Leaders in Customer Loyalty, Powered by Loyalty360
Leaders in Customer Loyalty, Powered by Loyalty360
Connecting the Bricks of Successful Loyalty: How LEGO® Built the VIP Rewards Program on Fun, Creativity, and Inclusivity
Mark Johnson, CEO of Loyalty360, spoke with Jason Whiting, Director of Membership at the LEGO Group, about the new VIP rewards program, building and planning strategic partnerships, and creating value for members through personalization and data.
Good afternoon, good morning. This is Mark Johnson from Loyalty 360. Hope everyone's happy, safe and well. Welcome back to another edition of our Leaders in Customer Loyalty series. In this series we speak to brand leaders about what they are seeing and hearing on the front lines of customer channel and brand loyalty. Today we have the pleasure of speaking with Jason Whiting, the director of membership at LEGO Group. How are you today, Jason, doing well, thank you. Great, good to connect with you. Great seeing you a couple of weeks back. I hope the flight back to Europe was uneventful, good, good. We'd like to start these on a more personal level. I know we've spoken with you in the past, but we'd love to know a little bit about you, kind of what you do at LEGO, maybe your career leading up to LEGO and, a fun fact, a passion you may have outside of work.
Jason Whiting:Okay, cool, yeah. So I got my career. I started my career in retail. I was in there for about seven years, followed by seven years in the agency world. Then I was a head of marketing for regional telecom for seven years before joining LEGO Group 10 years ago. So that very much dates me. Then with the LEGO Group 10 years, heading up membership for the past five, and right now what I'm in charge of is all our benefits and mechanics, as well as rewards and operations of our program. Kind of personal thing. You probably see it from my backdrop, but I'm a massive Star Wars fan, and mostly a LEGO Star Wars fan, and I would like to say that that probably got me my start in the company is had such a passion for it I thought it was easier just to work here. So huge fan. But yeah, that's a little bit about me.
Mark Johnson:Okay, witness, the next theatrical release for Star Wars coming out.
Jason Whiting:Oh geez, I honestly don't know, and I should know this. I was just at Star Wars Celebration hearing about everything coming up in the additional prequels and sequels and everything like that, but I don't recall when the next one is.
Mark Johnson:Okay Interesting. I was reading something about how they do directors now going forward. They only let a director have it one or two series of time or something like that, just to create some free funny. Some can be more intense, more drama based, but I think it's only one director at a time or maybe two. Then they kind of switch it over just to kind of give some different color or engagement in the end of the series.
Jason Whiting:They've done a lot of interesting stuff with the series over between the shows and the movies and stuff. It'll be really great to see what comes up next.
Mark Johnson:Okay, yeah, I was just telling the story that we just did a bunch of redesign our house and I actually saved this from my floor of my. We put carpet upstairs of my house and my son had it in his and just broke it on his floor in his bathroom and I'm like that's going to get stepped on. I made him fix it and I just broke it again. But I like Star Wars Legos as well, so perfect. So for those who may not be familiar with Lego, can you tell us a little bit about, like a short history of The LEGO Group, what you guys do, how you do it and kind of how the company's grown and evolve?
Jason Whiting:Yep, and I'm sure I can give you a little bit of background. I'm sure everybody's heard of the company 95% brand awareness, so it's been around since 1932. So we were born in. Billund Denmark is a really small town in Denmark. It was mostly like farming land to begin with. That's where our world headquarters are still today, owned and operated by the family. The same family who started it still owns the company.
Jason Whiting:So a privately held company Start off in a woodworking shop making furniture, got into wooden toys and stuff and then moved on to injection molding and plastic bricks and we've been doing that for quite a long time. Now we're coming up on our 100th anniversary not too far away, so getting pretty excited about that. But yeah, it's a fun place to work. Like I said, our global headquarters are in Bill in Denmark, but we have some regional headquarters around in. London is one of them, which is one of our regional hubs, as well as one in Connecticut, soon to be moving to Boston, and then we have Singapore, china, etc. So we operate globally and our program actually runs in 34 countries in 26 languages. So pretty substantial.
Mark Johnson:Perfect when you look at the LEGO VIP program a very successful program, award winning, just won a number of awards at the Loyalty 360 conference. How does the program work? Can you give us a brief overview of the benefits, how it works and how it keeps people engaged with the program?
Jason Whiting:Yeah, so the program itself is much like a lot of other programs and we have a point system based on when members make purchases with the LEGO group, either through LEGO. com or our owned and operated stores. But the big difference in our program, what I like to say is it's really built on our company values, which includes fun, creativity and inclusivity. So it's one of the reasons why we don't have a traditional tiering approach to anything. As an inclusive brand, we want to make sure we're welcoming to everybody and we really use the different benefits and rewards to target our different users. So, while some users will gain lots of points because they do have high spending thresholds, we usually look at or they have high spend. We usually look at the types of things that they're interested in which tend to be more expensive in the program, and then we offer them up.
