(*POC = Proof of Concept)
To say I have been waiting for a long time for this Loyalty Leader interview (#33) is an understatement!
It has been 13 years since I met Kristy Elsworth and with transparency, I have had the privilege and delight to have worked with Kristy as a client on three loyalty programs and I think the fourth will be my free coffee!
Over those years, I have learned so much from her passion, brilliance, EQ, IQ and communication dexterity and most importantly, her belief in the power of a Proof Of Concept (POC) to enable the long-term viability of loyalty programs as a business growth asset!
Kristy is currently Executive Manager – Loyalty & E-commerce with Thermomix in Australia and this interview could have been a book, however IMO it reveals some valuable insights, most notably her 10 stages on how to deliver loyalty program success with a POC.
Enjoy!
1. So, who is Kristy (outside of work) + a little on your work biography
I'm a busy mum of four. Our eldest son is 13, our daughter is nearly 12, and then we have twin boys who are eight. We're super lucky. They're all awesome and healthy and they give us a lot of energy and motivate me in all the things that I do.
For me, being so busy with the family means I love my exercise, it’s my personal time and part of my daily routine. It keeps me mentally and physically fit, sane and patient and helps me manage the stress of having, should I say…a crazy-busy life.
Being a mum to a big family has really made me value and appreciate my time – and the many nuances between people – even ones with the same genes!
This has helped with a lens through which to look at customers.
And, you know, in terms of people, they might have the same profile on paper but meeting them in real life you’ll discover it’s not the case – it’s like what happens if you use just demographics to create personas.
That’s why I love loyalty programs as they give me the opportunity to dig deeper than demographics!
In terms of my journey into loyalty, it all came from wanting to be able to directly measure the impact of the marketing activity I was doing. I started my marketing career in 2007 working as a campaign manager on ‘above the line’ activity – it was all TV, Radio, Print.
There was no paid digital media – no way to directly attribute a behaviour or a result to a marketing activity you were doing. The exception to this were loyalty programs – and from there my love of programs was born. I finally found a strategy and communication channel that I was able to measure impact, test & learn, and then do it all over again and again and again.
My first loyalty role was at Sigma Pharmaceuticals in 2009, working on their Amcal & Guardian Pharmacy loyalty programs. When I joined the business, they wanted to re-launch both of their programs – from both a program design and look and feel perspective.
And there was a strategic layer of looking into how we could monetise our program through providing opportunities to brands stocked in the pharmacy to target customers with relevant offers. This supplier funding strategy was key to driving longevity for the program.
This was my first shot at designing and implementing a program, and I learnt a lot about the process of having to update the technology as well as understand our customers.
We were managing franchisees as well, and they're another customer group in all of this, because effectively, you're not just looking at your overall business results, you're trying to support all their businesses as well.
From there, I moved into a fantastic role leading loyalty at Bakers Delight. I was given the challenge to design and implement a new loyalty program moving from a physical stamp card to a digital-based customer experience.
After I joined the business, I discovered there had been previous attempts to launch a new program without success. The main reason was there had not been a strong enough business case for the Board.
That’s when I unearthed what I now believe to be a common gap for many businesses when it comes to launching and maintaining loyalty programs successfully and that is there is not enough rigour in proving a program can achieve success based on an in-market proof of concept (POC).
With a POC delivered and proving the business case, I was given the approval to implement a business-wide program - implementing the Bakers Delight Dough Getters loyalty program in 2022, which I was thrilled to see was awarded the 2024 Australian Loyalty Associations ‘Best New Program Launched’ award. It’s fantastic to see the programs you bring to life delivering for customers as well as meeting business expectations – the ultimate combo!
And finally, my most recent and current role is at The Mix ANZ, home to Thermomix, The Mix Shop & Kobold. I was recruited to design and implement a loyalty program, which I’m happy to report after a successful POC, we’ve just recently launched MyMix Rewards (early September 2024).
2. Tell us about the newly launched Thermomix My Mix Rewards program
Our new MyMix Rewards program has been a joy to work on – not just the program development itself, but the incredibly talented people as well.
I’ve been extremely lucky to work with the most fantastic project team in bringing this program to life. I want to do a special shout out to Natassja Mant for taking the lead on bringing the program to market, and Emma Topham, our brilliant Salesforce functional consultant, who literally built the program from the ground up.
The business at TheMix is built on our raving fans – so it was incredible to be able design a program to reward them after their years of loyalty.
In terms of the benefits our raving fans enjoy, it’s a points-based program where members earn one point for every dollar they spend, and once they reach 150 points, they receive a $10 voucher to spend at TheMix Shop. They also receive a $15 welcome gift voucher just for joining, a birthday voucher in their birthday month, and exclusive access to new product launches, sales and many other personalised exclusive offers that show our members that we know them!
