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 this episode, we’ll discuss:
- the foundations that underpin the best B2B and B2B2C loyalty programs,
- share examples and in-depth case studies of loyalty programs that utilize these pillars to deliver B2B loyalty best practice,
- the innovations and technology trends driving next generation B2B loyalty platforms, which are also helping partners to engage at a B2C level,
- the development of e-B2B loyalty platforms, which are proving especially useful for FMCG brands in bringing together loyalty and ecommerce,
- and why a human-to-human approach that focuses on personalized experiences, ease of use and simplicity, underpinned by technology, is fostering long-term business relationships.
A must listen for anybody involved with loyalty, especially B2B, retail and FMCG/CPG programs, listen using the link below, or read the transcript below.
(1:57) I want to focus on B2B loyalty, which is an area that I know that [Apex Loyalty] is strong in. What is setting the best programs apart from the rest in this space?
Ozan Yagci: “There are loads of different aspects to create a successful best practice loyalty program. So maybe I can start with explaining how we create these programs, what the pillars basically are.
“Loyalty programs are generally considered a single product or a service. But when you deep dive into what it takes to create successful loyalty schemes, we see that there are many different critical functions that need to be run simultaneously. And of course, when we're talking about successful programs, these programs always should deliver business goals.
“So, of the main pillars, for us, based on our expertise, and our previous experience of these programs, I think program design is super critical. Of course, use of technology is of great importance. Then there's content management, because these platforms are like living organisms, you have to keep them fresh all the time. And of course rewarding. So the rewards procurement and operations, which as our Loylogic, you're executing this on a global scale.”
(3:19) You've mentioned four pillars there. Would you mind breaking them down into more detail? Let's start with program design.
Ozan: “Program design is the most critical step of all, because if you cannot set the foundation correctly, no matter how cutting edge your technology is, or you know how great rewards you offer in your catalog, the program most likely will fail. And when I talk about program design, we should maybe go a bit deeper, because that's the heart of the successful programs. If you cannot just nail it down, you know, then it's not going to work properly.
“So, I think understanding the customer's business goals is very important. The value proposition is super important within this program design process. Personalization nowadays, I mean, for the last few years, it's very hyped, but this is the foundation of all successful programs actually for a very long time. And of course, the ease of use and the simplicity of the platform and the program itself.
“When understanding the customer's goals, we spend most of our time sitting with our customers talking for hours and hours, trying to lay everything on the ground to make sure we understand our customers' business goals, their pain points, the use cases and the future expectations from the program. And these discovery sessions have great impact on the overall program design, the target audience, the value proposition, the gamification mechanics, the tools for the correct engagement, the reward options, even the UI/UX design of the platform. I cannot express the importance of value proposition.
“For me, the main reasons we are implementing loyalty programs is that we would like to have impact on our customers buying behaviors at the end of the day, or we basically ask our customers to take an action in return of a benefit or reward. So that's why the program's value proposition comes in. What's in it for the users of the program to execute or to drive the behavioral changes we want from them to do, whether it's unique rewards or experiences access to some resources, these benefits should be relatively easy to reach, and attractive enough to incentivize these users to be actively engaging with our loyalty program.
“So we talked about personalization, if we open it up a bit more, this is a very high-up concept for the last few years. But as I said, we've been utilizing personalization on our programs, basically since day one. In the very early days, we were using segmentations, we were grouping customers, but today, the idea behind personalization is, really simple: every customer is unique. I know this is like a cliche, but this is the reality. Personalization is something like you walking into your favorite pub, and you're being greeted with your name, you get served with your favorite drink, without even asking for it.
“This is actually the personalization, we have this in our daily lives, you, me, everyone, and this is what makes you feel special. And the same thing really applies to these loyalty programs. And when you have these digital platforms, when you're not face to face, this is even harder to make them feel privileged. But in order to have this personalization, of course we need to have the customer data. I mean, the Pub should know my name. They should be knowing what I order frequently, where I sit in the pub etc. With the mining of transactional data and online platform interactions, and behaviors, we access the first party data to enable customer segmentation, and one to one personalization."
(7:49) This is all really good, really enjoy hearing about this. So I guess the next step there is kind of around ease of use simplicity and importance of the MVP approach?
