#541: Leaders in Customer Loyalty: Brand Stories | RBC's Loyalty Program is a Broad Value Proposition for All Canadians

In this episode of Leaders in Customer Loyalty: Brand Stories, RBC’s James Lombardi explores how Avion Rewards has evolved into a broad loyalty ecosystem open to all Canadians. He discusses RBC’s approach to strategic partnerships, the continued importance of travel rewards, and how AI and hyper-personalization are helping the bank deliver more relevant value and experiences to members.

Transcript

Welcome To Brand Stories

SPEAKER_01 0:02

Welcome back to Leaders in Customer Loyalty. It's a Thursday, so another edition of the Brand Stories is on tap. It's great to have you with us every Thursday. Today we're gonna be talking with the Royal Bank of Canada, RBC, a brand who is bringing together banking, customer loyalty, partnerships, and technology to create more connected customer experiences. Through partnerships with organizations like Live Nation, Canada Tire, Petro Canada, WestJet, RBC is building a broader loyalty ecosystem designed to deliver greater value and strengthening customer trust all along the way. Joining us today is James Lombardi. He's a senior director of High Network and Premium Experiences at Road Bank of Canada. He's going to discuss how RBC is leveraging AI, the connected customer profile, and an open technology strategy to differentiate the customer experience and help shape the future of customer loyalty in Canada. Welcome, James. How are you doing today? Thanks for taking the time to join us. I'm good. Thanks, Mark. Nice to be here. Nice to have you here. To start off, can you give us a brief overview of the Royal Bank of Canada and kind of the services you provide to Canadians?

What RBC Does For Canadians

SPEAKER_00 1:18

Yeah, happy to. So the Royal Bank of Canada, or RBC for short, is Canada's largest bank by market cap. We've got almost a 160-year legacy, which we're very proud of. And we serve over 17 million clients worldwide across Canada, across the US, and 27 other countries. And, you know, we really run the full gambit of everything you would expect within financial services. So think personal banking, commercial banking, to wealth management, insurance, investor services, uh, cap markets, and beyond. Um, you know, and I think we're pretty proud to have both the strongest physical network in the country, if you think about our branch presence coast to coast, at the same time being really anchored on a strong digital first strategy. And we'll talk about that, I'm sure, as we dive into our loyalty program, uh, Avion Rewards, which is where I spend my day-to-day. Okay, excellent.

SPEAKER_01 2:09

Uh, can you tell us a little bit more about your role at the company, uh, kind of what you do on a day-to-day basis? And uh I mean, how did you get in that role? Were you in customer loyalty before? You know, what's what's your background?

SPEAKER_00 2:19

Yeah,

James Lombardi’s Partnerships Background

SPEAKER_00 2:20

for sure. So I didn't come up in banking. I've been with RBC for about seven years, uh, but I built my career in partnerships. And that's really what I parlayed into the bank. Um, and my first big role in loyalty was in our loyalty partnerships division. So I actually led uh that part of our business and uh helped us navigate through, you know, scaling up our portfolio across a bunch of different categories. So think gas, think fuel, think pharma. Uh and today I'm the senior director, as you said, of high net worth and premium experiences. So I still live within our loyalty strategy, but I really focus on a very particular part uh of our consumer base, thinking about those high-valued segments, those premium card holders, which run the gambit from you know fee ping credit card holders all the way up to our high net worth and ultra high net worth clients in private banking. So uh I like to think I get the most fun parts of our portfolio, everything from live music to fine dining to luxury travel. So we're really just thinking through that segment. What kind of needs do they have? What value we can unlock, and what are the capabilities we need to deliver that?

SPEAKER_01 3:27

So that's a very interesting segue there. You're talking about needs. Uh obviously, everyone uh has their customers segmented the high net worth. They want uh unique experiences, they want to feel welcome, right? So obviously you want uh to get more uh you know kind of hooks into them. You want to get uh more money, more accounts, more investment. You get that emotional loyalty connection going. So how are kind of the customers, what are they looking for these days, kind of the high net worth customers, and and how might they be changing overall?

