Carolyn Schnare:

Welcome to Convenience Matters, I’m Carolyn Schnare with NACS and I’m joined by my cohost…

Rose Johnson:

Hi, I’m Rose Johnson also with NACS.

Carolyn Schnare:

So Rose, one thing you and I have in common, we were talking about this just yesterday, is that, and with everybody else listening right now is, we’re customers. We’re customers of stores, customers of brands, and just like everyone else, we love to feel loved. Am I right? We all have some of those stores that we just love to shop. And generally speaking, those are the stores who know who we are and what we like. And sometimes, even a little bit more about what we know and like, than we really want them to. So we’re going to talk a little about all that today, and we’re gonna talk about some brands that really get to know us and how they can do that well. And today’s guest on our show was here about a year ago, and I’m very honored to have her back with us today. So Paula Thomas is a global expert on brand loyalty and is the host of “Let’s Talk Loyalty” podcast. Thank you so much for joining us again, Paula.

Paula Thomas:

Thank you so much, Carolyn. I had such fun doing the show with you last year, so I’m thrilled to be back again.

Carolyn Schnare:

Fantastic. And, so when we talked last year, we were… we thought we were pulling out of a global pandemic and yet here we are, we’re still trying to get there. But at that time you gave us some great ideas in global retail stores and what they were doing to lead the pack in loyalty programming beyond just a punch card and telling us welcome back. So I just want to dive right in and I’ll put it in the show notes with last year’s episode so folks can listen to that as well, but what are some of the global best practices that we touched on last year, this time, which would have been in 2020 that folks are still doing really well, that we hope kind of stick around past this moment.

Paula Thomas:

It’s a great question, Carolyn and I certainly listened back to our episode from last year, so you’re right. It was October, 2020. We thought we were through the worst of it. And I still feel now at this point, we have a way to go. But I guess from a loyalty perspective, we talked on, I’d say five or six, really big themes that were emerging in the field somewhere already, I suppose, and becoming important to customers, but I definitely feel they were accentuated and certainly accelerated by changing customer behavior. So in order to look back, I kind of thought there’s probably two main ways I think about loyalty now. So like you, podcasting as much as possible about something I’m very passionate about. So there’s almost an endless series of topics to cover, but in its simplest form, I think for loyalty, first of all, I think there’s the mindset of loyalty.

Paula Thomas:

So that’s extremely important and very different, I think, to think about than the mechanics of loyalty. So when I look back to a year ago, I suppose the first thing that kind of happened in terms of the mindset was there really was this increased focus on trust. So customers were saying to us, you know what, we’re totally scared, we’re absolutely freaked out, so we only want to shop in places where we share values with a particular retail brand. So I think that has become increasingly important and things even like hygiene, for example, we probably took for granted in the past, but now what we’re finding is we need to be explicit about that as a basic piece to reassure people before we can look at the bigger concept of loyalty. So that was one I thought was super important to remind yourselves on.

Paula Thomas:

And another one would be the difference, between transactional loyalty and emotional loyalty. So anyone who’s ever listened to my show would hear us talking about this a lot. And I’m sure all of your listeners are very familiar with all of the big loyalty programs, which probably really originated in the airline sector. So we’re all very familiar with our points and prizes and coupons. But really when we start to think about emotional loyalty, it’s a whole different ball game. So that is definitely again, being an accelerated and people are paying more attention to how do I feel about this brand? And there was some great research as well, Carolyn, recently, which totally emphasized this point, which was talking about, I suppose, our perception about how are we being loyal to the brands, but also our perception on is this brand being loyal to us. So it’s an extraordinary difference of opinion, in fact. Where what we’re hearing is, customers are half as convinced as the brands are as to who’s being loyal to who. So brands think they’re doing a great job, but actually customers aren’t convinced. So definitely that’s all the mindset stuff. So does that make sense in terms of what we started with last year?