And this is just phase one! Without giving too much away, I can tell you that there is more benefits planned to launch in the future.
We made a conscious decision to launch with our tried and tested benefits, to keep the program proposition simple for our members and our Consultants and will look forward to adding on other benefits that we know our members will love in the future.
Speaking of tried and tested, I think it’s important to tap into the process the business invested in to design and validate this program – it’s not something we just came up with overnight.
The first step was to align on the objectives of our program.
Clarity was gained on what we wanted to achieve for our customers and for the business. To do this, we analysed our customer data to determine our current state and from there we identified some clear opportunities for customer experience optimisation and business growth. Having these data insights was imperative in allowing us to quantify the potential opportunity – which helps with gaining business engagement and alignment on objectives.
The second step – based on an alignment on objectives, we started to design our program.
To do this we worked collaboratively with people in the business as well as with our customers. We’re fortunate to have a very engaged customer base who were thrilled to have the opportunity to contribute their thoughts on what we were considering. Having both business and customer input into the program design really helps with prioritisation of benefits. It helped give us confidence in what would be desirable and feel achievable for customers, which was pinnacle to our program design.
The third step – and in my opinion the often most missed step (and the make or break of program’s success) was to take our program design and validate it in a Proof-Of-Concept (POC).
This provided real in-market data to understand which parts of the program design are meeting objectives and which aren’t. Modelling the data on a broader business level over a longer period helped us to forecast with confidence what the Return On Loyalty Investment (ROLI) would be. This was imperative when building a business case and gaining Board approval for the long-term investment. It was also imperative in managing expectations around the program’s contribution to business growth – another powerful benefit of a POC. A Loyalty program is about long-term sustainable growth – a business-case supported by a validated POC will help you quantify exactly what that means to the Board.
3. If you had to choose the most important measures of success for a loyalty program, what would they be?
This one is a tricky one to answer, because ultimately, I think that comes down to what your objectives are. Your objectives determine your key metrics and have a significant influence on how you’ll measure the success and Return on Loyalty Investment (ROLI). Having said that, in the early stages of a programs’ life, my go-to measure is acquisition. I look at this measure as the first in a sequence of metric dominoes. In general, if you’re not hitting your acquisition targets, all of your other targets will lag as well.
In terms of key measures of ‘program health’, again it’ll be very specific to your program design as to what/how you measure it. For us, with MyMix Rewards where customers are earning vouchers as their reward, Voucher Redemption Rate is a critical indicator of program health, as redemption indicates that our reward is desirable and achievable, both key ingredients for building customer loyalty. In that lens, redemption = retention = healthy loyalty program.
(Note: Redemption = Retention)
If redemption is slow, you need to investigate further. And it doesn't always mean you need to look at the reward itself.
It might be how you're communicating to customers. It might be that you're not communicating. It might be that you're not communicating often enough. You’ve really got to look at all the signals, but don't jump straight to thinking that the reward itself is not working. There's probably more to it.
(Note: I loved this insight from Kristy because what you're looking for are more signals rather than the first bright light.
4. What are some of the challenges you’ve faced in getting loyalty programs to market, and how did you overcome these?
There are three main challenges. And these have been consistent in all four programs that I've worked on from design to launch.
1. Scope creep.
When you start to talk about loyalty programs you often get a lot of excitement, which is great. But that can lead to scope creep, which complicates the process and creates time and cost impacts.
Sometimes there can be a temptation to include too much in your loyalty program composition in the first instance. To go too big to soon before you know enough.
I would say scope creep even leads towards an indication you're not ready for a loyalty program. In my opinion, its symptomatic of not been clear on either your objectives, or the prioritisation of those objectives. If you can't articulate and align on your objectives, and you can't analyse data to validate that those objectives will deliver growth, you are not ready.
I just think there is a massive temptation (and sometimes business pressure) to rush into it.
The analogy I use is that a loyalty program is like a marriage. You are seeking long term sustainable growth. You are making a long-term commitment to your customers as well as to your business in terms of what that program will deliver. And you shouldn't rush into it. So that's where I look at the Proof-Of-Concept. It's like dating. You're dating for a bit to see if it's going to work out.
2. Validating that the program design will achieve the objectives that you've set.
This challenge is about how the program design delivers to the objectives and validating that it will achieve those objectives.
3. Quantifying the impact the program will have on business performance.
Quantifying the impact that the program will have to build a solid business case because as I said, a loyalty program is a marriage. You need to take it seriously.
They are the three main challenges that have come up again and again consistently.
I have a solution to overcome those, and that is through having a Proof-Of-Concept - a POC.