SPEAKER_00 3:59

Yeah, it's a good question. I mean, you talk to players in this space every day and you know it well. I think the premium landscape is very competitive, uh particularly so in Canada. I mean, high net worth is the fastest growing consumer segment in the country. And I think, you know, that's no surprise to everyone who's playing in this space. And I think that's unlocked a wave of upmarket investments across our competitors. You know, that's everything from new partnerships and value propositions uh to card refreshes and new products and propositions. So there's just a ton of movement in this space, and I feel like the baseline is is shifting almost on a daily basis with the news cycle. Um and that's also that's also risen expectations with our clients. The baseline is higher, they're expecting more. So, how do we respond and what's our ambition in this space? So I think we've got pretty compelling roadmap in front of us as we think about what we can unlock and how we sort of respond uh to meet that demand.

SPEAKER_01 5:00

Okay.

Designing For Gen Z And Families

SPEAKER_01 5:01

So you talked about that uh the younger generation. Uh the goal there obviously is to kind of get them involved, get them engaged, and kind of grow them as they grow. You know, how is the younger generation changing? And we we do a state of customer loyalty research paper. We actually did a Gen Z research paper recently as well. And, you know, they want to be treated like they're a high net worth customer, potentially, right? They want the unique experiences, they want customization, personalization, which can be challenging, right? If you don't have the data on them and they they really haven't reached uh maybe that level. So, how how are you engaging the younger generations? What's working uh, you know, in with the success that you've seen?

SPEAKER_00 5:40

Yeah, I I think it's a fewfold. So, like first and foremost, I think we we think about channels and product design. Like, I think you got to meet younger clients where they are, you know, whether that's in mobile apps, uh, whether that's social media, whether that's digital first touch points. I think you know that first interaction point likely isn't gonna be within one of our branches. So, how do we design around that? Uh, I think a really good example of that, and probably one of my favorite products within the bank uh is an experience that we have called MIDO. So it's designed for younger clients, anywhere from six years old all the way up to 17. And it really is an entry-level banking and credit product designed to sort of learn money management, give parents visibility into kids spending, all anchored in a digital first experience and a virtual visa debit card. So it's a really clever experience. I've got uh young kids myself, so I'm excited for them to get old enough to actually use the product. So it's sort of like building those money smart skills young. But then beyond that, you talked a bit about the data. Like we have such a rich uh transactional data set being a proprietary loyalty program connected into a bank. So I think a lot of where we spend our time is understanding relevant value based on how our clients spend and interact in the marketplace today. So we don't just sort of think about that moment of banking. We think about showing up in those three-day moments. That could be when they're at McDonald's having a meal in QSR. That could be when they're at the mall, going to a Sephora, or that could be going to a concert with Live Nation, right? We want value across that whole ecosystem so that we're building like a deeper relationship with our members and clients beyond that just sort of transactional conversation within a bank.

SPEAKER_01 7:23

Okay.

Avion Rewards From Points To Platform

SPEAKER_01 7:24

Your uh reward program, the Avion Rewards program, uh kind of an award-winning program. Obviously, won awards with our organization and others. Uh, you guys do a great deal of uh award keeping it, uh modern keeping it current. So tell us a little bit about the program. How did it start? Uh, you know, what are you guys doing?

SPEAKER_00 7:42

Yeah, for sure. So Avion Rewards, as you said, it's our flagship loyalty program. It's proprietary to RBC, uh, and it's open to millions of Canadians. So think like not just our RBC credit card holders, every single RBC client. So you could have a mortgage product with us, you could have a direct investing product with us, you're still eligible to participate and earn. And then it's also open outside of RBC's walls. It's open to all Canadians. So just like a very broad value proposition for Canadians. Um, what I really love about it is the flexibility too. Like our members earn points and cash on everything from everyday experiences to those more premium propositions. Um, you know, and I've been in this program for a number of years, so I've had a front row seat to that evolution. We sort of started as essentially like a pure credit card uh points program, uh, earn and burn. And now we have this really robust capability and proposition for all Canadians. So it's, you know, it's not just points, but it's cash and statement credits for members. It's not just travel alone, but everyday value across a really rich portfolio of partners. Um, and then it's sort of powered by these next gen capabilities and uh like our, I think, a really rich digital experience that pulls it all together for our members.

SPEAKER_01 8:56

That makes perfect sense. So open to uh non-members. I know we've talked about this uh in the past uh when we interviewed uh, you know, the RBC. Uh, how did that come out? That's very unique, right? Uh, you know, what was the genesis of that? And and what do you see for the customers that are non-members? Do they transition to become members at some point? What's the value prop for them to get involved?