Carolyn Schnare:

Oh, definitely. Definitely. I think I mean you hit the nail on the head with the sharing values, I think right there alone. Just knowing your customers and….just everybody’s a little on edge still, I think, so the last thing you need to do is make someone feel…you want people to feel loved – I want to feel loved, I want to feel taken care of and I want to feel cared for. And to me, that’s what’s going to bring me back to a brand, whether it’s a store or a candy bar, it’s hopefully…well, the candy bars always make me feel loved.

Paula Thomas:

We’re not that complicated sometimes when it comes to getting the basics right. But you’re absolutely right. Carolyn. So what I’ve always said about loyalty is, as if we have an intention of loving our customers, actually they do feel it. So, we can focus on that. So that mindset piece, I think, is something that definitely, as we said, started last year and continues. And then just on, I suppose, the mechanic side of how our industry is evolving and there were two that I touched on last year. One was gamification and the other was subscription-based loyalty and pleased to report…certainly gamification has been around for a very long time and I think what we found through these last year or so, when you don’t have the opportunity maybe to go in stores, as you might have in the past, then you probably do appreciate the opportunity to have fun.

Paula Thomas:

So if there is a digital connection, you might engage in that outside of your store experience. So that definitely has a role to play. And then subscription loyalty is a huge topic, Carolyn, I don’t know if you’ve touched on it separately, but definitely we launched last year with them, I suppose. Panera Bread was the big example. They had launched just pre-pandemic as it happened. And we’ve seen explosive growth and not just in convenience retail, we’ve seen airlines launching paid loyalty programs. We’ve seen lots of different sectors and also internationally. So like Panera Bread is a great example because they’re owned by a global company called JAB Holdings, which has convenience stores in the UK and all across Europe. And they’ve taken the model from the U.S. snd they’re rolling it out across Europe. So something’s working, it’s not obviously a guaranteed – nothing’s guaranteed in business – obviously we need to take a lot of things into consideration, but I would definitely say even the likes of Circle K with their carwash are doing lots as well. So very exciting times in terms of that new, I suppose, mechanic for loyalty programs.

Carolyn Schnare:

If I could just real quick – clarifying the Panera Bread one that’s coffee-based mostly, or maybe it’s pastries too. My mom came over not too long ago and was like, “did you get our Panera Bread coffee today?” And looks at my dad, “did you get our Panera coffee today?” I’m like, how much coffee are you guys drinking, a lot? So, I mean, if my parents, if they can grasp this and they can jump onto it, I mean, now they pay every month, they love this. They stop there, they make it their destination and I’m sure they don’t walk out with just a cup of coffee.

Paula Thomas:

Well, that’s exactly the point, Carolyn, I think you’ve nailed it on the head. So when Panera launched that program, they really released some very impressive statistics. So you’re absolutely right. It’s focused on coffee, unlimited coffee. It’s $8 99 a month. But what they were talking about was the cross-sell and the upsell. So obviously the business case is something that has to be very, very carefully done, but again, the fact that they are expanding beyond the US, into other companies in other countries would definitely suggest that the model makes sense. And I’m super excited actually as well because Panera Bread are coming onto my podcast. So I’m going to get to ask all of the latest figures and see how it’s performing for them 18 months on.

Rose Johnson:

That’s cool. Congrats on having Panera Bread on your podcast.

Paula Thomas:

Thank you, Rose.

Rose Johnson:

There’s something that Carolyn just mentioned about your parents. Being able to understand clearly the program that Panera was offering and Paula, I was listening to the podcast you did with Phil Devlin. And that was something that was pointed out that transparency was a part of what is required and making it clear and easily understandable. He spoke about I think it was airlines, I believe at that point that he was talking about, and how they had switched from a mileage-based points system to dollars. And, you know, I thought that was hilarious because in the past there were some airline programs where you’d have all these hundreds of thousands of miles, and then you’d go on to see what you could pick out. Like, “what can I pick out? I have all these miles,” and it’s like, oh, you get a wallet, you get this little tiny wallet for all those hundreds of thousands of miles. Can you speak a little bit more on that?

