In the latest episode of the Loylogic Podcast, we discuss the story of PREMIO, Nescafé Dolce Gusto’s world-leading multi-market international loyalty program.
Along with Yves-Louis Pigueller, Nescafé Dolce Gusto’s Global Data and Digital Ecosystems Lead, Joël Muller, digital marketing advisor for Nescafé Dolce Gusto and Dani Schmidt, Loylogic’s Head of Growth, we hear how this world-class loyalty program, designed to build engagement and boost consumption of products, has developed from initial idea to the global success it is today.
Topics discussed include:
- The challenges PREMIO was designed to overcome
- How PREMIO enables the brand to directly connect with consumers through personalized communication
- How the program delivers an appealing value proposition in a consistent yet locally relevant way across multiple geographies
- The data and measurement behind the program
- The reward shops driving engagement
- Future plans for PREMIO and much, much more.
A must listen for any internatonal brand looking to scale-up a loyalty program globally, or create a new international engagement stratgey, listen here, or read the transcript below.
(1:20) A good place to start is with the story of Nescafé Dolce Gusto and PREMIO. So Yves-Louis, what's the background that led to the creation of the program?
Yves-Louis: "Nescafé Dolce Gusto is a pod coffee system, offering consumers the ability to prepare at home, all the beverages that are made in a regular coffee shop. The range includes espresso, americano, but also the latte macchiato, the cappuccino and chocolate and teas. You can even find, since a couple of years, all of Starbuck's iconic recipes in the portfolio.
"Nescafé Dolce Gusto is available now in 70 markets, mostly in retail channels for the machine, but also for the coffee pods. We also use our own DTC to sell pods and machines. The overall yearly turnover has exceeded more than 1 billion USD in the past year."
Joël: "We like to call ourselves billionaires!"
Yves-Louis: "We're already there, Joël!
"Nescafé Dolce Gusto is operated by each of our markets and the central function provides support for anything which is a common solution, process or capability. This is the case for the Nescafé Dolce Gusto digital ecosystem, which is made up of a direct to consumer, CRM, but also PREMIO, our loyalty scheme, all of which is operated above market."
(3:17) Joël, I'll bring you in here. What challenges has PREMIO been designed to solve?
Joël: "Well, like any brand sold in retail, our challenge is to have a direct engagement with our consumers. This direct engagement provides the ability to collect precious insights on our consumers, and also the ability to engage with them through our own channel in a relevant matter.
"One of the other big challenge we have is the pressure from compatible capsule solutions, and inflation on top, which has increased the need to maintain brand value perception to engage with consumers. So PREMIO, our loyalty scheme, has been designed to answer those challenges."
(4:07) PREMIO has been in play now for a number of years. So what have been the main stages of development since its launch? How has it adapted to meet those challenges and overcome the barriers to success?
Yves-Louis: "It has been a long journey, not an easy ride every day. To design, to build and also to roll out PREMIO across the world did not happen overnight. We invested upfront a firm enough time and effort to define the concept, but also to build a sustainable business case. Loyalty is not really a frequent practice in our industry, so it took time to get everyone on board and to be convinced about the concept. Then, in order to validate all of the business assumptions and to harness the concept, we worked with a pilot market over a period of two years.
"Following these two years, where we had good results, and for the past four years, we've focused on two folds. Number one was to roll out PREMIO to our top DTC markets. And now today we're covering more than 80% of our total revenue. The other fold is about fine tuning the value exchange. What is very important to find is the right balance between an appealing proposition for a consumer, but also for us to remain ROI positive. And this is where we are now."
(5:26) Dani, what role does Loylogic play in supporting this development?
Dani: "Well, as mentioned by Yves-Louis, a major focus in recent years has been on opening up new markets on various continents. And what I mean by launch is, of course, beyond the technical implementation. It's about acquiring members and driving engagement from the program registration, and the very first can onwards. This requires a lot of effort and provides a lot of learning opportunities for all involved parties, including us. Hence, our role is to support NDG in line with its strategy and focus, and while there will be additional market launches, the next one is just around the corner in May, the engagement and value for the brand will mostly come from existing markets and its millions of members. Hence our job is to evolve and support the mentioned initiatives from both the conceptual and executional perspective."
(6:20) Joël, bringing you in again here. What are the core pillars of success for the PREMIO program?