SPEAKER_00 9:18

Yeah, I think it was really important for us to intentionally design a loyalty program that could be open to all Canadians. And I think the thing that you find

Open Ecosystems And Linked Loyalty

SPEAKER_00 9:26

in the Canadian landscape is it's so loyalty is so uh concentrated and overlapping. Like it's not just a bank proposition, it's not just a retail proposition. Because you have, for instance, you have grocery retailers who are also banks, who are also also issuing credit cards, who are also issuing loyalty currencies. So the overlap is very complex, um, which means that we need ability to compete across all of those spaces. And I think if we just sort of close things off to within our walls, it's it's much more difficult to be everywhere we need to be and be competitive in the market. So I think that was really the impetus for us to want to open it up. Uh, and I think it's been really powerful for us. Like you think about, I guess it's a couple years ago now, we had our sponsorship with uh Taylor Swift and the Eras tour. Uh like exclusive inventory, an opportunity to compete and get to go see Taylor uh at those events in Toronto and Vancouver. We're able to open that up to all Canadians. And when you think about what that did for us from a loyalty membership acquisition standpoint in bringing new members into the program, uh, let alone engaging the ones that we had, it's just such a rich opportunity. So we've seen an influx of new members. And when we sit down with partners, we're able to have like a really fulsome conversation about how many people we can get you in front of. But then it's also important to us to make sure that we are finding value within those relationships for all tiers. Uh, and hopefully creating a bit of a ladder across those tiers that will incent that member to want to move their way up and maybe get an RBC product and come deeper within our walls.

SPEAKER_01 11:05

Absolutely. You talked about loyalty being overlapping. It's a unique uh kind of phrase there. Definitely in Canada, different than many countries, right? Uh coalition is very important. And coalition is changing in Canada right now pretty rapidly. You know, the Aeroplan has kind of made some changes, been sold off, changed, repartnering. You have Scene Plus, right? You have TELUS, uh, you know, they're both members of Ulti 360, they have partners and it's like everyone's partnering up. There's some overlappings potentially, but it seems to be uh kind of a big push in coalition in Canada, but not only traditional coalition, but it's kind of changed, right? And and staying relevant could be a huge opportunity, could be challenging as well.

SPEAKER_00 11:46

For sure. And I, you know, I think we have a unique paradigm when we think about sort of like the strategic partnership landscape. We wouldn't think of Avion Rewards as a coalition. It's it's more so an ecosystem where different loyalty programs can live side by side. Um, and I think one of the first ways we did this, and we I I think we were leaders in the market when we did this like eight plus years ago, uh, it's our partnership with Petro Canada and their Petro Points program. Yeah. You know, when we sat down with them, we were thinking about okay, how how can we help them acquire more members? How can we help drive a share of client spend for them? How can we unlock differentiated values for our members, but do it in an innovative way. So we didn't say, let's stand up a new co-brand. We didn't say all of this happen has to happen in our currency. Um, we actually think there's room for both currencies, for both partners' loyalty programs. So we introduced this concept that's very commonplace now, but it was quite innovative at the time, which is linked loyalty. You can connect your Avion Rewards uh loyalty profile with your Petro Points loyalty program. And by doing so, every time you spend on an RBC product, you get accelerated value. And that value is now up to seven cents per liter every time you fill your tank. So we think this is a really compelling proposition. You can connect to other loyalty programs within our loyalty program. And it helps fuel your earn and it helps fuel uh growth for our program and our partner's program. And uh we just did something very similar with Canadian Tire last year with their Triangle Rewards loyalty program, where we're now, again, connecting loyalty programs together, unlocking accelerated earn for our members up to three times the CT money when you spend on your RBC card. And again, just driving different kinds of propositions in market that I think we're really proud of.

SPEAKER_01 13:39

And are these these partnerships you have uh with PetroCanada, they're based on kind of you being the issuer of that private label card or their co-brand card, correct?

