The Evolution of Loyalty Programs within the Grocery & Supermarket Industry w/ Andy Kulina
Andy Kulina: And it's not just talking to you about bananas, but it's talking to you about bananas because they know you're a runner or they know you have a pet monkey.
Julian Bracey-Davis: I'll tell you what. I would pay good money to watch you do it. The Paris Marathon with a monkey on your shoulder.
Speaker 3: Uncaged Wisdom, Cheetah Digital's podcast for modern marketing.
Julian Bracey-Davis: Hello again and welcome back to another episode of Uncaged Wisdom. I'm Julian Bracey- Davis.
Kayla Siegmeier: And I'm Kayla Siegmeier.
Julian Bracey-Davis: Today, Kayla, our pre- packaged subject, straight off the shelves, is the exploration of loyalty programs within the grocery industry. Our guest has over 25 years of experience designing, implementing, and operating consumer engagement, growth, and retention programs, head of loyalty at EMEA and host at Cheetah's Loyalty Royalty Roundtable. Easy for me to say. It's Andy Kulina. Welcome Andy.
Andy Kulina: Thanks for having me, Julian.
Julian Bracey-Davis: Great. To start off, rather than getting into the meat of today's subject, or vegetables, depending on your delicatessen sensibilities, Kayla, could you kick off with a random ice breaker question?
Kayla Siegmeier: Yes. That was very inclusive of you by the way, Julian, so good job.
Julian Bracey-Davis: My end, meat and veg. Meat and veg.
Kayla Siegmeier: All right, Andy. You see how we like to do a little ice breaker question just to kind of get a view into who you are. So for this one, if you hadn't become a marketer, what do you think you'd be doing today?
Andy Kulina: Oh, well that's a very good question because I didn't even study marketing. I wanted to be an aeronautical engineer. In fact, I loved airplanes growing up.
Kayla Siegmeier: How did that happen? How did you switch to marketing from aeronautical engineer? I'm curious now.
Andy Kulina: Well, first of all, to be an aeronautical engineer, you have to take a lot of physics and just the size of the physics book almost wears you out after lugging that thing around for two years. And, as a part of the coursework, I took a computer science class and mind you, this is 1984, 1985. I loved that. And I was talking to people and they said, " There is no book to carry around. It's just a computer class. You just go in there and use the computers." Because there weren't laptops or anything. So I got a job at Kroger as a computer programmer. Developers used to be called programmers back then. And that then evolved from, I went from a programmer to a business analyst, which I call a programmer with social skills. So that meant I went out to the stores and saw what they were doing and then came back and translated what we needed to write into code. And then eventually you start doing that enough you get farther and farther away from technology and more and more into the commercial side of things. And that just sort of evolved into marketing and strategy
Julian Bracey-Davis: No one grows up dreaming to be a marketer. Sorry for anyone listening to this who did dream of being a marketer when they were in their youth and doing posters of marketing. But the amount of background, random backgrounds that people have and they fall into this, but I can see why lots of different people who have interest in a wide variety of pieces do end up down the marketing realm.
Andy Kulina: I think it's interesting because you think about digital marketing, there's three pieces to that. There's the digital piece, so what can the technology do? There's the marketing piece, so what is the message you want to do? But I think a lot of people forget what's the consumer want? Because we're all getting emails and SMS and social posts. So what do I want to read and what information do I want? I think anything you do, job- wise, you apply everything else you've done in life and what your own perspective on it is.
Julian Bracey-Davis: So to start us off on our main subject here, we'll be talking predominantly about loyalty programs and their evolution in the grocery industry in particular. Of course, yourself, you have experience across many, many industries in loyalty. Start us off by, I guess, setting up a little bit of the work you do have within Cheetah and then actually if we could dive into the past, there is a wonderful flow of evolution of loyalty programs, just from the experience you've said yourself have seen.