Paula Thomas:

There’s actually a lot of points, Rose, and you’re right to pick up on that. So Phil Devlin is an incredible loyalty professional based down in New Zealand. And you’re absolutely right. His background is with \Aair New Zealand and Qantas New Zealand, and currently working for Countdown, which is a really big grocery chain. So he touched on a couple of things. And for example, he mentioned the plain language bill, and I really think that’s something that speaks to all of us with, as you said, the complexity about the currency, for example, I think is something that has always done a disservice to loyalty programs in the past. So simplifying into a way that the customer or the member can understand what is the benefit of this loyalty program? Like, why am I giving it my attention? New Zealand has an extraordinary level of loyalty penetration, probably the highest in the world, actually, I discovered when I was talking to him. They have had to pull back to this level of respect and simplicity. And in fact, even one of my own shows, I think and if I look at my top five shows within them, there is one all about simplicity. So it’s extraordinary to me that loyalty is something that people need to feel, they need to understand, but definitely it’s like let’s get away with the asterixis and the conditions and the poor redemption experience. Because if anything, I’ve learned as a loyalty professional, the moment of truth and the time that you really earn trust is actually when you do reward the customer. So the really key, I suppose, shift in management thinking is, it’s no longer, really good if we have what we call breakage, which is when people maybe earn points and don’t claim anything.

Paula Thomas:

And in the past, you know, the CFOs might’ve been super happy. Great, we don’t have to pay for that reward, but very much, we now, as loyalty professionals are saying, well, hang on a second. There’s a disappointed member who either didn’t understand what they could get, couldn’t afford anything of value, or just weren’t engaged with the program. So we kind of wasted all of our time when they didn’t get to get what we ultimately wanted to give back to them. So, yeah, lots in there. I hope that answered your question, Rose.

Rose Johnson:

Yes, it did and it went beyond as well.

Carolyn Schnare:

You made me think of something because I can think of two examples in my own personal life. It goes back to what we were saying, we’re all shoppers in one way or somewhere. We have to buy groceries, we have to buy goods. And I was at a certain drugstore company yesterday and on my very, very long printed receipt, it said that I have a $2 off extra money I can go use. So I wanted to use that. I took it home, I tucked it away. So I kept that one. But last week I had one, too, and then when I went to use it yesterday, it expired within a week and I’m like, oh man, no! And the other one doesn’t work until tomorrow. So now I’m like, well, the whole reason I’m here…and I’m like, I’m out.

Carolyn Schnare:

You know? So it makes it kind of complicated in that manner. Like, how am I supposed to remember what day that expires? I don’t even know my password to things, you know? So it’s like…in fact, I couldn’t get in the app at the store either to show them the card so that I could do it electricronically. Anyway, it was just a disaster. I didn’t buy anything. I left. And then another one I thought of is a grocery chain in our area – the Washington DC area Rose – that you get rewards and your rewards go towards goods. You know, you can get your…in seven rewards, you can get $10 off your next purchase, or you can get a free avocado or something like that. But it’s broken down into little increments. And so I’m sitting in the store going, okay.

Carolyn Schnare:

I had seven, I used three. Now I can use five more. Did I buy that? Do I have pasta in my cart? I think I did. Now I have to go across, the store to get the pasta because that one’s free. I love it. I’m saving money. I still go there, but it’s probably more complicated than it needs to be. And I think that when you said it needs to be easy and it needs to bring you back there, and money is always a way to get my attention, obviously, as you can see, give me $2 back, give me a free avocado. But it does go sometimes more than that. Maybe it’s that you get a, buy one, get one free because you’re this member or like you said, the subscription thing…just the subscription program just makes so much sense. I mean, if you can imagine,if I could send my kid off to a store and say, “hey, you get your smoothie today.’ I mean, that’s something I don’t have to pay for. Now that kid’s going to go back every day. So there’s, certain merits to those kinds of programs, for sure.

Paula Thomas:

And I also think Carolyn, what you’re talking about there in terms of that complexity with those coupons, for example, really comes back to this mindset of, are we looking to be loyal to our customers and build that love and reassure them and get them in the store every time they need to shop? Or are we just trying to drive a commercial transaction? Because that, to me, feels like your experience there. And that I think is where loyalty programs are going wrong. They’re overly focused on trying to get Carolyn in this one time, rather than building a long-term relationship and trying to go, ‘okay, cool, don’t worry, look, we’ll give it to you another time.’ Or how can we take care of you and all of those other things that demonstrate the brands taking care. So there’s a fundamental shift happening and you will feel it if you start to see those things coming through on your receipt, whereas now what you just feel is frustration. So unfortunately that’s not marketing money well spent in that situation.