Jason Whiting:So our program has everything from very low value items including free rewards for those just starting off in their journey with the Lego brand all the way to things that are like money can't buy benefits and rewards. So, like I said, traditionally it's got the point system and extensive reward catalog. We have over 1,000 different types of rewards depending on the different target audience affinity, things like that. And then we have additional features and benefits so early access, special events, signing events for our users, points, promotions and stuff like that. But really we look at we want something fun. We try to be a little bit creative in the different types of things that we make for our users and then really making sure it's super inclusive and there's something for everybody.
Mark Johnson:OK, I think, knowing your program, knowing you for a number of years, you guys do a great job with your program initiatives and keeping the program up to date. You also do a lot of research consumer research, trends research, that kind of influence, your personalization partnership program. So how has customer data influenced your program initiatives and what type of research do you use to build out such a successful rewards program?
Jason Whiting:Hugely important. It's everything from getting everybody involved in the user journey and trying to figure out where are there moments that we can bring the program to life, to focus groups, to surveys. But really, for me, the best thing that we can get is talking to our users, that zero party data, finding out what they really like, what did they really want? And this is really getting to the heart of what drives them emotionally, not just transactionally. So if you ask any user what they want, they're going to say they want something cheaper or they want money off or they want something free. So really understanding where their passions are, that really is super important to us to understand what we need to create from the program.
Jason Whiting:So we work very closely with our digital insights team around just analytics to see what's working. But then we work with our global insights team, focus groups and, like I said, just going right out to the user, just wait and ask him what is it that? What's the thing that's interesting? What do you really wish we could bring to the program? And then trying to see what is feasible. So it's a huge aspect, but it's not that I would put little value to the traditional insights and data metrics, but sometimes it's just better to get out there in front of people and really understand what's going on, and that's something me and my team do constantly.
Mark Johnson:OK, personalization is a big area of interest for brand stays. I mentioned zero-party data, transactional data, behavioral data all that goes into effective approaches. But you can have all that data and not do it. Well, as you know, and I think LEGO does a great job of doing personalization. When you look at a brand I look at LEGO as a brand new how are you focused on personalization? What does it mean to LEGO?
Jason Whiting:Yeah, and I think I appreciate your comment saying that we do it well.
Jason Whiting:I think we are hypercritical of ourselves and we don't necessarily think we're doing a great job at it, but it's constantly a journey where we're trying to better understand our users.
Jason Whiting:What's really tough is getting into the space of personalization, is we've all very much sat in this segmentation world and looking at different how can we put users into different segments, look at their behaviors, look at their shopping patterns, things like that.
Jason Whiting:We're really trying to move closer and closer to personalization, to one-to-one, and I think the challenge often lies in balancing the need to provide this personalized experience or personalized information that brings people through that journey, versus how much data do you really want to collect? As a children's brand, we have to be very careful with that and our program works directly with shoppers. But we are very critical of and of how important it is for us to keep trust within for the brand, especially to families, right. So when we look at this, we say what type of information do we really need to make that personalized experience and then what type of information does that user need? On the other end, I would say like we are very early in that journey on where we want to be, but we're treading very carefully because of the use of data and the fact that we are a global program.
Mark Johnson:Okay, what metrics do you see? Growing personalization that can kind of tell the story about efficiency efficacy of the program, especially the measurability engagement spend potentially.
Jason Whiting:Yeah, I mean, it's the traditional ones that we all look at, right? So sales frequency, average order value, retention metrics, things like that, click through rates to make sure that the marketing is doing well. The big one for us, though excuse me, that was a change was really looking at our engagement. Scoring and this is something I'd shared at the Loyalty 360 is we built an entire scoring model to look at all the different touchpoints that people have within the program and seeing how things change for that user when they engage with different aspects of the program. And we've rated all of our users on a scale to understand how engaged they are.
Jason Whiting:And it's not just about sales, right? So you can't shop your way into a highly engaged user. You have to actually be interacting with various aspects of the program. And this is really important to us because this type of metric shows us are we creating new benefits that people actually use? And then the more engaged we see them, the longer we keep them, the longer they hire their lifetime value and things like that are. So we really started with what is it we're trying to achieve and then measured across all the different aspects of the program to say, okay, are we achieving this goal? Are they engaging with this feature? Are they using it? Are they using it over time? And if they are, let's rank them a little higher and see what we can do next to make them even more engaged with the program. So I think that's a big shift for us, moving from those traditional, like sales based metrics. Okay, that's fine, okay excellent.
Mark Johnson:You know partnerships. I know they're another important part of the LEGO's custom ability approach. You guys seem to do it quite well. I know you have some incredible collaborations with IKEA, ditas and you know the Levi's collection. How do you go about establishing a partnership that's mutually beneficial, both to LEGO and the other brand but, you know, also to the consumer? How do you get that to work, because that could be a big challenge for brands these days having a partnership that is advantage to everyone in the mix.