Andy Kulina: From the headline. I'm head of loyalty for EMEA, for Cheetah Digital, which means that I get involved in basically all of our client and prospect conversations around loyalty in the EMEA region. So let me give you a background of how I ended up in that role. People call me a subject matter expert. I think expertise just comes from being old because you've lived a long time so you've learned a lot of things and if you could remember it and share it with people then suddenly you become an expert. So, as I mentioned, I worked for Kroger Supermarkets straight out of university and when I was doing that role as a programmer with social skills in the stores, and we were automating everything from checkout to how we sell prescriptions in pharmacy, to how the stock came in the back door on a windy 2: 00 AM. I was out with our supermarket chain we had acquired out West called King Supers. And the marketing director came up to me and said, " Hey, you're the tech guy. I want to launch a loyalty program. Can you help me?" I said, " Sure." First question is, " What's a loyalty program?" And he described it to me. And of course, Kroger being Kroger, we had all the big companies. We had, back then, IBM and Oracle and Informix, and everybody coming. " You tell us what a loyalty program is and we'll build it for you." And we found this little company out on the East Coast that was actually doing a loyalty program. I forget the name of the chain, but they were doing a small little seven- store regional chain and they were doing exactly what we wanted to do, which was to capture all the transactional data, turn customer groups into segments and do targeted marketing or one- to- one marketing back then. The marketing director's name is David Chacho. He's a bit famous in the loyalty sector, as well. Him and I and a lady called Gloria who had an access database, we became the loyalty team. So I was the techie, he was the strategist and she was the data gal. And we launched what's now the largest supermarket loyalty program in the US, Kroger Plus, with 65 million households, a hundred million customers. And that's how I got to start that little company, which doesn't exist anymore. It was called Retail Marketing Systems. They had one guy doing sales in Europe and they said, " Hey, we want somebody to set up our consulting and support team and office in Europe." And I had just run the Paris Marathon so I had a passport, which put me in that 1% of Americans in the'90s that had one. So I came over and helped them launch loyalty programs in 13 countries with 17 different clients. That company was sold and I stayed and ended up doing a variety of things in the loyalty sector, either working for companies or working as myself as a consultant by just building strategy around programs or redesigning programs or rethinking programs. And things went from plastic supermarkets and cards to text messages for special codes on Coke bottles to branded micro- sites and then social media, and I just luckily was able to follow that along and sort of evolve through the whole digital marketing technology or roadmap or whatever you want to call it. And then just before I joined Cheetah, I had a startup called StylePoints. It was a coalition loyalty program that created a value exchange of people sharing their permission intent and preference data with brands through publishers. And it didn't quite start up. We almost made it, but I was looking for a job and Cheetah found me. And it's kind of a good story because when Cheetah said, " Hey, we've got some loyalty technology and we're looking for somebody to help us sell," I went, "Oh man, we're not a loyalty platform." Those things haven't changed in 20 years. So I was very pleased to see the way that Cheetah had presented a solution that wasn't based around the transaction. It was based around all the information that a brand holds about their customers.
Julian Bracey-Davis: When we briefly did a little bit of homework together on this, you described the key milestones in the loyalty in the grocery world. And then it seems like when a milestone is hit, the whole industry sort of slows down and just, I don't want to say rests on its laurels, but perhaps doesn't embrace what could happen next.
