Welcome to the Loyalty program builders podcast, where we collaborate with top loyalty experts to tackle both business and technical challenges in growing loyalty, guided by a robust customer loyalty strategy.
In this episode, we talk with Henry Christian about how sometimes we focus too much on technology and forget the human aspect of loyalty. Read on to see what we can do to connect better with our customers and drive better business results.
Who is the customer loyalty expert?
Henry Christian specializes in driving customer loyalty and commercial growth in B2C sectors.
With extensive experience in product management, partnerships, and marketing, he successfully crafted coalition loyalty programs like GoTo Loyalty, MAPCLUB, and Link Rewards.
Passionate about fostering sustainable customer relationships through loyalty, analytics, and data monetization, his expertise spans technology, marketplaces, fashion retail, groceries, and banking.
What you will learn about the importance of understanding the customer
Henry discusses managing loyalty initiatives, emphasizing the importance of understanding the customer before diving into technology choices. He explains why securing stakeholder support, starting with the CEO, is pivotal for successful loyalty management.
Next, we delve into the significance of comprehending customer behavior beyond numbers and analytics tools. He introduces the "jobs to be done" framework to enable more effective segmentation and actionable strategies that address customers' pain points.
Lastly, we'll focus on choosing loyalty technology wisely. Henry highlights the importance of prioritizing your needs over technology requirements, engaging with platforms when you're ready to scale, and the significance of integration simplicity when selecting the right platform.
You can listen to the full episode on Spotify, Apple Music, Google Podcasts, and here:
Key takeaways
On managing loyalty initiatives:
- Loyalty discussions often centers on tech choices, but grasping customer and stakeholder expectations should precede tech implementation.
- Loyalty means providing what customers want in exchange for value from their behavior. The program design should make this exchange frictionless.
- When kicking off loyalty initiatives, secure stakeholder support. And, being practical, the CEO should be the priority.
On the importance of understanding customers:
- Move beyond numbers and understand what drives customer purchases, enabling a more nuanced segmentation beyond mere metrics.
- One way to frame this is using “jobs to be done.”
- One example from retail:
- Customer: man in his thirties
- Inner desire: to look good
- Trigger to shop: a high school reunion
- Profile: lazy shopper
- Job to be done: provide an impressive outfit with minimal effort for the customer
- With this breakdown, it’s easier to come up with actionable and effective strategies. For example, offer to deliver outfits for them to try.
- Recognize that everyone encounters pain points with brands. For example, some may lack awareness of trends or struggle with finding what suits them, while others might perceive your prices as high. It's vital to address these concerns directly.
On choosing loyalty technology:
- Begin by understanding your needs instead of focusing on the technology requirements.
- Engage with platforms when you're prepared to scale your operations.
- When selecting a platform, emphasize integration simplicity and its capacity to facilitate ROI tracking.
Three actions to start today and increase your loyalty effectiveness
- Identify: Spend time on your customer’s shoes and determine their unsaid motivations for shopping.
- Reflect: Do your program rewards address the inner desires and pain points of your customers? Or are they points for the sake of points?
- Grow: If you adopt an existing loyalty technology, choose a platform that is flexible and helps you track ROI.
Loyalty program personalization inspiration corner
“Every department, be it marketing, operations, or finance, has different expectations from a loyalty program. The challenge lies in capturing these diverse goals and ensuring everyone is aligned.”
“I encourage managers to go beyond numbers and truly comprehend what makes a customer buy. Only then can you genuinely appreciate and segment them beyond mere metrics.”
“Marketers have been talking about personalization for a long time. But true personalization isn't just about sending different discount amounts. It's about understanding customers' impediments and pain points, then addressing them upfront.”
Full episode transcript
The following transcript has been edited for clarity.
Introduction
Irek: Hello Henry. It's great to have you on the podcast.
Henry: Likewise, I'm thrilled to be here.
Winning customer loyalty is based on understanding your customers
Irek: Today, I'm excited to delve into understanding customers. The trigger for our meeting was one of your posts on LinkedIn, where you mentioned that winning customer loyalty is based on understanding your customers. Could you elaborate on that?
Henry: Certainly. Loyalty isn't a new concept. For someone representing a loyalty technology company, it might sound strange when I say that, to me, loyalty is all about humans.
