This episode of Let’s Talk Loyalty features Elliott Clayton, SVP of Media at Epsilon. Elliott discusses:
- Why other channels can learn a lot from the loyalty market.
- The biggest challenge facing marketers this year: retention.
- The role loyalty programs play in solving this challenge.
- The opportunity for digital media over the next five years.
- The importance of first party data as 3PC are deprecated.
Elliott also highlights the merge of Epsilon & Conversant, and how Epsilon's power of customer identity is thriving in the world of third-party cookie deprecation.
Transcript:
Speaker 1:
Welcome to let's talk loyalty and industry podcast for loyalty marketing professionals. I'm your host, Paula Thomas. And if you work in loyalty marketing, join me every week to learn the latest ideas for Morty specialists around the world. Hello, and welcome to episode 92 of let's talk loyalty where I'm chatting with Elliot Clayton, senior vice president of media at Epsilon based in the UK. Our discussion is a fascinating insight into some huge changes that are unfolding in the world of digital media. Particularly some massive changes announced by Google in terms of how they handle third-party data and cookies for brands. Elliot described these changes as potentially having a greater impact for loyalty marketers than GDP or, or European privacy regulations. So for me, it was a fascinating opportunity to learn about these changes and how, and when they are likely to affect loyalty program owners. So Elliot, tell me, what is your favorite loyalty statistic?
Speaker 2:
So my, my favorite loyalty statistic at the moment has come from a recent survey that we did where, um, 7% of the consumer survey felt that they were being well, well, personalized to buy brands, which is a little bit disappointing, but it also shows that there's a big opportunity for people who can do it properly.
Speaker 1:
Wow. Oh my God. That's actually a Bismal Elliot seven, like with, you know, nothing before or after it seven.
Speaker 2:
Yeah, no, just the seven, but if I think about my own sort of experiences as a consumer, I think that's quite fair. I mean, there are rare, rare brands that do it well, but if there's far more, that kind of fall over it. Yeah.
Speaker 1:
Yeah. Sure. And actually, because I knew you were going to use that statistic, I did go back and look at the whole an origin, you know, that phrase data is the new oil. So this idea of the importance of personalization would you believe that goes back to Clive Humvee in 2006? So we're 14 years being told that data is the new oil and personalization is critical. And unfortunately we don't seem to have made much progress.
Speaker 2:
No, absolutely. I did something very similar recently actually, which was to look for first, first comments about personalization at scale. And it was called the Holy grail about 15 years ago. And I think it still is. Yeah,
Speaker 1:
It's your, is my goodness. Okay. Well hopefully you're going to give us some solutions today, Elliott and before we get into what those solutions might start to look like, because I know there's a lot of change happening right now. And tell us a bit about your background and how you ended up as speaking to me today with Epsilon.
Speaker 2:
Well, thank you. So my, yeah, my Emilia I'm actually, I've worked at Epsilon now for 13, 14 years, but background is actually through digital. So digital media particularly, and I'm a business that Exxon acquired a few years ago called converse and which is it's unique in market because it was built to replicate a loyalty program in digital in about 2007, which was, it turns out visionary to be able to be honest. Um, and as my career has progressed of beginning to work in other parts of the, of our business, so loyalty CRM, um, which has been, which has been incredibly interesting, actually very inspiring, insightful.
Speaker 1:
Absolutely. Yeah. And digital digital can mean so many things I think Elliot. So I really think it'd be, it'd be great to get an insight in terms of M you know, maybe some of the, the digital work has been done quite well, um, in the past couple of years, but I do think we're probably facing unique challenges, you know, 20, 21 and all of the behavior changes we've seen in the last 12 months. So, so I'd love to get your perspective. Obviously you're leading, um, the media business for Epsilon in the UK, very mature, very sophisticated business. So, so from your perspective on the kind of clients you're working with, what would you think are the kind of biggest challenges and things that you're hearing at the moment?
Speaker 2:
So what, what you hear people talk about a lot within digital media or digital advertising. You hear people talk about, um, hyper personalization or personalization, but the tools that are in market what's actually happening is people are talking to segments and they're customizing messaging. They're not really doing true one-to-one messaging and that's that's to do with the systemic issues with the market. They've always been there. Um, obviously the big news is that, um, Google is about to start or continue process that other businesses have started of third-party cookie deprecation. And that's gonna, that's gonna be, that's going to make some pretty seismic changes to the market. So again, um, some surveys, we did have marketers, um, very high percentages, like 77% plus per se. And they thought that this change was going to be bigger than GDPR. And I'm not sure everyone is completely aware of what's.
