50. Customer Retention And Loyalty With Adam Posner

50. Customer Retention And Loyalty With Adam Posner

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TRANSCRIPTION: THE CUSTOMER-CENTRIC SHOW PODCAST
with Mel Telecican (Customer-Centric Coach)

Episode 16. Steve Baxter on Processes and Networking to Scale Your Business
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Before we get into today’s episode I want to bring your attention to Nora. Now this is not a paid post. This is me telling you about it because I think you will find some value in it. if you are in retail and I know a portion of my listeners are. So I got a mixture of hospitality services based businesses and retailers. If you are in retail, you really should check out Nora because they have put together a bunch of resources but also they run fantastic events that you can be part of as well. So just to give you a bit of an insight into what they are doing in Sydney. They got an event coming up on the 11th February. It’s expedition to Lush. Lush is international cosmetics brand that you may be familiar with. They have essence overloads if you ever went into those stores. You get to see the behind the scenes of this business. Now that’s a business growing to 800 stores. So if you want to check that out that’s in Sydney and in Brisbane this one I am actually heading to, there is expedition to beginning boutique that is explosively growing brand. There is a fashion brand online as well as seeing behind the scenes edible balloon a company that puts chocolates into amazing looking cakes and seeing how these business run. Being able to ask questions and also to collaborate and talk to people who are in the industry is a great opportunity that exist when you get along to these events. So events aren’t the only thing they do. They put on free webinars for their members and they create lots of other valuable resources. So I would suggest go over to their website and have a look, Nora.org.au. I am positive that you will find real value in what they do.

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You are listening to the customer centric show with Mel Telecican, where we talk with successful business owners and experts to share smart ways to attract more customers, profits and freedom by thinking about customers first. Now, here is your host Mel Telecican.

Mel: Hello and welcome to the second episode of 2016. I have invited today’s guest on the show because he has been involved in researching specifically the Australian market around customer retention and what it takes to generate a loyal customer and while there is quite a little information out there globally, there is remarkable in depth research in the Australian. My today’s guest changed that by commissioning the independent study. Adam Posner is the CEO and founder of directivity. Having been a data driven direct market for 23 years, he started this back in the mid-90s with a loyalty program for a shopping center called a scratch and save initiative. Since then he has been involved in a range of customer loyalty and retention strategies and programs for clients like Hotels and Apartments, Mt Buller, Global Beauty Group, Chemplus, Horseland, and Milwaukee Tools. Adam is all about helping his clients establish and maintain valuable loyalty programs that are both profitable to the business and meaningful to the members. Those parts go hand in hand. I first came across his research back in 2013 when the money report was first released and then since the 2nd report published in 2015. Adam is also author of ‘give back to get back’ and ‘making price irrelevant’. Adam thanks for joining me on the show. Great to have you.

Adam: Thanks Mel for inviting me.

Mel: Now can you tell me an example of who do you believe is a great example of a customer centric business?

Adam: Yeah I have been thinking about that a little bit and I have actually got 3 great examples. One of international one which is an interesting proposition which is Toms the show footwear. They are famous in a sense that they accompanying matches of shoes and giving new pair of shoes to child in need and why I love this business in terms of customer centricity is not for typical reasons that you might think but because they really know their purpose and I think that a business that really understands why every day they wake up to deliver obviously great product for their customer and they got a bigger purpose and customers love it because I think they are giving something like 45 million pairs simply. So if 45 million pairs have been given that means 45 million pairs of shoes have been sold. So that’s the one international one that I am a big fan of and then locally there is fantastic food business called Foxes Dan in Melbourne which is a chicken and salad organization. It has got 4 stores and what I love about their customer centricity is they made an error one day on my order and they did apologize but when I got home there was surprise and delight in the pack. It was some extra chocolates and dessert which his never really expected, didn’t know about and that’s what I call a business that really understands and heart to delight at a small. Just something as basic as doing that is really amazing.

Mel: So they didn’t tell you when they handed you your order.

Adam: No they said we really sorry for that mistake. I said look it is fine I understand and I accepted their apology, I was slightly grumpy but that’s okay but overcame everything when I came home my kids came and saw them and it is one of those moments when you know business really understands their customer.

Mel: Hmm and they are showing that they care aren’t they? It is not just enough to say thank you we are actually being quite thoughtful about how we can make it up to you.

Adam: Exactly and going little bit you know unexpected and the third example I have which is my web guy called emphatic design and reason why I share with you is that it is a business that is so focused on getting successful. So his mantra is if my web is clean and successfully working, then I am successful. He is always pro-active, always looking for bugs, these sorts of things I just think we forget about. It is taking those extra steps.

Mel: Yeah absolutely. So what does your web guy do? Does he notify you that he has gone back to your site and checked for things?

Adam: Yeah he first made analysis and I trusted the guy in person. So it wasn’t sort of international based analysis that you often find coming through. I had met him and trusted him. Just for a moment I said maybe you can help me. He said no problem I would do a quick analysis of your site and tell you what the bugs are and that’s all complimentary and that night sitting and really simple stuff because I am not an expert in that space, he gave me a quote and it was so reasonable and every time I had a bug he says no problem I can fix it. It is just so service centric businesses.

Mel: Yeah excellent. So you recommend him to other people as well then?

Adam: Recommendation is the great form of marketing and advertising and we don’t do it likely. Human beings don’t recommend truthfully unless they believe and it is their reputation to recommend in. So I agree.

Mel: Excellent. Can you share with us that was this deliberate thing that you sort of gone down this path of focusing on retention and loyalty?

Adam: It is a funny thing how we land up with life and what we do with business and personal. I am from South Africa and I migrated Australia about 30 years ago and my life of loyalty was different there because it almost forced on me to and I to do conscription. But always funny enough that it was in my DNA that I was forced to do things and loyalty forced was natural and when I got into business of commerce and into world of opening business and I had a food business and I had café and so on, I got into space of understanding data. Now in early 90s it was those little cards at the back of the shop. You were lucky to even have a spreadsheet. But it landed based on that concept that you mentioned because I was walking around shopping centers and talking to retailers and saying look I will do local area drop and we will go 20 and hit discounts behind on this card. You give me ads, I will promote your stores. I will drive people to your stores and they will scratch and you will give those discounts and you get your peak business. Great concept but bit hard work knocking doors and getting people take it on. But then I got these questions from these businesses saying great they are coming in, they are buying, how do I get them back again? And it was all in the beginning of the days what we call direct marketing capturing customer info and using direct mail and phone. It was really back off the retailers asking me well I get all these customers but how do I get them back again? Brilliant service, great product and marketing methodology and that’s how it all started.

Mel: Great. So they didn’t have anything in place to be able to have that retention. So then what was the next stage?

Adam: We started giving them the opportunity to start collecting the data. So basics of getting their name and address and their phone number and without that it is anonymous and then the work CRM started to come customer relationship management and databases and keeping info and it was fun to have spread sheet driven also had the opportunity to capture customer information.

Mel: Yeah I think in those days people just didn’t know what to do with it or did nothing with it right so the opportunity is there but whether you take the next step I guess and seeing value in it. So you have seen this whole space change and evolve over the last 20 years. What would you say the biggest change has been that you have experience or that you have seen has made the biggest impact perhaps?

Adam: Clearly and we all believe technology. It is just explosion of applications and technology that is available. So it has almost created a lot of confusion in that sense. So that’s to me is the biggest changes and then naturally into the whole mobile phones and I also think because of the social space being available to everyone. The consumer has changed massively. I think the generational change has changed the consumer landscape and the consumers control now. I think businesses sometimes don’t really know how to take control again. In the old days where you could do the communication when customer come in, you never knew whether they love you or hate you unless they told you. Now one click away they love or recommend you and one click away they tell they don’t.

