An interview by Adam Posner with Loyalty Insights Leader – Nicola Shawyer, Senior Insights Manager COTTON:ON Group (COTTON:ON & CO. Perks)
This is the 32nd interview in the series on Loyalty Leaders that I continue to have the pleasure and privilege of doing.
This one is a little different and is good (great) different!
The Loyalty Leader in this interview is an Insights Leader, rather than the leader of a loyalty program.
And wow! This one is packed with (dare I say it) insights!
Nicola Shawyer is a Loyalty Insights Leader with extensive experience and expertise in leveraging the value of data and research to benefit the business and the customer.
Her extensive career (20+ years) spans industries with diverse data, insights and research requirements, where her seeds of data passion were planted at university, bloomed at Dunnhumby and then grew at Torque Data (acquired by Virgin Australia in 2015).
It is now blossoming at the COTTON:ON Group in the depths of a large and valuable COTTON:ON & CO. Perks loyalty program.
(The ‘flowering’ analogy is a little cliched however provides a picture of how the seeds of data can extend into a grounded strategy of business and customer value!)
Enjoy!
1. So, who is Nicola (outside of work) + a little on your work biography
I'm originally from the UK, the Northwest. Besides my work biography and areas of passion, outside of work I’m a Formula One fan and I love a cold dip in the ocean to clear my analytical brain.
I came here to Australia on an exchange year at university to Monash, found a husband and ended up moving here.
But before I ended up moving here, while I was at university I completed some modules that really stuck out for me which were consumer behaviour, market research and database marketing.
One of those I hated for the first ten weeks of the whole 12-week semester. It was all the coding in SPSS. It was only right at the end of it, I had a lightbulb moment, the penny dropped, and I was like, I get it, I love it, I want more of this! It took me beyond market research into truly database marketing, real behavioural data, big data.
Back in the UK, I worked at Dunnhumby with all the Tesco loyalty card data. This was a great opportunity working in all the different parts of a very big growing business, very cutting edge.
At the time (circa 2003/4) I was a campaign manager working with targeting for a direct mail file (millions of pieces of direct mail going around England), which made me vigilant and curious with data.
(Comment: What a perfect combination of an Analyst’s focus - being ‘vigilant and curious with data’!)
When I came back to Australia to live, I looked for a similar company to Dunnhumby and joined Torque – a data analytics firm (later acquired by Virgin Australia in 2015).
I loved the variety there. We dealt with lots of different clients, big and small across different industries, from airlines to retail, to superannuation to banking with a breadth of data services, including segmentation, propensity modelling, and campaign management.
It really set me up to have a broad view of data with the foundation of coding skills, interviewing customers, analysis and perhaps one of the most important skills, storytelling with data for wider business buy-in.
I am now customer insights manager at COTTON:ON Group. Here, I have the privilege of being a custodian of the loyalty program data and analysing that data in my role.
(Comment: I love this sentiment “Privilege of being custodian of the loyalty data” which I think proves the humble responsibility of caring about the data that is the customers!)
2. Tell us about the Cotton-On & Co Perks program. Any stats you can share?
COTTON:ON & CO. Perks has been in market for about seven years now and has over nine million members worldwide.
We're in eight regions world-wide including US, Asia, South Africa and the UK online.
The program has a similar proposition and mechanics across all regions with customers earning points for spend as well as behaviours like completing their profile. There are some adjustments for currencies and other nuances by region, based on different levels of market maturity and customer frequency.
I'd say we're one of the biggest non-grocery retail loyalty programs in Australia, from what I'm aware of, in terms of active membership (defined as members have shopped in the last year).
Also, from what I'm aware of we do have a very high tag rate – members identifying themselves at point of purchase. And within those members we have a segment of core members who drive the majority of sales.
So, the value for us is learning from, and connecting with our most valuable customers. Additionally, being a global program provides the opportunity to compare behaviours, across different regions. I love this and it keeps me busy.
3. What is the most unique element of the program?
It's simple and generous. It has an accessible reward earn-rate based on members that have earned vouchers.
Based on the nature of our business and brands, we're skewed to Gen Z customers. The program engages our target market, and we have an amazing opportunity to elevate our engagement proposition and shape how we better engage with Gen Z through our loyalty program.
4. If you had to choose the most important measures of success for your program, what would they be?
Before I go into what I think the important ones are, I want to qualify it with the ones that are the vanity metrics. Those you hear are… “our loyalty program members higher ATV than our non-members.”
That is just self-fulfilling. To me it’s a vanity metric.
What it's all about is incremental spend from a commercial business perspective.
And there are several ways to measure incrementality and it's not always black and white to prove that. There's an art and science there.
Earlier I mentioned accessibility of rewards (earn-rate), and while it might not be a KPI I think it is an important customer metric, in the sense that you want as many customers as possible to see value in being an active member. And indirectly, if you are driving spend and loyalty then more customers will reach that milestone. Strategically we want to make a positive difference to people's lives. And I really believe that Perks is a big part of that.
