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Welcome to Travel Buddy
In this episode of the Travel Buddy podcast, we dive into the intriguing dynamics of customer loyalty with Carly Stemmer Ivory, VP Research Analyst at Loyalty360. Join us as we explore the challenges brands face in keeping pace with changing consumer expectations and the role of technology in personalizing customer experiences. Discover insights into the next generation of loyalty programs and the cautious yet promising potential of AI, providing practical takeaways for businesses navigating this complex landscape. Key Highlights —The critical importance of understanding and adapting to changing customer preferences for brand loyalty. —Challenges in achieving true personalization and overcoming data silos. —The evolving concept of next-generation loyalty programs and engaging younger generations. —Emerging trends in gamification and digital rewards to enhance customer engagement. —The balancing act required to effectively integrate AI without losing the human touch in customer interactions. Quotes —"Listening to your customers and actually hearing what they are saying are two very different things." – Carly Stemmer Ivory —"It's about building out a community of advocates and aiming for emotional loyalty." – Carly Stemmer Ivory —"Leveraging AI is about finding where it intelligently solves a problem rather than creating one." – James Houchin
Transcript
Brandon Giella (00:01.332)
Hello and welcome back to another episode of the Travel Buddy podcast. Today I have the usual suspect, James Houchin, head of marketing for Switchfly. But we have another wonderful guest joining us today who I have to say her title, VP of Research Analyst at Loyalty360. Did I say that right? VP Research Analyst at Loyalty360. Crushed it. OK.
Carly Ivory (00:23.206)
You did. Yep. Spot on.
I'm
Brandon Giella (00:27.528)
Carly Stemmer-Ivery, thank you so much for joining us. And I'm excited to dig into your nuggets of wisdom, because I know this is what you do all day. And so I want your expertise to shine in front of our listeners and to get some great insights into what you guys are thinking and researching at Loyalty360 on the customer loyalty segment of the world. So within travel, of course, something that is so important is
building that loyalty for customers to stay engaged, to stay traveling, to stay with that one brand you mentioned earlier before we started recording, why it's so important that of course.
It is easier to retain a customer than it is to get a new one. so higher profitability, better margins, better revenue. But it's really tricky. It's really difficult. And so you guys have a lot of research that is helpful for brands and suppliers in the loyalty market to help showcase what's happening in the world. So that's what I hope to talk to you about today. But you guys had this really interesting report that came out last year. And I know you have a new one coming out very soon. But in last year's report,
It talked about how 52 % of customers have higher expectations for brands customer loyalty efforts yet only 51 % of brands feel they understand how customers are changing and 57 % of brands have average or below average understanding of tech platforms and their impact on customer loyalty efforts. So it seems like there's a disconnect. They know that the customer preferences are changing but
not all brands know how to adapt to those changes or what those changes even might be. And so thinking about 2025, how do you think about that relationship between what customers want and what brands can offer? And then and I'll turn it over to James to chime in as well. But that's that's how I'd like to set up this conversation is when you're thinking about next year, how what's changing in the market and how are brands adapting?
Carly Ivory (02:33.64)
Yeah, of course. And I think that's a great question. And the stats you pulled from our state of customer loyalty report, and we do conduct that annually with our brand members. And to your question, there's a couple of different parts to that of why there is a disconnect between how brands know customers are changing and why they're unable to keep up with that. And I think the first reason, of course, just technology in general.
hard to keep up with. It's changing so fast. There are new players in the market. You see a lot of acquisitions within customer loyalty where larger players are acquiring smaller ones and adding their capabilities to their tech stacks. But there's also so many new enhancements and capabilities out there that that's hard to keep up with. But it's also what is shifting and what's taking priority. With customer preferences too, they can change.
rapidly. saw that going through COVID where you had one set of customers that were comfortable shopping in stores. All of a sudden you see a huge shift to digital because you have to adapt. But I think we've seen that continuing after. the thing with customers too, what we hear from brands, lot of customers, they're irrational. Maybe they tell you one thing of what they want, but they really act a different way. So it's hard to find that balance of what is truly
But with expectations, we are really seeing a shift toward personalization. We've heard that from brands the last couple years and expect that to see as a trend going forward. But to get to true personalization, you have some brands that personalize as maybe your name in the subject of an email. But true one to one personalization, that's hard. That takes getting the right data.
But even before that, understanding what data you need and asking customers for data you'll actually use, but having it in the right place, being able to action on it, being able to access it, even having visibility into that. We see a lot of brands, their data's siloed in different systems and it's in different platforms. They don't integrate. So how do you get those to work together and speak to one another so that you can get to personalize?
