The End of FlyBuys New Zealand & the Rise of the "Zero Consumer"
With recent changes to Air Miles in Canada and Nectar in the UK, the coalition model continues to evolve. But will it go extinct? Iain Pringle explores the seismic shift in the New Zealand loyalty landscape that led to the demise of the FlyBuys coalition while Rick explores the rise of the “Zero Consumer” and Airbnb’s customer loyalty strategy.
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Hello and welcome to episode 4 of The loyalty newscast. I'm Katie Topping.
Thank you for joining us all, Ian Pringle journeys down under this week to
explore the changing loyalty landscape that led to the demise of New Zealand's
Flybyes programme.
Rick Ferguson unpacks the rise of the zero consumer with Columbia Business
School's Matthew Quint.
And we ask the burning question, does Airbnb need a loyalty programme?
We'll take a look at all the data as usual and share some sponsor love with Tri
-cycle Marketing's Michael Hemsy, a jump-packed episode of The loyalty newscast
this week.
And so without further ado, I'll hand over to Rick Ferguson now with your
loyalty headlines.
Hello all you beautiful people out there. I'm Rick Ferguson and these are your
loyalty headlines for the week of July 22nd, 2024.
Despite continuing inflationary pressures and global instability, summer 2024
is the summer of spending.
Lead in the US at least by Amazon Prime Day, the veritable Roman Bakanalia of
online shopping.
Let us not forget that Prime Day is the biggest loyalty programme promotion on
the planet, with Adobe Analytics predicting a record breaking $14 billion in
sales.
So while you're buying with one click, spare a moment to thank all those Amazon
warehouse workers and delivery drivers who will be working overtime to fulfill
those orders.
Also fueling the summer of spending or rewards credit cards, the adoption of
which shows no signs of slowing down.
In fact, the spherical insights report predicts the global credit card market
will reach 1.15 trillion, that's trillion with a T dollars by 2033.
While North America will continue to hold the largest slice of that pie, Europe
is expected to grow at the fastest pace,
fueled largely by loyalty programs and the ubiquity of reward points.
Now back to Amazon, the company announced that it has rolled out Rufus, its
generative AI shopping assistant to its US customers using the Amazon shopping
app.
CEO Andy Jassy says that Rufus has already responded to tens of millions of
customer questions. In partnership news, the Air France KLM Group has added
Uber as an earned partner in its flying blue loyalty programme and in industry
news, the customer engagement platform Jeveth has been acquired by the CDP
provider, BlueConnac.
Congratulations to both for that acquisition.
Those were your loyalty headlines for this week. Now if you'll excuse me, I
have to ask Rufus about the delivery date for the $24 hydroflask tumbler I just
dropped into my Amazon basket.
With recent changes to the Air Miles programme in Canada and the nectar scheme
in the UK, the multi-merchant coalition model of loyalty continues to evolve.
But will it go extinct?
In our first segment in our series on the evolution of coalition loyalty, Ian
Pringle explores the seismic shifts in the New Zealand loyalty landscape that
led to the demise of the Flybyes Coalition.
At the end of May, loyalty New Zealand announced that after 28 years it plans
to close Flybyes at the end of 2023. In a same-rush-the-press CEO Liz Riley
stated that the closure was due to a rapidly changing loyalty landscape.
To help us understand the market conditions in New Zealand, I'm joined by New
World Law to consultant, Lawty Expert and native Kiwi Craig Grimshaw, who has
seen this history firsthand.
Hi Greg.
Hi Ian, here you go.
Good brilliant. So can you talk about just what is happening in New Zealand and
why what is the landscape changes that have driven to this?
It's easy. The landscape recently has been what I call a seismic shift has gone
on to the loyalty landscape in New Zealand.
Flybyes has been around for 30 years and owned by ZDNG, which used to be Shell,
BNZ, which is owned by Nish Australia bank, IAG and foodstuffs, who grow a
certain amount of food.
And overtime and there's a 25% share holding by each and overtime there's been
a concern about how the Flybyes program works.
There's a discussion around the relevance of it to card holders.
The generosity of the program to card holders then makes it really difficult
for people to earn a lot of points unless you've got a B like every coalition
program and every airline program.
If you've got a credit card, you'll earn the rest of the time you'll struggle.
With the change in the landscape in terms of marketing technology, in terms of
consumer data, in terms of privacy, it appears the shareholders are creating
their own capabilities to make themselves more relevant to their own customers.
And therefore the concern that I look at is why am I paying into an external
party to reward the very same customers that I get a master or why don't I look
after myself and get the reward coming back into my life?