Speaker 1:
Yeah. Well, I wasn't, I will be totally honest with you Elliot. Um, we spoke a week ago and I had no idea what third-party cookie deprecation was, and it's even a bit of a mouthful, as I said to you here today. So what I did do is first of all, I went off and got the definition of a cookie, even though I am a digital marketeer as well. And, but I liked one that Forester at used, and again, for lots of listeners, they mightn't know the definition of a cookie. So a third-party cookie, which they said for all its faults is the underlying mechanism by which the whole digital advertising ecosystem transacts and communicates. And I think for as long as you've been in media, digital media, as long as I've been in digital media, so let's say 14, 15, 20 years, and the cookie has been the solution to all of our problems, you know, admittedly not perfect, but, um, what is happening with cookies? Tell us, so,
Speaker 2:
Yeah, so that, that piece about cookies, what they've been used to do, they've been used to track a user within, within web. So typically what you would use in for is to frequency cap media personalize, a site visit on a, on an e-commerce site. So that the next page is relevant based on the last thing that somebody looked at, or it would help you to measure like you would be able to track all of those things and then measure, measure outputs of media spend, et cetera, or, you know, marketing spend over time. Um, what's been happening slowly is I don't think the consumers are completely aware that they're being tracked. So based, based on privacy and rightly so, people have been looking at it saying this needs to be addressed. There's there's been two P two problems with cookies. One is that they get deleted.
Speaker 2:
They're not there. They don't hang around for very long. They're not a very good indicator. They don't work in mobile and there's people have become more cross device into mobile. They've been less able to connect to a real person. So one issue that one issue, um, that they've had, um, then there's the, this, this point about, um, tracking without, without consent so that they, the process where cookies have gone away has been happening for a while anyway. So Safari stopped using them and Firefox has stopped using them. And that's about 20% of the market online browsers. You can't see what consumers doing. Okay. Um, what's about to happen is that Google is also going to stop using them, um, in 2022 and they make up another 60% of the browser market online. So come 20, 20 to 80% of consumers are not going to be addressable through those channels. Um, and that creates, that creates opportunities for marketers. It creates threats. Um, it, it absolutely creates a huge opportunity for loyalty marketers and the loyalty industry as a whole. Um, which I, which I think is really, really interesting.
Speaker 1:
Exciting. Yeah, yeah. Yeah. So 2022 is, is, is certainly not very far away. Um, and especially, uh, you know, I think we're all, you know, really waiting for it to come round, given how 2021 is unfolding dare I say. Um, but, uh, that is certainly sooner than expected. Um, for me, I suppose, with my consumer hat on and nothing to do with loyalty, but I have noticed, um, and I assumed it was purely GDPR. Um, you know, perhaps because I'm a European citizen. So allowing cookies on websites is something that I've become, you know, slightly frustrated, but, you know, very, um, I suppose tolerant because I do understand what the cookies are and I know that the GDPR means that the website has to protect itself. So is this something that only applies in Europe Elliot, or does it apply for websites globally? Um, it literally just, just, you know, to give me a sense of if this is a, a global situation,
Speaker 2:
So I it's it's for, um, certainly what Google is doing is, um, that, that piece around consent management platforms. So GDPR, I think what you see is in additional markets that haven't got it yet, they use it as a standard to look towards or to go towards. So very often in say APAC or MEA, we will be asked, are you compliant with GDPR or not? Um, so I think it's, I think it's a good thing. It's a good, it's a good model. Um, totally assume of consumer do need to know what's happening with their data. Um, and I just think it's something that everyone can get on board with basically.
Speaker 1:
Yeah, absolutely. Okay. So we won't have cookies, um, but yes, clearly digital is, is the way of the future. So, so what are you thinking and recommending in terms of solutions and you mentioned opportunities and challenges, and again, listeners to this show are loyalty marketeers. Um, so definitely, um, you know, very appreciative, I suppose, of the, uh, opportunity side of things, but what do you think the, the, um, I suppose both sides are, because again, I think the audience are going to be communicating with, let's say their colleagues in marketing to am to help them understand that they no longer have these cookies, for example, for their acquisition campaigns. So what kind of things are you recommending?