Mel: That’s right. So do you think that it is a little volatile in terms of say reputation management of your business because there is so many opportunities out there for people to say that they like it or hate it so often?

Adam: Volatile is a great word and I think going from there volatile into it is a also great opportunity to be better. To me the transparency of the world now makes better business and better marketers. We can’t be lazy anymore, we got to be on our toes. We got to be consistently looking after and loving our customers because of that technology out there. So it has created new set of skills and businesses have to evolve with that to manage the volatility of marketing communications.

Mel: You said something there before Adam that there is opportunity there. Do you mean in terms of really truthfully knowing what people don’t like about your business to be able to make change? Or what do you mean in terms of opportunity there?

Adam: Well as much as challenge to manage reputation management for the moment there, as much as it is hard to manage what people say on social media and on review sites and all of those sort of things. it is also opportunity for you to continue to be better to ensure that you minimize those social mis-happenings that create problem on your reputation but it is hard because people out there just push like or dislike with one finger and don’t give it a much thought. So on the one hand you get people saying how great you are so there is the positive and on the other hand you got the openness of the fact that they are not happy.

Mel: And sometimes there you can just leave a star rating and no comment. So it is not required to be logged. It is just not there. There can be no reasoning attached. It is not necessary. Okay so this is what you do then. You help I guess change asses is that what you do? Can you explain what you do in directivity that I guess help this and then builds that loyalty and retention?

Adam: So my business focus is to help my clients retain their best customer and grow the rest and I am much focused on customer retention and loyalty. All above what I often talk about and which is customer accusation getting new customers. Because I believe every day that and I certainly understand that you need to have customer in the first instance. But once you got them, then your existing customers are your advertising and if we focus on existing customers being the most effective way to attract the new customers, then your business can grow accordingly. Now I am not naïve to say that you need that continuous flow of new customers and business. I totally understand that but I don’t believe enough effort and time and energy and investment is put into the existing customers that they do have.

Mel: Why do you think that is?

Adam: I think that is because as human being from the day we being hunters and gatherers, we are all about accusations. I think we are all about new and shiny. The next new car, phone that comes up. It is all about new business and commerce drives that so I think naturally it is in our DNA to get new things.

Mel: Do you think that bit of complacency thinking that once we got people in, they will naturally love what we do.

Adam: I just don’t want to believe that. I am just not sure. There is a bit of an element to well we got them in. What do we do now? Because customer retention and loyalty is driven of who your customer is. Now in small or medium business, that means customer information. It means technology. It means database, CRM. Something to manage and knowing who your customers are?

Mel: And to what degree do you suggest people should know who their best customers are?

Adam: To the degree of what they want to do with them.

Mel: So really thinking out where we want to take this and then reverse engineering that way to figure out what sort of information we need to be taking.

Adam: I couldn’t have said better than what you said. In all of those scenarios again small and large business retail services whatever it is, knowing your objectives around customer retention and loyalty. Why do you want to keep your customers? And why do you want to keep them loyal? That’s the first question you need to answer, any business needs to answer.

Mel: So wouldn’t the common answer be I want to more money?

Adam: Yes and my next question would be how much more? And then my next question would be who are they that is actually giving you more money?

Mel: Yeah okay. So let’s talk about that. So that’s what connected to what you are saying best customers right? Do you want to tell us about that?

Adam: Every business define best in a different way but if you want to keep it simple, best needs are couple of things from a revenue point of view. A better customer is somebody who buys more plus they come in more often. So there is a frequency that they spend more and they spend more often. So suddenly if you got 100 customers who on average spend 100 dollars, and come on in average 3 times a year, so you got 100 my 100/3. Suddenly you know in order to grow your business what leaders you got? Are they going to spend more? Offer more product or option to add to the mix or you get try and get them get back more often or both. So you need to know that in the first instance in order to define what a best customers looks like in a behavior point of view. The simple part I what is their buying behavior? How often are they coming in and what are they buying and how much are they spending?

Mel: And pod system for instance people are using that. You are saying does that information already on hand there for you to piece together?

Adam: Not unless you identify it back to individual. So this is where the next step is. You could have the identified data and general average transaction but you don’t really know they are. So I don’t know Mel this is Adam. Mel might come in 4 times a year but then I know who you are and I have got your customer information.

Mel: So this is where the value as well. Connection the user and collecting information to loyalty program so that you can attribute that spend to particular customer profile.

Adam: Fundamentally yea I mean the loyalty program and the first person to say it is not the answer to everything but it is certainly an answer to a lot of things fundamentally depending on your business and structure. So I always start off with what does loyalty mean to your business, what is customer retention mean and then let’s work out the solution. It doesn’t always have to be in the typical sense the loyalty program. Yes often it does especially in retail because you do need frequency of purchase. You do need the general transaction to keep the momentum.

Mel; I was thinking about the examples of clients and people you work with and I was thinking clearly there is no loyalty program that touch there and there is the retention strategy that you are implementing and for the other examples like K Mart you would be looking potentially looking at the loyalty program there right?

Adam: Clearly in fashion and food retail where there is regularly customers coming often, that’s where you get the opportunity to know them and to invite them back again. When you got a long transaction or big items and different kind of strategy and different kind of retention and loyalty strategy because you don’t necessarily have the believers to keep getting to buy more and more often. So that’s where you really got to understand who your customers are and the buying behavior before you rush in and just come up with any old program because that’s when the danger and suddenly you find it is not working and you have invested in something that is not giving return to your business.

Mel: Yeah I think Adam when I look around there is probably a big surge in loyalty programs and appeared from the outside to the case where they are doing it and well so we should do it too. So I would expect that it is common mistake people make but do you agree and what are the other mistakes that people make when introducing and bringing loyalty rewards program to their business.

Adam: Yeah I see a lot of mistakes and I am going to share with the listeners exactly what they are. The first one is not knowing why. So I keep coming back what are your objectives in your business? So clearly lot of people may say oh we want more customers, so we want them to come back more often. The other one I mentioned is we want them to recommend us. Reconnection is different that general loyalty program and what I mean by this is when we do know who your best customers are, well then recognize them being those best customers so that they do refer you. So when you recognize your best customers, just like real example I gave earlier on. Giving them something they never expected. We are a member of health fund and out of the blue they gave us some tickets on an event. Now I know that behind the scenes, they would have looked at the value of us being a family and member of that fund we don’t expect to get tickets to the event so what they did was a bit of surprise and delight and now here I am talking about the fact that we got recognized for our ongoing spend with them. So recognition and referral is a different kind of strategy but underneath that you do know who your best as you asked your own. Who are those best customers and how are you going to recognize so that they do talk about you.

Mel: And so what you have seen out there at the market? Often when I am thinking about business and what they could be doing that’s unique because sometimes their common ways that people do things and so it doesn’t seem to have the impact as something that’s very unique. So is there anything else out there that’s really blown your way and just part of that recognition or referral.

Adam; Yeah I give you a little example and it is using what is commonly used and just taking different angle from it. So a happy birthday especially when you know your customers birthday and when you got that information is a very common little surprise and delight and thanking here is your birthday surprise. A lot of retailer do that and also fundamental thing in loyalty program that give them little birthday surprise. I am currently working in furniture retailer and what they doing is they say happy birthday to the furniture. So what we like to do is do anniversary date of furniture every year. We going to say happy birthday to the furniture and what about furniture cake for you.

Mel; Fantastic. Another revenue stream.