Andy Kulina: Yeah. So, let me give you the quick history of supermarket loyalty. And I guess there's two things. What Kroger wanted to do is two things. Every business decision has got two sides to it. What's the company want out of it, and then how do they get what they want out of it? And I think that's key to making a decision because too many times in these loyalty programs that I've fixed, I've seen people say, " This is what we want to do, help us do it." I'm like, " Well, what do your customers want?" That's the first thing, because if it's not what they want, they're not going to do it, but at Kroger's we had two sides. One, the brands. Quickly, in supermarket retail, the brands will fund a lot of the promotions. If you see Pepsi on sale, it's usually because Pepsi has given Kroger a deal to discount the price of Pepsi. But the brands wanted more and more data. They were getting transactional data from the store. They knew how much Pepsi they sold and how much more they sold if it was on sale and how much less they sold if Coke was on sale, but they really wanted engulfed data. So they were actually pushing this to say, " How can we get more granular data about the customers?" So we knew a basket, but we didn't know what that basket was tied to, so we had to come up with some sort of customer identifier. And if we could, then the brand said they would give us even more money for promotions, because they could target them better. So then we came up with the other side, which is what is that customer proposition? Again, remember, this is the mid'90s when everybody who was doing coupons were still clipping them out of a newspaper, putting them in a stack and then walking from the car to the grocery store and then, if you remember the checkout process, pulling out the right piece of paper that went with the right item to show you had the discount and at Kroger we made the customer proposition quite simple. We said, " This plastic card becomes all your coupons. As a matter of fact, you don't even have to clip them out of the paper. Just bring this card, scan it when you check out your groceries and you'll get the best price on all of the items that are on sale." So the consumer process, it was friction- free before there was friction- free. You don't need to do the clipping. You don't need to bring the paper coupons. You don't have to forget about something that's on sale. Just use this card. So there was something in it for the consumer, which was less hassle to get a discount. There was something in it for the brands, which is much more granular data. And therefore we got much better funding. And we could do things like go after customers that maybe were buying their disposable diapers or nappies at Walmart. We could actually sell those at a loss if we knew that that customer overall was profitable to us, because they had a family so they were spending$ 200, $ 250 a week in the store. So that was the evolution and that was great and that was game changing. In Europe, a slightly different model, where they went with the points model. So Nectar and Clubcard and Payback in Germany, everybody was coming up either with its own brand of coalition programs where there were points- based programs. And I say a lot, in 2001, when Nectar launched, you scanned your card, you got your discount and you got some points. The only difference now in 2020 is you scan on your phone, you get some points, you go across. And those programs all launched. Zuckerberg was a freshman at Harvard in 2003. So this is all pre- Facebook and they really, really haven't changed. That's why I was saying this is interesting, in 20 years it's crying out for something different because the way consumers engage the channels they are, the whole process of loyalty. Loyalty was all built and still, in a lot of the cases, it's all built around the transaction. And even though a supermarket is something you go to two or three times a week, rewarding someone only after they buy something is way too late in the digital age. You've got to incentivize somebody to think of you as the place where they want to buy, or the product that they want to buy and then reward them when they do. So what that means, it's a seismic shift. It's a shift from that point of interaction, that point of surprise and delight, moving from the transaction to much, much sooner in the consumer journey, which is actually the point of awareness and consideration. So if you think about the consumer journey being what is consideration, purchase, repurchase, loyalty, you've got to go all the way back to the beginning, because now that I'm living in the UK, it's not even about what's the closest shop that I'm going to go to, it's who's got an online delivery slot for 8: 00 PM Friday, and that's my loyalty and I'll pick the one that has it. So, yeah. And then you mentioned the future. What I love is that our client, Salling Group, and they presented this at SIGNAL's, is they went that next step, which is I don't even want to call it a loyalty program. It's a customer program. What's going to make somebody become a digitally engaged, permission customer for us? And they had a blessing that they didn't have a legacy program that they inherited, so they could start up from scratch and they could look at the way that consumers engage now and build a solution around that. And what Salling Group did is build a solution that just said, " What could we do to make your life better?" Well, the things that you already buy, so it's a two- tiered proposition. The first one was the things that you buy today. The best price you can get on those are only available on the app. So they went from having no card, and maybe 100,000 email addresses, to having over a million people download one of their three brand apps. And a million people is 25% of the adult population in Denmark. So it's a significant change. And they downloaded it. That's a lot of Danes, that's right. And it's the price proposition, so the best price on the things you buy today is only available on the app. And the second thing, which was nice, they create digital receipts. So everything you buy, you've got a digital receipt. So you go home but the bananas are brown. You don't have to call anybody. You don't have to go back to the store. It's a couple clicks and you get that refund put onto your next shop. So they just took that pain of the us- by date on the fish is today and I wanted to use it on Tuesday, or their bananas are brown or the bread's moldy. Not that that happens, but occasionally it does. And when it does, then it's just a good customer experience. So the end result of that is loyalty.
Kayla Siegmeier: Andy, coming at this from two angles. And you've touched on this a little bit already, but what makes for a good loyalty program, both looking at it from the customer's perspective and what they want versus the brand's perspective and what they're looking to get back?