Carly Ivory (04:53.524)
communications or offers, rewards, whatever that may be for your brand. So that is a really big challenge. Third, I think we see just the gap in platforms available today. There is a disconnect between the bench strength of internal teams to be able to manage them. Just because there's a platform out there that has all these really neat capabilities and the bells and whistles, doesn't mean somebody can
can run it, where they have the people to manage it. And we're seeing a push toward self-serve platforms, marketer-friendly platforms, and I think that's great. They're a lighter lift for brands to onboard. They may be less expensive, less resource intensive, but once they get those platforms in-house, there's a realization that they may not be able to run it effectively. A lot of loyalty teams, they're small teams. They may be also working in
digital, might be working on their website, they might be responsible for CRM or communications, they're often not solely focused on loyalty. So how do you get the right partner in place and not just a technology platform is really key to not only understanding those customer expectations, but being able to action on them and improve your loyalty efforts overall.
Brandon Giella (06:17.986)
So what I'm hearing is there are small teams, things are moving quickly. They don't have the budget or the resources necessary to do it. But it's also just, it's hard to know what customers want. And so it's just, there's a lot of complexity. And so it's really hard.
Carly Ivory (06:33.946)
It is. And I think too, with a lot of brands, see a difference between, you'll see customer surveys and things along those lines that brands feel that they're listening to their customers. But I think there's a big difference between listening to your customers and letting them give you feedback and actually hearing what they're saying and incorporating that into your loyalty strategy. So having an effective voice of customer process, if that is through surveys, but also getting feedback from
internal sources, getting it from those on the front lines, your employees, what are they seeing, what are customers telling them, what's working, what's not working, and having that entire organizational commitment all the way through is really crucial as well.
Brandon Giella (07:20.074)
you
I want to touch on something. You mentioned in one of your reports the term next generation customer loyalty. And one of the stats that I found was interesting was 74 % of brand marketers said it's highly important or of growing importance. But I'm curious, how do you define next generation loyalty, especially for people that are listening that are interested in that in 2025, going into this year, some new trends or developments and especially
around AI. So I'm combining a couple of different ideas in this question, but I'm really curious, like when you think about the next generation platform, what is that and how does AI relate to that? And do you have any hot takes around that for people to think about this year?
Carly Ivory (08:07.964)
Yeah, I think that's interesting. And when we put out our research on next generation customer loyalty to us, it was about that next iteration of your loyalty program. And what does that look like? I know we talked a little bit before this about the sea of sameness and just this feeling in the industry that there's a lot of programs out there that they look alike. They may have similar structures when you just look at it generally from they'll have two or three tiers. The rewards look the same.
How do you stand out in that crowded market if you're a restaurant, retail, hotel, whatever industry you may be? Just thinking about the next version of your loyalty program and what does that look like? When we did our research though, it was interesting. We had some brands come back to us and say, not only are they focused on the next generation of their loyalty program and the structure of it, but how are they also engaging that next generation of customer? And that can be hard to, especially for
brands that have been around for years, have a solid, loyal customer base. You don't want to have your customers feel like you're moving on from them, but how do you get more people involved, especially with younger generations? And that's a challenge for a lot of brands, and that involves operations. It might involve your product offering it. It changes your messaging, and it really gets into having to leverage segmentation to understand your different audiences.
So that was really interesting to see come out of that report that it's not just the next version of your program, but also how are you going to be relevant to customers that have been loyal for years and new ones coming in. With that next generation of loyalty program though, I think a lot of things that we saw from brands that stood out, personalization continues to be huge. Personalization at scale.
Seamless customer experiences across channels, if that's digital, in-store, making sure they match up. Experiential rewards, we've seen a shift in, if you're differentiating your program, maybe experiences is something you can offer, if that's travel, tickets, VIP offerings, making someone feel special and giving them that status as one of your best customers. But also building out a community of advocates and really getting to emotional loyalty and
Carly Ivory (10:28.924)
Emotional loyalty is not easy. It's challenging to define. It's one of those things that's more, know it when you see it, than having a firm definition around it. And measuring emotional loyalty is a challenge as well. There's not an emotional loyalty metric out there. Sometimes people use a proxy for MPS or C-STAT, but that's not truly getting to that emotional piggy bank you'll have with your best customers.
