As today’s brands continue to seek ways to improve their customer loyalty programs, marketers and loyalty professionals are challenged to provide enhanced experiences and authentic personalization that can lead to greater brand affinity. Emotional loyalty is not built overnight; brands must commit to knowing their customers and preferences, leveraging the knowledge in the right way at the right time. This can be accomplished through customer data insights prioritizing personalization.
Ernst & Young (EY) operates in over 150 countries, working through four integrated service lines — Assurance, Consulting, Strategy and Transactions, and Tax. The organization offers loyalty program services, partnering with brands so that they can cultivate deeper emotional connections with customers. EY’s loyalty programs are designed to enhance customer retention and engagement, increase sales and encourage frequency, facilitate heightened brand awareness and referrals, and provide greater insights into customer data.
EY’s research concluded that 87% of consumers are at least somewhat comfortable sharing data. However, when EY surveyed corporate decision makers that have control over loyalty budgets and programming, personalization and data management capture were lower priorities for investment among companies. EY reports less than half — around 42% — said that they were focused on personalization and customized touch points.
In this podcast, Mark Johnson, CEO of Loyalty360, spoke with Patricia Camden and Michael Anders, Loyalty Leaders for EY, about the state of customer loyalty, why personalization is the number one thing brands must focus on today, and how traditional loyalty programs focused on frequency and volume are giving away to more nuanced approaches that consider a customer’s entire relationship with the brand.
As today’s brands continue to seek ways to improve their customer loyalty programs, marketers and loyalty professionals are challenged to provide enhanced experiences and authentic personalization that can lead to greater brand affinity. Emotional loyalty is not built overnight; brands must commit to knowing their customers and preferences, leveraging the knowledge in the right way at the right time. This can be accomplished through customer data insights prioritizing personalization.
Ernst & Young (EY) operates in over 150 countries, working through four integrated service lines — Assurance, Consulting, Strategy and Transactions, and Tax. The organization offers loyalty program services, partnering with brands so that they can cultivate deeper emotional connections with customers. EY’s loyalty programs are designed to enhance customer retention and engagement, increase sales and encourage frequency, facilitate heightened brand awareness and referrals, and provide greater insights into customer data.
EY’s research concluded that 87% of consumers are at least somewhat comfortable sharing data. However, when EY surveyed corporate decision makers that have control over loyalty budgets and programming, personalization and data management capture were lower priorities for investment among companies. EY reports less than half — around 42% — said that they were focused on personalization and customized touch points.
In this podcast, Mark Johnson, CEO of Loyalty360, spoke with Patricia Camden and Michael Anders, Loyalty Leaders for EY, about the state of customer loyalty, why personalization is the number one thing brands must focus on today, and how traditional loyalty programs focused on frequency and volume are giving away to more nuanced approaches that consider a customer’s entire relationship with the brand.
Good afternoon, good morning. This is Mark Johnson from loyalty 360. Hope everyone's happy, safe and well. I want to welcome you to another edition of loyalty live. In this series, we stupidly leaving agencies, technology partners and consultants and customer channel and brand loyalty. But the technology trends and best practices that impact the brand's ability to drive unique experiences enhance engagement that, most importantly, impact customer loyalty. Today we have the pleasure of speaking with Patricia Camden and Michael Anders. They are loyalty leaders for EY. I'm John. Welcome, Patricia. Michael, thank you for taking the time to talk to us today.
Speaker 2:Thank you for having us. We're thrilled to be here, Mark.
Speaker 1:Appreciate it Absolutely. First off, can you tell us a little bit more about yourself, your current role with EY and a little bit about your background? It'd be great to know. Let's start with Patricia.
Speaker 2:Sure, absolutely. I'm Michael and I co-lead our loyalty offering for the firm. My background is in customer experience, marketing, transformation and, of course, loyalty. I joined the firm going on seven years ago now, after 25 years in the digital agency space, where I was always focused on how do you develop that deep understanding of consumer insight and translate that into activations that make them do the things you want them to do, michael?
Speaker 3:Perfect, michael Anders. I'm a principal EY based out of San Francisco. I started a PC, came over to EY about seven years ago. As we talked about, our focus is very much on what we refer to as commercial strategy elements and loyalty pricing marketing. Those sorts of topics are where I spend my time and have been in consulting broadly for the past. It's one of those things to say out loud roughly quarter century and came over to EY about seven years ago.
Speaker 1:Perfect, Michael. For those who may not be familiar, can you give us a brief overview of how EY works with brands to enhance their customer experience and loyalty offerings?