Joël: "The first pillar is the simplicity of the user experience. It is super user-friendly. So concretely, as a consumer, you just have to flash the code which is printed inside every box of Nescafé Dolce Gusto beverage, and each scan will increment your point balance. So you can redeem your points in a gift catalog. And with our latest coffee machine generation, NEO, earning points is even easier. Once you connect your machine to your Wi Fi points are automatically granted for every cup brewed. So no more QR codes to scan so it's even more user friendly.
"The second pillar for the success is the reward catalog itself. So not only we can select for each market, the relevant rewards for all type of points, but consumers can also select many types of appealing rewards like virtual gift cards, physical gifts, vouchers for our own web shop, and so on."
Yves-Louis: "I will add two further pillars. The third pillars is definitely the solution. So we went for a cloud solution that enables two benefits: the first one is easier to roll out than the other solutions that are hosted on premise, but also to get, with a quicker time to market, all the latest innovation from the cloud solution. And to conclude, the latest pillar is in the communication, which is key. One of the main success factors is the ability to be able to advertise on the back in order to reach our acquisition target."
(8:06) Taking that point to the next stage. You were quoted in a recent press release that Nescafé Dolce Gusto was able to establish a strong personalized intimacy with its customers through PREMIO. So can you elaborate on that further?
Yves-Louis: "Indeed, PREMIO is a goldmine of data points. Thanks to these small QR codes, we're able to track the consumption behavior at the consumer level. And with reach of this data, we can push to our consumers the right message at the right time. So any activities that could be scaled like the tech segmentation inside and communication concept, are now run above market. And these enable us to empower the market to be really spot on with the engagement with the consumer."
Joël: "And to be even closer to our consumers, each market can localize and fine tune the value proposition. So the cost per point the reward catalog are different per market. If you go and visit the reward shop in Korea, for example, and then you go to the French one, you will see that the catalog is adapted to the culture of the country. The marketing activation is also mainly local, each market can define how to activate the first party data collected through PREMIO."
(9:23) Okay, so it's all about engaging members in a personalized manner?
Joël: "Exactly using the data to engage with our consumers to spread the right message at the right time to the right people, which is the you know the basics of CRM."
(9:37) So Dani, it seems like a good place to bring you in here to talk more about the rewards catalogs and that personalization from a Loylogic perspective. So how does Loylogic work with PREMIO to source relevant rewards that work both internationally and locally?
Dani: "Yes, thanks for the question. We are often asked whether we can show THE Loylogic catalog. The answer always is that this just doesn't exist, because our job is to create an engaging rewards experience for the communities of our clients and all of our reward shops are curated for our clients. And in fact, we involve our clients in co-creating and providing a rewards briefing which includes potential categories or must have rewards, a wishlist of certain brands, do's and don'ts, in line with the brand and the program DNA.
"In the case of NDG, we collaborated closely with the global business unit and the pilot market, which was Spain back then in 2017/18. And we defined the categories which includes NDG rewards like vouchers that bring members back to the NDG web shop for their next coffee purchase. We defined music technology as a must have category. This includes earbuds and loudspeakers, electronical gadgets etc. We defined kitchen as a must have category because coffee is often produced and consumed in the kitchen, so we offer kitchen appliances and coffee mugs and these kind of things, as well as experiences which is a mix of international and local gift cards. Within these categories, we look for the right rewards that fit the community profile and the program economics.
"Now, you can imagine that the accrued points value in a coffee pod program is much lower compared to a frequent flyer program, and hence the price points of offered rewards need to be within members' reach. It's important that committed members are able to reward themselves within 30 to 90 days after registration, after starting engaging with the brand. And this requires reward offers at a few euro value or dollar value in this specific case. And on the other hand, we we need to ensure that the offers fit the brand DNA and positioning, which might be a stretch in some cases.
"And maybe another important topic is that, PREMIO is a global concept, but member behavior and needs vary slightly among European countries, and are quite different in markets in Latin America and Asia. And this requires a well-balanced approach to rewards that follows global brand principles, as Joël mentioned, but takes local needs into account. And this is important not only to gain the loyalty of the members in these markets, but also to maintain the commitment of all NDG markets. Within NDG we apply the Pareto rule wherever possible, whereby 80% of the catalogue is, let's say, globally defined, and the markets have a 20% of room to maneuver local needs into the equation. Hence PREMIO is therefore a uniform global concept which is nevertheless localized. I think that's a key success factor."