So people are looking for an honest transaction and effect.
So that's happened, the bit that's happened even just six months prior was
there was a petrol coalition program called A Smart Fuel on that close down.
And that was where people could earn points at countdown, which was a wall with
owned supermarket chain.
And you'd earn a sense of palliative petrol. And that closed down primarily
because we're going to rebrand in New Zealand and bring our own multi-program
across from Australia into New Zealand.
And that is, we've spoke just before this interview and is all around the
retail media discussion.
And particularly when you look at, I've got some figures of, we'll last year
got 550 million of retail network media revenue,
media revenue, coals in Australia got 250 million dollars of retail media
network revenue.
They're looking at the New Zealand market and they're going, why don't we have
a common platform going across both countries and seeing how we can sweat that
in New Zealand as well.
That's then changed the landscape significantly, I think.
And it's caused the retail media network pieces in my eyes as foodstuffs have
been working on that.
Whilst they're also looking at the future of their involvement in the coalition
program of flybys.
And as I mentioned before, all shareholders have rocked at their involvement in
that and going, what should we stay involved?
Is it working for us? The interesting thing I find also is that with flybys
closing down, the holding company, Laughtie New Zealand is a fair chunk of it
is going to be moving into IAG, the insurer.
And that's going to be an interesting Laughtie play by the looks of it and
being sure to see what they're up to in that space.
And it's interesting what you say about seismic because just to get, can you
give people who are listening who aren't from New Zealand, the indication of
the size of both of these programs because AA SmartFuel was massive.
And so is the flybys.
Yeah, definitely. And the flybys had about 75 to 80% of households as a
customer base.
IAG SmartFuel, I believe, had about 70% of households as customers as well as a
strong B2B component.
So it's caused a big shift. And it's going to be interesting to see who fills
that gap and with what.
Airpoints are putting in, which is New Zealand's Laughtie program, putting in a
new Laughtie platform.
But the generosity of Airpoints has been interesting for some people, that they
're not getting rewarded enough for all the spend that people do.
So it's a really interesting landscape.
Personally, I think like everywhere around the world, there's a cost-aliving
crisis going on.
If there's anything that a Laughtie currency can do to help people alleviate
that cost-aliving crisis, then that will be, for the next two to three years,
will be a big opportunity.
For example, a fuel, someone stepping in the fuel perspective or someone else
driving with the foodstuffs provider compelling proposition against the Wool
worth Program.
So as these seismic plates move in New Zealand, we'll keep an eye on it.
We'll fetch top time-trade and then we'll speak soon.
Thanks a machine.
The recent McKinsey Research Study coined the phrase "zero consumer" to
describe a new generation of shoppers with zero boundaries between the physical
and digital.
Zero mid-range shopping habits, a net zero attitude towards climate and health
concerns, and zero brand loyalty.
To unpack this research, Rick Ferguson spoke with Matthew Quint, director of
the Centre for Global Brand Leadership at Columbia Business School.
Are zero consumers a trend or a buzz word?
Matthew and Rick are on the case.
Hi, Matt. Welcome to the program.
It's a pleasure to be on the podcast with you, Rick.
In terms of the zero consumer discussion, now it's easy because I've done it
myself to take some loosely connected consumer behavioral data and tie those
behaviors together into a broad trend, which seems to be what McKinsey has done
with this latest research.
Is this the case with the zero consumer concept?
Or do you see these behaviors, they describe them as omnichannel, declining mid
-tier brand loyalty, fickle loyalty overall, sustainability concerns? Are these
behaviors legitimately connected in your view?
I think your assessment is right that it is a little bit emerging out of
convenience in terms of putting all these consumer trends together.
Clearly some of the behaviors have links between them, but I don't think there
's necessarily one underlying element that connects them all, such that they're
a particularly connected trend.
I mean, you get things like definitely self-reported evidence as McKinsey notes
, and there are plenty of other polling and research companies that have similar
reports around consumers leaning towards getting deals balanced out by the
occasional premium splurge.
Now and then, but some of the problems that let's say this sort of zero mid
range or challenges in mid price products are much more related to underlying
real estate economics, inflation pressures, the shrinking of the middle class,
different investor expectations.
There's a lot of underlying things between them. One of the trends that the McK
insey study honed in on was this truly horrible word that they called digital,
which I vow never to use again.
But it seems obvious today that consumers do want that seamless multi-channel
experience, but are there still obstacles to brands delivering that experience
today? Are there any brands that you've seen that are delivering on that
promise?
Right? 15-year-olds challenge that brands have been talking about in terms of
multi-channel, omnichannel, blended digital physical experiences, et cetera.