Rose Johnson:

I love that you’re setting this up with having the mindset of loyalty as the backbone of everything. Because that’s actually what resonated with me the most from the conversation from October, when you talked about transactional versus emotional, and, you know, there were certain things that you said that were transactional types of actions. What are some more emotional actions that people can do to build loyalty?

Paula Thomas:

So a great question, probably one that we all at say, we don’t have the answer to. So this is probably the result of lots of brainstorming, where I suppose it has to be a balance, Rose, between something that feels special to the individual, but also that can be done at scale. So that’s why it’s quite a complex thing to do. So, when we did talk about it last year, I know I gave the example of McDonald’s, which had a gift card, for example, where they put unlimited coffees on some gift cards handed out, I think it was about 5,000 cards and just let people pass them and pay it forward to each other. So get your free coffee and pay it forward. And what I thought was amazing about that example, Rose, was that’s not a structured loyalty program. There’s no points involved here, but it means that somebody can enjoy something back from the brand and share it with somebody.

Paula Thomas:

So I pulled as a brand example, McDonald’s did it really well. And I’m sure, you know, McDonald’s now do have a loyalty program, certainly in the US and so I’d be dying to get into that particular story. I haven’t done any work on it yet, myself.The other piece around emotional loyalty is the whole piece about being relevant in a local way. So it’s all great to do, checks for charity and create those kinds of ideas. But actually, if it doesn’t make sense to me, or if I don’t feel connected to a community, then I probably haven’t achieved emotional loyalty. And one you reminded me of Rose, that I did…one of my favorite episodes in fact, was with IKEA and it was just in January. So I think it was exactly the injection of global expertise that certainly my audience really loved.

Paula Thomas:

Again, it’s a very popular episode of mine, but what IKEA we’re talking about is they have a family program and there’s lots of benefits within that. So for example, free tea and coffee on mid-week days. So really simple, powerful benefits. So I can imagine, particularly if I was a mom, I could see Carolyn nodding right there, you’d probably want to bring all the kids in all of a sudden on an off-peak day, so immediate benefits, but the genius piece. And to answer your specific question about the emotional loyalty, what IKEA realized is, actually they have a community of people who all love the brand, and obviously IKEA is doing its best to love the customers. But the missing piece that they identified was those customers can support each other. So if I buy a piece of IKEA furniture, for example, case in point, I’m probably not very good at assembling it. So I might need to ask somebody else’s advice, and it might be IKEA, but it might be another member of the IKEA community. And I think what they particularly nailed there was, there is absolute power in people feeling part of something bigger than themselves. And I think there’s a lot of loyalty programs can say, oh yeah, that community idea means I’m part of the IKEA community now. So that’s definitely an emotional connection, nothing to do with how much money I spend there. I just feel connected to them.

Carolyn Schnare:

And I’m with you. No one really knows how to put them together. No one.If anyone listening right now has ever put together a piece of IKEA furniture – first try – without ever putting something on backwards, you’re my new hero.

Paula Thomas:

Yeah, I know. It’s a brilliant brand and I love them to bits but yea, there is that frustration about how can I get extra support. And again, the point they were making was around, it’s also in the design phase, because from an environmental perspective, they announced actually back in January, discontinuing the catalog, which we’ve all used for inspiration. So instead they’re going digital and they’re going community. So again, what a great way to bring people together.

Carolyn Schnare:

Yeah, that’s for sure. Now I have one question. So I want to sort of pivot, but look at the opposite of best practices. I mentioned it in the beginning and you also talked about it on one of your shows is when brands get a little bit too much in your business. So in other words, they’re….they maybe…it’s called, I think remarketing, when it shows up on the side of the webpage you’re on. It’s like, “you might like,” and you’re like, no, no, no, no, that was supposed to be a Christmas present, and now my husband just saw that on my thing, you know, something like that. So are there some examples of what not to do, especially as technology and the data behind loyalty catches up with everything else.