Ozan: "Yeah, this is a very important pillar. Sometimes, most of the failing programs we see have trouble navigating the step. These loyalty programs can be very complex due to having loads of different components at the same time. And sometimes, the brands, the leaders, have ambitions to achieve quick results from these programs.
“Instead, what we need to do, we have to aim for a very clear program structure, a smooth registration process, a very user-friendly interface, of course, that is, again, dependent on who you're talking to your target audience. Mobile accessibility is vital in today's world. You have to be accessing the platform from wherever you want. There also needs to be a very simple earn and burn mechanism, and a very easy redemption process should be in place.
“So, we always consult our customers, when we are, you know, picking off new projects, we always advise to start with an MVP, which is a, you know, very simplistic version of the of the program. But that can still satisfy the user's needs on a minimal level.”
(9:14) That leaves us with one more pillar, which is technology. So where does that come into play?
Ozan: “Yeah, technology, this is this is the backbone of all today's successful loyalty programs because, you know, my age allows me to witness paper-based reward catalogs. I'm old enough to witness this.
“At the time, you know, programs were run on very manually. The catalogs were sent by post, even couriers were not were not in place at the time. And the customers were receiving these catalogs, they were just picking their rewards, they were tearing the pieces from the pages, and then they were posting back the chosen reward to the head offices for the redemption process to happen. Today, we're talking about AI and all the great things. Technology is constantly transforms the way we do businesses.
“As Apex, we are utilizing all the advantages of cloud computing, because we are using Salesforce infrastructure. The reason we chose to have our solution built on Salesforce is because of scalability, trustability, innovation, and of course, security reasons. As we are dealing with some large scale enterprise loyalty programs, some programs have more than 200,000 members. We wanted to offer the best in class technology for our customers so that they can utilize all the benefits of what the latest technology can offer. And they can then focus on the customer experience that they would like to design for their customers. With the built in CRM capabilities, infrastructural advantages, the speed of development and deployment, and this innovations, Salesforce brings beautiful things onto the table for us. And then we can easily incorporate these new technologies into our solution and offer them as ready to use functions for our customers, for example, AI and chatbots.”
(11:49) There's a lot of theory there, you've covered a lot of ground, in that that kind of opening question there. So are there any real world examples of best practice that you can share where a lot of that theory is all being brought together?
Ozan: “I think we can talk about one of our latest programs that we are powering for PepsiCo in Europe. It's called Pepsi Connect and is a B2B customer engagement and digital ordering platform. I know digital ordering is a new term for us. This program is being used to transform how PepsiCo is dealing with their traditional trade stores across Europe.
“We're not only talking about loyalty, customer engagement, incentivization, personalization and rewarding, but we're also covering the digital ordering process, and also in store execution, which creates an end to end B2B platform for PepsiCo, that yields loyalty, incremental sales, sales efficiency, field force optimization and more.
“The target audience for this program was traditional trade store owners in Spain, Portugal, Russia, Ukraine, Romania and Turkey. These stores are like small to mid sized convenience stores, or like small tobacco shops who sell PepsiCo snacks and beverages, as well as other FMCG brands. When a store owner logs into the platform, our platform recognizes the user's identity, and then comes up with the personalized communication banners, news, promotions, surveys, quizzes, videos, even reward selection is being real-time personalized, based on who's just logging into the platform. And I think one of the trademarks of this program is that the incentivization engine is on member level. That means PepsiCo is able to define a store level. So not segment level, this is very important, store level monthly business challenges that is powered with gamification. And stores can earn bonus points upon the completion of the business challenges, which at the end of the day brings incremental sales for PepsiCo.”
(14:24) How can stores monitor their progress with this platform?
Ozan: “Stores can also monitor their progress towards these bespoke business challenges. They can even place PepsiCo orders online from the digital ordering section of the platform to complete their business challenges without needing to call their sales reps or write to them from WhatsApp to place the order in the traditional way.
“We've also digitized something called perfect store execution. So there are certain rules and guidelines that CPG brands will like imposed to their, to their retail stores to sell their products. It's like, I need you to place my stand here, I need you to place my cooler there. So, that's sort of an execution they're trying to impose. And the reason being is because this is super critical for CPG brands, in terms of being visible on the shelves, that's a key success factor in FMCG business. We've also digitized these perfect store KPIs on platform so that stores can earn bonus points from these business activities as well."
(15:41) Looking beyond the work that you're doing, what do you think are the latest trends that program owners need to be aware of when it comes to b2b loyalty?
