Loyalty360 interviews Sam Panzer, Talon.One, to discuss the trends in customer loyalty and customer experience, and the changing industry landscape.
Hello and welcome to another edition of Loyalty Live on Loyalty 360. I'm John Diether. In this series, we talk to the leaders in our industry about the technology trends and best practices that drive customer engagement and loyalty. Our guests provide practical solutions and expert advice on building and maintaining relationships with customers. Today we have the pleasure of speaking with Sam Panzer, director of Industry Strategy at Talon One. Welcome, sam, thank you for joining us.
Speaker 2:Thanks very much, John. Very happy to be here.
Speaker 1:Good. Can you tell us a little bit about yourself, your background and your current role with Talon One?
Speaker 2:Yeah, you bet. So here at Talon One I lead our business value practice, so really doing things, our own program, ROI modeling and thinking about what could the commercial impact be of trying new things with our customers. We work with brands like Adidas, Eddie Bauer, River Island, Live Nation, Ticketmaster, so most of the kind of enterprise skewing more towards the retail side of things. I've been with Talon for about five years, mostly in a customer's success capacity, so started as just helping our customers launch their programs and their promotional strategies. Before that I worked with shopping malls on their digital engagement strategy too to kind of have a nice background in the retail industry especially. But BF, mostly kind of an ROI geek here at Talon One about what does it work to kind of change things in your program and how might that drive increased purchase frequency or more positive sentiment, those kinds of things.
Speaker 1:So, for our viewers who might not be familiar with Talon One, you mentioned some of the brands that you support. How exactly do, what do you do for those brands in terms of helping them promote customer loyalty?
Speaker 2:Yeah, so Talon One itself is a promotion engine. So we have an incentives product that can stream in data from different sources, so it might be the customer's session, the customer themselves and the CDP, or the CRM, customer's and their cart, financial data and margin data about items they might be looking at, etc. So we have a rules-based approach to building incentives based on those different data streams and our focus is on keeping that real time and integrated throughout the customer's digital experience, especially when we also do in-store stuff as well. But if you think about like a user moving around on e-commerce website as a member, we want to show them value throughout that experience, as showing you know might be member pricing or product labeling, personalized offers and discounts, things to kind of nudge them to increase their basket size, to get to a new loyalty status, those kinds of things. So really we really handle the evaluation of the incentives in the loyalty program.
Speaker 2:We also do some stuff that's not in a loyalty program. It's just incentives at work or CRM work. Generally we kind of try and bring those two things together and move loyalty and more of like a passive points and tiers earn and burn static thing off the side and be a bit more kind of iterative and agile in terms of like the different incentives that are getting in front of your customers and your members, and to get kind of focused on being real time and really handling high API load to communicate that value in real time so you don't have one of those annoying things where you don't see your pending points on your profile page for like three days or something like that.
Speaker 1:Right Now I see your tree in the background there, and the holiday shopping season, of course, is top of mind with most marketers right now. What are the latest trends and practices that you're seeing, specifically with customer loyalty and rewards this holiday season?
Speaker 2:Yeah, it's a fascinating year because we kind of had this very interesting kind of whiplash after COVID of, okay, inventory was really leaned during COVID and retailers stocked way up and then consumer demand so often. So last year it was kind of okay, we had to move stuff and at the expense of margin and all these kinds of things, whereas this year the inventory reality has has studied out a little bit and there's continuing challenge around acquisition cost, sharper focus than ever on being profitable in the retail industry. So the overarching focus is how do retailers move on a path to profitability while still stimulating demand in a time when consumers are really really deal seeking? So in the loyalty context, let's say that the biggest kind of macro trend that we see is moving most of your promotional mix behind or into the loyalty program so that you're only kind of giving things out when you're confident that you're set up for a long-term marketing relationship with that customer. So you see this in all kinds of different ways.
Speaker 2:I mean, I'm a big Target fan.
Speaker 2:I live in Germany and I miss Target a lot when I'm living over there.
Speaker 2:So I paid a lot of attention to what was Target doing on Black Friday, especially on their main landing page for Black Friday.