Andy Kulina: You've got to map what the brand wants to what the consumer wants and there has to be a collaboration between those two. So, this is what I want, this is what they want, how do I make that happen? But probably the second most important, actually the most important thing, is then, it's the consumer. If the consumer doesn't do it, the loyalty program is not going to work. The consumer proposition has to be a no- brainer. It has to be one line or two lines. You've got to think about if you're reinventing your business, pretend it's a startup. When I was doing the startup style points, the elevator pitch, a busy mom with three kids running around the store is not going to read an entire poster of all the benefits that your loyalty program gives her and then fill in a paper form. So Kroger was, again, " Don't clip the coupons. All the offers are on this card." Amazon Prime, they had free next- day delivery. It's easy for me to calculate the breakeven point, whether that makes sense. Salling, the frictionless returns. It's just got to be that simple. People go, " Okay, I get that. It doesn't even feel like a change of behavior to me." In reality, it was. At Amazon you paid 79 pounds, you registered your payment card program. You're always going to amazon. com to buy things first. But that felt like, it's learned behavior, but it just felt like natural behavior. It became natural behavior to just show your loyalty card. And then the next step was to link that to a payment card so you didn't even have to show a loyalty card. But it's just keeping the proposition simple and fresh and then reminding people each time of that benefit that they're getting.
Julian Bracey-Davis: They're really nice examples of people getting it right. When they've got it wrong, brands, and we don't necessarily have to name any names, but is it almost over- complicating things, to your point about keeping it simple? The ones who have perhaps missed the boat. I don't know if you have seen any who have. I'm sure there are plenty out, but are they trying to over- complicate it or make a proposition that's like, " I don't actually know what I'm doing as a customer"?
Andy Kulina: Yeah. You know what I think a lot of them have done, at least a lot of the ones I fixed as a consultant, they looked at what somebody else was doing and they tried to put it into their model. Especially a fashion retailer tried to match Clubcard and they'd come to me and say, " Hey, this is a blue plastic card and you get one point for every pound you spend, why is it not working?" Well, how frequently do your customers come? " Well, our best customers come two or three times a year." Well, they're not going to carry this plastic card around for the off chance that they walk into your store two or three times a year so a transactional program doesn't work. Another example, the flavor of the month last year was everybody tried to come up with a subscription program. " You mean people will pay us to join our loyalty program? Awesome. My loyalty card is now$ 29." And what do you get? Absolutely nothing different. It's that type of thing. So it's just not the me- too program. It's really looking to see what benefit you can get. The thing you do want to copy, if you charge for delivery, if you charge more for next- day delivery or two- day delivery, does the business model work that, let's say the frequency is enough where if I pay$ 20 a year, I get free next- day delivery? Does that work in your industry? Does the ROI work for you? But something like that might make sense. Because that does make you think. The fact that I do pay 80 pounds a year for Amazon Prime does make me go to Amazon and just say, " Hey, if I go here and they've got it, I'll have it tomorrow. I won't even get in the car and go."
Kayla Siegmeier: I'm curious for the brands, from the KPI perspective, what are you seeing them trying to get out of loyalty programs?
Andy Kulina: The first question is anybody, and we talk about a brand first, is it's a multi- channel retailer. So if you sell online and offline, you're going to be competing, if it's not with Amazon, you're going to be competing with somebody else who's set up even a mom- and- pop shop, who's set up an e- commerce solution. If you've got an e- commerce solution, 100% customer identification, because you have to sign up with your email address and you know where they live because you do the delivery. If you're selling stuff online and in- store, you've got to have that single- customer view because you've got to know both of those transactions online and in- store with the same person. So what are you going to do to make me identify myself on a metaphysical store? Whether it's a card, a credit card, a QR code on the phone, that's that extra step. What's in it for me? So that's the number one thing they're trying to do is create a single- customer view. If they have, just say they're just a mono- line retailer, they just do e- commerce, what are they doing to get customers to engage with them and to think of them so you're front- of- mind for that awareness for that next purchase? Because no matter what product you sell, somebody else sells it. So what are they doing to reward customers, to share permission intent and preference data? You want me to take a quiz, you want me to read an email, click here to see our fall sale. Why? What am I getting? So it's creating that value exchange to drive that extra engagement.