(12:55) Do seasonal promotions play a part in the rewards appeal too?
Dani: "Absolutely, I mean, redemption is a good thing right, as it is the ultimate proof of member engagement. And of course, to encourage such engagement over many years, it is crucial to run marketing campaigns, whether through the introduction of new rewards categories or reward items, seasonal campaigns such as Valentine's Day, or Black Friday, or run prize draws remember can win the latest iPhones or an annual supply of NDG coffee capsules. So, we closely collaborate with the markets to provide an exciting marketing calendar in line with the local Nescafé Dolce Gusto marketing plan, you know, throughout the year."
(13:38) Okay, it's clear listening to you that data and analytics are important to the success of PREMIO and you seem to have a really clear picture of what's going on with the program across the numerous markets. So one question I would like to ask is, what criteria do you use when selecting which markets to roll PREMIO out to? Or indeed, stop? Joël, I'll let you answer that one.
Joël: "So we do indeed define two main sets of criteria to set up PREMIO but also to stop PREMIO. When setting up PREMIO in the market we take a fact-based approach by running a business case considering the consumer base by size, the cost to set up and operate the program and the rewards price range.
"Once we're live, we monitor on a monthly basis, the success of PREMIO, looking at the consumer base evolution, acquisition and churn rates. We also look at consumer reviews or we run surveys. When KPIs are not met, all mitigation plans are exhausted to sustain a positive return on investment, then we make the decision to stop PREMIO in the market. This happened. Thankfully, not so often. But we are able to monitor it in an accurate way and we can decide to stop it if necessary."
(14:58) What role does Loylogic play in supporting the data gathering and measurement?
Dani: "Loylogic's scope is related to the rewards experience. And we do complement the picture with redemption related data primarily? Such data contains typical ecommerce metrics such as how many members come to our reward store? How many use their points by placing orders? What's the average order value? What are the top performing rewards and so on? Markets can access reporting dashboards individually 24/7. And the data is also uploaded on a monthly basis in the NDG BI, which allows every stakeholder to have a complete picture of the metrics related to premium."
(15:40) Looking to the future, how do you see PREMIO developing further, given you've got all this data available to you? Yves-Louis, let's start with you.
Yves-Louis: "So we're working on three main streams and I will cover the first two. Number one, we want to complete the footprint, we still have a couple of big markets to launch as well as tackling the non DTC market. So this is really the number one challenge.
"The number two challenge or looking forward is to be able to target the low value user segment. Back to the famous equation of how to have something appealing, but ROI positive. So we're working on extending the reward catalog with smaller gifts like a retail coupon, or raffle ticket donation. The aim is also to bring more gamification into the program for the specific segment by allowing consumers to select instant win versus point collection."
Joël: "The last stream is more longer term, which is to search for partnerships with the help of Loylogic to work with other brands. This is also an option for us together where we are stronger. So this is something also that we're looking at more long term."
(17:00) So Dani, what are the key takeaways you can share from the success of PREMIO that other loyalty program managers should consider when looking at a global rewards program?
Dani: "I have four things in mind, which I would like to share.
"First of all, PREMIO is a true omni-channel concept. And this is very essential for consumer goods brands who generate 80% or more of its business via indirect retail and wholesale channels, which is probably the case in most instances. So direct access to retail shoppers is where the incremental value lies, and what really empowers the brand in a competitive environment.
"Secondly, scalability is a must for multinational and global brands. The scalable architecture as also mentioned, by Yves-Louis, via cloud solutions, and involving global partners, are the key elements here. Just to give you one interesting piece of information...in the case of PREMIO, the go to market is less than three months after a market has signed or approved its business case the green light is given to the involved parties. Less than three months, which is only possible due to, you know, a scalable ecosystem.
"Third, PREMIO is a truly global concept, which can be introduced to every NDG market. And there is still some white spots out there. But not only introducing this to these markets, but also with a very consistent user experience across the globe. The programs, of course, have local a local flavor, but it's Nescafé Dolce Gusto PREMIO across the globe.
"And finally, although being a global concept, it is crucial to ensure a certain degree of local flexibility, for example, with regards to offered rewards. A global rollout must always be supported by the markets, because they also finance these initiatives."