Speaker 2:They had 16 different elements on that landing page and four of those pointed to Target Circle, member only benefits and discounts. So full 25% of their prime real estate for Black Friday was pointing users towards the loyalty program because Target's confident that once you create an account, download the app, sign up for emails whatever that is they're going to be set up to market to you profitably long-term. I think that most retailers kind of move beyond this idea of, hey, we just run a 30% site-wide discount on Black Friday and get a nice bump in demand and are really being a lot smarter about how do we show really really strong value to customers without discounting ourselves into margin oblivion with site-wide discounts for customers that are only going to buy from us once or only when we give them a 30% discount. It's kind of using the loyalty program as a vehicle to set up this long-term profitable relationship and moving most of your promotional mix behind the loyalty program and kind of using the loyalty more as like an active iterative vehicle for personalized Target offers.
Speaker 1:Well, in this holiday season, do you, or can you suggest any creative ways, besides points for rewards, that businesses can reward its most loyal members?
Speaker 2:Yeah, absolutely. I think that loyalty programs are really good at this for a couple of reasons. The first is that loyalty programs are really good at leveraging efficient rewards where the perceived value of a benefit is greater than the financial cost to the business. The really classic example of loyalty is an empty seat in first class and moving a good loyal member who's in premium economy up to first class doesn't really have financial costs but it's really meaningful to the member. I think that in terms of the creativity, I think a lot of the work that I do with our customers is trying to think what are the efficient and meaningful things you can do for your customer that have a higher perceived value than a cost to the business. That's one big area. So a lot of our folks and customers is on like partnership-driven benefits. We have one customer who I really love in the US built rewards, which it's basically a credit card scheme you can also earn points by paying your rent and their entire program is really partnership-driven and their target consumer is mostly an urban millennial renter Gen Z as well. Of course. The benefits for that are really kind of targeted towards that persona. It's like Hawaiian air flight, soul cycle, spin classes, those kinds of things Because those have such a high emotional value to the member, they have a pretty acceptable financial cost to the business because they're just so darn meaningful to customers. So that's a big part of it.
Speaker 2:Otherwise, the exact way that you structure your offers is really really important and this is the kind of thing that there's really good academic research on. Like, if you're doing a buy one, get one for a discount, like, is it better to do you get a discount on the the cheap right and the more expensive item, or blend it across the two, and there's tons of you know it's kind of like, in the small margin optimization, but these can make a really meaningful difference if you're able to be really really intelligent. But how exactly you structure your deals? Because consumers obviously they've asked consumers what they want. They're going to tell you that they want 30% site-wide discounts. We as brands can't really afford to give everybody a 30% site-wide discount.
Speaker 2:So it's kind of like, how do we still deliver things that are meaningful to the customer but contribute to, especially in the retail space? Larger baskets, more food can purchase full price items wherever possible. So like, if you go back to Target, for example, on Black Friday on their Black Friday landing page. Tons of the stuff they were moving was full price. It was just like affordable everyday items, which I think is brilliant. So kind of taking a more intelligent approach to are we showing value and not just being discounts on your entire purchase, but rather kind of showing users things that nudge them towards additional purchases, bigger carts, yeah, those kinds of things. So just being really strategic about why are you running a promotion? What's the best way to structure that promotion to drive a positive result for the business while still being really meaningful and positive to the customer? Thank you.
Speaker 1:From a corporate social responsibility perspective during the holidays, we often see, as we've seen again this year that rewards are tied to certain charitable contributions. During this time of the year, are you seeing any specific examples of how brands are tying the loyalty in with charity, and is that going to give these brands a lift in engagement? Is it realistic to expect, especially during these economic times, a lift in engagement from tying in the charitable causes?
