Mark Johnson, CEO of Loyalty360, spoke with Mladen Vladic, General Manager, FIS Loyalty Engagement Solutions, about looking at the holistic enterprise value of the consumer, the value in looking inside the organization to determine friction at touchpoints, and the challenges and opportunities in customer loyalty in the year ahead.
Mark Johnson, CEO of Loyalty360, spoke with Mladen Vladic, General Manager, FIS Loyalty Engagement Solutions, about looking at the holistic enterprise value of the consumer, the value in looking inside the organization to determine friction at touchpoints, and the challenges and opportunities in customer loyalty in the year ahead.
Good afternoon, good morning. This is Mark Johnson from Loyalty 360. I hope everyone's happy, safe and well. I want to welcome you to another edition of Loyalty Live. In this series, we have the privilege of speaking with the leading agencies, technology partners and consultants, and customer channel and brand loyalty by the technology and trends and best practices that impact a brand's ability to drive unique experiences, enhance engagement and, most importantly, impact customer loyalty. Today's discussion and focus is going to look at the trends that are going to shape customer loyalty in the industry and 2024 and beyond. We have the pleasure of speaking with Ladin Ladic. He's a general manager of loyalty services at FIS Global. He's going to be discussing some of the challenges and opportunities in the year ahead and what they are seeing in their approach. Welcome, Ladin. Thank you very much for taking the time to talk to us today.
Speaker 2:Yeah, thank you, Mark. Very happy to be here and thank to you and Loyalty 316 for everything that you do for the loyalty market in general.
Speaker 1:Absolutely no problem. Thank you very much for that as well. So, when you look at the last 12 months, customer loyalty is becoming more important ever for more interest. Many brands are looking to improve and revamp their customer loyalty efforts, either by adding functionality or changing the program structures or changing benefits for program members. Is this something that you are seeing and, if so, what changes have your clients been focused on?
Speaker 2:Yeah, first of all, I would say that 2023 was really a very active year in terms of the consumer loyalty, a very exciting year. I think that we have all witnessed so many different changes and I think that's because there's a lot of disruption in marketplace and there's a rapidly changing consumer preferences. All of those forces are effectively impacting how we think about the loyalty space and the changes that we have seen. I think we all witnessed some really good examples of program simplification, for example, when I think about the pet retailers, some really good, impressive examples there. When I think about the retail space, I really good examples of introduction on NFTs and subscription-based programs. When I think about we also have seen some really good examples of omnichannel engagement strategies, with completing quizzes and surveys and games to earn the loyalty currency.
Speaker 2:One thing that we have seen in 2023, and I believe we'll see more of that in 2024 and beyond is the concept of more and more experiential rewards, both in the retail sector, but we also have seen some really good examples in the financial institution loyalty space of the experiential rewards.
Speaker 2:Now, all of that being said, we also witnessed some brands that, if you will, took away some of the benefits from the consumer, effectively devaluing the value prop for the consumer, and we certainly witnessed the backlash that they got from the consumers, which I believe is also a huge learning lesson for brands in terms of how to introduce those changes to make sure that they don't lose engagement from the consumer. And then, finally, I would say, as I think about the financial institution loyalty, where the majority of our business is focused on and, I would say, roadmap focus. We saw more and more focus on the enterprise relationship with the consumer. That is looking holistically versus transactional based loyalty, and I believe that that is a result of all of the disruption that's happening in the space and I do believe it will continue to see more and more of that in 2024.
Speaker 1:OK, when you look at some of the program changes in Hansen that you're talking about, is there one or two that you think marketers brand should be focused on?
Speaker 2:I do believe that continuous focus on this shift from transactional loyalty over to experiential and emotional loyalty is going to continue to be a team as we go into 2024. And so I do believe that focus on maximizing the value from your most loyal customers is, for all of the right reasons, going to be the focus. I would say gamification as a concept and building emotional connections and, potentially, subscription are big teams that we will continue to see in 2024.
