool, Chief Commercial Officer at Loylogic.

It’s an exciting period for those of us working in the loyalty industry, as increasing numbers of brands recognise the power of rewards to boost engagement and loyalty – and partner with companies creating innovative rewards technologies. And Klarna is fast becoming an exciting player to watch in this space.

Klarna’s new rewards programme worth watching – article by Gabi Kool, Chief Commercial Officer at Loylogic.

It’s an exciting period for those of us working in the loyalty industry, as increasing numbers of brands recognise the power of rewards to boost engagement and loyalty – and partner with companies creating innovative rewards technologies. And Klarna is fast becoming an exciting player to watch in this space.

Zurich, Switzerland | 6^th September 2018 

Loylogic, the global leader in e-commerce and e-payment solutions for loyalty programs, announces the appointment of Lansy Joseph as their new Chief Innovation Officer. Lansy, a strong advocate for innovation and technology, has worked with Loylogic for almost a decade in different roles on the technology and product development side. He has played an integral role in developing and driving the company’s technology and innovation roadmap spanning ideation to commercialization and worked on turnkey solutions, such as the conversion of points to Cryptocurrency feature that has been shortlisted for the 2017 Mega Award in Loyalty.

Zurich, Switzerland | Amman, Jordan | 7^th January 2019

Loylogic, the global leader in e-commerce and e-payment solutions for loyalty programs, and Royal Jordanian Airlines have extended their partnership by launching an additional three of Loylogic’s leading solutions for their Royal Club loyalty program: Buy and Gift Miles solution as well as REX, the global rewards portal.

Zurich, Switzerland | 4^th February 2019

Loylogic, the global leader in e-commerce and e-payment solutions for loyalty programs, and Atlasglobal, a leading Turkish Airline, announce a strategic partnership for Loylogic’s cutting edge, co-branded earning solution, Akruu. Through this collaboration, Atlasmiles aims to deepen member engagement by enabling their members to earn more miles through Akruu’s innovative earning modules, thereby leading to increased program revenue. 

Zurich, Switzerland | 3^rd April 2019 

Loylogic, the global leader in e-commerce and e-payment solutions for loyalty programs, and Icelandair Saga Club, Icelandair’s loyalty program, announce a partnership to launch Loylogic’s cutting edge travel platform in the coming months. The global portal enables Saga Club members to collect or redeem points, and a combination of both, by booking hotels and renting cars from thousands of offers across the world.   

Zurich, Switzerland | 29^th April 2019 

Loylogic, the global leader in e-commerce and e-payment solutions for loyalty programs, announces its business expansion in Japan by opening its eight office to be located in Tokyo.  With this new strategic location, Loylogic expands its international reach and increases its presence for existing and new customers in Japan and the APAC region.   

Zurich, Switzerland | 23^rd May 2019

Loylogic, the global leader in e-commerce and e-payment solutions for loyalty programs, and Irish Life, Ireland’s leading life and pensions insurance provider, announce the launch of a reward store for Irish Life’s new and innovative health and well-being app, MyLife. The MyLife app encourages people to adopt a healthier lifestyle, and it rewards them for doing so. Irish Life customers will have access to a reward store built by Loylogic, and will be able to claim rewards for their healthy behaviour through this store.    

Zurich, Switzerland | London, United Kingdom | 26^th June 2019

Loylogic, the global leader in creating and running e-commerce solutions for loyalty programs, announces the appointment of Ms. Aileen Parsons as their new head of PointsPay, Loylogic’s leading loyalty solution and payment platform. Aileen joins Loylogic as PointsPay continues to rapidly grow and expand in the loyalty payment market. She comes with more than 15 years of experience in online payments and e-commerce across a wide range of industry verticals with PayPal.