We can't overlook the importance of technology in building customer relationships. But, when discussions center around loyalty, people immediately pivot to the technology aspect, such as “which platform to use” or whether to adopt web3. I believe that's premature if you haven't grasped what your customers want or what your internal stakeholders expect from a loyalty program.
We must understand the needs of both groups within the company. Every department, be it marketing, operations, or finance, has different expectations from a loyalty program. The challenge lies in capturing these diverse goals and ensuring everyone is aligned.
Loyalty as a bridge between business and customer
Irek: So, would you say that a loyalty program serves as a tool to understand customers and align different stakeholders based on the insights gained?
Henry: When we talk about loyalty, the word “program” often follows. However, loyalty can exist without a structured program.
Loyalty is a means to facilitate the exchange of values between a business and its customers. The business offers what customers desire, and in return, the business extracts value from their behavior. The program design, which includes elements like tiers or signup fees, should facilitate this exchange.
Only after establishing this should we turn to technology solutions. Always remember, it's the humans in the loyalty ecosystem that matter most.
Where to start? By securing stakeholder support
Irek: I concur. Often, I default to the term "loyalty program," but it's indeed about the essence of loyalty. So, if we were to provide some actionable tips for those new to the concept, where should they begin?
Henry: Start with internal alignment. Understand the business's short-term and long-term goals. Speak with your CEO, CFO, and other department heads. Ask them what loyalty means to them and how it can assist their specific objectives.
Remember, you can't please everyone. It's essential to prioritize some goals over others and communicate the reasons behind such decisions. Your loyalty objectives should align with the company's overall business goals.
Without internal support, loyalty initiatives fail. Loyalty is a team sport. It can't be an independent project because customers perceive the brand as a whole. It takes just one negative touchpoint to mar the customer experience. Hence, securing stakeholder support is crucial.
Irek: Absolutely. It emphasizes that loyalty isn't isolated but integrated into the entire business operation.
Henry: Precisely. Loyalty is about serving the goals of your stakeholders and ensuring every department contributes to the customer's experience with the brand as a whole.
The primary stakeholder to consider: the CEO
Irek: Okay, so when considering the North Star, you ensure the loyalty initiative aligns with it. You've also emphasized that it's not possible to make everyone happy, and it's good to understand that from the start. Who are the primary people to consider? If you were to give advice on who to prioritize in satisfying, who would that be?
Henry: Well, your CEO should be the priority. I mean, he's the chief, he's your paymaster. It's practical. He has goals for the quarters or the year, and it's important to know what those are.
A good CEO sets the company's direction for the year, and everyone else should align and ensure the overall business goals are met.
I'd start with him, understand his objectives, and then explore how the different functions support his goal to achieve the company's objectives.
The importance of understanding customers
Irek: Brilliant. Thank you for sharing that. We've discussed stakeholders, then customers, and finally technology. I appreciate the sequence with technology not being the foremost thought, but rather the genuine needs of the company and customers.
Could you delve into the needs of the customer? You seem to have a distinct plan or framework to understand customer desires. Could you explain?
Understanding customers – example from retail
Henry: Sure. Let's consider a retail example. Traditionally, retailers segment their customers using metrics like Recency, Frequency, Monetary Value (RFM). They analyze frequency, spending, and the last visit.
But humans are complex. It's not just about buying clothes. Understanding why people buy clothes – their inner desires – is vital. Every human either wants to improve, get richer, look better, or live healthier. These are fundamental needs. I encourage managers to go beyond numbers and truly comprehend what makes a customer buy. Only then can you genuinely appreciate and segment them beyond mere metrics.
You should put yourself in the shoes of the customers. Consider the true reason they visit stores. Is it just because they received a promotional email? Sometimes there are external triggers. For instance, receiving an invitation to a high school reunion. This is a moment where they'd want to look their best, especially when meeting people they haven't seen in decades.
So, understanding what prompts someone to begin searching for an outfit is crucial. It defines when you should reach out to customers and how to phrase your call to actions. That's why I believe it's so important to not just segment customers based on transactions. You need to delve deep into understanding the customer.
One strategy to go beyond segmentation: ”jobs to be done”
Irek: I love it, especially this combination you've mentioned. If you discover those inner desires and then know the triggers, that leads to a powerful call to action. Your communication is so much better. This is definitely a great tip. Our audience will surely be able to use it.