Speaker 1:Okay. When you look at the customer multi-programs, there's an increased focus on performance metrics measurement. When you look at the efficacy of some of the programs, what do you believe the top three or four metrics brand should be focusing on?
Speaker 2:are yeah, I would say no surprise there, as we think about for those of us who have been in the industry for a while there's more and more emphasis on looking at the holistic enterprise value of the consumer, versus siloed view that is tied, let's say, to the loyalty offer or loyalty program that they're part of.
Speaker 2:So I would say enterprise value of the customer is going to become more and more relevant to brands.
Speaker 2:It is very relevant to some of them I would argue, not all of them and then all of the typical things that you would expect to hear from the marketing, from the loyalty source, in terms of the spend tenure of the relationship, frequency, and then I would say digital engagement.
Speaker 2:I think that one of the things that we hear brands focusing more and more is that first engagement, first redemption, first experience, and we know that for the longest time it took a very long time to put the consumer or customer through that first experience. I do believe that that more and more brands are now focusing on driving that first experience to take place as early as possible into that relationship, to make sure that they go through it, engage in a proper way. It's going to increase the probability of retention and everything else. And then I also you know what we witness and what we hear from our brands is really. You know how do we become and get more data intelligence around predictability of the future engagement. So, looking at the past behavior, transaction, you know history and every digital footprint and everything else to try to predict their engagement over the next month, three months, six months.
Speaker 1:Okay, are your clients asking you for different metrics now than they may have in the past?
Speaker 2:I would say this last piece that I alluded to when we talk about prediction and predictability is one item that we are hearing more and more because their brands are looking to get any data, intelligence from all sources to help them with predicting the future engagement from their customer.
Speaker 1:What new trends have you seen that are top of mind for brands in 2024, and what innovations do your clients you know? What are they looking to implement in 2024?
Speaker 2:Yeah, I would say the first thing is really looking at this holistically as part of their overall ongoing strategy, versus the reaction being reaction oriented based on what your competition did or what the latest market trend is Very important to think about this as a long-term engagement and implications because, as we all know, debt carries the fiscal expectations in terms of the cost and the commitment that you made to the consumer.
Speaker 2:I would say top three trends that we see out there. Number one simplification of the program, so it's easy to understand by the consumer, so that they can get engaged in a meaningful way and understand what is expected of them in order to have a meaningful relationship and engagement with the brand. The second one, I would say definitely experiences. We see more and more brands effectively focusing on experiential rewards. And then the third one I would put it as a broad category in partnership. So I would say that more and more brands rightfully so are training and setting the expectation with their customers that they will be experimenting with partnership. Some of those partnership may not necessarily thin out long term, so it may be a temporary benefit or the engagement, but I think that brands are doing a good job setting most of them setting the expectations with their customers that they will be experimenting with partnerships and new types of engagements that they are going to bring to them.
Speaker 1:Okay, when you look at technology, to me a significant challenge for brands. We just released our next generation customer loyalty board yesterday and brands have a great interest in increasing the efficacy programs, but getting technology work can be a big challenge. So should brands be looking at adding incremental technology? So or, you know, should they be looking at more of a complete revamp? What are your thoughts?
Speaker 2:I would say in general. In general, I am a big proponent of thinking about this journey as an evolution versus revolution, if you will write, given the commitment that this requires from the brand and given the fact that you have a core customer base that is engaged with your program. In general, I'm a big proponent of evolving your program versus relaunching and starting over Now. That being said, every the actual execution for each of brands may be different depending on where they are in their journey, but in general, I think about keeping those components of the program that work, that drive the engagement that we can prove and measure the KPI and the engagement that they're driving, and then, over time, as I alluded to before, if it makes sense to partnership, introduce new feature and functionality that is going to be potentially supported by a supplier or in a house. And I am a strong believer in a phased approach and in a segmented approach so that you can do some of these tests, some pilots, on a smaller scale before you deploy this to your complete or overall Customer base.
Speaker 1:OK when you look at brands who may be on a budget how can they? Best incorporate a new trend.
Speaker 2:I would say, in my view on this, I would argue all brands are on a budget Right.