So it's still a work in progress. I've seen improvement from a category level
in airlines, and their app and multi-channel experience with tickets on your
mobile phone, reminders, and various ways on text, on your app, et cetera.
So we're seeing some advances there, and another great one I think is Ulta, the
beauty company. I just hosted their chief marketing officer, Michelle, Croç
and Matos at my Bright Conference this April during our fireside chat.
She noted they have a huge loyalty program over 40 million people, and part of
what makes it connect and create this experience is a full management
commitment at all levels of staff to understand the value of the Roir's program
, to have them utilize the data that comes out of it, to have them focus on
driving that value to customers who are not already a part of it.
I understood that this study was initially directed towards Asian consumers,
right? That seemed to be where they were focusing.
But I've certainly seen, you know, at least the manic total examples of these
types of behaviors happening in the West. We've seen the decline of, you know,
mid-tier restaurant chains in favor of either, you know, super-fash casual or
fine dining, and we've seen the result of some mid-tier retailers struggling.
But some of that may be driven by consumer behavior, and I think you touched it
in this earlier. Some of it's completely unrelated, you know, red lobster being
the example.
That's a mid-tier restaurant chain that's really struggling, but that's more of
a real estate and financing issue than it is consumer behavior.
Is there evidence of these types of behaviors happening in the West and a shift
that you've noticed in your work with brands?
Certainly, I think the McKinsey article was really actually bringing up the
fact that these more western shifts that have been going on for the last five
to 10 years have hit Asia, which used to be a community in which brand was more
heavily important and valued, and now some of this shift away into, hey, where
can I be deal oriented, where do I make sacrifices on my purchases?
It's sort of hit Asia in a way that it was slower to get into the changes we've
seen in the West already.
And then I did want to touch also on the sustainability aspect of this behavior
We've heard the term greenwashing used extensively in terms of corporations and
brands, more or less just doing PR-driven sustainability efforts.
Do you see evidence that there's an actual shift in younger consumers demanding
more concrete actions and something that brands will need to respond to, or are
they going to be able to continue to get away with doing as little as they
possibly can?
It's a very complex issue. The sustainability question, there's definitely
greenwashing going on.
And yet at the same time, I think many companies are heavily committed to
sustainability efforts because of changes in their bottom line and supply chain
issues in which being more sustainable is important.
Unilever is heavily focused as an example on water issues because they have no
product to sell if there isn't clean water for them to go through the
manufacturing process.
People are leaning towards sustainability more now. There's no doubt about that
They like that, provides a sense of value, but it's a percentage of their
purchases and it's mixed into decision making about value, about price, that
all these other things.
So I think on particularly younger, more affluent consumers who can afford to
push towards more sustainable brands and have potentially the time and energy
to truly try to understand whether they're more sustainable.
You are beginning to see those shifts rise.
Thank you again, Matt, really appreciate it and we look forward to chatting
with you again soon.
Great. Thanks, Ray. Pleasure to be chatting with you again.
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And now it's time for sponsor love, our spotlight on those companies who make
this newscast possible. In this week's edition, Rick Ferguson continues his
conversation with Tricycle Marketing CEO Michael Hemsey on the Loyalty Shift, a
shift to innovative uses cases and the new business models changing the market
for Loyalty Tech.
Michael, the last time we spoke, you talked about a phenomenon you describe as
the Loyalty Shift in which both B2C and B2B brands are reimagining the Loyalty
platform as a tool to facilitate the journey of sales associates or as a way to
build Loyalty within client or partner relationships.
Now I'd like to hone in on the client requirements of today's Loyalty platforms
, the RFPs if you will. Are those requirements shifting as well and if so, what
does this shift mean for the traditional models of Loyalty Tech?
You know, my time at ESC Loyalty, TESIS Loyalty, CoV marketing, Merkel, and now
Tricycle, you know, I would say 99% of the opportunities I engaged in over
those years were really about standing up those B2C value propositions.
The solutions in market were very similar over time. There were requirements to
make the currency more available in real time to get it to the point of sale to
get it integrated into mobile applications to e-commerce sites, to call centers
, all of the different channels that consumers would interact with their brands.
And that served very well. And the SaaS model for Loyalty platform was born,
whether it was hosted in a managed service capability or hosted on behalf of
the client in the cloud, clients would engage with agencies and pay them to
both stand up to value proposition.
This could take months and a whole bucket of money and budget. And then they
would engage those agencies to retainers and tech fees to manage that program
and innovation over time.
Now, the notion of gamification of leaderboards, of publishing processes that
are working for certain sales folks and may not be working for others is what
clients think of as phase two and phase three.