Speaker 3:Yeah, absolutely. We work from on a number of different topics. That can be from the strategy and vision to things like program design, business case evaluation, etc. Then we can follow that all the way through till things like experience, design and actually development, etc. Things like mobile apps as well. One of the other things, obviously, that we're obviously well designed to do is also to think about not only some of those design and front end elements, but also some of the back end things around finance and accounting, tax, data protection etc. And other aspects that are critical to making sure that the overall loyalty program is functioning.
Speaker 1:Patricia, when you look at customer loyalty, how would you describe the state of customer loyalty? What are you saying?
Speaker 2:Yeah, this is a great question and incredibly dynamic space that we are in currently.
Speaker 2:If I were to choose one word, I would say that loyalty is evolving and evolving in every possible way, from customer expectations to corporate recognition of loyalty as an increasingly important driver of business growth and everything in between.
Speaker 2:We have a team inside EY called the Loyalty Observatory that tracks hundreds of loyalty programs globally. We follow program changes, we look at the mechanics, we look at the business impact, we look at the growth, consumer sentiment and everything in between. I can tell you this team has never been busier in tracking everything going on in loyalty. Some of the most exciting things are to see programs transform from being these more old school transaction based programs to being done dynamic, relationship focused, ecosystem approach, and personalization is really at the heart of all of this change. We think loyalty is no longer just about collecting points although recent research tells us that is still important but it's about deeply understanding customer needs and preferences across the journey. When we see programs that are successful, what we see is agility and a customer centric approach and the ability to continually adapt. So it's this time of evolution that we think is really exciting for loyalty and what we think really encompasses loyalty today.
Speaker 1:Okay, Michael, when you look at some of the challenges that you see with customer loyalty offerings. We actually just did a research study on next generation customer loyalty and the opportunities challenges. It's a very unique time. What do you think some of the biggest challenges that you see with the clients that you work with pertaining to customer loyalty is?
Speaker 3:Yeah, I think part of it is making sure that there's good alignment between the strategy and the technology. Really thinking through, as Patricia mentioned, what we're seeing is also an acceleration and the speed of change. The number of times that we're seeing clients actually look to refresh or change elements of their loyalty program is speeding up. We're seeing some of those refreshes happening every two, three, four years on average in insignificant ways, whether that's refreshing mobile apps or changes to the technology environment, whole scale changes to the program, etc. A lot of that, I think, goes along with and we just completed consumer loyalty market study. That completed late last year.
Speaker 3:One of the things that we're seeing is challenges from the consumer side is, from a customer perspective, there's a lot of complaints around. Okay, how do I actually engage with the program? One of the challenges are that there's too many purchases required to redeem an award. Making sure that there are ways to make programs again, as we talked about, more accessible, more personalizable, etc. And really make sure that, as we talked about that personalization, that it's really aligned with things that are going to excite and kind of motivate customers and consumers as well.
Speaker 1:Okay, when you look at customer loyalty definitely evolving next generation customer loyalty, ai personalization, personalization at scale all of those are front and center. Patricia, how do you think that customer loyalty is changing? Yeah, it's interesting.
Speaker 2:Loyalty programs are. They're evolving but they're also becoming commonplace. It kind of seems like everything has a loyalty program these days. Even I saw over the weekend one of the battery companies is launching a loyalty program. And from our research, we recently did a market study as well and we talked about consumers as well as corporate decision makers. And no surprise, consumers are enrolling in lots of different loyalty programs across sectors and many times within the same product category two, three, four loyalty programs. So loyalty has started to become integrated into the fabric of a customer's life cycle and this is a trend that we expect to continue.
Speaker 2:From our research, most consumers are in at least one to five loyalty programs. In that 25 to 44 age group they're more likely to be part of 10 loyalty programs. They weigh over index on loyalty program usage compared to other cohorts and 66% of the folks that we surveyed reported being members of loyalty programs of two or more different brands in the same category. So it's more important than ever that brands differentiate and expand their rewards to engage with members and to reinforce the value that they receive. But a lot of programs give the same things right you get a discount, you get reward points. Some are moving more toward exclusive content and services. People expect those discounts. They're still important.
Speaker 2:We can't underestimate the importance of saving money and our research time and time again across cohorts it comes out as being important. But today's customers want more. They really crave a sense of belonging and purpose from the brands they're loyal to. So the traditional loyalty program, focused on frequency and volume, is giving away to more nuanced approaches that consider a customer's entire relationship with the brand, so including their interactions, their personal values, their overall experience. So in response to all this, we see loyalty programs evolving to increasingly incorporate elements of experiential rewards We've all heard that community involvement and social responsibility, and we do expect these sorts of nuanced programs to continue over time.
Speaker 1:Okay, if you could recommend one thing that would help a brand in their customer loyalty journey, what would that be?