Ozan: "Yeah, trends, as I mentioned about the technology previously, things are moving very quickly. In today's world. Speaking of trends, as you might guess, the biggest trend at the moment is AI, for loyalty programs, for humanity, maybe.
"We should not escape it by the way. We should get what it to do what we need it to do, utilize it in a proper manner. But when it comes to how we can utilize AI in loyalty programs, I have many answers. But from the top of my mind, I can mention about automating customer segmentation and personalization. So this is today, being done a bit manually, because the structured data is being examined, analyzed, and then customer clusters or segmentations, are getting created. And we can utilize AI to have this for us.”
(16:55) Sorry to interrupt there. This is generative AI we're talking about?
Ozan: “Yeah, it can help us automate recommendation engines, this is for rewarding, I think this is quite a nice use case for us. Also, we can utilize chatbots and virtual assistants in our programs, rather than, you know, having call centers, or opening up tickets, when we are giving support to the users of the platform, image recognition, to digitize in store execution, which I mentioned previously, which we have utilized already for our platform.
“I think one very important topic in loyalty programs is fraud detection. Today, it's not being automated. I know there are some programs that can benefit from this. But generally, I think we can get great help from AI in order to, to enhance and in order to automate that fraud detection functionality for our platforms.
“Predictive AI is different to generative AI, because it is giving us some future, some predictions about the future, which can enhance our businesses greatly. We can utilize this in understanding customer needs and expectations before they actually happen. And, again, a very important aspect, we can identify at risk customers who may churn with the predictive AI. This is one of the greatest matrix in loyalty programs. I think predictive AI can really help help us out on this part of the discussion.
“And, of course, we can use predictive AI to identify the best timing to push the offers and promotions to our users. That's going to have great impact on the conversion rates."
(19.10) Beyond AI, are there any other trends that you're seeing?
Ozan: "Yes, there are a couple of more. One I can mention is headless architecture. So this is API driven platforms, actually. That approach is a new trend for the last few years for almost all applications today, not only for loyalty programs. It's technical, but I think everyone should know about this, even the marketing guys, because this headless structure is really starting to become the main foundation of large-scale omni-channel and end to end loyalty programs.
“What is this headless architecture? For loads of programs, most of the applications have a front end, there’s the customer facing side, and there's a back end taking care of all the data processing integrations and calculations and stuff. So we're talking about having these two ends not being tied to each other, so that we can have flexibility on quick development on the front end, or quick iterations on the back end, without needing to wait for the other. This offers great flexibility. The marketers of today like to try things out, you know, with A/B testing, with segmentations, with trial and error. So we see a great amount of iterations on digital platforms today, which is driving agile development and agile approaches.
“When you have multiple touchpoints in loyalty programs - say you have a web app, a mobile app, a POS, and so on, all these front ends can connect to that single back end and that back end can still power these applications, so that you can enable omni-channel experiences.
“I think that the third trend, maybe we can mention, is loyalty driven e-B2B platforms. Loyalty driven B2B platforms are something new and are where loyalty and digital ordering functions are offered on the same platform. We've been monitoring user feedback, customer expectations, technological advancements, and all that stuff for a very long time. For the last few years, that digitalization train for B2B was already coming, because whatever technology is coming into our lives is first applied on the consumer side of the things and B2B is left a little behind. Now, I think the time has come for B2B digitalization.
“These new programs are still B2B loyalty programs. They help organizations deliver digitalization to the B2B businesses, the users of the program, who learn to navigate on a digital platform, they learn to consume content, they learn to add or redeem rewards in a very similar manner to a b2c e-commerce shopping experience. They can even use their credit cards to top up the remaining balance of rewards when their points are not enough to redeem rewards.
“Unfortunately, when the pandemic kicked in, brands faced cut-outs on their field activities and the sales operations for a very long time. In these difficult circumstances, the brands who had a digital platform to communicate with their B2B customers were one step ahead. Brands ideally needed a digital ordering solution in place to receive orders from their b2b customers directly. So at this point, I think that the EB2B concept was born. So the word e-B2B is today majorly used to define digital ordering solutions for B2B customers. We want to take it one step forward as Apex loyalty and we call it 'loyalty-driven e-B2B solutions. We believe that these digital ordering solutions are working best when you embed the loyalty solution and when you incorporate gamification into the ordering process.”
