Jason Hartman sits down with Jeff Berry for today’s Speaking of Wealth show. Jason does a quick 16 minute interview with Jeff to talk about his company, Colloquy and why small businesses should adopt loyalty programs. Jeff talks about how loyalty programs help you understand the customer better and how they can also help you tailor your business to your best customer’s needs on today’s episode.

 

 

 

Key Takeaway:
1:10 – Jeff’s company, Colloquy, is actually a word. Jeff talks about what the word means.
1:45 – Jeff is currently located in Toronto.
4:50 – Small businesses are often closer to their clients and these businesses might not see the value of adopting a loyalty program.
6:55 – Learning about what the customer wants is just as important for a large business as it is for a small business.
9:40 – If you take your loyalty program digital, you’ll be able to learn more about the customer and their needs.
11:30 – Where’s the future headed with loyalty programs? Jeff explains in this segment.
15:30 – It’s free to subscribe to Colloquy.

 

Tweetables:
“By giving customers a discount, you may not understand which products are most motivating to your consumers.”

“You can start to optimize what you’re doing from a marketing standpoint with loyalty programs.”

“The goal for small businesses should be, what’s the right data? What can I affect within my store environment?”

 

Mentioned In This Episode:
500friends.com
https://www.loyalty.com/
https://colloquy.com/

 

Transcript

Jason Hartman:
It’s my pleasure to welcome Jeff Berry to the show. He is senior director of research at Colloquy. Yes, that’s a tough one to pronounce and Jeff is here to tell us what it means. We are talking about loyalty programs and consumer and client engagement. Jeff, welcome, how are you?

Jeff Berry:
Thanks, Jason. I’m great, how are you?

Jason:
Good. I was surprised to learn that Colloquy is not a fanciful made up word. We have so many of those nowadays, because all the domain names are taken. So, you know, in the old days we had Kodak and Exxon. Now, we have a zillion others. Colloquy is actually a word, huh?

Jeff:
It is. I believe it’s Latin and actually means dialogue. Really, you know, it’s about creating communication between parties.

Jason:
Good, good. Well, that’s an important part of anybody’s business and I’m sure listeners will get some good ideas on you today on that, so we appreciate you joining us. Give our listeners a sense of geography too, where are you located?

Jeff:
We’re actually, we have offices around the globe. I’m actually headquartered in Toronto, so I’m in snowy Canada today.

Jason:
Good stuff. Okay, loyalty and engagement in this dialogue very, very important to any business obviously when you look at the lifetime value of a customer. How can businesses be better at creating it?

Jeff:
I think the core of…most people think about loyalty programs, they think about a reward itself or they think about consumers pulling out a card at the point of transaction, at the point of purchase. We generally think about the loyalty, any company’s loyalty program, really as a means to try and engage consumers.

Part of the best benefit of a loyalty program is ultimately the underlining data asset that’s created and visibility into what consumers are doing and when used for marketing purpose or to create more one to one kinds of experiences, I think consumers are certainly both open to that, but also expecting it. In the research that we do, we found that 79% of consumers are saying, I understand that companies collect data about me and I’m fine with it. I think they need to use it to actually create unique experiences for me.

So, as we think about loyalty programs it really becomes a tool to create a meaningful dialogue or meaningful engagement with consumers based on the things that consumers are actually doing with the particular retailer or financial institute or travel and hospitality company. This understanding that consumers have different needs, have different buying patterns and behaviors and ultimately that information can be used to customize the way in which companies deal with and relate to those consumers and interact and create a dialogue with them is really a powerful way to actually drive customer engagement and ultimately customer value over the long term.

Jason:
Yeah. It certainly is. So, let’s kind of drill down if we could, Jeff, and talk about some specific examples of maybe how some of your clients are using this. You have a lot of fortune 1000 type companies as clients and, you know, maybe take that into the realm of how a solopreneur, a small business might use this kind of thing.