Speaker 2:So even if you think some of the biggest brands that they're doing, by all measures, really good job in terms of driving engagement, if you talk with them about their product roadmap, they do have ideas and they would like to deploy concepts that they might not be able to do either because of the budget limitation or because of the priorities and technology limitations internally.
Speaker 2:So I do to go back to something I mentioned the moment ago, in those instances, I still am a big proponent of doing something and enhancing the value prop and being part of the journey. And if that means that you need to scale back in terms of the phased approach, if that means that you will deploy the functionality or added benefit to only segment of your customer base, then you should be doing that Right. And then, obviously it goes without saying, then measure the impact that that drives so that it becomes easier to get more budget when you go to the next budget cycle, so that you get the marketing content, endorsements and the feedback from those changes that you implemented, so that it's easier for you to build a case to continue to innovate and get the bigger budget next time.
Speaker 1:Okay, excellent. When you look at the kind of state of customer load, there's a belief that there's a sea of sameness, that all the programs are somewhat similar. Brands want to stand out from their competition. They want to have a unique offering, unique program. When you look at this sea of sameness, is that something you see in regard to program?
Speaker 2:Actually, I actually read the study a couple of weeks ago and 80% of the executives actually believe that one of the challenges that their brand is facing is that their programs or their engagement strategy is really not differentiated enough when they compare themselves to the competition, and I would tend to agree with that view, which, in my opinion, represents an opportunity for brands that are introducing brand new loyalty programs in 2024 right and beyond, because they get to learn from all of the feedback and experiences that those brands that already deployed their program went through. So that is an opportunity for those, for those that already have the existing program. I do believe that, as I alluded to before, I'm a big believer in training your consumer to embrace you on that journey. So if that means that we will be testing, we will be introducing new, we will be thinking about partnerships in a different way, then that is going to be, and as long as your customer is embracing you, then that gives you permission to try new things.
Speaker 2:Now I want to be very clear about this. That doesn't mean that they're giving you permission to bring them something irresponsibly that we know this is not going to work, but it does, with the proper cadence right and the discipline around this. It gives you an opportunity to innovate and look for that differentiation so that you can truly distinguish your program from the competition. I would also say you know, on this same topic, you know there's a tremendous value, in my opinion, of looking inside the organization and looking at the consumer journey, looking at the friction at every touch point that exists. Look at the abandoned shopping card, look at the digital engagement footprint and I would say, when you look at that holistically, there are tremendous amount of opportunity to look for enhancements that could potentially drive the point of differentiation, so that you don't end up with the program that is being perceived as just another loyalty program that is very similar to what your competition is doing.
Speaker 1:Okay, absolutely. When you look at some of the new technologies in customer experience, customer loyalty you know artificial intelligence, the big one game vacations, zero-party data. What technologies do you believe are the best promise for customer loyalty in 2024 and beyond?
Speaker 2:I will pick one that is at the top of my list. I'm actually a strong believer in AI, in artificial intelligence. I truly believe that we are in early days and we will start seeing some real use case applications in 2024. I do believe it's only accelerating 2025 and beyond.
Speaker 2:I do believe, and one of the reasons why I believe this is, I would say, in general I think about AI as a deflationary tool, and what I mean by that is that because the capabilities that it brings to the table, it is an easy tool to think about. How do we control the expense better as a result of the capabilities that the AI is going to bring to organizations, to brands, and therefore I do believe that that's going to be one of the first applications, as I envision the impact on the loyalty space is going to be on the servicing component of those programs and automation and large language models and things like this. And then over time, in 25 and beyond, in my opinion, beyond servicing, we will see more and more AI being used in content creation and curation of that content. But I absolutely believe that AI is going to play a tremendous role in our industry and we will start seeing some first applications actually in 24.
Speaker 1:Okay. So on that, as you talked about personalization, being able to use AI for that content creation from both a creative perspective, but also from a content offers, discounts, whatever it may be is a way many brands are looking at it right now from a personalized reward perspective, and being able to engage them on a more unique and one-to-one level. What are some maybe experiential rewards that brands could be using to drive uniqueness and engagement?