(24:37) When it comes to best practice, what are the variations between B2B and B2C? Are there any differences? Or are the lines blurring?
Ozan: “That's a great question. B2B, B2C, who are these guys? We often find ourselves in, conversations with our potential customers, who ask, are you doing B2B loyalty? Can you do B2C loyalty as well? To a certain extent, these are valid questions. Yes, these two approaches can be slightly different. But, they have loads of similarities, when you actually deep dive into the psychology of buying, and what loyalty is, or how you can establish loyalty. For B2B businesses in general, even though the business is done with the business owner, with a person, with a human, for some reason, business B2B relationships have always been positioned like the business owners are not real people, like we are in contact with the company itself. That clearly isn't the case. The owners, or the employees running this business, are real people, they're human. They have similar buying psychology as any other consumers.
“I'll share a funny story about this topic. Seven or eight years ago, we were designing a loyalty program for a truck company and the target audience was the truck drivers, because they have influence on the transportation company owners as to what trucks needed to be purchased. Of course, for each project, we worked on the design, technology and all the other aspects. And finally, we were discussing the reward options that should be available in the program.
“Our customer offered to include all the truck gear, all the relevant truck hardware in the catalog, and a very limited selection of other categories, like, you know, cosmetics, electronics, like fashion, clothing, etc. Because apparently, these guys are driving almost all month, or all week, and they should be needing business related divorce, right? But when you reduce a truck driver personality into a B2B business profile, then you just forget that these guys are human beings, and they have feelings. This thinking might make sense. But we have to remember that these people don't have personal lives. They have families, they have other motivations, just like you and me.
“So, the program went live, the reports started coming in, and after a few months, we were analyzing the data that we've been accumulating on the system and we were checking the most redeem rewards. And you know what? What was the best selling reward in the truck driver loyalty program? It was an epilator! We weren't expecting this at all!
“Long story short, what I mean is, we talk about B2B or B2C, but we should talk about H2H - human to human. B2C, B2B or B2B2C all comes down to influencing the behaviors of humans.”
(28:58) What's driving success when it comes to loyalty in the B2B2C space?
Ozan: "I think today's marketers have realized the power of win-win scenarios that drive value for both channel partners and their consumers. One of the main reasons, from what I see, why companies like to establish B2B2C programs is that brands would like to have control over the marketing efforts to the consumers.
“Brands whose route to market is through B2B partners like retailers and wholesalers, and not directly to consumers, cannot touch the consumers. Hence, they have no access to consumer data. They don't know who's buying their products. And from that point on, they don't know which consumers are buying or who they are, or how their segmentations are performing. In this scenario, the brands can only sell in to the business partner to the b2b partner, but they don't have any control on the sell out to the consumers. This is very important.
“Where the B2B2C approach kicks in is because brands use this strategy to collect consumer data via B2B partners, so that they can execute direct to consumer marketing to enable the pull, to enable the sell out. This way, brands start to have control over the sell out of their products from their B2B partners. And from what we see, the main driver of success for these types of programs is to offer value for all parties on the chain, and also the incentivization of the B2B partners, so that they actively participate in these programs, because they are the ones who will promote the program to consumers.”
(31:09) That makes sense. Do you have a an example of this strategy in play?
Ozan: “We have a very recent B2B2C program. Royal Canin, as most of us know, is a global pet food company, they have recently established a B2B2C loyalty program with us to transform their channel partnerships and incentivize partners, who are pet shops, breeders and vets. Secondly, they would like to access consumer data through these channel partners and subsequently offer personalized promotions to the pet owners to the consumers themselves. The b2b side of the program is designed to engage and incentivize pet shops, breeders and vets.
“So you walk into a pet shop, let's say, so you're out of pet food, or you would like to have a new pet. You would like to adopt a new pet, let's say then you go to a breeder, right. So what happens is, the B2B business owner promotes the loyalty program to the pet owner, and tries to convince the pet owner to participate in the program. And when the pet owner is convinced, then the business owner inputs the pet owner data into our app, in exchange for a very attractive discount voucher to be redeemed at the Royal Canin website.
“When the pet owner redeems the discount on the website, on a new order, then the B2B business, who is the owner of the lead actually, earns points. That's a win-win situation. I think this is a great example of a B2B2C program where there's attractive, rewarding mechanisms and incentivization mechanisms for all the parties involved in the program."