Adam: Yeah and just looking at something in a different way. We are looking at from another point of view.

Mel: Great. So would there by like an average period of time that the furniture retail would know people going to upgrade as well as part of that process.

Adam: Yes they would and then we start looking at what we call the life cycle of the purchase and that’s when good strong retention marketing comes into place. When you got the data to know what the life cycle of whatever customer is buying in that case furniture, TV or whatever it is. Then you can start thinking about marketing closer to that time.

Mel: Great so it advents that line of relationship through gifting and developing that relationship through those thoughtful messages. What are your thoughts there?

Adam: There can be a difference in a sense that you can have a formal loyalty program where you formally name and brand it. So you are asking for customer data in the first instance so okay please join our circular program. So if customer ask why are asking me to join your program, well what we going to do is we are going to send you updates to our product range. We are going to invite you to special events, we are going to send you a birthday gift and also we are going to give you a discount every 6 months. You have to formalize what all those benefits are. So you got what I call formal program when you making a promise to your customer based, they giving you the customer, they engaging and buying from you, but the transaction there is they are giving you the customer information and you are giving them rewards so you get them coming back. So that’s a formal program at a simple level. An informal program where you don’t make promises and you don’t tell people to join something does need basis of customer data. You need to have got some information from them if you want to drive some personalized marketing. You do need it.

Mel: There is just so many businesses that do already collect that information whether they feel confident after this.

Adam: Exactly and think through once we got it what we do with it. So my tip to those people is to map it out. In a 12 month period what are the reasons that you can think about to communicate over 12 months. Think of good reasons to reach out. Whether it is a seasonal change or customer birthday or whatever. If you map them out, rather than just wake up every month and think what should we do this month, if you map them out suddenly you got a calendar of 1 to 1 marketing opportunities.

Mel: Yeah well thought out is important because if you are going to the effort of doing that potentially the cost as well, then you need to make sure that you are going to have a degree of success and there is a return on that investment.

Adam: Yes and you need to understand the financials first. I have to go through a very robust process called 9 steps. I call it to a valuable loyalty program. It can be translated as I say it just keep simplicity to 9 to 12 month valuable program and in those 9 steps the first thing is why and I started as you know why would a program benefit your business and why would a program benefit your customers. So getting your strategy, reason up front and knowing them and general why of getting customers and get them to come back more often but to try and set more specifics. What I mean by that is we want to grow average spend from 100 dollars to 200 dollars across 10,000 customers. When it get specific, suddenly the financial start to make sense. So surfing objectives is really important. I have often seen oh we want to reward our customers. Why? So that they come back again. Okay how often? So I am trying to get specific.

Mel: Yeah and achievable as well.

Adam: Yeah specific measureable specific timing as well. So that’s number one step. Number two step is commitment. It is a big thing because often these are seen as marketing initiatives and business growth strategies. So when you are committed to a loyalty program, it is like opening your doors every day because marketing campaigns are usually slashed when it comes down to time and task.

Mel: Yeah so this is a long term approach. You have to on the patience to see the results.

Adam: Yes I see many fail because they do just a little marketing idea. So number three in the process is who it is for? And you ask that right in the beginning. Is it for your old customers or your best customers? Is it for your team? So I have got number of audiences when I talk to my clients about who is program for and that start with your customers and there might be different segments because I do a lot of work in pharmacy and you know you got young couples and families. They are all different segments that do not only have different spend patterns but also different buying behaviors. So understanding who is your program for? If you say for everyone that’s fine. But at least ask that question. The next one is who is internally your team? They really got to get behind it and that is to me the biggest failure in any program when the team doesn’t love it. The team and the staff needs to be in love with your program as much as your customers.

Mel: I had a little bit of difficulty with this when I had restaurant business and my experience was that they saw it purely as a selling thing and so we really had to sit down and talk about the value it would have and I guess like you said before because it is a long term approach and they eventually saw it but in the early it was a little bit hard for them to understand and I guess that’s because people exposure to other loyalty programs too right.

Adam: According to my research over the last 3 years that 88% of Australians over the age of 18 are member of at least one loyalty program. Many of us are members. Not everyone but many of us are and because of that all the good and bad experience start up and never received anything. Oh the points are worth nothing you know all of those ask this question every day in every course I do. I ask this that which loyalty program you love and why and which one do you have and why and common things come through on both sides. On the love side, they love because they get recognized and they love the rewards and benefits. On the hate side they see they never get anything. We all have a point of view. But in a business you need to ensure why you are doing it. Things we do is we get a team and one of the programs that I did was in a tool company which is trading customers in terms of developing their program we got the whole organizations to come up with names and to vote and the winning name went away for a weekend.

Mel: So it is a collaborative effort.

Adam: Yean and what about your suppliers? Never mind you want to get program for customer or your team. Maybe you got suppliers. Well why can’t they give offers and benefits and get involved in their brand out to your member base?

Mel: Yes partnerships right. Yeah okay.

Adam: Exactly and I am still a number three which is who is. Now number four is what kind of program and there is you know is this just a general communication program or is it discount program, what does that look like? It comes back to understanding your customers and your business.

Mel: Do you think there is a space then to let’s say you got a coffee shop, everyone else in the market has either an app that is about the buy one get one free or card that does the same. So obviously you will be collecting data to a better degree but could you then implement a different program to separate yourself from everyone else in that coffee space.

Adam: It is tough one because the loyalty programs are a little bit more and there is lot of apps and POS items opportunity for café retailers but it seems to be the same thing. I am not sure where the point of difference there is unless you start getting coffee specialist. A lot of smart café are doing that. So they are turning what I call retention and loyalty outside of typical program. Educating them and creating an experience. We talk about experience now rather than just typically transaction. I just went in on there. In terms of structure what I am trying to do is trying to move people from what I call points to purchase to points to purpose. From transaction based rewards. They want to go to oh by the way does you organization support local charity? Can we donate our points to charity? Can we further than transaction? Exclusivity piece. So your program is not only about transactional, it is about moving and what I call points for purchase. Once we there, we also look what the competitors are doing because do you want to be the same as your competitors or do you want to be the competition. i always ask this question. Do you want to be the competition or do you want to beat the competition? And it is hard to answer that when everything else is same but that’s where the challenge lies.

Mel: And I guess it comes down to testing. Find something that works for your people and customers.

Adam: And get your team come up with idea and brainstorms.

Mel: Yeah absolutely. Ten heads are better than one right.

Adam: Yeah and quickly through to number five that is understanding your experience. So any program there is an experience that a member has from the time they joined. So what is the time? Is it hard to ask questions? You know the whole join process and then experiencing the program, you need to think that through. You really need to think about how the experience being the member of your program and that means of your business. It means from customer service to online experience through to all elements of engaging and interacting to your program.

Mel: Yeah making it seamless.

Adam: Number six is your technology and your data. So again as big as those words are, you got to ensure that you got the point of sale system to capture and to manage. Communication plan I mentioned earlier on, mapping out in advance. What is your communication look like? From launching your program to ongoing.

Mel: I am going to pull you back to point six, technology and data. Is that what you do? Do you place together that information? Do you pull that from the other sources? What is it that you do that allows peoples to make those good decision from their data?

Adam: I am not a vendor of technology. So I am an independent consultant but I am not a lot of technology and vendor presuming they come to me or I order them to help my clients. So it depends on business and what kind of support they need from technology point of view. I do not know everything but I know enough either to introduce, facilitate or look after that piece. Often clients say to me take us all the way and then introduce us and then we will go from there.

Mel: That’s great though because it means that as that consultant that you bring other things to the table and then can tailor or suggest based on people's specific needs as a post to pushing them in one direction. That’s great.

