Hi there, this is Zsuzsa Kecsmar, 
CMO and Co-founder of Antavo. 
And I'm Jörn Roegler, the 
VP of Strategy and Insight at Antavo. 
There is a change on the market that we see. 
Traditional loyalty programs are
less and less relevant.
I'm talking about these
earn and burn style loyalty programs.
Meanwhile it's 77% of
customers who are saying
that having a loyalty program with the
brand helps them to stay loyal.
Isn't this a contradiction?
Well, actually, I don't find this to
be a contradiction at all.
What the statistics show that you
just quoted are two facts really.
The first one is loyalty programs
are still very very relevant.
Customers want to be recognised for the loyalty that
they give to a brand, to a retailer.
At the same time old style loyalty programs,
let's say our parents' loyalty,
they don't work anymore. They don't cut it anymore. 
Because they haven't responded 
to the change in market dynamics. 
Ok. So what do you think, what is the future?
What are the things that
make loyalty programs successful?
Well we are looking at this from a holistic perspective
and we can see five ways to keep a
loyalty program really relevant
in the modern age.
And they respond to what I called 
earlier the market dynamics 
that have changed, so they respond to a change. 
Customer attitudes they respond
to availability and technology.
They respond to techniques and things
that we've learned from general marketing.
So let me focus on those five
things and explain them one by one.
The first one is what
I call the incentive dimension.
So instead of just incentivising financial rewards 
you want to incentivise also engaging with the brand. 
So you want to have engagement
incentives in the program.
What do I mean by that?
Traditional earn and burn programs really only
incentivise that you spend money with the brand.
So every transaction you accumulate points that
you can then use for rewards.
That's not how customers
define loyalty today.
And customers have a lot more touch points with
brands and customers are a lot more loyal
in many other ways than by giving money.
For example when I talk with my friends, 
or when I walk into the store, or when I interact
with the latest look book of this new fashion brand. 
Absolutely! Brands that we're loyal to
we go out of our way to promote
them to talk about them. We're just
happy that they're in our lives right.
So I want to be incentivised and recognised for
that loyalty that I give to a brand.
So this is an important element
to a new modern loyalty program.
On the flip side of the incentives
for certain actions are the rewards.
Again traditional loyalty rewards have focused
very much on the financial dimension.
They are very transactional, let's
say vouchers, discounts, free products.
We know these rewards. 
In a way they worked
but consumer attitude has changed.
Customers are now much more interested
let's say in experiences than possessions.
Customers choose brands more based
on values than on price.
Consumers are looking for things
that simplify their life.
Time has become much
more important than money.
So the loyalty program should reflect that.
So what we're looking for are emotional rewards
here. Rewards that are not just money.
Yes. So for example, when you can be a part
of this special group, with people 
with your interests are accepted. Or you can
get access to a special event or you
can get access to switch days so you
can get access to a special event.
That's right.
Look loyalty programs face the same
difficulty that all of marketing does.
It's more noise.
You have to work harder to get attention.
Competitors are emerging here and there.
So you've got to stay relevant
and you've got to stay memorable.
Now going to an invite-only money-can-buy event
in a store of the fashion retailer where no
where a new collection is presented:
it's obviously something I remember and I'll talk
to people about much more than if I
got an email with a 10% discount voucher.
Because I get that everyday from these ten brands.
Exactly.
The third element and that's where we really
go into the customer's psyche a little bit
is the value focus.
What do I mean by value focus?
Increasingly we see a trend that customers make
purchase decisions not on a value for
money perspective but on a emotional
value or brand value dimension.
The emergence of say ethical production, 
sustainability, Fair Trade coffee, just to name a few,
shows that in real life not just in surveys, 
customers make purchasing decisions 
based on how they align with
the values of a brand.
So that needs to be seen in
the loyalty program as well. 
Yes, for example if as one of our clients, 
Simply Be supports body positivity then they can
encourage their customers to upload pictures of
themselves and share who they are.
Absolutely. Another example would be if as a
brand you want to support your customers and
getting healthy, you can reward
people for working out.