5. You are a POC professional. Tell us about POCs, lessons learned and advice on successful POCs.
I believe they are an absolutely necessity to the long-term viability of programs. Because a loyalty program is not a promotion, it's not something you can just put out there and easily take away.
A POC is short-term in-market validation that comes at a small cost for a long-term investment.
Yes, there is time and resource needed plus some technology adaptation, however, as I’ve said, it's that analogy of the lifelong commitment of the marriage with a little bit of dating before you dive into that marriage.
Some might say that the POC is an opportunity cost of time and revenue loss of a full program not being in the market, however in my opinion it’s non-negotiable. On the other side of that opportunity cost is a whole lot of risk that ironically also revolves around loss of time and revenue if it doesn’t deliver on commercial objectives and customer expectations, not to mention brand reputation.
From my experience, after successfully designing and implementing multiple POC’s in market before full program launches, the return far outweighs any risk…in the words of Mastercard, I would say a POC is actually ‘priceless’.
I have seen unsuccessful program launches without a POC and the reason for that is because they never had a business case that a board would buy into with the reality of in-market results. Because you can't fudge your numbers. And you certainly can’t fudge your customers’ experience.
A POC will give you so much confidence and learning, maybe we should call it a Proof of Confidence! Even if you do a POC and it doesn't hit any of your objectives. That's great. That's a learning. You avoided a long-term disaster. But if you don't do a POC, you won't know what you're heading into. You are flying blind.
I believe so much in POCs, at this point in my career, if I was working with a business and they wouldn't do a POC, I would walk away, because I wouldn't risk that investment from the business. It's non-negotiable.
What’s your guidance on how to ensure a successful POC?
I've got ten critical factors to design and implement an effective POC and the extra glue to hold them together are patience and a strength of conviction or back bone to see it through.
1. Be clear on the objectives
When you get to a POC, you should have done the work to align on objectives and have a program design in mind that you think will meet them.
2. The audience
It’s a POC, which means you need to be able ring-fence a group of customers to be a part of the POC, and equally have a group of customers who can operate as your ‘control’ group who will not be exposed to the POC to validate the change in behaviour you’re seeing come through in your metrics is as a result of the POC and not something else.
3. Measurement
Be clear on what metrics you’ll use to measure the impact of your POC and how you’ll measure them to determine if the program will achieve its objectives. Be clear on how you’ll get that data. It doesn’t matter if it’s a manual process, however you need to be sure you can access the data you need, and that data is clean. Similarly, you also need to make sure you can measure the same metrics for your control group to use as a benchmark and ensure the difference in metrics for your POC customer group vs your control group is a behaviour change because of the POC and not something else.
4. Stick to your Minimum-Viable-Product (MVP) proposition and avoid Scope Creep
This comes back to what your objectives are and being careful not to complicate your POC. You want to test the CORE program design, not the phase 2 or 3 components. They can wait until your program is in market. You want to be very narrow in the focus of what you’re testing and purely test your MVP program design in the POC otherwise you won’t get what you want out of the POC in terms of data, and the technology to support it and timeframe will blow out so much that the business will likely not proceed with it.
5. Iterate your program design during the POC if you need to
When the POC is in market and one or more aspects of your proposition are not achieving their objectives, then iterate and keep measuring to see the change. If they are core to the program design, you’ll need to consider what could replace it to achieve that objective – and you’ll also need to test it – which is what the POC is all about. Leverage the POC for more value by looking beyond the program design and A/B test your comms strategy to support your loyalty program design as well – this’ll give you a wonderful head start when you launch!
6. The timeframe
This will depend on the type of the brand/business you’re in. It needs to be long enough to measure the impact of your loyalty program design. In my experience, a rule of thumb is three months is the minimum amount of time you would have a POC in-market to be confident you’ve gathered enough data to be valid and reliable enough to apply to a financial model that’s looking at the commercial benefits over the longer term.
7. The technology to support it
This will differ by business depending on current capabilities, size and tech stack. The technology you have in place to support the execution of your POC should be your Minimum Viable Product – it doesn’t need all the bells and whistles to meet the requirements of your longer-term program because this is just a POC. It just needs to do enough to support the execution of what you’re trying to test. If this means you need to do some manual data extraction and analysis to do your POC, so be it – historically during POCs that’s what I’ve done to keep costs to a minimum and make it a no-brainer for the business. I’ve found it much easier to gain business buy-in to invest in the time to do a POC than I would if I was asking for financial investment in technology up-front before I’ve validated the program design.