That's where brands want to move. They want to have that community of advocates. But getting to your second question around AI, and that's some separate research we've done. There's a lot of buzz around AI, of course. I think there's a lot of opportunity for it, but for customer loyalty seems to be very early. We don't see a ton of proven use cases for AI. Right now, if
brands are adopting it. It's more of a test and learn approach. I think people are very cautious with it, especially when you get into what we're seeing with data and privacy. There's a lot of concerns about what you share with AI platforms and how that may be distributed and handled. But nonetheless, a lot there to consider. for right now, what we're seeing, we're seeing brands test gen AI more from like a marketing and communication standpoint.
I think there's opportunity there, like we said, for personalization. Maybe it's a next best offer recommendation to a customer. And we've seen some things too in recent demos where more suppliers are putting in AI capabilities to their platforms. If that is in terms of maybe campaign management or journey management or reporting and segmentation. I think you'll see a lot more of that in 2025 as some new enhancements come out with supplier roadmaps.
Some things too we've seen, and I think you've seen it for some years, more around customer service, customer support, chat bots, that could be an opportunity for AI. I think that gets to a balance though of convenience versus losing a human touch element as part of your loyalty program, especially with your better customers. Sometimes those customer support bots, they can be more frustrating than anything else, and you turn a customer off instead of just...
Carly Ivory (12:50.324)
letting them speak to a human that can actually help them with whatever their question or concern is. But I think to be used effectively, what we're seeing, I think it has to start with education. And that's where we're really focused as an association with putting out our research. We do a lot of member only meetings. We have a continuing education process. And AI, of course, is one of those topics. And from the education there, it's about putting the right team in place to make sure you can manage it.
having the budget and buy an internal support for it. So I think AI, you'll see more use cases in 2025, but still very, very early on over.
James Houchin (13:30.074)
And I would love to kind of hop in there and circle back with a question as well. mean, high level, we definitely, you know, on the supplier and for sure have really tried to play with AI. Where is it most intelligently used and where does it actually solve a problem versus where is it a solution looking for a problem for switch fly? That's that means just like Carly said, the communications and the education piece specifically, we have some localization features where, know, say you're
Usually with travel, it's either something you're wildly familiar with, like going to see grandma or, you know, Frankfurt, Kentucky, or the complete other end where I've never been here before. I don't know, you know, the locations, the nuances, et cetera. And we've really tried to leverage AI there where, you know, I'm going to go to Cincinnati. Where's the cool place to hang out for food? Where's the, you know, best place to stay if I want to be, you know, near a sporting event, et cetera. And, you know, just trying to take some of the onus off the traveler or the purchaser.
And then yes, we do have some recommendation features, but I mean, that's something everyone's kind of come standard or coming to expect between Netflix to Amazon to, you know, relevancy. However, we really try to kind of make sure it's a value add versus a frustration driver. Like Carly said, we're, you know, putting it in front of your customer service piece. I mean, I can think of some large air carriers that do that. And even if you have status, the first interaction when you have a problem is
Hey, I'm going to act like it doesn't really matter or we're not going to leverage our people. That leaves a sour taste in anyone's mouth for sure. Especially as we're coming up on holiday travel and nothing seems to get simpler. My question for Carly though was what's changed in the last 12 months of how you see other next gen loyalty, the overall loyalty space? Like how has that changed how you defined it or have there been any nuances that have kind of stood out as we've gone from the AI hype train to
You know, it's been here for a minute. It's starting to get to be an old hat. Like, you know, what
Carly Ivory (15:32.402)
Yeah, a couple of things and not just related to AI. I think you see it more from really a sense of keeping customers engaged in those non transactional rewards and that could be due to some concerns with the economy. Maybe you're not seeing your customers as frequently as you once did, but also just a push toward staying relevant, especially if you're a brand that.
Maybe your customer isn't shopping with you weekly. Maybe they shop every few months, once a year. How do you stay top of mind for them? And I think what we're really seeing in that non-transactional reward is, and one of the most interesting ways we've seen it recently is more of this push towards digital and also gamification. gamification, it's interesting. We've seen it through a number of our sessions. And when people think of gamification, maybe you think of that.
cheesy spin the wheel that's really annoying when you land on a website for the first time and that can be fine too for offers and discounts but more of a customized approach to gamification that's a little bit more authentic and you see it sometimes in you know maybe a spin to win but maybe it's something like a
customized game, maybe it's more of a scavenger hunt, and maybe it's something we've seen too that's crossed between digital or in-store where it's maybe an element online and then it's an element in person as well to drive foot traffic. The other thing we're seeing too is part of gamification is a push toward zero-party data and collecting more zero-party data and that information that customers willingly give a brand and share with them.