Paula Thomas:

It’s a great question, Carolyn, and you’re absolutely right. So the episode you’re talking about was really quite a shocking story about data being used in a way that was completely unexpected, first of all, by the person. Certainly not with his explicit permission and this gentleman, his name is Richard Jones, he is a Chief Marketing Officer of Cheetah Digital – very big loyalty technology company. And Richard gave an example, and it was in the US – and I did specifically ask that question because I’m sure, you know, data laws are very different around the world certainly in Europe where I’m from this probably couldn’t have happened – but what Richard explained was he found it really creepy because all he had done was am basically take an Uber from home to go to a hospital for a very specific operation, which was a hernia operation.

Paula Thomas:

And he hadn’t told anybody about this hernia operation. So it wasn’t through being retargeted for example, he hadn’t gone searching for solutions. He literally put it in and to get a lift there. And then over the subsequent days and weeks, he was being targeted by hernia messaging and advertising and he had to really think through where could that information be coming from that’s freaking him out that they know his business and absolutely he had no idea. So you’re absolutely right about – data is powerful, but it needs to be used, I think, with the mindset of loyalty, actually at the risk of repeating myself. And I think what we have known in the past is, cookies have been the default for the advertising industry to understand obviously our behavior online. And I don’t know if you’ve been talking about this part at all, but that’s actually going to be phased out.

Paula Thomas:

So Google did announce Chrome will no longer support cookies in the future. It keeps getting pushed out. So I think at the moment we’re looking at 2023, when you won’t be able to literally follow people around the internet with remarketing. But I guess what we’re saying, as a, as a loyalty professional is, it just really emphasizes the importance of your own relationship directly with your customers and capturing zero party data, first party data, all of these and types of information that your customers directly share with you willingly and with their own interests at heart so you can personalize and show up in a way that they expect and enjoy.

Carolyn Schnare:

That’s very smart. And I know in the United States, our rules are not as quick to catch up with everything else. So that’s interesting that it happened here, not surprising, but interesting. And Paula offline, you and I were talking about another thing that is possibly, could be the next frontier in loyalty or a vehicle for getting customers to pay attention to, which is WhatsApp and, Rose, do you use WhatsApp at all?

Rose Johnson:

Yeah, I do use WhatsApp. I’m not consistent, but I use it.

Carolyn Schnare:

Well, so that’s something Paula and I were talking about when we were preparing for the show because for those listeners in America, I guarantee half the people that are here are like, “what’s WhatsApp?” What is that? So it’s a text – you can probably maybe even explain it better – because it’s a text-based platform, is basically like a software, an app that you can use to text. It’s the same exact thing as i-messenger or regular phone number texts. But in the United States, we don’t use it. We don’t know…most people don’t even know what it is, but anyone that does use it – I did a little Facebook poll on my own personal Facebook page and asked all my friends – they only use it to communicate with people not in the United States for the most part. Whether it’s relatives or friends overseas or for us, or vice-versa or when you’re in another country, but not here, but outside of the United States of America, it is like the communication platform. And so Paula, to go to the actual question here, you mentioned this could be a way that people are getting in touch with other people. Can you explain where you’ve seen that happen or maybe some things folks haven’t heard about?

Paula Thomas:

For sure. Thank you, Carolyn, because you’ve very generously allowed me to pick a couple of favorite topics. So WhatsApp is definitely one that I’ve been feeling quite strongly about for certainly I’d say at least the last three years because of a very good example of how WhatsApp was used in a way that I absolutely loved. So first of all, I also did some kind of numbers research because of this actual conversation. So globally, WhatsApp has 2 billion users. So that’s an extraordinary number. It’s the dominant messaging platform in South America, in India, certainly here in the Middle East, and I would say in Europe and probably Western Europe is more accurate. I also looked up the US figures because again, none of my US friends ever seem to be knowing what I’m talking about.