Speaker 2:Yeah, there's a lot in this topic. I mean, first off, there are brands where there's a really, really organic way to tap into CSR elements and to communicate in their program. If you're using organic materials to kind of celebrate how much whatever, how many acres of organic cotton you've helped produce, to kind of celebrate like that you're on this journey together in your CSR work, that's definitely one big part of it is like, if your brand does good work in this, use the loyalty program as a chance to say that you know this is you, like you as the customer have helped us do this and really kind of celebrate their contributions to the business and the ability to drive CSR work. I've seen some really clever stuff. So Pangeya did a really clever thing on Black Friday where you could. You could get a 25% discount if you donated $10 to one of four environmental charities that they provided. So you needed to donate to get the best discount. I have some qualms with how they structured it because like it didn't feel like the brand was necessarily going on that journey with the member and I think that or the customer. I think that's super, super important. It's like a lot of times I feel like brands are just kind of saying I don't know, like, yeah, if you do a sustainable thing, that's good and we'll celebrate that. But I think it's really important to kind of feel like you're in it together and moving towards things. So, like you know, adidas in their Audi Club program they have this run for the ocean thing they do pretty regularly where it's like you know Adidas is really kind of sponsoring and going along with you in this. So you know that could be matching donations, it could be facilitating events for a specific cause, just showing you kind of how your support of the business helps us do interesting, sustainable or whatever the social cause is.
Speaker 2:I would say that you know it's interesting if you look at like what customers actually say they want from brands and like why consumers make choices of brands.
Speaker 2:You know the Boston Consulting Group, in the run to Black Friday, did release some really good research in this question and I think that's like what are the most important criteria that influence your decision on holiday shopping events? This year the biggest one is just the yields and value for money, and majority customers list that. So finability and ethical considerations. I think we're at 11% if consumers say that that's important to them. So you just have to be honest, that you know consumers aren't necessarily expressing, you know, that much interest in this and there's always going to be a massive they do gap and consumers saying what they want versus what they. You know what they actually do based on you know, if you give them what they say they want. So it's a really tricky one, but I mean, I think that that Lich programs are a good vehicle again to kind of, you know, to go with the user, to move with the user towards towards a shared, shared goal is probably the most interesting and legitimate way to do that.
Speaker 1:Turning to personalization. As you know, personalization is always vital in loyalty programs. Are there opportunities right now during the holidays to actually for brands to pick up their game when it comes to personalization and sort of create memorable holiday experiences? It seems like this is a perfect time of the year to do that.
Speaker 2:Yeah, it is. It is and I think that a lot of it's also like how do you set yourself up to take your Q4 purchases and then you know, drive, drive, drive loyalty enrollments, collect data, get marketing opt-ins that you can then kind of come back to the member after the holiday peak and continue to market them in a positive way. You know, personalization it's like the most, it's the most like under delivered term in all of marketing. And I think that One thing that brands really struggle is like okay, we kind of have this vision of like what personalization could look like for us long term, but it's one of those things where you really need like an evolutionary approach to like work towards the data completeness that you would need to really kind of do that big vision of where you're working towards in personalization.
Speaker 2:I think that you know, if you can do things like understand what's the gifting behavior in your brand, then to celebrate that okay, like if you're I don't know if you're buying I don't know like a gift basket of beauty products, like that's probably not for you, so at least like in the comms, to kind of celebrate that you know, hey, we're with this item that you bought or with kind of your search history or your purchase history To kind of show that, like you know, we've helped you be a great gift giver. Those can things kind of bake that into, like your, your serum work and your, your, your email or kind of whatever you're doing. I think that's kind of one easy one to really understand what are the journeys around gifting that your brand supports and then to kind of, you know, there's there's like this, I don't know like like the psychological glow that you get as the brand if you help somebody give a really good gift, like that's. That's just kind of a warm, fuzzy thing. That kind of breaks the typical like transactional I buy by some stuff and then use stuff kind of kind of paradigm most retailers are in, so up to it.
Speaker 2:I mean, I think that we do a lot of kind of discovery stuff, like okay, what's like your current data reality in our product is, the focus is always how do we kind of continually enrich the customer data to segment and targets and then ultimately to actually do like dynamic personalization based on that. But it's a it's an evolutionary thing for sure. So in in like the short term in the next six weeks or whatever. For me it's mostly, yeah, kind of how do you kind of understand the gifting journey and just kind of freshen up your communications to celebrate that or or tap into the the positive emotions with, with buying and giving gifts?