Adam: And then I also implies it in people I trust and know. One of my co-author he has got retention. So agency which is very strong on the tick and the technology and the ongoing communication platform pieces. Him and I work many times together because we got both sides of brand. I got strategy and he got tech experience. So that the answer to your question.

Mel: It is a great combination and I really want to direct people to the reports that you have put together because there is just fantastic insight there and while a lot of loyalty programs are referred to big business, I think there is a lot that can be taken in terms of understanding who is taking on a retention, who is involving themselves in loyalty programs and what they like and dislike. So that’s a really fantastic piece so congratulations for putting that together. Now before we finish up I could talk to you days about this stuff but in terms of results and really maximizing the positive customer experience, is there anything that stands out for you as an example of significant improvement that a client that you worked with in the past?

Adam: I think I will keep it simple and the answer is yes. I am going to stick with pharmacy. Where a group of larger stores haven’t really worked out what loyalty means to their pharmacy, they didn’t have any information. So clearly prescription area but you can’t use loyalty in that space. So once we got them excited about yeah look you got all the reasons to ask for your customer’s information and giving updates and all the good reasons. What we did was we followed the 9 steps I mentioned and I am going to come back to the birthday because I want to give you the results because it blew me away. I just couldn’t believe it. So when we did came to the birthday mail and it was a direct mail not e-mail because we didn’t get enough e-mails which by the way is just one channel. We were nervous and we need to give some sort of offer 5$, 7$, come in and here is a gift for you. So the results were phenomenon and what I am going to share with you is the top line results. They got 23% redemption rate and what that means is that 23% people said that they offered to came into their store and by the way the highest response rate for one of the store is 40%. So that customer base they got 40% back. They also got an extra 717 customers per month. They compared that to that month that based on customers.

Mel: That frequency you talked about have been increased.

Adam: And they got incremental spend after the 5$ they got 23$ on top of that spent.

Mel: That’s huge.

Adam: And as I said I am sharing this because it is real and I know for the fact that it just one of those cases as simple as it was birthday. May be the customer just stopped having communication to the local pharmacy.

Mel: And I guess specially if you are one of the first people to market to, you got a really great opportunity to throw that into the mix because it is completely different. You know what I got to ask you 2 different questions because you got me thinking before. You talked about lots of opportunities or different opportunities to catch up with people. So the not only clicked in e-mail and looking at collecting their postal address as well is what you looking to right?

Adam: Yes.

Mel: How much information is too much to ask for? Because we talked about that earlier and we are talking about that wanting to make it easy and not too hard, so what is your suggestion?

Adam: That is a really critical discussion point and really cost a lot and I would suggest this is how what I would recommend to my clients. Try and get the maximum that you can get in the minimum amount of time. So what I mean by that is I call this fancy the progressive profile. So you got to get at least the first name and surname, gender and contactable communication. E-mail at the bare minimum. Then if you can get a mailing address and a phone number mobile. Give people reason to why you are asking for it.

Mel: Yes they got to know what is in it for them right.

Adam: Yeah. Why asking for my birthday? Are they security or is it legal requirement in gambling or liquor businesses or whatever it is. If it is not, tell them you are going to give them something like surprise or thing. So you need reasons. The minimum is enough to the extent that you are not spending so much time in making experience unpleasant. Because you have opportunity to get more over time.

Mel: So it is another thing to test and measure back and if they say no I don’t want to do.

Adam: It is also the how because a lot of iPads or tech pieces online if we have point of sale you know it could be very simple. It is also the accessibility of how you are going to gather it. So not only asking what do you going to get but how are you going to gather it?

Mel: Right. Now this last question is around asking you what your thoughts are on centralization for new clients because even though we are talking to small medium sized business owners here on this show. For example I see a lot of people coming to market on board with the private health insurance or we will give you this and then as a pre-existing customer if you want to try and get that, you can’t. So I can sense that there is a lot of frustration in the market that there is a big strong move to sanitizing new customers but not taking care of the existing ones. What is your thought?

Adam: Here is the problem. As you just said you also got the streaming business with other people who want you to subscribe and then you see the offer out there that is not for existing. I think that is a problem and I don’t know really what answer is because each business has such different objectives but if they want to show and set fire for there is exactly what you said, give more to the existing. Just extraordinary and in agreement with you.

Mel: Yeah and may be if people want to incentivize to encourage people to come on then would you think there is value in keeping minimal.

Adam: Otherwise you match or do better for your existing customers. So in your planning, hang on a second what about us doing this plus this to our existing base. So at least having thought through that process. I am not sitting in the border room to make these decisions but you just said it. Think through what impact has in existing base.

Mel: For people who want to follow you and discover your fantastic research and they want to know more about what you do, where can they find you?

Adam: Thanks for asking the question. The research is free and it is available at a site called theloyaltypoint.com.au. Just scroll down and all the studies are there for free that is the latest one called for the love of money 2015. We did one in 2014 which is called share the love which has got a lot of data about which data to ask and what information people like to give. So there is a great in that one and the first one for love of money 2013 is a benchmark which is 3 free research studies. Quite 50 60 70 pages if you got some spare reading time. My book give back to get back is a book I published few years ago. So it is there for free as well. it is not available to download and have a look there and even the infographic nine steps is there. So there is great resource and all asking for is your information’s. So our value exchange is tell us who you are and download the stuff. We know obviously clearly we are very transparent. My website which is directivity.com.au.

Mel: Fantastic. We are going to put the links to all of those websites and those profiles in the show notes. So thank you Adam so much for your conversation today. You really are a fantastic leader and thanks for giving me the time to chat to you today because it is great to talk to someone who is just so reversed in our Australian market. So thanks so much for your time it has been really good chatting with you.

Adam: Same back to you. I really appreciate you putting the time into these sort of shows. Thanks Mel.

Before you go we would love it if you enjoyed today’s episode or any other episode of the customer centric show. To leave us a rating on iTunes or review or both on ITunes. What it does is it increases the visibility of the show on iTunes so that other business owners can come across it more easily. So if you think it is value think of business owners should see it then please leave that review in rating. It would be very grateful. Have a fantastic week. I will be bringing you another new quest next Tuesday. Every episode drops at 6 a.m. so you can always access it on your way to work or perhaps your way to home from work or wherever you are in the world. Thanks again for tuning in. I really do appreciate it and I’ll see you next Tuesday.

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Thanks for listening to the customer centric show. For additional smart ways to attract more customers, profits and freedom head on over to the website www.customercentricshow.com.


Adam Posner

Customer Retention And Loyalty

Adam Posner has been on my radar for some time for his involvement in researching customer retention and what it takes to make a loyal customer. While there is quite a lot of information globally, there is little in-depth research into the Australian market. Adam changed that by commissioning an independent study called ‘For Love or Money’ and has also authored two books, ‘Give Back to Get Back’ and ‘Making Price Irrelevant’. Adam Posner is the CEO and founder of Directivity.  Having been a data-driven direct marketer for 23 years, he has been involved in a range of customer loyalty and retention strategies and programs for clients like BlueScope,  Quest Hotels and Apartments, Mt Buller, Global Beauty Group, Chemplus, Horseland, and Milwaukee Tools. Adam is all about helping his clients establish and maintain valuable loyalty programs that are both profitable to the business and meaningful to the members.