SPEAKER_00 13:48

No, it this is exactly my point. It's not a co-brand proposition. By being of our loyalty program and by being a member of their loyalty program, we can connect those two accounts through an API and put our payment cards at the center of it. So you can actually show up to one of these gas stations or to a Canadian Tire retail store, and you can pull out any RBC card in your wallet. It could be a debit card, it could be a credit card, and because we've linked those profiles, we can unlock accelerated earn on any product. We don't need to try and scale up a whole new co-brand just to get there. You know, and sometimes that makes sense. We've got grocery co-brands, we've got airline uh co-brands with a great partner like WestJet. Um, but we think we can unlock even more scale when we open it up to everyone, especially when you're thinking about an everyday proposition like fuel, like pharma, like mass retail.

SPEAKER_01 14:41

Yeah, okay, that makes perfect sense. So using the APIs, you're able to connect these different uh brands in a very unique way, right? Because technology can be kind of the opportunity, but can also be the bane of one existence, right? Getting things to work in a seamless way where you can look at cross-industry uh and add value, right? So that that that that opening it up to everyone and being able to have and leverage technology that allows you to do that really creates some unique opportunities for the brand, correct?

SPEAKER_00 15:10

Yeah, I think for us, like from a design principle and an execution principle, being real time, being in path, and being seamless for the member is so important to us. So again, if we sort of anchor ourselves in that petro flow or that Canadian tire flow, it takes a matter of clicks to link your accounts together, uh online, mobile, or web. If you are not currently a member of those other loyalty programs, you can sign up and register in path within our flow without even leaving our ecosystem. And again, once you have set that up, all you need to do is walk into that retailer. You don't need to even pull out a loyalty card. You can tap your RBC payment card. That loyalty membership is embedded in that flow. Tap, earn, walk out the store. Incredibly seamless. So I think as we think about bringing partnerships to market, just making it dead easy for the end member, the end client is so foundational for us.

SPEAKER_01 16:09

Absolutely.

Defining Value In A Tight Economy

SPEAKER_01 16:10

You talked about value a little while earlier. Value is uh front and center for our brands right now. Value to the program, does the organization find value in the program, right? Uh does the do the customers find value? Do the merchants and retailers find value? Uh, you know, we talked about this K-shaped recovery in the United States and Canada. People are going to find different value uh in what they may be asking. So how are you looking at value? It looks like you're bringing a lot of value, bringing significant value to the program through these partnerships and opportunities. How else do you look at value right now?

SPEAKER_00 16:44

Yeah, it's a good question. I mean, there's so much change going on around us, but I think all of it has still put loyalty sort of at the forefront of the conversation. Like, you know, whether it's economic pressures we see in the market, inflationary pressures, that becomes a very important loyalty conversation because I think as it starts to hit clients and members' pockets, they start to think about savings and value and how can they squeeze a little bit more out of their budget. That's why having, you know, grocery partnerships with partners that we have, like Metro and Patison Food Group, become really important. Saving every time you go to the pump, really important. So I think for us, it's showing up in those everyday moments in really relevant ways, in in path ways. I think that's incredibly critical to us. Um, but it's different for different segments. And again, you know, last year when I stepped into this new mandate, it was one of the first times that we had actually differentiated within our business what's an everyday client versus a premium client and what capacity should we put behind them to focus on value just for those segments? Because as I sit down, you know, a high net worth cardholder is gonna have very different needs than um someone holding a mass product, for instance, right? So I spend my days thinking about, you know, uh luxury concierge and how can we make it very seamless and unlock bespoke value in a very personalized way for that segment. So I think for us, it's sort of like who is the end user? What is their experience gonna be? And what's important to them from a value, from a channel perspective, and how do we bring that to life?

SPEAKER_01 18:23

Okay, that's interesting. When

Travel Upgrades Plus Everyday Redemption

SPEAKER_01 18:25

you look at um kind of the travel rewards, very important right now, aspirational. Um, they can be a big selling point for members, right? Um but how important uh was it to make the loyalty program more flexible when you made some of these changes recently and offer rewards beyond travel?

