Bryan Pearson in a tete-a-tete with STORai's Editor on loyalty marketing, customer satisfaction and loyalty programs which are relevant to the customers as well as the brand.
St orai retail feature - tap their loyalty (interview with bryan pearson)
1. Retail Feature
Tap their Loyalty
We all know the importance of the customer in retail. We also know that it is the customer
satisfaction which will help us carve a niche for ourselves and our brand amidst fierce
competition prevalent in the market today. No wonder, each retailer today is all set to woo his
customer with attractive loyalty programs. But then, is designing and implementing a loyalty
program as simple as it sounds and more importantly is it enough to just have a loyalty
program in place relevant to just our brand when the customer wishes to redeem his cash /
points earned? We get talking with Bryan Pearson, president and chief executive officer,
LoyaltyOne and author of the book The Loyalty Leap to put our queries to rest.
H e calls himself a
grandfather of loyalty and
coalition loyalty programs,
And by no means is he wrong. Not
only is his knowledge on the history of
programs for their customers. So to
speak, we are sitting on something
that is just about two decades old.”
Adding more to the history bit he
says, “Originally it was just value add
is just the program itself – thinking
about how do I take it to the next level
– probably the easiest one of that is –
once you started understanding the
customers, it was time to reward
loyalty programs impeccable but the to the customers. Only later was it them according to their spending
insights he shares with regards to its seen as a means of promotion and get patterns and segment them into
current market dynamics, global people to consolidate more of their silver / gold / platinum members. So I
trend and future potential can leave spending then they might have done think you saw program expansion in
you wanting to record each word that in a more fragmented environment.” terms of – So what do I get for joining
he has to share. Says Pearson, “I think / being a good customer to this brand
Over the years, across the world,
the original loyalty programs were / retailer? The second thing that
loyalty programs gained momentum
airline programs going back to quickly happened in the late 1980s
and to encash on their growing
American Airlines and The British and early 1990s was the emergence
importance and popularity, the
Airways. They were the pioneers. This of a partner model which not only
concept of coalition / partner loyalty
was back in the 1980s wherein the offered great learning's to the brands
programs came into being. Shares
frequent flyers could collect points / retailers but also incremental
Pearson, “Changes that this industry
and redeem it for something free. benefits to customers - an ability to
has witnessed have been enormous
Post the airlines, it was the hospitality earn bigger and more aspirational
as people started looking to innovate
industry and it was only towards the rewards. The third dimension I think
around the programs that they had to
early 1990s that the retail industry is really being driven more over time
offer. We had three dimensions – one
started having strong loyalty over the past 10-15 years with the
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2. Retail Feature
internet and advent of database
technology enabler which has given
rise to what I call Relevance
Marketing. This ability to actually
deeply understand the profiles and
segments of customers you have and
connect their shopping behavior and
be able to communicate and design
the marketing activities on a one to
one basis. This has been a trajectory
that has really driven various
programs we see today.”
has its own unique dimensions and be segmented into 4-5 categories
Ask him whether it is okay to segment
how you need to put things together according to Pearson. There is a set
customers according to their
and the subtleties that need to be which looks at ways and means to
shopping patterns without offending
taken care of. India has two make the dollar stretch further
them and he says, “If you don’t then
fascinating challenges – first is that through ways of the points earned.
you miss the opportunity. It is usually
unlike the other bigger markets, in Then there is another set which
20 per cent of your customers who
India the payment vehicles are not as usually just derives a sense of pride
represent 80 per cent of your
pronounced and the second is the being a privileged member to have
business so why wouldn't you want to
distinction between the network on personal emails being addressed to
concentrate on them?”
the organized retailers and the small her, the store being open an hour
With LoyaltyOne recently entering kirana stores.” earlier for her during the launch of a
India to set their operations, Pearson new collection or a sale. The third set
Customers of a loyalty program can
and his team have had to face of customers belong to a category
challenges considering the where they want to monetize quickly
uniqueness of the Indian market and In a coalition loyalty program, the on the points they have earned and
Indian consumers. As he shares conversation is much richer when then the last set of customers belongs
details on this, “I think globally you companies from a variety of to the category of 'aspirational
face a challenge in every market you industries are involved, and the customers' who will redeem their
go to. The foundation of elements of opportunities for communication points for goods or services they
what drives consumer behavior is multiply. Further, the richness of wouldn't have spent their money on.
based on his hopes and fears but once the data obtained from customer
Sharing more insights on loyalty
you get down into putting cultural spending across categories
marketing, Pearson says in his book –
filters on and see and understand enhances the ability of each
The Loyalty Leap: True Loyalty
how the economy works in different participating company to fine-
marketing transcends the
countries, the structure of business in tune its marketing and
programmatic experience that
different countries etc. then you communications strategies and occupies the wallets of most
automatically get the architecture of ultimately acquire new consumers – make a purchase, earn a
what you need to build. Every market customers. few points. The best loyalty
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3. Retail Feature
marketing leaders have come to
understand that their programs are a
way to connect with customers on a
l e ve l e l e vate d b e yo n d m e re
transactions. The customer
information and insights that arise
from these loyalty programs is the
fuel required to empower a new
competitive platform. For over 20
years, programs developed at
LoyaltyOne have affected the
behavior of more than 120 million
people around the world. We also
operate the AIR MILES Reward then to redeem them however they variety of industries are involved, and
Program, the largest loyalty program want. The basic premise of the shared the opportunities for communication
in Canada, where we work with two database and cost infrastructure also multiply. Further, the richness of the
decades of customer spending enables each company to devote data obtained from customer
information to bring incremental more energy to understanding its spending across categories enhances
value to more than one hundred customers and developing the the ability of each participating
leading brands. In Canada, our brand relationships that matter, using the company to fine-tune its marketing
has higher penetration than any funds and resources gained from the and communications strategies and
credit card, higher usage than laundry efficiencies of the coalition model to ultimately acquire new customers.”
soap, and higher retention than any fuel the growth.”
Pearson concludes saying it is
wireless service. Adding further, Pearson says, important to see and recognize the
Coming to the discussion on coalition “Visibility also is raised in a coalition real value of loyalty program as a
loyalty programs, Pearson explains, environment. Companies are able to means to gather relevant information
“If loyalty programs are a better understand their customers, about your customer and not just
sophisticated way to develop deeper which products they buy, how look at it as a below the line
ties with the consumer, then coalition frequently, and where. A company promotional activity. As he says,
loyalty programs – in which group of has visibility because the database is “Customers can only be acquired,
companies band together to offer shared, and not only into its own churned and re-activated so many
customers a common ‘reward customers; it can also understand the times before they tire of your brand.
currency’ and create a shared behavior of non-customers – those There is a proven marketing equation
database – is loyalty on steroids. It is patrons of other coalition members in which customers willingly share
collaboration of dozens, or even who may live across the street but information with you in the
scores, of retailers, airlines, banks, choose not to enter its store. Last, a expectation of being better served
and other organizations all operating coalition model can amplify the and valued during future
under one program – through one company's voice in customer transactions. Capitalizing on that
card – that allows members to earn relationships. The conversation is equation is our business
their points wherever they want, and much richer when companies from a responsibility.”
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