Speaker 2:
So well, th th that's the first thing is, is that the digital ecosystem has not really, in my opinion, worked very well for loyalty marketers up to now. So where you want to have a consented one-to-one communication with somebody and you know, who it's talking to, that's not been, that's not been how digital works. You push a message out to some sort of media platform, and you can't be sure that you're saying what you think you are to the right person. If you actually just got no idea, really who that, who that has gone to, and that the piece around the third party data, it's not your consent, you know, there's no consent involved in that interaction. So the ability to personalize well has not been established in digital as it's been done previously. So, so what's changing is what I would talk about as marcomms like big push to segments in digital is moving much more towards what I would consider Lloyd comms, which is personalized one-to-one communication based on consent. Okay. Now I can think of a, of a, of an industry that started all of that 50 or 60 years ago. That's got that nailed down, obviously, which is all the loyalty practitioners, so
Speaker 1:
Totally Elliott.
Speaker 2:
So what, what we're saying to, um, businesses is that you need to build up a first party data asset. You need to know who your consumers are, um, law, in my opinion, and our opinion, loyalty is a really, really good, good way to do that because it's a self-funding first party data asset, if you do it well.
Speaker 1:
Okay. Okay. To talk about that. Yeah. Yeah.
Speaker 2:
The, um, the, it comes with marketing consent because you've built it part of it, and it's got a very transparent value exchange with the consumer about what you're doing with their data and, and the facility to use it properly. Yeah. So, um, this move away from third-party towards first party plays really well to businesses that operate within loyalty. Now, the threats that loyalty also overcomes is as, um, you're less able to use third party cookies. You're kind of, you're kind of pushed towards investing more with Amazon, with Facebook, with Google, but, and using their models, their data, and using their consent talk to people problem with that is that they are inserting themselves further into the customer relationship with a brand taking the brand away from the consumer because they don't give, you know, they don't give businesses a lot of insight back about what their consumers are doing, et cetera, et cetera. But a loyalty program is a really good way to reestablish that value and that relationship and to own the customer relationship. And you see, yeah. You know, I, I think of McDonald's what McDonald's is doing with their loyalty programs. I think of that in those terms, like they're creating the opportunity to maintain relationships with their consumers, which is really interesting.
Speaker 1:
Yeah, absolutely. And you're right. It does go back 40, 50, 60 years Elliot because, you know, airlines, I think were the very first to recognize actually there was an intermediary, which at the time was the travel agent. So they didn't have that very valuable, direct consumer relationship. And clearly the technology has now caught up. So, you know, all retail sectors have that ability. Um, and what I like, what you're saying is, you know, this kind of messaging is important for this audience to be able to have internal conversations, to really emphasize, you know, the challenges of, of third-party data and intermediaries interrupting their customer relationships and hopefully drive further investment in their loyalty programs. Yeah,
Speaker 2:
Absolutely. It's a, it's a great time to be in loyalty, I think. Yeah,
Speaker 1:
Yeah, yeah. You're right. Actually, and to be honest, um, I think it's always a great time to be in loyalty to be, to be honest, when the economy is suffering, that's when I got into loyalty. So it is quite counter cyclical. And I remember it being incredibly impressed with certain brands deciding it was time to invest. And for me, again, listeners will know it was O two priority. It was, it was very innovative. And even, I think the pandemic had already driven that particular increase in the reliance on loyalty programs. And I think what you're telling me today, Elliott is, is actually the third party deprecation is, is another reason to, to focus on the loyalty business.
Speaker 2:
Yeah. So I, I can't say who they are obviously, but my, my second favorite stat is that in the law, in the last two months, we've re we've received more RFPs for loyalty than the whole of last year. And I think that's because people are, wow. I wouldn't say it's a response to third-party cookies necessarily, but a lot of people have got a lot, a lot of new customers in new channels, like D like INdigital. Yes. So how do you, so it's like the year of retention, how do you retain those customers, a loyalty program? That's the answer to in many cases, a loyalty program as a solution to that, or how do you stay connected when loyalty is contactless or in digital, again, loyalty programs are very, very able to solve that problem. So that's been really interesting. Brilliant. Yeah.