Speaker 1:And what about technology? At this time of the year, whether it be mobile app, ai, virtual events, how do you think brands can really leverage the technology?
Speaker 2:Yeah, I mean. So I'll just talk about the things that I focus on most, which is more on like understanding the thing about like the data on like your item data, so kind of understanding how do certain items pair together to deliver like interesting promotions, and think kind of around like if you're able to combine, you know, high margin low price items with low margin high price items, bundle those together and deliver those in like a personalized way based on customer data. So I think that there's like kind of just understanding what's like the inventory landscape, what's like the affinity webs between different products to be able to kind of bring those to customers. That's that's one thing that I find I find really interesting. Obviously, you know there's lots on virtual events that you mentioned.
Speaker 2:We've got some customers do some really kind of clever things around, you know streaming or just video content. I've really been a key observer. I'm not like a tic-tac user myself, but the stuff that they're doing around tic-tac shop. I find this is really interesting and just kind of showing, you know, kind of connecting where the user's attention is into promotions and into items and into like loyalty enrollment as well. So you know, loyalty specific context, of course there's tons of like tons of angles for AI to come in. On loyalty, it's not like we all want to set up a AI ML model just to just to actually decide what benefits to give. I think we still definitely want some some human control over like what our incentives mix is in the loyalty program. But that's certainly big folks for us and you know putting stuff in our product roadmap to deliver that, to deliver that as well.
Speaker 1:Well, what about after the holidays are over? What are some strategies that you can recommend that brands can retain those customers they may have picked up during the fall.
Speaker 2:Yeah, I think the foundation of it should be just like we talked about earlier to use the loyalty program as the vehicle for your most interesting compelling offers, because presumably your loyalty program is going to be the vehicle through which you're delivering your best CRM work. Your best personalized marketing is going to come through the loyalty program. It's a period obviously of a pretty high consumer intent, of course, much higher spend than the rest of the year. So to take advantage of that intent and that spend to drive enrollment into the loyalty program is the foundation. For members who are already in. I think that obviously there's tons of different ways programs around, like the tiers and the challenges users are working towards. So just to really make sure that you're set up to see what's their proximity to interesting earning moments or it could even just be point expiration events, if you want to do the negative cognitive dissonance or cognitive upper conditioning side of that but all these things really make sure that all this moment marketing that you generate through the loyalty program points to your challenges. Make sure that you're really prepared to deliver messages than those in the new year.
Speaker 2:Obviously it depends on what the actual structure of the program is. So get members signed up, be prepared to take advantage of the moment. Marketing that your loyalty program supports you with, I think, are the most important things. I mean users acquired during Q4 tend to have a higher lifetime value than users acquired during the rest of the year, especially because basket sizes, of course, tend to be a little higher this time of year. But yeah, just kind of think about what's the long-term profitable goal for our customers and how do we be really smart about our investment in customers during Q4 and during a really high promotional period like Black Friday said Monday, that we just passed and really make sure that you're not chasing empty calories through discounts that are just going to acquire customers that maybe they'll come back next year for their 30% discount but they're not going to do anything in the next 11 months.
Speaker 1:Right, sam, do you have anything? We've not covered Any parting advice for brands immediately for this holiday season and let us know what may be next for Town 1 coming up in 2024.
Speaker 2:Yeah, I think I mean it feels like the main two themes for me this year. The first has been really kind of work like getting back on the path to profitability, giving kind of changes in the marketing landscape and acquisition costs and those kinds of things. So I think that's been like one of the two huge, huge key topics for us. And the second is, like you know, I think there's been a really rapid maturation in loyalty around understanding that loyalty programs are data vehicles for like year zero and first party data strategy. So next year is the year that finally, google Chrome will kick the cookie bucket and, you know, no more third party cookies in Google Chrome by the end of next year. So really entering, like you know, it's been a story for five years of kind of the rapid loss third party data.