Jason Whiting:Yeah, I would like to say I have the magic sauce for fixing this, but I don't like. We have an entire team at the LEGO group that works on brand partnerships. The biggest thing for us in finding the right partners whether it's a good brand fit. There's quite a few brands out there that just don't align with our company values and we wouldn't necessarily work with them. So we have an entire team that looks at all the different partnership opportunities and it truly makes my life easier because that team comes forward with those opportunities already. So I might be able to say here's a new company I'd like to work with or a new area I'd like to work with and hand it off to them. But often they're coming forward with those partnerships and, like I said, we have an entire team dealing with inbound and outbound licensing. They're looking at both IP partners to bring into the LEGO brand as well as partners to bring the LEGO brand to.
Mark Johnson:Okay, and when you look at the partnership approach, you have a team now that focuses on it. How do you see that changing? Are you looking at more partnerships, more strategic partnerships? How does the approach to partnerships, how's it, changed within your group?
Jason Whiting:Yeah, I think, even starting back some of the older IPs that we had, and I mentioned LEGO. Star Wars is one of my fan favorites here and that's a huge IP partner and we work with them everywhere, from content that's Lego mini figures inside, like Star Wars branded content, all the way to the Star Wars branded sets and things like that. So there's a lot of work that we do with Lucas and Disney. I think over time we're just looking for more of those types of partners that we can work with that can bring mutual value to us. So, like I said, star Wars is a great one where we have quite a few rewards that we know that our fans are really engaged with, so we create more and more features in there.
Jason Whiting:And another great one is Nintendo, where we have products that we've worked with them and then we actually worked in collaboration our two programs, LEGO VIP and my Nintendo to build a relationship where we both had benefits for our members. So I think there's just gonna be something more and more that we do over time Once we find that, like I said, that right fit. But it's becoming super important because a lot of, like I said, brand recognition is huge and a lot of the way we get people to think about our brand is in the context of things that they're already into the IPs that they're already into and there's usually just a really good fit between the brand, our brand and that brand, usually because it's based on some type of product storyline that those fans are really into, plus the desire to build.
Mark Johnson:Okay, great. And when you look at the measurement regarding customer loyalty, it can be somewhat challenging with regard to incrementality or just return on the program all the way around. But when you look at the KPIs, what KPIs does Lego and your team use to kind of look at your loyalty strategy and then make sure that your efforts are on track?
Jason Whiting:Yeah, and I would say goes right back to kind of those core ones. So we are looking at frequency and retention, kind of those are two big ones. We look at an active based model, which is how many times has somebody shopped within a one year period? We are very seasonal. Toy product, toy industry is very seasonal, so we look at a long time horizon for how often we bring people back. And then that's the engagement scoring piece, which just shows how well people are embedded into the program.
Mark Johnson:Okay, when you look at the economy, a little bit of economic uncertainty today, even though I was just reading that Apple's at all time high and some companies continue to do very well. Inflation in the US and in Europe. England job growth continues to be quite strong. But how can customer loyalty, customer loyalty programs, be a hedge against some of that economic uncertainty?
Jason Whiting:So I think like that's the big thing, right, as a lot of our programs were here to create this added value that maybe our products or our services don't automatically have in their own or people have been accustomed to, so we reward that loyalty for us.
Jason Whiting:I think the challenge I see with a lot of the things going on in the economy is, as we try to fend off some of these, the natural position to go into is like this discounting mindset and I think, a lot of those changes. They can be a big challenge for both our brands and our programs, right? So there's quite a few programs that I saw in some of the industries that, in order to make this transition from during COVID right From an in-person experience to an online experience or their entire business model, shut down. They over-indexed to providing way more value and it kind of reset everything and users expect that they're going to get more discount pricing benefits from that membership, and I think what that does is it devalues your product as well as your program, and I think that's the thing we have to watch out for. I think there's a role we play in bringing more value to our users, but we shouldn't do it at the expense of our product as well as our programs.
Mark Johnson:OK, and when you look at customers, a great deal of discussion regarding how customers are changing, going into COVID behaviors, change Stores had to kind of respond to that by in the line picking store, return shipping, whatever it may be within your respective industry. But how do you think your customers have evolved and how are you kind of addressing that and looking at it holistically from the Lego perspective?
Jason Whiting:So I mean honestly, we all saw the same thing right, we saw a bunch of channel shifts. Our stores are massive brand experiences and having those stores closed for some time and moving to the E-Com platforms, that was tough, right. So the upside is we saw a lot of people who had never moved into the E-Com space and were only in these physical stores shopping, moved to the E-Com and into our E-Com platforms and actually start understanding how to use the different aspects of the program that were only online at that time. So I think that was a huge benefit for us. It got visibility into various aspects of our program as well as our business. Once the stores opened back up, we saw that those tight shift and people moving back into those physical experiences, which is really good. But you get more omnichannel shoppers from that and I think that's a really positive thing because you move seamlessly between those channels.