If you're an athleisure brand, give people points 
or give people rewards for going on a run. 
And do it consistently. 
That way you really find that emotional 
bond. That's what creates true long term loyalty. 
Another example for the eco-consciusness
that is that you mentioned is that
if people bring back their old clothes
to your store so you can recycle.
That's also something that you can incentivise. 
Recycling and sustainability is a 
big topic, especially in fashion. 
It's everywhere, these days. 
So these would be I would say the three
additional elements on how you design and how you
structure a program. The things that are visible
really in terms of rewards, incentives and
in terms of, you know, 
the brand of the program. 
There are two things that are very very
powerful and very helpful that can underpin the
whole loyalty program, by making it just more effective
in nudging and changing customer behaviour
The first one we call the 
loyalty mechanics. 
Loyalty mechanics, I would say 
summarises things 
that we've learned from 
behavioural science, from marketing. 
They're just clever tricks to improve conversion 
to improve the performance of the program. 
I'll give you an example, which is gamification.
Gamification is a concept that
becomes more and more widely known.
It's basis on the customers or on any
humans really, responds to a target, something to
achieve, the moment of achieving, the moment
also to play and to compete.
This is where boardgames came from.
We can bring these elements into a program.
For example, if we have a leader board in
the loyalty program or if simply we have tiers,
Like these bronze, gold, silver tiers. These
are already the elements of gamification.
Absolutely making it visible, bring an element of
competitiveness in there, having fun attached to it.
That's all going to work and make
customers respond and behave and engage.
Yeah. If you think of limitations in time and
space, if you think of promotions that are
happening in the next two days and not more.
These give a sense of
urgency to the customers.
These all belong to loyalty mechanics. 
Correct. A sense of urgency time limitations.
We could talk about just exclusivity.
So let's say a limited club
where only certain people can enter.
We have that. We have fear of missing out.
Strong emotional factor that actually led
to the emergence of social media.
I want to have what
others have. Very strong motivator.
I could go on and on and on, but there is
a number of things that can be applied in the
right moment in the right way. And it will 
make your loyalty program stronger.
But obviously to do all of this, we need 
to really understand who it is that we're talking to, 
and who it is that we're engaging with. 
So data is the lifeblood of the economy,
and especially so in loyalty 
because relevance and personalisation are just key.
So this brings us to the fifth
sector that makes loyalty programs successful.
That's right. Data science. 
I would break it down into a number of steps
that you really have to do on data science. 
First you need to collect data. 
Find every touchpoint that a customer 
has with your brand recorded. 
Then you need to connect your data.
So you've got to bring it all into a single
customer view or in a unified customer profile.
Whatever the term is that you want to
use. So that you now understand, for every one
of your loyalty members every
one of your customers,
what exactly are their behaviors,
their preferences their patterns.
When you then have that data somewhere, you
need to make it work for you.
You've got to turn it
into some actionable insight.
So with the help of artificial intelligence,
machine learning, we can create algorithms that
pick the most relevant interaction any given
moment and deliver it to the customer.
If you want to see a practical example
this data science could help to give personalised
rewards for customers because for some people a
discount is needed to make the next
purchase. But for those customers who are
already loyal we don't need a discount.
You need to give a special experience or just
a little nudge, a little excuse to check
your store out.
So this way you can differentiate between customers
and it will hurt your margin less. 
Yeah it will hold your margin less, and ultimately 
we want to drive all our customers up
that loyalty ladder, from the one that sometimes
comes to buy something, to the one who
actively goes out and promotes your brand.
And for every single step there's a little different
technique and there's a different objective. 
So by knowing where your customers are
you can adjust your actions. 
But as you said, you don't give massive discounts to 
people that are loyal but to those people you
give opportunities to share and
opportunities to promote your brand.
Thank you so much for explaining all this.
This little onion of actually Recognition Loyalty 
and these are the five things
that make loyalty programs successful.
I hope that this was useful.
You can read more about this topic on the link
below and hope to see you next time too.
Bye bye.
Bye bye.