The next thing you mentioned in the post was understanding “jobs to be done.” Can you explain this a bit?
Henry: Absolutely. Jobs to be done is like this: imagine someone who buys a coat. We know the inner desire is to look good. The trigger might be an invitation to a high school reunion.
The job to be done for this person, especially if they're a busy executive like you, is to find an outfit that makes them look good in the easiest possible way. They don't want to go to stores, queue, or change. They want to look good, but effortlessly. Say, like a lazy shopper – someone who wants to look good but doesn't like to browse.
Irek: Guilty as charged.
Henry: Knowing the jobs to be done and what makes them difficult lets you identify your ready buyers. It makes communication precise and services tailored.
For instance, I can offer to deliver outfits to you to try. What you like, you pay for; what you don't, you return. It's about understanding the needs of different customers and deciding which segment to cater to.
Identifying pain points is crucial
Irek: Thank you. The combination you're presenting brings a clear understanding of the process. Understanding triggers plus jobs to be done helps identify ready buyers. We see the business benefit immediately. Another thing you mentioned was the pain points of customers.
Henry: Everyone has pain points with brands. Some might not know the latest trends or what looks good on them. Others might find your prices high. Addressing these pain points specifically is crucial.
For example, for someone who can spend money but is unsure of trends, why not offer an exclusive shopping experience with a personal shopper? Cater to their desire to look good and make it easy for them.
Irek: That sounds like an excellent framework for relevant rewards. If you understand the jobs to be done and pain points, you can create personalized rewards. Your idea of offering exclusive shopping experiences for the season is something I'd definitely be interested in.
Henry: Marketers have been talking about personalization for a long time. But true personalization isn't just about sending different discount amounts. It's about understanding customers' impediments and pain points, then addressing them upfront.
Turning data into action
Irek: Definitely. It's one thing to use marketing buzzwords, but actually implementing them is a game changer. If you understand inner desires and pain points, you have a winning value proposition. This must also help define loyalty initiatives and align them with a broader vision or North Star, right?
Henry: Exactly. Many loyalty programs today offer points, tiers, and the like. But not everyone is interested in these rewards. Understanding inner desires and pain points lets you craft a suitable value proposition. And for businesses, it’s about optimizing costs while giving customers what they truly want.
Irek: Thank you for joining us today. I appreciate you taking us through the whole system, beginning with stakeholders and understanding the business vision. We then transitioned to understanding customers to launch those loyalty initiatives.
I need to emphasize that loyalty isn't necessarily about the program. Loyalty is a function of a business, and I believe it's the result of a well-crafted value proposition. Businesses with a clear purpose usually work towards loyalty.
We also discussed the framework for understanding customers, ensuring that knowledge aligns with the business vision. Then, we delve into the need for technology. Any additional insights you'd like to share?
How to choose loyalty technology
Henry: Let's discuss technology. People often ask me, "What's the best loyalty platform out there?" My answer is always, "It depends."
I use cars as an analogy. If a Toyota can get you from point A to B, you don't need a Ferrari unless you're racing in F1. Understanding business and customer needs is essential.
The next common question is whether to buy or build a platform. If you can build it and have the resources, great. However, for most, I'd recommend not building it. Focus on your core business. There are plenty of excellent loyalty platforms in the market with similar features. Focus on the ease of integration and if the platform can help you track ROI.
Irek: I agree. It sounds right that businesses should focus on their primary objectives and leverage existing technology. Often, marketing tools have many features, but users only utilize a few. Start with basic loyalty mechanics and build from there.
Henry: Exactly. Don't buy a platform straight away. Begin by understanding what you want to do. Use existing company assets and offer them as rewards to customers. Get platforms involved when you're ready to scale. Starting with a platform can limit your creativity. You become confined to what the platform can or cannot do, which can be counterproductive.
Irek: An important point indeed. Technology can sometimes be limiting. Thanks for bringing it up.
To summarize, we covered business and stakeholders, understanding customers, and technology as a management layer. Although I represent technology, it shouldn't be the first consideration when initiating loyalty programs.
Henry: I've seen this in my career. We'd rush into requests for proposals without understanding what we wanted, wasting both our time and that of technology partners. Start with understanding your needs, not the technology.
Conclusion
Irek: Thank you for your insights. You've provided immense value for our listeners.
Henry: Thank you. It's been a pleasure.