During my conversation with Adam he shares:

  • His knowledge of the changing landscape of loyalty and customer retention
  • Why a customer retention strategy should be your focus to growing your business
  • Why you must know your buying behaviours before creating a retention or growth strategy
  • Why customer loyalty can look different even in like-businesses
  • The most common mistakes people make in their rewards or loyalty programs
  • The key components required to maximise the benefits of a retention program
  • Formal vs informal programs
  • Findings from his ‘For Love or Money’ research studies
  • How to generate topics for marketing content of value for your market
  • The 9 steps to a valuable loyalty program; and
  • Essentials for growing your customer list

 

Selected Links For This Episode

  • Access Adam’s 3 Research Reports & Book for FREE at The Loyalty Point
  • Adam’s 9 Steps To A Valuable Loyalty Program
  • Connect with Adam on LinkedIn
  • Directivity – Adam’s business website
  • Tom’s – Adam’s international examples of a customer-centric business for having a bigger purpose than selling their products
  • Foxes Den – Adam’s local example as a customer-centric business for including a surprise and delight after an error in their order
  • Omnific Design – Adam’s professional example of a service provider he uses that pre-empts his website needs

 

“Your existing customers are your advertising”-Adam Posner

 

“If we focus on existing customers being the most effective way to attract new customers, then your business can grow effectively”-Adam Posner

 

On social media commentary about businesses: “As much as is it’s a challenge to manage what people say on social media and on review sites. It’s also an opportunity for business to continuously be better and minimise those mishaps that create a problem on your reputation.”-Adam Posner

Read Full Transcript

TRANSCRIPTION: THE CUSTOMER-CENTRIC SHOW PODCAST
with Mel Telecican (Customer-Centric Coach)

Episode 16. Steve Baxter on Processes and Networking to Scale Your Business
___________________________________________________________________________________________________

Before we get into today’s episode I want to bring your attention to Nora. Now this is not a paid post. This is me telling you about it because I think you will find some value in it. if you are in retail and I know a portion of my listeners are. So I got a mixture of hospitality services based businesses and retailers. If you are in retail, you really should check out Nora because they have put together a bunch of resources but also they run fantastic events that you can be part of as well. So just to give you a bit of an insight into what they are doing in Sydney. They got an event coming up on the 11th February. It’s expedition to Lush. Lush is international cosmetics brand that you may be familiar with. They have essence overloads if you ever went into those stores. You get to see the behind the scenes of this business. Now that’s a business growing to 800 stores. So if you want to check that out that’s in Sydney and in Brisbane this one I am actually heading to, there is expedition to beginning boutique that is explosively growing brand. There is a fashion brand online as well as seeing behind the scenes edible balloon a company that puts chocolates into amazing looking cakes and seeing how these business run. Being able to ask questions and also to collaborate and talk to people who are in the industry is a great opportunity that exist when you get along to these events. So events aren’t the only thing they do. They put on free webinars for their members and they create lots of other valuable resources. So I would suggest go over to their website and have a look, Nora.org.au. I am positive that you will find real value in what they do.

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You are listening to the customer centric show with Mel Telecican, where we talk with successful business owners and experts to share smart ways to attract more customers, profits and freedom by thinking about customers first. Now, here is your host Mel Telecican.

Mel: Hello and welcome to the second episode of 2016. I have invited today’s guest on the show because he has been involved in researching specifically the Australian market around customer retention and what it takes to generate a loyal customer and while there is quite a little information out there globally, there is remarkable in depth research in the Australian. My today’s guest changed that by commissioning the independent study. Adam Posner is the CEO and founder of directivity. Having been a data driven direct market for 23 years, he started this back in the mid-90s with a loyalty program for a shopping center called a scratch and save initiative. Since then he has been involved in a range of customer loyalty and retention strategies and programs for clients like Hotels and Apartments, Mt Buller, Global Beauty Group, Chemplus, Horseland, and Milwaukee Tools. Adam is all about helping his clients establish and maintain valuable loyalty programs that are both profitable to the business and meaningful to the members. Those parts go hand in hand. I first came across his research back in 2013 when the money report was first released and then since the 2nd report published in 2015. Adam is also author of ‘give back to get back’ and ‘making price irrelevant’. Adam thanks for joining me on the show. Great to have you.

Adam: Thanks Mel for inviting me.

Mel: Now can you tell me an example of who do you believe is a great example of a customer centric business?

Adam: Yeah I have been thinking about that a little bit and I have actually got 3 great examples. One of international one which is an interesting proposition which is Toms the show footwear. They are famous in a sense that they accompanying matches of shoes and giving new pair of shoes to child in need and why I love this business in terms of customer centricity is not for typical reasons that you might think but because they really know their purpose and I think that a business that really understands why every day they wake up to deliver obviously great product for their customer and they got a bigger purpose and customers love it because I think they are giving something like 45 million pairs simply. So if 45 million pairs have been given that means 45 million pairs of shoes have been sold. So that’s the one international one that I am a big fan of and then locally there is fantastic food business called Foxes Dan in Melbourne which is a chicken and salad organization. It has got 4 stores and what I love about their customer centricity is they made an error one day on my order and they did apologize but when I got home there was surprise and delight in the pack. It was some extra chocolates and dessert which his never really expected, didn’t know about and that’s what I call a business that really understands and heart to delight at a small. Just something as basic as doing that is really amazing.

Mel: So they didn’t tell you when they handed you your order.

Adam: No they said we really sorry for that mistake. I said look it is fine I understand and I accepted their apology, I was slightly grumpy but that’s okay but overcame everything when I came home my kids came and saw them and it is one of those moments when you know business really understands their customer.

Mel: Hmm and they are showing that they care aren’t they? It is not just enough to say thank you we are actually being quite thoughtful about how we can make it up to you.

Adam: Exactly and going little bit you know unexpected and the third example I have which is my web guy called emphatic design and reason why I share with you is that it is a business that is so focused on getting successful. So his mantra is if my web is clean and successfully working, then I am successful. He is always pro-active, always looking for bugs, these sorts of things I just think we forget about. It is taking those extra steps.

Mel: Yeah absolutely. So what does your web guy do? Does he notify you that he has gone back to your site and checked for things?

Adam: Yeah he first made analysis and I trusted the guy in person. So it wasn’t sort of international based analysis that you often find coming through. I had met him and trusted him. Just for a moment I said maybe you can help me. He said no problem I would do a quick analysis of your site and tell you what the bugs are and that’s all complimentary and that night sitting and really simple stuff because I am not an expert in that space, he gave me a quote and it was so reasonable and every time I had a bug he says no problem I can fix it. It is just so service centric businesses.

Mel: Yeah excellent. So you recommend him to other people as well then?

Adam: Recommendation is the great form of marketing and advertising and we don’t do it likely. Human beings don’t recommend truthfully unless they believe and it is their reputation to recommend in. So I agree.

Mel: Excellent. Can you share with us that was this deliberate thing that you sort of gone down this path of focusing on retention and loyalty?

Adam: It is a funny thing how we land up with life and what we do with business and personal. I am from South Africa and I migrated Australia about 30 years ago and my life of loyalty was different there because it almost forced on me to and I to do conscription. But always funny enough that it was in my DNA that I was forced to do things and loyalty forced was natural and when I got into business of commerce and into world of opening business and I had a food business and I had café and so on, I got into space of understanding data. Now in early 90s it was those little cards at the back of the shop. You were lucky to even have a spreadsheet. But it landed based on that concept that you mentioned because I was walking around shopping centers and talking to retailers and saying look I will do local area drop and we will go 20 and hit discounts behind on this card. You give me ads, I will promote your stores. I will drive people to your stores and they will scratch and you will give those discounts and you get your peak business. Great concept but bit hard work knocking doors and getting people take it on. But then I got these questions from these businesses saying great they are coming in, they are buying, how do I get them back again? And it was all in the beginning of the days what we call direct marketing capturing customer info and using direct mail and phone. It was really back off the retailers asking me well I get all these customers but how do I get them back again? Brilliant service, great product and marketing methodology and that’s how it all started.