Speaker 1:
Wow. Well, that's extraordinarily exciting obviously for, for your whole team. And you mentioned another very exciting term as well, Elliot there about self-funding as an opportunity and something I'm very passionate about. Can you talk a bit more about that?
Speaker 2:
Um, yeah, so, I mean, I'm, I'm relatively new to the loyalty industry, but I, I see that the, one of the huge opportunities of loyalty, um, is that, you know, you set up a loyalty program, you assume it's been set up well back of, back of an envelope. You can kind of expect to a 10% incremental return year on year compared to not doing it previously. Okay. So I really liked that loyalty operates in incrementality, additional thing generated by this cause a lot of marketing just can't prove its value and loyalty can. So I think that's, that's quite impressive. There's the, there's the second year where that increase becomes part of your baseline. And it's down to your creativity as a loyalty marketer and you know, how you engage customers that allow you to do, to, to grow and continue, continue to keep that growth within the business, um, where we are engaging in the market and where I think we are looking at being able to uniquely engage with it is there's two ways to increase the performance of the loyalty program.
Speaker 2:
Assuming it's well, run one, you can get, you can get more people signed up to the loyalty program, but the second is you can increase contacts and communications and outputs from the loyalty program. And the way that we're able to do that in media is we work from first party data. And we always have done because the program is built to mimic a loyalty programs that comes to consent. So what that means is we're able to push one-to-one communication in digital. So you get this additional automated layer, that's pushing out the messaging. So you know, where you can't reach a consumer, maybe because they're not opening emails or they're not looking at SMS, you've got these additional touch points in which can be quite soft in digital, but they drive that additional value and they drive those incremental touches and they drive incremental return. So that's what I think is exciting. Cause you're talking about, you know, 20, 30% more return from an existing asset, which I think is quite a game changer. Yeah,
Speaker 1:
Absolutely. And I know when we talked before as well, Elliot, you made the point about, you know, yes, loyalty marketers, you know, communicating internally to the base. But I think as well, what you're starting to say is, you know, being able to take those one-to-one messages across the whole spectrum of digital and, and again, to compensate for, for the cookies, which are no longer available. Um, and that sounds incredibly powerful. And again, I haven't done communications for a loyalty program for a long time, but that sounds pretty extraordinary. Yeah. I think you can.
Speaker 2:
I think what it allows you to do is it, it allows you to push loyalty style communication, where you are driving deeper lifetime value through digital, but you extend that into digital, which historically has not worked like that. So not only are you improving the, the loyalty programs return, you also increase the efficiency of spend you're already making in digital. So you've already got, there's already wasted spend there. So you can accrue that to a loyalty model, which drives incremental return, which digital media is struggles to prove. So yeah, it's a lot going on.
Speaker 1:
Oh, for sure. Absolutely. And again, just forgive my simplistic understanding, but you know, known customers are one, um, you know, again, one-to-one communications are essential for them, but you're saying the, the same capability applies for, for prospects and for acquisition as well as for retention.
Speaker 2:
Yeah. So you can, the way that we operate, we can drive one-to-one communication for acquisition. So you could, for example, look at, um, a loyalty program and model the best customers and then go and target individuals that, you know, look like that. But more, more importantly, you consistently message them over time rather than a big burst. And that's, what's, that's, what's like loyalty. And then you can speak to your, you know, your, your best customers, get them to buy more. You can speak to your retention customers, you know, to retain them. You can get to one more purchase and you just have a model that looks like loyalty, but it has these additional reaches and you could, you could drive it through media, you could drive it through video, you could drive it through connected TV.
Speaker 1:
Yeah. Yeah. And have you any examples of video? That's certainly a format I'm I'm dabbling with Elliot. I will say
Speaker 2:
We're starting to see it. Yes. So we were seeing, say what Walgreens is a, is a client of ours and they are pushing video into their app. Now, the reason I think that's quite exciting is because the type of video content they're pushing is personalized, but you can also only get it if you're on the loyalty program. Cool. I think so. I think you're starting to see a value exchange around content and communication, which I think is a inevitable, an ongoing trend. Um, similarly, um, auto zone, uh, provide kind of video personalized how tos to people as well. Um, so I think it's, you know, you are, you are showing your con you're showing your customers that you understand them, but then you're using, uh, drivers of emotion and brand engagement rather than just, you know, there's, I think there's always a place for a hard value exchange, but you've got this additional way of showing people, you know, who they are, which I think is really important.