Paula Thomas:

So the US number is about 75 million. So about, less than a quarter of the population there is using WhatsApp as a messaging platform. But I guess the reason I like it, Carolyn, to answer your question is, the first time I saw it was very much in a very helpful, easy, practical way. So it was an airline, which I absolutely love – it’s KLM a big European airline – and I had booked a flight with them as a one-off, I wouldn’t be a frequent flyer. And they immediately sent me a WhatsApp with my boarding cards. So it was extremely reassuring that everything was there because you know, yourself even pre-COVID, checking in is a stressful time. But if you think about, again, a mindset of loyalty, KLM is making it super easy for me to have everything at my fingertips. My next example was when I booked a trip this year with all of the restrictions around COVID and I booked a hotel in Sri Lanka.

Paula Thomas:

And as soon as I confirmed that, the General Manager sent me a WhatsApp going “I’m here if you need me, anything that happens, if you need guidance on our COVID protocols or anything along the way, just send me a WhatsApp,” again, an extraordinary customer experience. And I guess the reason I’m excited about it, Carolyn is I think there’s a certain level of jadedness, dare I say it when it comes to apps. Actually, most of us don’t want to download them. And I think what we’ve seen in places like China, for example, is there’s like one big super app and you do everything there. So a brand can easily connect with you and it’s much more coherent, whereas we’ve got different apps for everything, you know? I’ve got to have Facebook, I got to have WhatsApp, I’ve got to have too much stuff.

Paula Thomas:

So with the simplicity in mind, I believe that platforms like WhatsApp, first of all, should be easily used, for example, to check your balance, your points balance. What are my coupons? What can I get? What’s going on? And specifically, customer support. So there is a WhatsApp for Business, which is definitely being trialed in Brazil and in India. So, even here in Dubai, I’ve seen evening dresses coming in on a storefront within WhatsApp that I could literally buy straightaway on the app. And a friend of mine actually just bought her car on WhatsApp. So when I see potential, I just think nobody’s done it yet as a full loyalty proposition, obviously, in terms of connecting with a points database, for example, but I feel like it’s something that’s gotta be done. So I hope somebody listening is going to build a loyalty program on WhatsApp for us.

Rose Johnson:

Yeah. I’ve actually had the airline experience with WhatsApp and originally I didn’t trust it because I’m like, well, “why do I have to go through WhatsApp? I just want to call and speak with someone,. But it was so seamless. It was awesome. I was able to quickly switch over and redeem some tickets for my parents to come visit. It was nice. It was really nice.

Paula Thomas:

I’m glad you had a good experience Rose because again, sometimes it’s badly done, you know, there’s like a chatbot, which doesn’t understand your problem. So in that case, obviously, you can damage the relationship and damage the loyalty to your point earlier, Carolyn, about how can you do loyalty kind of badly. So that would be a poor experience. So I think if you’re going to do it, you have to do, right.

Carolyn Schnare:

So that can be our next October’s discussion is all these brands that heard this episode and started a WhatsApp program to get us all engaged. So we’ve talked lot about your show and I know you’ve got some, you mentioned, some great guests that you have coming on. Ttell us a little bit about where we can find you and more about your show and maybe what’s coming out in the near future.

Paula Thomas:

Thank you, Carolyn. That’s very kind of you. I’m super excited about all of the guests and the other one, which I didn’t get a chance to mention is one that I think is going to be very exciting in December, which is with Fred Reichheld, which many of your listeners may know as the creation of Net Promoter Score. So a real leading thinker in the world of loyalty. And I think The Economist called him “the high priest of loyalty.” So big praise and from Bain and Company, but in general, LetsTalkLoyalty.com is my website, all of my shows are hosted there. Obviously, I’m on Apple Podcasts and Spotify so if you just type in “Let’s Talk Loyalty” I’m super easy to find!

Carolyn Schnare:

And super easy to talk to, so Paula, I thank you for joining Rose and I today, it’s always wonderful to reconnect with youi and I hope to do it again soon. So, thanks again for all your ideas. Rose, thanks for being with me and thank you for listening to Convenience Matters.

Convenience Matters Outro:

Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.

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