First step, of course, is to understand and get insights as to what's working
and what's not working in a similar fashion. We've seen brands look to leverage
a loyalty platform to enable content consumption.
So if you think of an offering that's content focus relative to read this
article, watch this video, provide some information, give us some feedback, go
back and forth because there's a journey we wish you to follow.
So same thing, they are looking to the loyalty platform to help them first
understand what that journey is producing and then number two to leverage the
fact that you can win currency to perhaps inspire people to continue along that
journey.
So the opportunity is there to leverage the tools of loyalty tech to enable
real organizational change.
But as you and I have spoken about before, taking advantage of this opportunity
requires organizations to maybe rethink their relationship with platform
providers.
If you look at what the record place offers, it's typically referred to as
software as a service and brands have the ability to license that tech.
It's like putting a quarter into the pinball machine, the pinball machine works
as long as you're paying those fees.
And so insights outward first and foremost is a platform as service. Well, one
of the design tenants we included in insights outward among others was our
ability to offer from a commercial perspective to a brand for them to actually
purchase the asset.
In the legacy way of working when a brand was interested in your platform, you
quoted an implementation price and time. This could take three or six months
can cost quarter of a million dollars or half a million dollars or you know
pick your level of complexity.
And then oh, by the way, when we're in production, we're going to retain you to
manage that on your behalf and we're going to need you along the way.
When you design something to be able to sell it to someone, a couple of things
need to be considered. Number one, that you're not needed to stand it up.
Number two, that you're not needed to manage it. And number three, if you do a
really good job, when you sell someone an asset, they don't ever need to call
you for anything that it is a self contained solution.
So that's changed how we compete. So when a brand comes to us and says we want
to understand what it would take to stand up, the insights outward solution
looked very different.
So the implementation time frames are compressed. The cost to manage those are
really negligible. You're not paying us any retainers. It's a flat price no
matter how large your market and database is, whether you're leveraging for B2C
, B2B, new and innovative ways to purchase media to inspire prospects and leads.
It's not going to impact your budget in a negative way.
Platform as service sounds like that's a great model for brands of businesses
to consider.
I know we want to spend some more time diving deeper into the capabilities of
the insights outward platform, taking it out for a spin as well.
So I'll look forward to talking with you again next time, Michael.
Thank you, Reg. It was a pleasure to chat with you and have a great day.
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Our look at McKinsey's zero consumer trends, part of our commitment to you,
dear listener, to parse the latest customer research for his impact on your
business.
Now McKinsey describes zero consumers as adding zero boundaries, zero mid-tier
shopping habits, net zero sustainability expectations and zero brand loyalty.
But should we take McKinsey's word that zero consumers are a thing? To test
this hypothesis, we look for research that supports the notion of zero
consumers.
But focusing on the US market, here's what we found. On zero boundaries,
research from Think Google reveals that today's consumers use an average of six
shopping touch points, with nearly 50% using more than four.
Meanwhile, a Genesis survey found that companies with strong omnichannel
strategies enjoy 90% higher retention rates than those businesses that don't.
On the mid-tier shopping front, anecdotal evidence includes record profits from
US discount retailer TJ Maxx and luxury brands such as Louis Vuitton, Christian
Dior, Ralph Lauren.
Meanwhile, department store retailer Macy's announced plans to close 150 stores
and other mid-tier brands such as Joanne Fabrics and Bedveth Beyond, a file for
bankruptcy.
As for net zero sustainability, a hot off the presses survey of 6,000 global
consumers by Simon Kutcher revealed some contradictory indicators.
While the survey saw a 6% decline in the number of consumers who consider
sustainability as an important purchase consideration, the research also
revealed a 64% rise in consumers ranking sustainability as a top three value
driver.
As for zero loyalty, the most recent SAP Amarsus customer loyalty index
revealed that US brand loyalty is falling fastest globally.
The US experienced a 14% decline in customers who are loyal to one or more
brands, plunging from 79% to 68%.
Our verdict, the research supports the idea of the zero consumer, so Kudos to
McKinsey for identifying the trend.
We have just one request, "Lease McKinsey never use the word digital, a portm
anteau of the words physical and digital ever again."
And that's how I look at the data for this week. We'll see you here again next
time.
In a recent interview, Airbnb CEO Brian Chesky revealed that he's not a fan of
currency-based loyalty programs and considers them a subsidy.
His comments raise a few questions, not only about the need for Airbnb to
launch a loyalty program, but also about the role of currency-based programs in
today's saturated marketplace.