Mel: Great. So they didn’t have anything in place to be able to have that retention. So then what was the next stage?

Adam: We started giving them the opportunity to start collecting the data. So basics of getting their name and address and their phone number and without that it is anonymous and then the work CRM started to come customer relationship management and databases and keeping info and it was fun to have spread sheet driven also had the opportunity to capture customer information.

Mel: Yeah I think in those days people just didn’t know what to do with it or did nothing with it right so the opportunity is there but whether you take the next step I guess and seeing value in it. So you have seen this whole space change and evolve over the last 20 years. What would you say the biggest change has been that you have experience or that you have seen has made the biggest impact perhaps?

Adam: Clearly and we all believe technology. It is just explosion of applications and technology that is available. So it has almost created a lot of confusion in that sense. So that’s to me is the biggest changes and then naturally into the whole mobile phones and I also think because of the social space being available to everyone. The consumer has changed massively. I think the generational change has changed the consumer landscape and the consumers control now. I think businesses sometimes don’t really know how to take control again. In the old days where you could do the communication when customer come in, you never knew whether they love you or hate you unless they told you. Now one click away they love or recommend you and one click away they tell they don’t.

Mel: That’s right. So do you think that it is a little volatile in terms of say reputation management of your business because there is so many opportunities out there for people to say that they like it or hate it so often?

Adam: Volatile is a great word and I think going from there volatile into it is a also great opportunity to be better. To me the transparency of the world now makes better business and better marketers. We can’t be lazy anymore, we got to be on our toes. We got to be consistently looking after and loving our customers because of that technology out there. So it has created new set of skills and businesses have to evolve with that to manage the volatility of marketing communications.

Mel: You said something there before Adam that there is opportunity there. Do you mean in terms of really truthfully knowing what people don’t like about your business to be able to make change? Or what do you mean in terms of opportunity there?

Adam: Well as much as challenge to manage reputation management for the moment there, as much as it is hard to manage what people say on social media and on review sites and all of those sort of things. it is also opportunity for you to continue to be better to ensure that you minimize those social mis-happenings that create problem on your reputation but it is hard because people out there just push like or dislike with one finger and don’t give it a much thought. So on the one hand you get people saying how great you are so there is the positive and on the other hand you got the openness of the fact that they are not happy.

Mel: And sometimes there you can just leave a star rating and no comment. So it is not required to be logged. It is just not there. There can be no reasoning attached. It is not necessary. Okay so this is what you do then. You help I guess change asses is that what you do? Can you explain what you do in directivity that I guess help this and then builds that loyalty and retention?

Adam: So my business focus is to help my clients retain their best customer and grow the rest and I am much focused on customer retention and loyalty. All above what I often talk about and which is customer accusation getting new customers. Because I believe every day that and I certainly understand that you need to have customer in the first instance. But once you got them, then your existing customers are your advertising and if we focus on existing customers being the most effective way to attract the new customers, then your business can grow accordingly. Now I am not naïve to say that you need that continuous flow of new customers and business. I totally understand that but I don’t believe enough effort and time and energy and investment is put into the existing customers that they do have.

Mel: Why do you think that is?

Adam: I think that is because as human being from the day we being hunters and gatherers, we are all about accusations. I think we are all about new and shiny. The next new car, phone that comes up. It is all about new business and commerce drives that so I think naturally it is in our DNA to get new things.

Mel: Do you think that bit of complacency thinking that once we got people in, they will naturally love what we do.

Adam: I just don’t want to believe that. I am just not sure. There is a bit of an element to well we got them in. What do we do now? Because customer retention and loyalty is driven of who your customer is. Now in small or medium business, that means customer information. It means technology. It means database, CRM. Something to manage and knowing who your customers are?

Mel: And to what degree do you suggest people should know who their best customers are?

Adam: To the degree of what they want to do with them.

Mel: So really thinking out where we want to take this and then reverse engineering that way to figure out what sort of information we need to be taking.

Adam: I couldn’t have said better than what you said. In all of those scenarios again small and large business retail services whatever it is, knowing your objectives around customer retention and loyalty. Why do you want to keep your customers? And why do you want to keep them loyal? That’s the first question you need to answer, any business needs to answer.

Mel: So wouldn’t the common answer be I want to more money?

Adam: Yes and my next question would be how much more? And then my next question would be who are they that is actually giving you more money?

Mel: Yeah okay. So let’s talk about that. So that’s what connected to what you are saying best customers right? Do you want to tell us about that?

Adam: Every business define best in a different way but if you want to keep it simple, best needs are couple of things from a revenue point of view. A better customer is somebody who buys more plus they come in more often. So there is a frequency that they spend more and they spend more often. So suddenly if you got 100 customers who on average spend 100 dollars, and come on in average 3 times a year, so you got 100 my 100/3. Suddenly you know in order to grow your business what leaders you got? Are they going to spend more? Offer more product or option to add to the mix or you get try and get them get back more often or both. So you need to know that in the first instance in order to define what a best customers looks like in a behavior point of view. The simple part I what is their buying behavior? How often are they coming in and what are they buying and how much are they spending?

Mel: And pod system for instance people are using that. You are saying does that information already on hand there for you to piece together?

Adam: Not unless you identify it back to individual. So this is where the next step is. You could have the identified data and general average transaction but you don’t really know they are. So I don’t know Mel this is Adam. Mel might come in 4 times a year but then I know who you are and I have got your customer information.

Mel: So this is where the value as well. Connection the user and collecting information to loyalty program so that you can attribute that spend to particular customer profile.

Adam: Fundamentally yea I mean the loyalty program and the first person to say it is not the answer to everything but it is certainly an answer to a lot of things fundamentally depending on your business and structure. So I always start off with what does loyalty mean to your business, what is customer retention mean and then let’s work out the solution. It doesn’t always have to be in the typical sense the loyalty program. Yes often it does especially in retail because you do need frequency of purchase. You do need the general transaction to keep the momentum.

Mel; I was thinking about the examples of clients and people you work with and I was thinking clearly there is no loyalty program that touch there and there is the retention strategy that you are implementing and for the other examples like K Mart you would be looking potentially looking at the loyalty program there right?

Adam: Clearly in fashion and food retail where there is regularly customers coming often, that’s where you get the opportunity to know them and to invite them back again. When you got a long transaction or big items and different kind of strategy and different kind of retention and loyalty strategy because you don’t necessarily have the believers to keep getting to buy more and more often. So that’s where you really got to understand who your customers are and the buying behavior before you rush in and just come up with any old program because that’s when the danger and suddenly you find it is not working and you have invested in something that is not giving return to your business.

Mel: Yeah I think Adam when I look around there is probably a big surge in loyalty programs and appeared from the outside to the case where they are doing it and well so we should do it too. So I would expect that it is common mistake people make but do you agree and what are the other mistakes that people make when introducing and bringing loyalty rewards program to their business.

Adam: Yeah I see a lot of mistakes and I am going to share with the listeners exactly what they are. The first one is not knowing why. So I keep coming back what are your objectives in your business? So clearly lot of people may say oh we want more customers, so we want them to come back more often. The other one I mentioned is we want them to recommend us. Reconnection is different that general loyalty program and what I mean by this is when we do know who your best customers are, well then recognize them being those best customers so that they do refer you. So when you recognize your best customers, just like real example I gave earlier on. Giving them something they never expected. We are a member of health fund and out of the blue they gave us some tickets on an event. Now I know that behind the scenes, they would have looked at the value of us being a family and member of that fund we don’t expect to get tickets to the event so what they did was a bit of surprise and delight and now here I am talking about the fact that we got recognized for our ongoing spend with them. So recognition and referral is a different kind of strategy but underneath that you do know who your best as you asked your own. Who are those best customers and how are you going to recognize so that they do talk about you.