More broadly, if I touch on some intangible measures, it is the value add of the data from the program itself. It is an enabler for things like product ratings and reviews to our bricks customers as well as NPS surveys.
When we were in Covid, our program was a big advantage for us because when all 1500 of our stores were closed on a given day around the world, we had a huge database of customers to convert online.
The program really was a portal and an enabler to stay engaged with our customers then.
5. What are some of the challenges you face on an ongoing basis to keep the program relevant/fresh/thriving (internally and externally) and how do you overcome these?
Externally, as the market gets a lot more proliferated with loyalty programs - how do you stand out to the customer?
There's a lot of passive participation and customer apathy.
And as the market gets more dense and more complicated, beyond just the simple mechanics and simple reward that we have, there's a lot more layers to building and connecting through loyalty programs now. So that increases the noise.
And how do you overcome that? By having high perceived value in the customers mind and minimising friction for them to engage. Simplicity is part of that.
6. What advice would you give to brands thinking about a loyalty program?
- Be clear on what you'll be measuring and what you're expecting as a business from a program in terms of incremental spend or other KPIs as well.
- Manage expectations, top down. Ensure the objectives of the loyalty program align with the objectives for the business, that there's a synergy there and program objectives amplify the business objectives.
- Think carefully about how you get cut through without creating complexity. Not just for the customer but the business as well. Operationalising a program and all the various mechanics and add-ons will add to the infrastructure. So, think about that.
- Research with your customers and your prospects as well, not just your existing customers and your best customers, but your prospects. What do they value? What do they like and not like about other loyalty programs?
7. What do you think is creeping up on programs that could disrupt them for better or worse?
I think customer contact management in terms of the opt ins and the moving landscape when it comes to privacy and the legal evolutions there.
That’s a primary one, which is for the right reasons. However, it creates some challenges along the way as to how you adapt processes and infrastructure to support that.
The other is customer apathy and fatigue.
Customers have high expectations and the more cluttered the market is with programs just creates friction and potential confusion.
8. What’s the most underestimated force behind a program’s performance?
I've seen this firsthand at Cotton-On and prior workplaces, it’s the retail team. Our bricks footprint is big.
And our retail team are very powerful and really engaged.
They're clear on what they need to do, signing up members and ensuring members scan their cards or if it's there on their app, their app or a digital card.
I don't take it for granted that we have a high tag rate. Retail team members know it's in the best interest for the member and the business.
The power of engaging your retail team not just with a KPI but engaging them with the why.
It’s the retail team - hands down!
9. What are your biggest frustrations with loyalty programs in general?
For me it's the label ‘loyalty program’.
I've analysed the data of a lot of loyalty programs over the years, and the customers in there are not all loyal. There are segments that are loyal, but even the ones that are the highest spenders aren't necessarily loyal to you. They're just high spenders in the category.
The word loyalty is a challenge because I don't think it's customer friendly. It's too overt.
We're trying to make you loyal and get more out of you. And I don't think ‘rewards program’ label is the answer either, because that just says we're dishing out rewards and cannibalising sales.
My frustration is I don't have a better name for it.
10. What are three most important skills a loyalty program marketer needs?
- Curiosity. Ask lots of questions, exploring outliers because there's always something to learn there and test and understand people's pain points, both the customer's pain points and internal stakeholders pain points.
- Communication. The ability to connect the dots and story tell how the sum is greater than the parts.
- Critical thinking. Have perspective and pragmatism to balance value versus effort.
The overarching focus on all the above is to be customer first.
11. If we are chatting again in (say) 2 years’ time, what do you predict would be the hot topic related to loyalty programs?
I don't think it's a new topic, but it's exponentially growing. PII – personally identifiable information and AI, the two big ones, and they're intertwined by privacy.
More and more data points are being collected, not just transactional but other data points such behavioural and attitudinal. AI has a huge role in the collation and analysis of data as does privacy.
12. Leave us with a lasting loyalty thought
Summary
For me, this interview with Nicola shines with wisdom, insights and notable reminders.
A summary of my favourite five (with quotes) are:
1. The force of the retail team for program success
“I don't take it for granted that we have a high tag rate. Retail team members know it's in the best interest for the member and the business. The power of engaging your retail team not just with a KPI but engaging them with the why.“
2. Asking members for their data is a privilege to be protected
“I have the privilege of being custodian of the loyalty data”.
3. Be careful of vanity metrics. Focus on incrementality
“Before I go into what I think the important ones (metrics) are, I want to qualify it with the ones that are the vanity metrics. Those you hear are… “our loyalty program members higher ATV than our non-members. That is just self-fulfilling. To me it’s a vanity metric.”
“What it's all about is incremental spend from a commercial business perspective.”
4. What’s disrupting programs for the worse?
“Customer apathy and fatigue. Customers have high expectations and the more cluttered the market is with programs just creates more friction and potential confusion.
5. What is loyalty?
“Loyalty = PV – F. Loyalty = Perceived Value less friction”.
Thanks Nicola!
Have a happy loyalty day