Kayla Siegmeier: And talking about that piece around linking the card and creating that single- customer view, how much are you seeing things starting to change when it comes to technology? We're looking at things like, even people talking about facial recognition and just crazy stuff like that. How fast are you seeing technology change to keep up with linking those things together?
Andy Kulina: I think that the technology is way ahead of the thinking. There's so much stuff out there. It's just how does that, again, apply? Because actually the problems are the backend, especially for people who've had loyalty programs for 10, 15, 20 years. They've got so much legacy technology that they can't connect the app without everything falling over. But the expectation is, from a consumer, the lowest common denominator for you is the thing that's easiest for you to use. So although old historical legacy retailers and brands might say, " Well, we've been around before Facebook and Uber and Netflix." That's our experience. We expect now to get what we want without talking to somebody and without paying. I'm talking about the Uber app. What did that fix? How hard was it to get a taxi or do you call a mini cab? But the fact that you can just look on your phone, is it going to be here? It's already paid, a little bit of gamification with a driver and that was nice. Netflix just wiped out my stack of DVDs that I had behind the sofa. It's just this constant content, recommending things, getting me to engage, go across there. And it's that digital, mobile- first experience, frictionless payment, easy to do things. That's the expectation. And it's now trying to figure out how do you make that work in a legacy environment where there's lots of technology that's all plugged together with sticky tape and spaghetti wires? Me, the facial recognition thing, I remember we talked about that. That was available in some way, shape or form 15, 20 years ago. I think I was still at Kroger when we were talking about that. I said it's a bit creepy. Could you use that to identify yourself, and nobody would do it. Now we're using it to unlock our phones and we don't think twice about it.
Julian Bracey-Davis: Looking into this, doing a bit of homework, when it came to legacy loyalty programs and the challenge that I guess people have, they can be set in their ways, or maybe they've built something in- house and they're shy from turning over the keys to a provider. How do you approach those discussions when I guess you you'd be brought in either in your past, as a strategic advisor, or in your current guise as head of loyalty for Cheetah, how do you approach that conversation of, " We need to move over from your in- house and all of the hurdles that can arise, because people can get very sensitive over that"?
Andy Kulina: There's a few ways to have the conversation. I was part of the IT department at Kroger so we were the big, scary guys that... because nobody really knew what technology was and when they said they wanted to do something, we'd usually say it's really expensive and it'll take a long time, and people just bought that. So we had good job security. But I guess the way you approach that conversation versus helping them. So let's pretend we're having a conversation with the marketing department to help them go talk to that big, scary IT guy whose heart and soul is in the loyalty platform that he built for that brand for the last 15 years and why do you need anything else. So I guess the first question is, what do they actually need? And it's not the loyalty engine that they might have now. I guarantee you that 99% of in- house loyalty systems now are bean counters. They're taking a transaction in and they're calculating points and they're spitting that out to something else. That's not what a loyalty system is. I hate the word loyalty now because people think, people say, " I know what loyalty is," but they're thinking about counting up some points, some Air Miles or some cash back. What the marketer wants is a way to create a value exchange for his consumers, regardless of what channels they contact them in. And that value exchange is an incentive to do something and a reward when you do. That means being able to have that single- customer view, to be able to collect all the data from all those different touch points that a consumer has, being able to do, when it's millions of customers across multiple channels, make some sense out of that by building segments, by using machine learning to figure out opportunities, to push things through channels. And when it goes out through one channel, you learn from that and it triggers another action. That's what they need, not a loyalty bean counter. And that's what they won't have if they're a retailer or they're a hospitality brand, or they're an airline. And the investment that they would need to make in that technology, one, it would take them longer to do than us because we're doing it for multiple sectors across the world. So they'd sink that money in. Then you've got to give them the ROI. Say you've got a million bucks to spend, do you pour that all in upfront, wait 8, 10, 12, 14 months for your IT department to build it, and then by the time it's released, see if it works. And over time, the needs of the consumer has probably changed in the digital age. Did you remember facial recognition? No, that wasn't in the spec. Where if you outsource it, you've got somebody who has to be in the spec because everybody's expecting, whether it's a regulatory thing like GDPR, or it's just a new social media channel or a new way for people to engage, we've got to keep up to speed or we're not going to survive as a company. And you also don't have to sink that cost up front. That investment is being made by a company like Cheetah because of the demands of all of our clients. So it's there. You can see it works. You can install the software and it's just there.