Speaker 2:This is a super easy answer because it undergirds so many of the next gen loyalty programs. Personalization is the number one thing that we would say is important for a brand to start to develop muscle around. In our research, 73% of consumers said being able to select my own rewards is moderately or very important. 72% said having rewards tailored to me is very important. 68% said I want to select my own channel preferences. You get the idea here People want to be in control of their relationship with a brand and, interestingly, most consumers are also comfortable sharing their data as long as there's a clear value exchange.
Speaker 2:As long as there's, I call it personalization with purpose. Gather my information, feel free to take it, but I need to feel like I'm getting something back with that. We were surprised to see that 87% of consumers are at least somewhat comfortable sharing data. Now what's interesting is when we then surveyed corporate decision makers that have control over loyalty budgets and programming, personalization and data capture are lower priorities for investment among companies. In fact, less than half it was around 42% said that they are focused on personalization and having those customized touch points. So there definitely is a need for what we're investing in and what we're building from a brand perspective, to more readily answer what our consumers are asking for.
Speaker 1:Okay, when you look at how you help customers and their customers let's join me, michael. How may that have changed over the last couple of years? Going through COVID, coming out of COVID, how are you helping customers?
Speaker 3:Yeah, I think it's a good question.
Speaker 3:I mean, a lot of the things that we've talked about are the things that you would imagine were important pre-covid or still important post-COVID in terms of making sure there's real connections.
Speaker 3:I think what we've seen, probably in the last couple of years, is more of a focus on how are we really using it as a driver of growth, how are we using that to really drive deeper customer relationships, kind of an overall sense of intimacy et cetera. But that's also come down in terms of, okay, how do we kind of audit it? How do we prove out the fact that the loyalty programs and what we've put in place is actually working for us? And so I think there's also been very much a focus on kind of the ROI of that and thinking through how that's kind of impacting things like customer lifetime value and whether or not it's driving the behaviors Again that everybody hopes aspirationally when they launch or refine a loyalty program. That it's doing. I think it's been a little bit more focus on that sounds great. Let's kind of measure and refine and, I think also kind of improve the frequency with which we kind of test et cetera, which I think is part and parcel with that personalization journey that we were talking about.
Speaker 1:When you look at some of the important technologies. What are some important technologies branched into, considering Michael?
Speaker 3:Sure. So I mean, I think again there's a variety of kind of a mix of both off the shelf solutions as well as kind of custom development. So I think one of the questions is just figuring out which of those paths you want to be on, based on the size of the investment and the maturity that you're in Mobile solutions. Thinking about kind of integration of that omnichannel experience to kind of link together your kind of mobile and in-store experience, I think is continued to be a challenge and I think that's one of the places that we've seen people invest to try to make that a little bit more seamless from kind of the customer experience.
Speaker 1:Okay, excellent, when you look at AI, kind of the whole discussion around AI how can you use the effective altruism versus effective acceleration? How does AI? How does EY looking at AI? That is OK, ccx, SC schedule. You can I go back then and I'm going to look at what's left then. How do you using that as an internationally demand, what I think we're running now? How do you know what?
Speaker 2:that means yeah, and I'm happy to take this one. You know we are putting lots of time and resources as most of most companies are these days into AI, not just developing the capability, but trying to be thoughtful about how we approach AI because it is so incredibly powerful. I mean, obviously we believe that AI should be used in ways that have significant positive impact on the greatest number of people. So prioritizing AI research is something we think about, with making sure that that research hasn't aimed to solve pressing issues. But we also believe that AI should be used to accelerate progress and societal change. So it really comes down to a balance. So what can that balance look like?
Speaker 2:First off, we think it's important to ensure that, as AI accelerates, it doesn't come at the cost of ethical considerations or lead to negative consequences. That's a big statement. It's hard to deliver on that one. We think it's important to focus on transparency and being responsible with AI development. We also think these things can coexist together. So we think that using the principles of effective altruism making sure that we're delivering the most good for the most people to guide the direction that we take that acceleration and trying to ensure that this rapid advancement with AI and all the associated technology serves to benefit humanity. So we think it's a balance, but not an easy one.
Speaker 1:Okay, there's a great deal of focus on measuring efficacy of customer loyalty. We actually have been working on our advisory board on a bulletin metric study which we feel will be quite needed and quite unique within the industry. When you look at measuring efficacy of customer loyalty programs within industry, what do you see, Mike? What do you think the top three or four metrics brands should be focused on?
Speaker 3:Yeah, absolutely.
Speaker 3:Again, it's going to vary a little bit by sector and business model etc.