To answer these questions, Rick spoke with loyalty-wide contributor David Sl
avic.
Welcome to the program, David. It's a pleasure to have you here. You're a
consultant and you travel extensively for business.
And my guess is that you have super titanium status and a bunch of hotel
programs.
So my first and maybe most obvious question is, have you ever booked an Airbnb
stay for business? And if you have or have not, have you booked for a leisure
travel?
Actually not for business because of my health and status. I'm pretty loyal to
them and love those points and all their properties. But actually for vacation,
we just did that the end of January in Annamaria Island in Florida through
Airbnb and one of their partners.
And the reason I ask that question is because one of the reasons that's often
cited for Airbnb's lack of reward program is that they lack penetration in the
business travel sector.
Like most people that most people who book with Airbnb do so for leisure, they
've tried to make inroads with corporate travel planners and so forth.
Thus far the company's bread and butter seems like vacation travel and given
the business focus of most hotel loyalty programs isn't even necessary for
Airbnb to get into the loyalty game.
If they were going to go and do something in the business space, I think they
could make it work.
Obviously the financial modeling is essential to figure all that out in terms
of the value proposition.
And I actually think on the business side if they offer aspects that are
complimentary to the business traveler and his, his or her trip, then you could
create something that's of benefit that perhaps the business traveler hasn't
quite yet experienced.
And they could do something out of the ordinary, not car rental benefits, but
as it relates to other aspects that the business traveler is looking for.
And the idea is that if you bring in partners, you could make that aspect of
the benefit structure in business and Airbnb worthwhile, generate incremental
revenue and create the kind of differentiation where I'm willing to give up my
health and points for an Airbnb experience.
Or I actually probably would have a pretty comfortable existence.
So through partner benefits, perhaps start to emulate some of that feeling of
status and inclusivity and special treatment that you would get in a typical
hotel loyalty program.
Yeah, return your points and get $10 off on the business day is not going to
cause someone to give up their relationship with the Hilton or a Marriott.
So the fact of the matter is when it's a business traveler, just any kind of a
discount off of the rate is not going to be motivating.
What you're going to have to do is tie in with restaurants, tie in with workout
facilities.
Those could be your thought starters in that regard.
And in some place with a working hot tub, right, because one of my beef with
Airbnb, it says is the hot tub never works.
So just get the access to working on and I'll be happy.
But you mentioned points.
That's not forgets the rooms at a health club too.
That's actually quite healthy.
Yes, exactly. Right. And one of the things that sparked my interest was this
quote from CEO Brian Chesky and Skiff.
He talked about the fact that he doesn't like points programs. He considers
them a subsidy.
He says you're taking your most valuable people and making them less valuable.
Now, it is perfectly legitimate to say that a points program isn't right for
Airbnb.
And it sounds like you would agree with that statement. And probably I would
too.
But that quote, it seems to bash maybe the entire idea of programs that are
built around promotional currency.
So in your opinion, and of course you don't know his mindset, but just based on
that quote, does that represent somewhat of a misunderstanding of what these
programs are built to accomplish?
In his position, doing something that looks me to wish, I agree with him a
thousand percent.
He needs true creative innovation. And it has to be distinctive and motivating.
And again, it's a tough one in the business to business world, but maybe not so
much in the consumer space.
But the bottom line is it takes hard work to come up with that differentiated
value, especially in a crowded space and in a mature space when it comes to
business travel.
I did spend some time rolling the community pages on Airbnb, the host pages and
the Reddit subreddits for Airbnb hosts.
And they seem pretty mixed on this possibility. Most hosts seem concerned that
they're going to kind of be coerced into playing along.
And if they don't play along, then they're going to get buried in the search
results by the algorithm.
Do you see a way just briefly David to design a program that hosts can get
behind?
You can do it on a regional basis. So try to do some test and learn and set up
measurable goals and objectives that are associated with it.
Study the satisfaction from the business traveler that's associated with it and
give them differentiated value.
So that's where your advantage can come from in an Airbnb situation.
But if you're losing out on your search, yeah, that could be a very valid
concern.
In podcast 66, we explore why retail media has exploded around the world and
how loyalty is driving this success.
As Steve Gray explains,
So join us for podcast 66 out on the 5th of August with a global retail media
industry worth an astonishing $128 billion can you afford to miss it?
And that brings us to the end of the loyalty newscast for this week. If you are
enjoying the loyalty newscast, do let us know and spread the word.
You can reach us on LinkedIn or at loyaltywired or oneword.com. I'm Katie Top
ping and on behalf of Ian Pringle and Rick Ferguson, thank you for listening.
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