Julian Bracey-Davis: What is your setup for the Cheetah loyalty program? And we're fortunate, of course, in that we do have a lot of recognition from people like Forrester. However, some people, they're not aware. So what is the core behind us? Is it, again, sort of leading you to maybe answer single- customer view and then having actionable data within that? Or how would you put it into a nice little of box?
Andy Kulina: Well, I guess the nice little box is, first of all, it's one solution. So we don't call ourselves a loyalty platform, we call it the customer engagement suite. And that's because if you say to a marketer, " What's your job? Do you want customer acquisition, do you want revenue growth or do you want retention of your best customers?" They're like, " Do I have to pick one? I need all three of those. I'm responsible for all of those." So you need a system that is servicing the needs of all of those. It's helping you to acquire a new customer, it's helping you to get more money out of the ones you've got and it's helping you to hold on for dear life for your most profitable one. And that's all built around the ability, first of all, to take in all the data that you're allowed to take, that you've got permission from your customers, into one single place. And then what's built around that is the solution that helps to drive the engagement, the growth and the retention. So my elevator pitch is" We've got a customer engagement suite. It's built around our engagement data platform." And if people say, " What's an engagement data platform?" I say, " It's like a warehouse, but it's not the old kind of warehouse where you had a forklift and it went around and it found some dusty boxes and brought it to the front. It's like the Amazon warehouse where you've got AI machine learning that's saying, Julian's just put it in an order for some new ear pods, earbuds, and it goes and pulls those off shelf 4022 and zips them into a box and sends them all off to you." So it's realtime, no data latency, doing things at the moment. The one action instantly realtime triggers another. That's what we've created. And that's not what any business that does something else for a living to make money, sell flights or sell trinkets or sell groceries. They're not going to build that.
Kayla Siegmeier: So, kind of pivoting from this, we've spoken to a lot of CPG brands, how can stronger relationships start being formed between those CPG brands and their grocers, especially when it comes to digital loyalty?
Andy Kulina: I think, like I mentioned before, that relationship, that marriage, is a bit of an arranged marriage, but that's been there since loyalty began in supermarkets. So that Pepsi/ Coke example was a grand example. They were some of the first brands we worked with that Pepsi wants to target people that buy Pepsi, but wants to know the ones that buy Coke when it goes on sale, and how do they retain that business? So there's always been that relationship and I think what's changed, first of all, I guess the way it used to work was the brands were desperate for data. The retailers had the data. So the balance of power was on the retailer because they knew who was buying what, and the brands would pay dearly for that. I think the flip now, because there's much more of a one- to- one relationship now between consumers and brands, whether it's inaudible, not necessarily the purchase, but the fact that a brand knows a lot more about me as a customer than the retailer one who just sells the product. They'll know someone who buys, let's say, a certain type of drink or food, what some of their other passions or interests might be. It could be lifestyle choices, like being a vegan or being healthy or things around allergy. They could know this is probably a strong indicator of your social status or whether you have kids. That type of insight around the people that buy their products, it's things now that the brand can share with the retailer, that they can then come together and come up with promotions that make sense. Because, again, if the retailer's got three or four different competitors where you can go, especially if you're online, how do they make the communications they give to you personalized to you? And it's not just talking to you about bananas, but it's talking to you about bananas because they know you're a runner, or they know you have a pet monkey. One of the two.
Julian Bracey-Davis: I'll tell you what, I would pay good money to watch you do the Paris Marathon with a monkey on your shoulder.
Andy Kulina: I've done 10, but my favorite one was the Marathon Médoc. The Marathon Médoc, it's a full marathon, but you have to do it in fancy dress. And there's 13 wine tastings through Médoc as you run a marathon.
Kayla Siegmeier: Awesome.
Andy Kulina: I've done 10 marathons. Nine have been sober.