8. Business alignment and engagement
While you’ve taken your team on the journey of designing the program, make sure you keep them aware of and engaged with the POC. The POC really is the first phases of the ADKAR® change curve for your loyalty project – its where you’ll create the awareness, desire & knowledge around what’s coming for your loyalty program. Nothing will create that desire more than having actual in-market data about your customer behaviours!
(The Prosci ADKAR® Model is one of the two foundational models of the Prosci Methodology, in addition to the PCT Model. The word “ADKAR” is an acronym for the five outcomes an individual needs to achieve for a change to be successful: Awareness, Desire, Knowledge, Ability and Reinforcement.
9. Gain customer feedback
You engaged customers in your program design, so now you can gain valuable feedback about their experience in the POC. You are seeking insight into what they valued and what they think you could do better. It’s a great opportunity to get quantitative and qualitative feedback which will help support your business case.
10. The business case
Everything in your POC leads to your business case – the succinct document that forms the foundation of your loyalty project (and soon to be program). The business case shouldn’t just be about getting approval to develop and implement your fully fledged loyalty program. It should also be your business’ loyalty blueprint that clearly stipules the programs’ objectives, your MVP program design, your forecasted business impact in the longer term based on the outcomes from your POC, the lessons learned and the customer feedback. It should enable you to develop a few Return On Loyalty Investment scenarios with different expense inputs. This will form your budget for the project as you go forward.
6. What advice would you give to brands thinking about a loyalty program?
1. A loyalty program is like a marriage – it’s a commitment – so don’t rush into it. It’s about long-term sustainable growth, so make sure to invest the time to achieve whatever ‘long term sustainable growth’ means for your business.
2. Do a POC
3. Do a POC
7. What’s the biggest frustration you have with loyalty programs?
When brands treat a program as ‘just another marketing channel’ and don’t personalise the experience and add value for members on a 1:1 basis.
With every touchpoint and every moment, you need to remind yourself that loyalty members expect more and challenge yourself to ask how you can deliver that. Related to that, is when brands don’t leverage the incredible depth of insights that come from having a loyalty program that can inform decision making across multiple functions of the business well outside of loyalty.
8. What do you think is creeping up on programs that could disrupt them for better or worse?
AI Facial Recognition to identify customers. It might enhance security in loyalty programs, but will it cause issues around how much contact data customers are willing to share and therefore our ability to connect and communicate with customers?
9. What’s the most underestimated force behind a program’s performance?
The amazing loyalty professionals in the team who are making it all happen! I think there is still some misconception out there that once you launch a loyalty program, they just magically run themselves, when the truth is that’s just the beginning.
In my opinion, the real value in loyalty for businesses goes far beyond the return on investment. It’s the less quantifiable benefits that come from being able to test and learn, continuously improve, segmentation & profiling...the list goes on and on.
All of these require awesome loyalty professionals at the helm proactively looking for opportunities for growth.
10. What are three important skills a loyalty program marketer needs?
1. Analytical
2. A strong communicator
3. Proactive to maximise the opportunity that a program provides. You have to constantly be looking for more learnings, more insights. Not just executing.
A bonus skill – you need to be strong in your conviction to wave the flag for your customers and the business to get the best outcomes.
11. If we are chatting again in (say) 2 years’ time, what do you predict would be the hot topic related to loyalty programs?
The good, the bad and the ugly impact of AI.
12. Leave us with a lasting loyalty thought
Summary
This interview with Kristy is a comprehensive insight into what makes a loyalty program a long-term success.
Three letters… POC!
A summary of the ten fundamentals of a POC shared in this Loyalty Leaders interview emanate from the real-life experience – thank you Kristy!
1. Be clear on the objectives
For the POC vs for the longer-term
2. The audience
Ring-fence a group of customers to be a part of the POC,
3. Measurement
Be clear on what metrics you’ll use to measure the impact of your POC
4. Stick to your Minimum-Viable-Product (MVP) proposition and avoid Scope Creep
This comes back to what your objectives are and being careful not to complicate your POC.
5. Iterate your program design during the POC if you need to
When the POC is in market and one or more aspects of your proposition are not achieving their objectives, then iterate and keep measuring to see the change.
6. The timeframe
This will depend on the type of the brand/business you’re in. A rule of thumb is three months is the minimum.
7.The technology to support it. The technology you have in place to support the execution of your POC should be your Minimum Viable Product.
8. Business alignment and engagement
While you’ve taken your team on the journey of designing the program, make sure you keep them aware of and engaged with the POC.
9. Gain customer feedback
You engaged customers in your program design, so now you can gain valuable feedback about their experience in the POC.
10. The business case
Everything in your POC leads to your business case – the succinct document that forms the foundation of your loyalty project (and soon to be program).
And don’t forget patience and a strength of conviction or back bone to see it through.