Jeff:
Yeah, it’s an interesting one. You know, I think for most small businesses they may think naturally of a loyalty program is being that they’re not able to do; there’s cost associated with it. In a lot of cases, small businesses often feel like they actually have the advantage over large companies and we’re certainly seeing that more and more, because they’re closer to their customers, they generally have a smaller customer base.

Not to suggest that they’re certainly not that they are viable business. They’re thriving business, but they’re often are closer to their customers so this need to actually generalize the experiences through a loyalty program is often not something they think about. I think what we’re seeing, you know, we’re certainly seeing large enterprises do a number of different things with their loyalty programs.

You’re seeing an explosion and kind of a revamping of loyalty within the content of pharmacy as an example. So, Walgreens and CVS and Rite Aid all have big loyalty programs, but they’re actually about how do they turn those programs into mechanism that are not just about a purchase. You buy this and I give you that. How do they actually leverage programs to create healthier lifestyles, so they’re trying to reward on things like flue vaccinations and buying certain healthy products over unhealthy products.

So, they’re trying to use the underlining data to move people around the store in a way that is more appealing to consumers, because it feels very cause orientated. So, I think as it relates to how small businesses think about that, there is a need to understand your customers beyond strictly the what are they buying. It is about how do you actually create some form for engagement. We did some recent research that we did 89% of consumers say that they don’t actually make decisions about what they’re going to buy anymore unless they’ve invoked some form of social media.

So, they’ve gone online, they’ve looked for ratings and reviews. It’s actually not really a new phenomenon. The tools are there to enable it to be much easier to actually easier to engage that way, but when you think about 50 years ago, you would buy something on the basis of what your neighbor said was a good product or your trusted advisers, your friends and family, those sorts of things. So, given that context, there’s a need then even for small businesses to think about how are they actually connecting up consumer transaction behavior with the social conversation, because consumers are actually looking to peers and other forms to actually, you know, decide whether or not they’re going to buy from you or engage from you in any meaningful way.

So, small businesses still have the need to understand the fulsome customer experience and often some form of a loyalty program mechanism, which is really ultimately just an identifier of the consumer to connect different pieces of behavior to one individual in order to enable appropriate communication with them.

Jason:
I’m still trying to kind of drill down. You know, as a listener to this, this is awesome, but I wanna know what I should do. You know, what should I do next? Are there some platforms that you might recommended? Are there some ideas? You know, this comes way back to the time of the old punch card, which by the way is still used. There are many apps for it that people are using on smart phones too, but just, you know, your 10th coffee is free or whatever. This is not Starbucks obviously, but the few local coffee shops that are actually left in business and those kind of things, I mean, they really do work, you know. the car washes use them. You see those kinds of things all the time, but taking this in to the more electronic realm, it can be pretty powerful, can it?

Jeff:
Yeah, absolutely. That’s it. I think there’s certainly is a place for what I deem as more promotional kinds of loyalty programs that the punch card type of program, but they’re very reliant on the consumer to be making the choice every time. You have no ability to actually interact with the consumer to try and motivate that behavior. You assume that the free product at the end of the rainbow is the motivator factor exclusively and I think often times the motivating factor goes deeper than strictly the free thing that I’m going to get. It may also be about special events or special recognition as a customer or special discounting.

So, I think there are certainly organizations out there in some measure competitive to our organization, but we tend not to serve small business, but there are organizations like 500friends that actually are loyalty program platforms that are much more turn key and enable you to actually capture data. I think, the ultimate goal in the data element is to recognize that even as small businesses, we are probably doing a lot of things.

We give away a free coffee, we also have discount days. We also have special events that we run and we wanna invite people. Your loyalty program if you take it digital actually has the ability to try and optimize for you across all of those things. So, equally when you give somebody a discount on a particular sale date, you’re still giving them a punch card deal.