Speaker 3:But I think, overall things like customer retention, sales among members versus non-members, customer lifetime value I think as a lead into that, you can get some early signals with things like net promoter scores and other feedback that gives you a sense around customer satisfaction and affinity.
Speaker 3:I think all of those things are incredibly positive. Again, as we mentioned from the consumer survey that we have for people who join loyalty programs, we're seeing that flow through and an increased affinity toward brands, where 67% are more positive about the brands and start forming more of that overall relationship, and I think that's the front-end piece of measurement etc. And then I think, to some extent, what you really want to be able to do is do those either difference in difference analyses or ways to look at okay, what are we seeing among people who sign up and more actively participate in the loyalty program versus those that don't, and then really start teasing that through just in terms of buying behaviors, but also engagement, search behaviors as well as some of the other things that we see as active participation in the program, whether that's active posts, instagram mentions and other kind of things that we pick up through social listening as well.
Speaker 1:Okay, our clients asking you for different metrics now than they may have in the past.
Speaker 3:So I think the metrics are expanded etc. And so I think to some degree there's a little bit more, particularly as people start to get focused on kind of how do I do better attribution than I may have been able to do in the past. I think that's expanded the focus a little bit more.
Speaker 1:Okay, when you look at the interest in rewards, it's definitely evolving, moving towards more personalized rewards. Content offers, special experiences, not just as you mentioned more that recently frequency or monetary spend. What trends you see within your clients? And then, what are their customers, their clients, asking for?
Speaker 2:Yeah, it's a great question and the shift toward more personalized rewards is reflective, really, of a broader trend that we see in consumer behavior where experiences are becoming more valued than material goods and all of our research. This is especially true with millennials and Gen Z. They're just seeking more authenticity and personalization and their interaction with brands, so they prefer prefer rewards that are more tailored to their unique preferences and life cycles. We see this as well with other cohorts. As an example, when we survey our late Gen Xers and Young Boomers. They want more access to higher tiers. They want something that showcases where they are in their life and how important they are to a brand. So it goes the gamut, depending on the specific consumer segment, from our young folks that want more experiences to our more mature demographics that really want more of that recognition.
Speaker 2:That said, we shouldn't underestimate the value of just getting the basics right with loyalty program rewards and benefits. As I mentioned earlier in our research we hear time and time again that discounts and sales and special offers are still incredibly important and drive value for members. So we have to be careful as professionals not to overindex on experiential surprise and delight. We've got to make sure that we're also meeting those table stakes of providing those discounts and cost savings incredibly important For brands. I think the challenge is to balance the scalability of their rewards program with the need for personalization, unique rewards and all of those wonderful things that consumers want to ensure that they can provide experiences in a way that's cost-effective, that makes sense for the business and that it is manageable.
Speaker 1:Excellent. Well, thank you very much to both of you for sharing your unique perspective as great learning partner about EY some of the things that you were seeing in the market around customer loyalty. That's a very exciting time to be in the industry, so thank you very much for taking the time to share.
Speaker 2:Thank you.
Speaker 1:Absolutely. And Patricia, now we have our quickfire questions. We'd like to have a one-word response or a short phrase. So, first off, what is your favorite word?
Speaker 2:Serendipity. I love the way it sounds, I love what it means.
Speaker 1:There you go. What's your least favorite word?
Speaker 2:Bra. I hear it all the time.
Speaker 1:Ah yeah, what excites you?
Speaker 2:Thinking about culture in 50 years.
Speaker 1:Okay, and what do you find tiresome?
Speaker 2:Oh, business travel.
Speaker 1:There you go. What profession, other than the one you currently are in, would you like to try?
Speaker 2:Man, I'd love to be an artist.
Speaker 1:Okay, well, what book do you recommend to colleagues?
Speaker 2:This isn't an easy one, using behavioral science. Marketing is one that I have on my book street.
Speaker 1:Okay, who inspired you to be the person that you are today?
Speaker 2:An amazing boss early in my career that hired me for a job I was not qualified for, but saw something in me and knew that I would work for it.
Speaker 1:Okay, what do you typically think about at the end of the day?
Speaker 2:What I can do to make a difference tomorrow.
Speaker 1:Excellent, and how do you want to be remembered by your friends and family?
Speaker 2:As someone that took the time to really understand people, I think that's important.
Speaker 1:Very great. Well, thank you again for taking the time to talk to us. Looking forward to learning more from EY in the coming year, and thanks again for all you do for Customer Loyalty.
Speaker 2:Thank you, team Appreciate it.
Speaker 1:And thank you everyone for joining us today. We're having you back on another edition of our loyalty live sessions. Thank you again and have a wonderful day.