Mel: And so what you have seen out there at the market? Often when I am thinking about business and what they could be doing that’s unique because sometimes their common ways that people do things and so it doesn’t seem to have the impact as something that’s very unique. So is there anything else out there that’s really blown your way and just part of that recognition or referral.

Adam; Yeah I give you a little example and it is using what is commonly used and just taking different angle from it. So a happy birthday especially when you know your customers birthday and when you got that information is a very common little surprise and delight and thanking here is your birthday surprise. A lot of retailer do that and also fundamental thing in loyalty program that give them little birthday surprise. I am currently working in furniture retailer and what they doing is they say happy birthday to the furniture. So what we like to do is do anniversary date of furniture every year. We going to say happy birthday to the furniture and what about furniture cake for you.

Mel; Fantastic. Another revenue stream.

Adam: Yeah and just looking at something in a different way. We are looking at from another point of view.

Mel: Great. So would there by like an average period of time that the furniture retail would know people going to upgrade as well as part of that process.

Adam: Yes they would and then we start looking at what we call the life cycle of the purchase and that’s when good strong retention marketing comes into place. When you got the data to know what the life cycle of whatever customer is buying in that case furniture, TV or whatever it is. Then you can start thinking about marketing closer to that time.

Mel: Great so it advents that line of relationship through gifting and developing that relationship through those thoughtful messages. What are your thoughts there?

Adam: There can be a difference in a sense that you can have a formal loyalty program where you formally name and brand it. So you are asking for customer data in the first instance so okay please join our circular program. So if customer ask why are asking me to join your program, well what we going to do is we are going to send you updates to our product range. We are going to invite you to special events, we are going to send you a birthday gift and also we are going to give you a discount every 6 months. You have to formalize what all those benefits are. So you got what I call formal program when you making a promise to your customer based, they giving you the customer, they engaging and buying from you, but the transaction there is they are giving you the customer information and you are giving them rewards so you get them coming back. So that’s a formal program at a simple level. An informal program where you don’t make promises and you don’t tell people to join something does need basis of customer data. You need to have got some information from them if you want to drive some personalized marketing. You do need it.

Mel: There is just so many businesses that do already collect that information whether they feel confident after this.

Adam: Exactly and think through once we got it what we do with it. So my tip to those people is to map it out. In a 12 month period what are the reasons that you can think about to communicate over 12 months. Think of good reasons to reach out. Whether it is a seasonal change or customer birthday or whatever. If you map them out, rather than just wake up every month and think what should we do this month, if you map them out suddenly you got a calendar of 1 to 1 marketing opportunities.

Mel: Yeah well thought out is important because if you are going to the effort of doing that potentially the cost as well, then you need to make sure that you are going to have a degree of success and there is a return on that investment.

Adam: Yes and you need to understand the financials first. I have to go through a very robust process called 9 steps. I call it to a valuable loyalty program. It can be translated as I say it just keep simplicity to 9 to 12 month valuable program and in those 9 steps the first thing is why and I started as you know why would a program benefit your business and why would a program benefit your customers. So getting your strategy, reason up front and knowing them and general why of getting customers and get them to come back more often but to try and set more specifics. What I mean by that is we want to grow average spend from 100 dollars to 200 dollars across 10,000 customers. When it get specific, suddenly the financial start to make sense. So surfing objectives is really important. I have often seen oh we want to reward our customers. Why? So that they come back again. Okay how often? So I am trying to get specific.

Mel: Yeah and achievable as well.

Adam: Yeah specific measureable specific timing as well. So that’s number one step. Number two step is commitment. It is a big thing because often these are seen as marketing initiatives and business growth strategies. So when you are committed to a loyalty program, it is like opening your doors every day because marketing campaigns are usually slashed when it comes down to time and task.

Mel: Yeah so this is a long term approach. You have to on the patience to see the results.

Adam: Yes I see many fail because they do just a little marketing idea. So number three in the process is who it is for? And you ask that right in the beginning. Is it for your old customers or your best customers? Is it for your team? So I have got number of audiences when I talk to my clients about who is program for and that start with your customers and there might be different segments because I do a lot of work in pharmacy and you know you got young couples and families. They are all different segments that do not only have different spend patterns but also different buying behaviors. So understanding who is your program for? If you say for everyone that’s fine. But at least ask that question. The next one is who is internally your team? They really got to get behind it and that is to me the biggest failure in any program when the team doesn’t love it. The team and the staff needs to be in love with your program as much as your customers.

Mel: I had a little bit of difficulty with this when I had restaurant business and my experience was that they saw it purely as a selling thing and so we really had to sit down and talk about the value it would have and I guess like you said before because it is a long term approach and they eventually saw it but in the early it was a little bit hard for them to understand and I guess that’s because people exposure to other loyalty programs too right.

Adam: According to my research over the last 3 years that 88% of Australians over the age of 18 are member of at least one loyalty program. Many of us are members. Not everyone but many of us are and because of that all the good and bad experience start up and never received anything. Oh the points are worth nothing you know all of those ask this question every day in every course I do. I ask this that which loyalty program you love and why and which one do you have and why and common things come through on both sides. On the love side, they love because they get recognized and they love the rewards and benefits. On the hate side they see they never get anything. We all have a point of view. But in a business you need to ensure why you are doing it. Things we do is we get a team and one of the programs that I did was in a tool company which is trading customers in terms of developing their program we got the whole organizations to come up with names and to vote and the winning name went away for a weekend.

Mel: So it is a collaborative effort.

Adam: Yean and what about your suppliers? Never mind you want to get program for customer or your team. Maybe you got suppliers. Well why can’t they give offers and benefits and get involved in their brand out to your member base?

Mel: Yes partnerships right. Yeah okay.

Adam: Exactly and I am still a number three which is who is. Now number four is what kind of program and there is you know is this just a general communication program or is it discount program, what does that look like? It comes back to understanding your customers and your business.

Mel: Do you think there is a space then to let’s say you got a coffee shop, everyone else in the market has either an app that is about the buy one get one free or card that does the same. So obviously you will be collecting data to a better degree but could you then implement a different program to separate yourself from everyone else in that coffee space.

Adam: It is tough one because the loyalty programs are a little bit more and there is lot of apps and POS items opportunity for café retailers but it seems to be the same thing. I am not sure where the point of difference there is unless you start getting coffee specialist. A lot of smart café are doing that. So they are turning what I call retention and loyalty outside of typical program. Educating them and creating an experience. We talk about experience now rather than just typically transaction. I just went in on there. In terms of structure what I am trying to do is trying to move people from what I call points to purchase to points to purpose. From transaction based rewards. They want to go to oh by the way does you organization support local charity? Can we donate our points to charity? Can we further than transaction? Exclusivity piece. So your program is not only about transactional, it is about moving and what I call points for purchase. Once we there, we also look what the competitors are doing because do you want to be the same as your competitors or do you want to be the competition. i always ask this question. Do you want to be the competition or do you want to beat the competition? And it is hard to answer that when everything else is same but that’s where the challenge lies.

Mel: And I guess it comes down to testing. Find something that works for your people and customers.

Adam: And get your team come up with idea and brainstorms.

Mel: Yeah absolutely. Ten heads are better than one right.