You’re still giving them some other future discount or whatever and ultimately you may actually not understand which of the things are most motivating to your consumers and by taking that program digital or at least the recognition digital, you now have the ability, you know, Jason is actually motivated by the free thing, the free car wash, at the end where Jeff actually wants a 10% discount every time he goes. You can actually start to optimize what you’re doing from a marketing standpoint so that you’re getting the most out of your consumers while also minimizing the cost associated with that, because often times you’re doubling up on the kinds of things you’re giving to people.

Jason:
Good. Okay, so yeah, that’s 500friends.com is what you mentioned. I looked at that site. Okay, good. Well, what’s the future of this? I mean, I assume your company spends a great deal of time thinking about where this is all going as we’ve seen the data mining industry just balloon, I mean, it’s a huge industry. It is amazing the kind of information that people can gleam about the consumer nowadays.

This is never, ever been available in history, obviously. Even if you, you know in the old days, owned a general store and had someone come in all the time and talk to you and you knew everybody by name in a small town, you still probably know a lot more about them today. I mean, back then you probably didn’t know their income. You probably didn’t know a bunch of things that you can today. You didn’t know their web surfing habits; there was no web, but it’s amazing. It’s truly amazing. Where is this all going? For better or worse, by the way.

Jeff:
Yeah, absolutely. I think there is a better and worse. I think ultimately the motivation for organization around doing this is to better understand consumer behavior in order to tailor the experience, so I think, you know, the perfect world that we’re ultimately moving towards is the integration of all of that data? What do I think and feel about you as an organization and then what am I actually doing with you. How am I shopping with you? How am I engaging with you when you run special events or those sorts of things? The connection point on all of those ultimately gets to a truly tailored experience for each consumer and with the advent of mobile in the loyalty space so that it continues to become where most loyalty programs are going digital and mobile delivery.

It also creates this ability to deliver meaningful experiences in real time, so no longer am I clipping coupons before I go into the grocery store. I am actually getting tailored offers. Ones that are specific and relevant to me and the things that are interesting to me while I am in the store shopping around and perhaps even tools that are helping me move around the store in the most efficient way that are beginner GPS enabled. So, I think what we’ll see is ultimately if you remember the movie Minority Report.

Jason:
I just watched a similar movie to that the other night.

Jeff:
So, not commenting on Tom Cruise’s acting ability, I think that world where every company I interact with and every thing that I’m interested in is really tailored to me to create, but the most relevant experiences as well as the most efficient and engaging experiences I think is ultimately the world we’re heading towards.

The downside, you know, I think is fairly limited. What I do think is happening right now is it’s almost an arms race to get more and more and more information and I think that there’s a fallacy in more data and more information naturally makes for better experiences. I think in fact it actually creates more confusion in businesses, so I would suggest, you know, both to large enterprises, but specifically the small businesses, the goal really should be what’s the right data? What can I actually affect within my store environment? Do I want information to help me change my product mix?

Do I want to see which things are actually more interesting to my best customers, as an example, because you may not today have this ability and that you probably know which product looks like, but you don’t know if your best costumers are buying it or your worst and if you de-list something that doesn’t seem like it moves frequently, you may actually be annoying your best customers and have them turn somewhere else. So, I think it’s important to try and leverage the right information for that rather than volumes of data, because I think the volume is actually the crippling piece and then the other side becomes capturing all of this stuff and not effectively using it and certainly we live in a world today where consumers understand what you know about them and they do have an expectation that you’re going to use that to create relevant experiences not just use it for your own advantage.

Jason:
Yeah, sure, sure. Good stuff. Give out your website if you would and tell people where they can find out more.

Jeff:
We’re two websites actually. We’re actually at Loyalty.com is the organization that lives in this customer engagement world and then Colloquy.com is our supporting publication site where, you know, we publish view of global trends and the loyalty space and the customer engagement and customer experience bases. You certainly can go and subscribe. It’s a free subscribe and we publish 6 times a year and we run conferences and a number of different things to engage our audience.

Jason:
Good stuff. Well, we appreciate you sharing this with us. That’s Jeff Berry with Colloquy and Loyalty.com and thanks for joining us today.

Jeff:
Thanks for having me, Jason. Take care.