Speaker 2:There are so many good examples, as I said, that we witnessed in last year. Some of the examples are leaving a review, refer a friend, take your brand on social media, take part in the some local event photo contest, early access, meet and read, be part of the early bird testing, and the list goes on and on. I would build a correlation to something I mentioned a moment ago, and that is this concept of look inside and when you look at your digital engagement with your customer and all of the different touch points, I believe that that offers a lot of content the loyalty marketers within the organization to potentially come up with the concepts and ideas that can truly drive differentiation compared to other brands out there are doing.
Speaker 1:And do you believe some customers value experiences more than the monetary back? Okay, it's a potential program.
Speaker 2:It's a great question, mark. I believe some do. I do believe it's still a minority. I think that we as the industry overall, potentially not potentially, you know we over indexed traditional transactional loyalty over, you know, emotional loyalty and bringing the personalized experiences for them. So I do believe that when I look, you know, holistically, at the customer base of the majority of the brands, I would say you will have a smaller segment of those that are truly appreciating and looking forward to those. I do believe that that that that percent will continue to grow over time, right, but I would argue that it's probably no more than a quarter of your customer base that is going to be really keen and exclusively be using personalized rewards today.
Speaker 1:Okay, when you look at brands who are considering offering experience rewards, you know what should brands consider before they actually pull the you know the pull the record and offer experience rewards.
Speaker 2:Once again, I do believe that careful evaluation, right and understanding your customer and their preferences is absolutely crucial, because it is very easy to to make a mistake here because when you think about you know one size fits all types of the program that you know, having out there and transactional loyalty for a very long time. We treat everybody the same. They get access to same benefits. If we are now personalizing that experience, we are saying that we truly know the customer. So if we claim that we truly know the customer yet we deliver the experience that is irrelevant to them, I think it's the damage that can be done to that relationship is much greater. So I would say this whole concept of know your customer, understand the data use, every opportunity to collect their preferences along the consumer journey is so essential and I also believe then you know you need to ease into that concept and see what their initial reaction and adoption is going to look like before you deploy that at the greater frequency and the greater customer segment.
Speaker 1:When you look at real-time interactions, real-time payments. This is kind of a growing air of interest that we see from our brand membership, being able to meet the customers in the channel in the moment. But it can be challenging due to a variety of factors having the right data, having the right technology and the integrations in place.
Speaker 2:Is this something that you're?
Speaker 1:seeing an interest in, and what advice would you give to brands who are considering this move to more real-time interactions?
Speaker 2:Yeah, first of all, I would say, you know I'm a strong believer in real-time interactions and you know, one of the things that I would say we at FIS do really well is this whole concept of pivot points in real time, and that was really our attempt to bring that experience closer to the real time.
Speaker 2:I would say the success of that concept is, you know, really is feeding our product roadmap, to be thinking about those applications or similar applications next gen into 24 and 25. And I would say one thing that comes to my mind, you know, on this front mark is really, in a moment, messaging right. I do believe that you know brands are looking for more in moment, relevant messaging to the consumer, given the fact that we are all bombarded with the number of messaging and value props that are being communicated to so many channels. So, just because you know something is communicated and we believe that it's communicating timely and to the relevant channel, every opportunity that you have to communicate the right offer at the right time is going to resonate with the consumer, and I do believe that this is going to be a big team for brands in 24 and beyond.
Speaker 1:Excellent. Well, thank you very much for taking the time to talk with us today. It was great getting to know more about some of the trends that you were seeing kind of reinforces some of the things that we see as well, and it's great to share best practices and share, just you know, the overall perspective on customer loyalty. You have a unique and very strong vantage point, so we appreciate you taking the time to talk with us today.
Speaker 2:Thank you, Mark. I truly appreciate it and I enjoyed it.
Speaker 1:Absolutely. Thank you, everyone else, for taking the time to listen. Make sure you join us back for another edition of Woods Live and until then, have a wonderful day.