SPEAKER_00 18:45

Yeah, it's a good question. I mean, travel's at the heart of our loyalty program. That's where our roots are, uh, you know, and it's gonna continue to be at the center. I think that's how many of our members experience value within the program. And it's also a space that we're gonna continue to invest in. Like you may have seen just last month we announced and deployed a total transformation of our travel platform uh with Hopper, uh, which is a Canadian uh travel fintech. We think best in market capabilities, they've parked with, they've partnered with the likes of like Cap One and New Bank, just like really cutting edge capabilities. And that's unlocked even more flexibility and value for our members. Everything from you know predictive pricing capabilities to flexibility on bookings, like cancel for any reason. So we are gonna continue to double down in this space, and we have, but to uh to answer your question more specifically, that's just one component of our program. It's not the entire program, right? There's so much here for members. When you start to look under the hood and unpack it all, like even on the burn side, everything from you know, not just gift cards and merchandise, but paying off your credit card with points, topping up your investment account with points. And then, you know, doubly so on the earn side, where we have 2,000 plus partners in our ecosystem uh driving earn on everyday transactions. And we've talked about some of those, but it's retail, it's QSR, it's fuel, it's food delivery with DoorDash and beyond. So I think being relevant across the client journey and speaking to members, whether they're travel-minded or otherwise, I think has been a really important design uh uh principle in terms of how we've you know evolved the program over time.

Choosing Partners And Ticketmaster Points

SPEAKER_01 20:31

Okay. You talked about it a little bit earlier, your partnership with uh Canadian Tire and Petro Canada. Uh, you have the Live Nation uh Canada partnership. So these partnerships obviously are very important. You have the technology to be very flexible, to add value to the customers and the brands. You know, how how do you go about finding the right partner, the best partner? Because it can be very challenging. I mean, you have the technology part uh figured out to make it a little easier, but making sure the value propositions align, making sure you know there's reciprocity, you know, how how do you get the partner rewards to work so well for the program?

SPEAKER_00 21:07

Yeah, it's a good question. I'll talk about Live Nation in a moment, because that's sort of our newest announcement and one that we're really proud of. Um but you know, it's it's challenging. Like we talked about the concentration in Canadian loyalty. Um, you know, when you when you step back and look at the data, right? If you were to think about what is every key industry and sub-industry that our clients are spending in, who are the key partners within those industries and who might we want to pursue for value and for a relationship? Um, it's a small list. And then when you start to peel out who's already in an exclusive relationship, who's partnered with whom, who's conflicted, the list gets even smaller. Um, so we've had to be really intentional over the years in getting ahead of the conversation, in being forward looking and thinking about those partner opportunities before we sort of Lose our chance to swing at them. I think that's one. But two, it's been just, you know, grounded in data, grounded in relevance to our members. Like if we can stand up value with someone that is a significant source of our spend of spend with our clients, that's going to drive engagement. That's going to drive relevance because those are brands that they're already engaging with, versus, you know, starting from the bottom and trying to really introduce them to a brand new entity that they don't have a relationship with. It can be a tall hill to climb. And so, you know, we talked about Live Nation. This is one that's so intuitive for us, right? They are the dominant player in Canada when it comes to live events and ticketing. So it's a no-brainer in terms of, you know, who is the right partner in this category. We've got a deep relationship with them. We already have a banking relationship with Live Nation and a program uh out in market called RBCX Music, where our clients can get access to concert cash and uh unlock that next live event that they want to go to. Um, and we also saw, as I saw through Taylor Swift and the Eras tour sponsorship, like this is a proposition that resonates so strongly with our members. And as we look to move beyond travel, you know, experiences and entertainment is something for us that just jumps right off the page. So as we thought about what we could do with them from a loyalty perspective, and again, like going back to what I said about being in path, I think the solution became really obvious for us. We don't want, you know, when you're buying tickets with Ticketmaster, it doesn't happen within our loyalty app. It happens at Ticketmaster, and that's where the value needs to be. So we partnered with Ticketmaster on a pay with points capability where you can connect your Avion Rewards account to your Ticketmaster profile so that when you go to checkout, your Avion points are there on the checkout page seamlessly as another payment tender, uh, as another currency where you can either offset part of the transaction, all of the transaction, up to $500. Uh, and you don't need to do anything more than just connecting up front. So we make it really easy, really seamless. And again, helping our members get to that next live event a little bit faster, a little bit more cost effective, uh, and using uh your avian points to make that happen. So we're really proud of that relationship.

SPEAKER_01 24:20

That's awesome. That's great to hear. Well, when you look at customer loyalty, it's uh you know, one of the great things we could do is speak to people like you on a daily basis about you know different facets of customer loyalty, but at the heart of it is customer loyalty,

Trust As The Core Of Loyalty

SPEAKER_01 24:32

right? Um, you know, what does customer loyalty mean to you and to RBC?