And that ties into everything else a brand's trying to do with personalization and driving loyalty overall. The more you know about the customer, the more you can personalize to them. it's maybe a quiz on your website of your favorite sports teams or a style quiz on a retail website, taking all that information and getting it in bits and pieces can be really powerful. The other thing we're seeing too is
Carly Ivory (17:46.324)
on the lens of gamification more toward these games and sweepstakes. It not only keeps customers engaged, but with those games, if you offer someone to enter sweepstakes for 500 loyalty points, whatever the number is, reducing that point liability and having customer engagement, but giving something in return that maybe isn't an offer or a discount or something that's a hard cost at the end of the day has been interesting to see.
Another differentiator, and this has kind of gone back and forth, I think, with brand partnerships. You used to see a ton of interest in brand partnerships, and I don't think you're not seeing the interest anymore, but it's a lot more complicated than it used to be. it's, people want to make sure if they're entering into a partnership with another brand, it's worth it. You know, having...
a brand listed on your website or an email and saying, here's a partnership offer. Maybe you get $5 off at this brand. It's a one-off thing. What's the value of that? It's hard to measure. It's hard to measure the impact of that. Are you really getting in front of other audiences? But having an integrated partnership can be impactful. But to get to that, we've seen has been complicated by a lot of things, data and privacy.
legal's involved with a lot more of those now. What used to be a three page partnership documents, a 25 page packet you need to go through. So I think there's still a lot of interest in partnerships as a trend overall. It's more just brands really focusing on that quality of partnership versus a quantity, which maybe it was a few years ago.
James Houchin (19:30.226)
Kind of tag teaming on the partnership I can definitely think of a few points where I've kind of co-merged my loyalty or you know You connect this app to that up and you get you know X between the two Where has which definitely seems newer the last two or three years, but where's a loyalty change for you most as a consumer I mean, obviously this is your day to day. So I'm sure there's opinions and habits being formed But what does that look like, you know for you personally?
Carly Ivory (19:57.938)
Yeah, I think as a consumer, you really see more of a push to digital. And we've seen some brands too that are newer or launching a loyalty program for the first time and they go digital first. And it's not common, but we do have a few brands that their program is digital only. And I know that has its own hurdles and challenges in terms of getting customers involved in communications.
making your program digital friendly and maybe it's not just having an app that is the only way you can get a part of the program. It's maybe an app and the website you can use it on mobile, but it connects to the in-store experience as well. Like we said, having that seamless connection is really important and for the brands that do it well, it's great. I think a lot of people are still working toward that for a lot of reasons. It's the technology has to be in place, the strategy, the people to run it. It's
and education as well from your internal teams managing platforms to everybody on the front line to be able to use it effectively. But you see the brands that are doing it well, it's a really cool digital experience and I think you'll continue to see a push toward that in the next generation of loyalty programs. But for some legacy ones that have had their programs for years, it is a challenge. It's not a quick overnight fix to just pivot completely.
But I think a lot of people are working toward that.
Brandon Giella (21:28.486)
I will say when you see an experience that is personalized to you and not in a creepy way, but it's like, you know what? actually do really enjoy that travel bag with toddlers or I thank you for that article. I'm actually really interested in that topic. When you do see something like that, it's such a delight and I know it's extremely hard to pull off. So bless you people who have, who get paid to do that all day, because I know that's really, really difficult. Carly, you've pointed out so many different technologies and the, the, the customer
customer preferences that are changing all the time due to a variety of huge factors. And so I know there's a lot going on, but that's why there are great teams and organizations like Loyalty360 who can help you out and help you find good partners and programs and strategies to put in place. And then of course, James with Switchfly, the work that you guys are doing on the travel side to help personalize travel for larger brands, for suppliers of that travel, and then also for customers.
finding their way around the world so i'm grateful to both of you because i think you guys are making these technologies and these organizations a lot better because it helps to serve customers like me on the end you know that are that are taking advantage of these benefits so i'm really grateful for y'all and i'm excited to catch up with you again carly some other time but if you want to look up carly stemmer stemmy hold on
Brandon Giella (22:57.874)
If you want to look up Carly Stemmer Ivory, VP Research Analyst at Loyalty360, please check her out on LinkedIn. have, my daughter is crying. And then do check out James, of course, James Houchin at Switchfly on LinkedIn. yeah, give Loyalty360 a look and hopefully we'll have you back on a new episode sometime in the future.
Carly Ivory (23:20.286)
For sure, looking forward to it. Thank you guys for the time.
James Houchin (23:23.09)
Thank you. You all take care. Bye.
Brandon Giella (23:24.009)
Thanks so much guys. All right, see you.