Julian Bracey-Davis: Yeah. Nine of them you remember. I guess, just to sort of round out on grocery, because I think we've done quite a good job of setting up where it started, certainly from your perspective, and how it's evolved and what both brands and customers want and expect from having a loyalty program in place. Is there anything else that you would really hammer home when it comes to, if you were directly speaking to a grocer right now, hypothetically listening to this, going, " Andy knows this..."?
Andy Kulina: I guess it's just thinking from a consumer pull- away from their brand and to the fact that they're loyal to their own supermarket. What makes you loyal to something else besides your supermarkets? So whether it's a hairdresser or a restaurant, not necessarily a partner but something in your life. What are those things that make you loyal? And people, they won't say it's cheap, but they'll say it's value for money. And value for money could be a Michelin star restaurant. It's very expensive, but it's an awesome experience. Or it could be something that's just cheap and cheerful, but you love it and they know your name. It's recognition. It's the fact that there's no hassle, it's easy. Loyalty used to be the corner shop because it was on the corner. So you're loyal to it because it was easy. So I guess pulling yourself back and saying, " What are those things that make you loyal to other things in life and what are you doing to your customers then to create that same sort of experience and reminding them that loyalty is an emotional response?" So it can be a positive emotional response and people will come back because they enjoyed that experience and they'll come back again and again. Me kicking you in the shins will also give you an emotional response and it won't be a good one. I call it the ice cream test. Occasionally I've done this in meetings where you bring everybody an ice cream cone and they're like, " What are you doing that for?" And if it's a contentious meeting and they start licking an ice cream cone, and you say, " You can't be in an argument with somebody while licking an ice cream cone." You can't not have an unserious, informal conversation because you're going every time with the lick. So how are you diffusing that, how are you making people sit back, think, give them something that is a surprise and delight, which was the ice cream cone, change the conversation around what they like and what they enjoy. Was it the right flavor? And then try to push that over into your marketing. So rethinking your brand and what are the reasons for people to choose you? Because if it's just, well, we're the closest supermarket or we're the cheapest supermarket, somebody can be closer or cheaper. You've got to build those emotional drivers and continue to refresh them and remind people what they are.
Julian Bracey-Davis: The final one from me and then I'll let Kayla close out. In the last 25 years, or actually just what we've done in the last few years, from looking specifically at groceries and the way that those programs have been set up, what do you reckon is their biggest impact in a positive way of how they started thinking about loyalty that other verticals could learn from?
Andy Kulina: Well, grocery got it right back then, which was it was the change of behavior. So way back in the Kroger days we couldn't just tell the consumer that they started having to show this plastic card so we knew who they were. We had to say why we wanted them to change their behavior and what was in it for them. And I think if you looked at the other verticals now and what we're trying to do so, let's say, as travel recovers from COVID and we want people to do something. We want people to share how they're going to fly again, or their thoughts on flying. Why? What am I getting in return and what's going to draw me back to maybe not changing my behavior, just bringing my behavior back to what it was. I just think it's that message, that consumer's simple proposition, business... I think travel is a good one because I was talking to someone in the airline industry the other day. We probably aren't going to go back to the road warrior. A lot of companies, Budgets, were like, " Hold on a second. These guys don't need to fly to every single meeting. You can do a lot of this on Zoom and then maybe just go for one face- to- face meeting a couple of times a year." I think there's going to be a shift from business travel to leisure travel on airlines. So that's going to change their marketing because their bread and butter was the frequent flyer. And now it's going to be the infrequent flyer who might spend more because the holiday is such a treat. It's that simplified value proposition, always refreshing and rethinking of what your consumers want and rethinking what you are as a business. Do I sell travel or do I sell enjoyment? And, if I sell enjoyment, then let's talk to people about what they enjoy. Is it beach holidays or sports holidays, or seeing the world?
Kayla Siegmeier: We like to close this out with a little piece of Uncaged Wisdom, so what's the most important thing that you've learned in your career that you've carried with you throughout this time?
Andy Kulina: I think it's two things. I think it's always challenge when do you think something needs to be challenged. That's probably the one. And that could be challenging yourself or challenging your management or just an idea. I learned a good word because, besides elevator pitch, the second most popular word in a startup is disruptive. Maybe blockchain. But it has to be disruptive. And disruptive used to mean that kid in school that was shouting and was interrupting the teacher and you couldn't learn. Disruptive means now just it's not status quo. It's shaking things up and seeing what's different. And I guess now, I'm 55, you still should be disruptive because that's how you're going to find opportunities is by shaking the lens and looking at it again and seeing something different.