Jason Whiting:But it runs the risk is, we taught a lot of users around convenience aspects and things and there was big shifts in our business. Like you said, return policies and free shipping and free returns and all these other things that fundamentally changed the demands of our users. How do we just manage that when we might not be able to provide those same things going forward in our stores or online, and all of us have challenged with this. There's been some big, monumental shifts and I think, especially in some of these programs, there's been some big things that were done during COVID times to keep people engaged and I think, looking at what that means for our business and how do we continue those experiences where people they've set their expectations fast shipping delivered to your home, easy returns those are as should be expected, but we've made them so easy as we're opening in our stores.
Jason Whiting:What does that look like in our stores? And, honestly, this is a place I'm not sure about Like we have to keep an eye on it as people move around, but it's really important for our customers to get a lift and push back in the industry comes a tougher thing, I think, for a lot of businesses that have like franchise models and things like that, because people want to move across all those channels very seamlessly. And what does that look like? So I think like things like the hotel industry or airlines and they've been dealing with this for a while, but I think in retail it's been a little bit different and some challenges over the next few years to take a look at, but I would say overall I think it's been a positive. Covid wasn't a positive thing, but I think it was a positive thing to get people moving through those channels and seeing the different experiences that they can have.
Mark Johnson:Okay, are there other customer loyalty programs, customer loyalty efforts that you admire, that you may find yourself loyal to being one of the leading programs in the industry? If so, what do you like about their program? What keeps you loyal?
Jason Whiting:Yeah, so I'd say there's probably two programs in one industry that I think, that I find that I really like. So the Explorer program from North Face, I think, is really good, I think because it really feels very similar to what we do, embraces their users, really understands, like you know, what their passion is about and means into that, and that's something that I take a lot of inspiration from and how we approach this. And then I also really like what Nintendo has done, having their dual currency and moving for both engagement and purchase. They have a pretty well well established rewards portfolio. I think that one I feel is similar to Explorer, similar to ours. I just like how they're really leaning into the passion points of their users versus really looking at it as, like, like I said, a transactional or discount-led program. And then, I think, from an industry standpoint one I kind of hinted at some of the challenges I saw earlier.
Jason Whiting:But the cruise line industry I find fascinating, right, they went through this huge shift during COVID where they had no business and fundamentally changed a lot of their programs, and now they're faced with the scenario where a lot of their users have moved up their tiering systems and now they have to assert providing those benefits and they're facing with bringing that entire business back with a huge set of users that moved up multiple tiers. I think that's really interesting to see that right, unlike our company where, I said, like you know, we're very much about the inclusivity piece, which is why we don't have tiers. Their entire business model is built on tiered rooming systems and benefits and stuff. So, seeing how, how do you take people who traditionally would have been your highest tier and now literally they're they're in the middle but they're still being, they're still being called by the high tier numbers how do you deal with that and I think that's just something interesting to learn from and how they're affected by everything that's happened over the past few years.
Mark Johnson:What can Loyalty 360 do to help you and your team and your customer loyalty efforts?
Jason Whiting:Yeah. So I think there's probably some a few areas that just like keeping a lot of the different vendors coming in, different speakers talking about some of the the different things that are happening in the industry I think is very helpful, especially in the space of the metrics Right. So things like how are people approaching predictive lifetime value or or the attribution modeling piece. I think all of this is super helpful. I get a lot of benefit and me and team get a lot of benefit from looking at different research, different presentations from different leaders to understand what's going on in the industry, plus to help us either set our strategy or look at kind of setting the story for our leadership right, what is going on in the industry.
Jason Whiting:I think we probably also a lot of us who've been, who've had a program for, sometimes suffer from the same thing, which is how do we evolve this? We take, we look at externals and we take inspiration from that, but nothing's ever as easy as it seems from the outside. Being able to get a glimpse into what others are doing, I think, is a huge thing that Loyalty 360 can do and something I really I really liked being at the the conference to just seeing that other people talk about their programs, talk about what their challenges were and how they overcame them. I think is incredibly helpful for both me bringing back and inspiring my team, but also to get set some direction for internal leadership.
Mark Johnson:Okay, perfect. Well, thank you very much took some copious notes there, and it was great seeing you a couple of weeks ago at the conference. Hopefully we'll continue to see you, and congrats on all the amazing success that you're having with the program.
Jason Whiting:Fantastic. Thank you absolutely.
Mark Johnson:You too. Thank you everyone for joining us today. Make sure you join us back for another edition of our leaders in customer loyalty series soon. Have a wonderful day.