Adam: Yeah and quickly through to number five that is understanding your experience. So any program there is an experience that a member has from the time they joined. So what is the time? Is it hard to ask questions? You know the whole join process and then experiencing the program, you need to think that through. You really need to think about how the experience being the member of your program and that means of your business. It means from customer service to online experience through to all elements of engaging and interacting to your program.

Mel: Yeah making it seamless.

Adam: Number six is your technology and your data. So again as big as those words are, you got to ensure that you got the point of sale system to capture and to manage. Communication plan I mentioned earlier on, mapping out in advance. What is your communication look like? From launching your program to ongoing.

Mel: I am going to pull you back to point six, technology and data. Is that what you do? Do you place together that information? Do you pull that from the other sources? What is it that you do that allows peoples to make those good decision from their data?

Adam: I am not a vendor of technology. So I am an independent consultant but I am not a lot of technology and vendor presuming they come to me or I order them to help my clients. So it depends on business and what kind of support they need from technology point of view. I do not know everything but I know enough either to introduce, facilitate or look after that piece. Often clients say to me take us all the way and then introduce us and then we will go from there.

Mel: That’s great though because it means that as that consultant that you bring other things to the table and then can tailor or suggest based on people's specific needs as a post to pushing them in one direction. That’s great.

Adam: And then I also implies it in people I trust and know. One of my co-author he has got retention. So agency which is very strong on the tick and the technology and the ongoing communication platform pieces. Him and I work many times together because we got both sides of brand. I got strategy and he got tech experience. So that the answer to your question.

Mel: It is a great combination and I really want to direct people to the reports that you have put together because there is just fantastic insight there and while a lot of loyalty programs are referred to big business, I think there is a lot that can be taken in terms of understanding who is taking on a retention, who is involving themselves in loyalty programs and what they like and dislike. So that’s a really fantastic piece so congratulations for putting that together. Now before we finish up I could talk to you days about this stuff but in terms of results and really maximizing the positive customer experience, is there anything that stands out for you as an example of significant improvement that a client that you worked with in the past?

Adam: I think I will keep it simple and the answer is yes. I am going to stick with pharmacy. Where a group of larger stores haven’t really worked out what loyalty means to their pharmacy, they didn’t have any information. So clearly prescription area but you can’t use loyalty in that space. So once we got them excited about yeah look you got all the reasons to ask for your customer’s information and giving updates and all the good reasons. What we did was we followed the 9 steps I mentioned and I am going to come back to the birthday because I want to give you the results because it blew me away. I just couldn’t believe it. So when we did came to the birthday mail and it was a direct mail not e-mail because we didn’t get enough e-mails which by the way is just one channel. We were nervous and we need to give some sort of offer 5$, 7$, come in and here is a gift for you. So the results were phenomenon and what I am going to share with you is the top line results. They got 23% redemption rate and what that means is that 23% people said that they offered to came into their store and by the way the highest response rate for one of the store is 40%. So that customer base they got 40% back. They also got an extra 717 customers per month. They compared that to that month that based on customers.

Mel: That frequency you talked about have been increased.

Adam: And they got incremental spend after the 5$ they got 23$ on top of that spent.

Mel: That’s huge.

Adam: And as I said I am sharing this because it is real and I know for the fact that it just one of those cases as simple as it was birthday. May be the customer just stopped having communication to the local pharmacy.

Mel: And I guess specially if you are one of the first people to market to, you got a really great opportunity to throw that into the mix because it is completely different. You know what I got to ask you 2 different questions because you got me thinking before. You talked about lots of opportunities or different opportunities to catch up with people. So the not only clicked in e-mail and looking at collecting their postal address as well is what you looking to right?

Adam: Yes.

Mel: How much information is too much to ask for? Because we talked about that earlier and we are talking about that wanting to make it easy and not too hard, so what is your suggestion?

Adam: That is a really critical discussion point and really cost a lot and I would suggest this is how what I would recommend to my clients. Try and get the maximum that you can get in the minimum amount of time. So what I mean by that is I call this fancy the progressive profile. So you got to get at least the first name and surname, gender and contactable communication. E-mail at the bare minimum. Then if you can get a mailing address and a phone number mobile. Give people reason to why you are asking for it.

Mel: Yes they got to know what is in it for them right.

Adam: Yeah. Why asking for my birthday? Are they security or is it legal requirement in gambling or liquor businesses or whatever it is. If it is not, tell them you are going to give them something like surprise or thing. So you need reasons. The minimum is enough to the extent that you are not spending so much time in making experience unpleasant. Because you have opportunity to get more over time.

Mel: So it is another thing to test and measure back and if they say no I don’t want to do.

Adam: It is also the how because a lot of iPads or tech pieces online if we have point of sale you know it could be very simple. It is also the accessibility of how you are going to gather it. So not only asking what do you going to get but how are you going to gather it?

Mel: Right. Now this last question is around asking you what your thoughts are on centralization for new clients because even though we are talking to small medium sized business owners here on this show. For example I see a lot of people coming to market on board with the private health insurance or we will give you this and then as a pre-existing customer if you want to try and get that, you can’t. So I can sense that there is a lot of frustration in the market that there is a big strong move to sanitizing new customers but not taking care of the existing ones. What is your thought?

Adam: Here is the problem. As you just said you also got the streaming business with other people who want you to subscribe and then you see the offer out there that is not for existing. I think that is a problem and I don’t know really what answer is because each business has such different objectives but if they want to show and set fire for there is exactly what you said, give more to the existing. Just extraordinary and in agreement with you.

Mel: Yeah and may be if people want to incentivize to encourage people to come on then would you think there is value in keeping minimal.

Adam: Otherwise you match or do better for your existing customers. So in your planning, hang on a second what about us doing this plus this to our existing base. So at least having thought through that process. I am not sitting in the border room to make these decisions but you just said it. Think through what impact has in existing base.

Mel: For people who want to follow you and discover your fantastic research and they want to know more about what you do, where can they find you?

Adam: Thanks for asking the question. The research is free and it is available at a site called theloyaltypoint.com.au. Just scroll down and all the studies are there for free that is the latest one called for the love of money 2015. We did one in 2014 which is called share the love which has got a lot of data about which data to ask and what information people like to give. So there is a great in that one and the first one for love of money 2013 is a benchmark which is 3 free research studies. Quite 50 60 70 pages if you got some spare reading time. My book give back to get back is a book I published few years ago. So it is there for free as well. it is not available to download and have a look there and even the infographic nine steps is there. So there is great resource and all asking for is your information’s. So our value exchange is tell us who you are and download the stuff. We know obviously clearly we are very transparent. My website which is directivity.com.au.

Mel: Fantastic. We are going to put the links to all of those websites and those profiles in the show notes. So thank you Adam so much for your conversation today. You really are a fantastic leader and thanks for giving me the time to chat to you today because it is great to talk to someone who is just so reversed in our Australian market. So thanks so much for your time it has been really good chatting with you.

Adam: Same back to you. I really appreciate you putting the time into these sort of shows. Thanks Mel.

Before you go we would love it if you enjoyed today’s episode or any other episode of the customer centric show. To leave us a rating on iTunes or review or both on ITunes. What it does is it increases the visibility of the show on iTunes so that other business owners can come across it more easily. So if you think it is value think of business owners should see it then please leave that review in rating. It would be very grateful. Have a fantastic week. I will be bringing you another new quest next Tuesday. Every episode drops at 6 a.m. so you can always access it on your way to work or perhaps your way to home from work or wherever you are in the world. Thanks again for tuning in. I really do appreciate it and I’ll see you next Tuesday.

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