Kayla Siegmeier: Very good. All right. Well, I don't know, Julian, if you have anything else but I think I'm good here.
Julian Bracey-Davis: Thank you again, Andy. That was really, really good. I'm looking forward to seeing what 2020 brings us all. It's 2021 now. I don't know, I've lost a year. I lost a year. You know what? Does even 2020 count? It doesn't matter. It's fine. Whatever current year we're going to go into because these episodes are timeless.
Andy Kulina: Well, thank you. Thank you for your time. Thanks for having me and thanks for everybody who listens.
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03:50 - Andy sets up his experience and history in the loyalty game, including being a major player in the creation of Kroger’s — and the grocery industry's — very first loyalty program back in 1995. Today, Kroger Plus has become the largest loyalty program for supermarkets in the U.S., with 65 million households and 100+ million customers. It captured transactional data, turned customer groups into segments, and attempted one-to-one marketing. After such success, all roads lead to Paris for Andy and eventually to Cheetah Digital!
08:10 - A quick history of supermarket loyalty in the U.S. and Europe, including its (lack of) evolution. Keep in mind two key considerations;
- What does the customer want out of a loyalty program?
- What is the brand trying to get out of the program?
11:40 - Typically, grocery loyalty programs today are still built around the transaction, but *sound the key quote klaxon* rewarding someone only after they buy something is way too late in the digital age. You’ve got to incentivize them to think of you being the product or place they want to buy from and then reward them when they do. This is a seismic shift, shifting the point of interaction earlier, from transaction to much sooner in the customer journey — at the point of awareness and consideration.
Andy brings up a great example of this future vision in play today. Salling Group created a program that made digitally engaged, permissioned customers, by focusing on initiatives that made their lives better e.g. offering the best price on the things you buy today, via the app, and digital receipts for frictionless returns.
14:30 - Andy explores what makes for a good grocery loyalty program — both for the customer (what are they looking for) and for the brand (what do they get back).
You have to map what the consumer wants to what the brand wants — there must be a collaboration between the two. Perhaps most important of all — the consumer proposition has to be a no-brainer. Keep the proposition simple, fresh, and never lose sight of your customers' needs whilst reminding them of the benefit they are getting. Change consumer behaviors without them even realizing it.
18:10 - From the grocery brand's perspective, as a multichannel retailer, often handling customers both offline and online — they are always competing with somebody. How can they identify their customer each time they shop, wherever they are shopping, and create a Single Customer View across these different channels? This is where a loyalty program really comes into its own — they encourage individuals to identify themselves when shopping. Additionally, these programs allow brands to be front-of-mind for the consumer when it comes to the next purchase, by creating intelligent offers and interactive experiences. These value exchange experiences also allow the brand to collect timely and relevant permissioned based preference data they can then act on.
22:30 - If you have a legacy, in-house loyalty program, why use a loyalty provider? And if you use a provider, why should you use Cheetah Digital?
26:00 - "The Andy Kulina Cheetah Digital Customer Engagement Suite, Featuring Loyalty." Andy gives us his Cheetah CES elevator pitch which covers the core benefits of the entire Cheetah Platform. Strong Indiana Jones Raiders of the Lost Ark warehouse-at-end-of-film vibes going on here.
28:00 - How can stronger relationships be formed between CPG brands and Grocers, especially when it comes to digital loyalty programs? Somehow running the Paris marathon with a monkey comes up.
31:00 - For any marketers working for grocery and supermarket brands, Andy has the following message for you. Thinking from a consumer's perspective — what are the things that make you loyal. Value for money and the different meanings this has. What are you doing to make your customers loyal to you, to elicit a positive emotional response?
33:40 - To close out, we move away from grocery and supermarkets. What loyalty lessons can be taken from this sector and applied to other industries? Keep the value proposition simple, keep what you're offering to your consumers fresh and keep evaluating what you’re looking to get back from any program you run.