SPEAKER_00 24:38

You know, it's it's interesting. We sit we sit at a unique vantage because we have both a banking relationship and a loyalty relationship with members. And I think if you were to really boil it down, it's about deepening that overall relationship for us. We need to build trust over time. And for us, as I said earlier, that's so much more than just like a transactional exchange or even a points exchange on the loyalty. We need to make clients feel understood by us and valued at every single touch point. And for us, one of the most effective ways to do that is by putting power into their pockets in a way that reinforces the value of the relationship we have together, both on the banking and the loyalty side, while also sort of growing that strategic moat around our program and around the bank at the same time. So I think if we were to boil it down, it's just about helping them feel understood in a way that furthers that relationship.

SPEAKER_01 25:35

Okay.

AI Strategy And Hyper-Personalization

SPEAKER_01 25:36

New technologies out there, uh, obviously AI is the one that everyone's talking about. We've seen uh even in the state of customer loyalty research paper, we do uh kind of a rapid uh transformation, especially over the last couple, three months. You know, how are you looking at new technologies to enhance and to enhance customer experience, customer loyalty, and potentially how can AI play in that role?

SPEAKER_00 25:57

Yeah, it's it's amazing how dynamic this space is. I think it's it's literally changing by the day every time we uh open up our news feed. You know, AI is certainly at the heart of our strategy. I think honestly, RBC has been ahead of the curve, I would say. Um we have our own proprietary AI uh lab, uh Borealis AI, that we've had since uh 2016. And I mean, if you sort of put that in context, that's six years before the introduction of Chat GBT to the market. We had our own AI lab thinking about how we could harness this technology to propel growth, to unlock value and insights and products for clients. So um we've sort of long been on this journey. Um, and it's something that's already infused into our loyalty program. Like we've used AI, for instance, as a personalization engine uh to help deepen and predict uh behavior and redemption behavior so that what we're putting in front of you is is actually the offer and value that's right for you, not just the one that we want to push. Uh, and we've seen that produce tremendous uh incremental results in terms of the level of engagement and the level of redemption behavior. So uh it's a journey that we're on and we're excited to keep going through it. Um and I think it also reinforces where we're going, which for us, we've been really declarative about getting not just to personalization, but almost to hyper-personalization uh as a bank and as a loyalty program. And I think data and AI are gonna be foundational to making that happen. So we're really, really laser focused on that and excited to see how that unfolds over the coming months and years.

SPEAKER_01 27:37

Excellent. Well,

Loyalty 360 Relationship And Closing

SPEAKER_01 27:38

I'll ask questions: you know, what can Loyalty 360 do to help you and your team and your customer loyalty journey?

SPEAKER_00 27:44

Yeah, absolutely. I mean, we're we're so proud of this relationship and we, you know, we're gonna keep coming back to the conference. Uh, we're happy to continue to engage because I think for us, we continue to learn, we continue to understand, you know, benchmarking data from our peers, best best practices from loyalty leaders across other industries. Uh, and it also helps us foster connections. You know, again, I talked about this unique dynamic where, you know, Avion, I think, coexists as an ecosystem with other loyalty programs who are also our partners. You know, so as we go down uh to participate with Loyalty 360, our partners are there too. You know, WestJet is there talking about their loyalty program, uh, Petro is there talking about Petro Point. So it's just a great opportunity for us to share, to have dialogue, grow new connections, and uh and help amplify the story of what uh RBC and Avion Rewards is doing in the market.

SPEAKER_01 28:36

Well, excellent. Well, thank you very much, uh James, for talking with us today. It was uh great getting caught up on RBC and Avian Rewards, some of the unique things you're doing, especially the partnership uh and how you uh facilitate some seamlessness in the experiences for your customers. So that was great to hear and adding significant value as well. So uh it's great talking to you and always great catching up. Thank you, Mark. Happy to come back anytime. Also, want to thank everyone else for taking the time to listen. Make sure you join us back every Thursday for a new episode of our Leaders in Customer Loyalty Podcast, the Brand Stories Edition. Don't forget to subscribe and follow us on YouTube and our other social media channels. The details are listed in the comments section below. Until next week, have a wonderful day.