Speaker 2:But next year is really where, where it feels like the rubber hits the road on that in loyalty programs are so, so good about transparently collecting and using customer data, so asking customers for data, giving them a clear reason to share that and kind of building the strategy of the program around like a data vehicle for the brand where you can, you know, be really honest. Members like this is why we want this data here. So what's in it for you? So to say, so that's definitely our big, big focuses like kind of evolving our customers data strategy, especially as we think about how do we start to incorporate AI into your loyalty and promotional strategy. You know it's AI. Of course, it's garbage in, garbage out, so you need really kind of clean, good data to work with and look programs are really good vehicle to start to collect and use.
Speaker 1:use some of that data Well thank you, sam, very much for those insights and a couple more insights we need from you. It's time for our rapid fire questions. We're going to go through a series of questions. Just let us know your first thing that comes to mind Great, great. What is your favorite?
Speaker 2:word, oh great. So I live in Germany. German is a Lego language where they stick things together. So I got a letter this year that had the word put Kristen energy fessel in the letter. That's one, one word in the craziest language on earth. That's probably my, my favorite one, because it's, like you know, 32 letters long.
Speaker 1:You may have to spell that for us. Yeah exactly what is your least favorite word.
Speaker 2:Uh, if you say like synergy, just things that like business people kind of throw out there because they're like safe, safe words to cover bad thinking, I mean obviously synergies are real. But I get frustrated when, when we all kind of package our our bad thinking and fancy language. That's the things that trigger me the most.
Speaker 1:Well, what excites you?
Speaker 2:You know, as we head into the holidays and I'm back in the US right now I mean good food, with, with, with my family is the thing that's that's most, most motivating and exciting Maybe I should say a work thing, but that's the truth is. Gathering my friends and family over really good food is what I, what I love to do.
Speaker 1:And what do you find tiresome?
Speaker 2:I Think as a person I have a major bias reaction. If I want to do something, I do it full gas, if I don't, I struggle with. So it really grinds me down, is like when there's alignment, that something is worth doing but we're just not doing it yet. Usually just a matter of prioritization. But I think, just like this awareness that hey, this is something exciting that we should be doing and we're just not doing it yet, I find that like a really exhausting thing in a, in a work environment anyways.
Speaker 1:And where is your favorite place to shop during the holidays?
Speaker 2:Oh, redwing shoes, the best boots on earth.
Speaker 1:And what profession other than your own would you like to try?
Speaker 2:Chef. I grew up wanting to be a professional cook until I learned how terrible of a workplace that is, but but still Dream sometimes about trying my hand in a professional kitchen, even though it's no, it's terrible idea, and what profession would you? Avoid. Yeah, we've got to be the same thing. So, chef, chef again. I mean it's just, I love cooking, it's what brings me the most joy, but I know it's something it's professionally pretty pretty unsustainable and who inspired you to become the person you are today.
Speaker 2:Who, my, my, my grandfather. He's a, he's a doctor, but he had like a library in his house that just had books on all kinds of topics, I think being kind of being instilled with the intellectual curiosity from from the cradle in my family. I think my grandpa embodied that the most, just reading random books about I don't know theology, I'm woodworking, really just kind of random topics that you just totally and gross himself in from that really inspiring, and I try and do a lot of that.
Speaker 1:What do you typically think about at the end of the day? I?
Speaker 2:Got really geeky about sleep this year and got a Fitbit, so end of the day, I'm probably thinking how many hours I'm gonna get is it gonna be good enough rest? And then getting stressed about my ability to de-stress when my head hits the pillow.
Speaker 1:And how do you want to be remembered by your friends and family?
Speaker 2:Oh, that's sweet. Yeah, I mean, my love language is is food. My, my sister-in-law just had a baby Last week, so we're, we're with them to kind of help, help around the house and stuff. I don't know what to do with a baby, I don't know what to say, but I know how to cook. So for a couple days I just cooking and I left them with a fully stuffed freezer of Good things that they can heat up. You know that the next stressful couple months they have ahead, so hopefully, yeah, just facilitating good moments around, around food is the thing I'll leave my, my family, with the most memories with there.
Speaker 1:You go Well. Thank you, sam, for taking the time to speak with us today and share your experience and your Expertise and customer loyalty, and we certainly look forward to hearing more from you and from Talon one in the year ahead, and we'd like to thank everybody for listening and watching today. I'm John Nathan.