Speaker 1:
Sure. Yeah. Well, I've been saying a lot as well recently, Les, you know, the, the, the power of the human voice I think is proving particularly compelling. So both audio and video for me are, um, really coming into their own. Um, and I know you guys do work with email marketing, but to be able to personalize that and embed videos as well, and to make sure that that's relevant to the person receiving it, like, you know, I often talk about the fact that I haven't had enough personalization on my birthday. Um, so I want a video from somebody at some point, singing me happy birthday, Elliot. I don't know if Walgreens could do it, but, but genuinely like it's, it's, it's something I noticed as a consumer. And I always think good marketing people should, should think like consumers for, you know, anybody that I am, you know, wishing a happy birthday. Let's say my family and friends, I don't just WhatsApp them where I normally do. I will actually then send a video. So it's a form of escalation to say, I'm really seeing you today and I really want to connect with you today. So yeah. I love the sound of what Walgreens is doing.
Speaker 2:
Yeah. I think that, I think the opportunity to increase engagement or relevancy at every interaction you have with a person is super important when there's a gen a general lack of engagement because people aren't coming to store, they're not seeing all the norm, they're not seeing out of home ads. So as an overall loyalty has a way to bridge that to other people, other channels don't so, yeah.
Speaker 1:
Yeah. Powerful. And I know as well, Walgreens have done, um, some very impressive work in terms of becoming a media player in their own rice. And I started wrote an article about it and literally, you know, January, I think it was this year. So is this something that you also see, particularly with the cookie deprecation issue that you mentioned already, do you think other loyalty program owners are starting to explore this a media opportunity as well?
Speaker 2:
So I, yeah. So w w w yeah, there's the, what, what term you would think of in loyalty within partner funded marketing, which again, something Lord's has been doing for a really, really long time that is now the fastest growing segment of digital media is what is being called retail. It's exceeds extending that communication with a loyalty base about a specific product, not just using email, but then pushing that out into digital channels or video, et cetera. And then that what's happening is for Walgreens. They're becoming a media owner like, um, Amazon, um, but they, they have a better engagement. I'd argue they have a better engagement with their customer base and Amazon do. And then we're supporting them by providing very, very personalized, very, very relevant, very, very well measured communication to people, um, that it benefits the consumer because of relevancy benefits, Walgreens, because they're showing the consumer, they understand them what they're interested in, why they should care. And it benefits the partner because they're getting much higher quality executions of media better than measured. They've getting much better measurement of what's happening. So, yeah.
Speaker 1:
And dare I say it, I mean, the, the, the, you know, loyalty program owner is also benefiting commercially because then there's media fees, obviously with this as a whole new business model.
Speaker 2:
Yeah. And also very high profit line margins against what they might expect, expect as a retailer as well. So, yeah, absolutely. And we're seeing it in, um, w you know, we're seeing lot, we're being asked about a lot at the moment by a lot of, uh, lots of big retailers.
Speaker 1:
I was going to say, because I've only seen examples, like you mentioned, obviously Walgreens. Um, but it, but I haven't seen it for example, in the UK market as yet, but sounds like something that's absolutely eminent from your experience.
Speaker 2:
Yes. So it's, it's across all, I would say it's a Crow, it's anyone that sells anybody else's product it works for. So we see it for urban Outfitters who are obviously very interested in creating strong brand brand engagements for a slightly younger audience who would be in mobile. Typically we see it for B2B. So kind of very large components, businesses with very complicated audiences and tens of millions of schools like products, schools. So very difficult to manage a lot easier to execute through digital and using machine learning to support all of that. Um, yeah, we really, a lot of places, I mean, it's, that's, that's two very different intersection let's see here,
Speaker 1:
But I hadn't thought about it in a B2B context. So, um, so that's a, that's a big one as well, I think, for anybody listening, right?
Speaker 2:
Yeah, absolutely. And then the classic one is obviously a soup supermarkets, so supermarkets are doing this, but they are now focusing on the digital offsite, uh, aspect of that. But in, in, in, in the majority of cases, I would say a loyalty program at some point is driving the engagement with the consumer and the understanding in the client's business of what is possible, because they've already got that learning inside.
Speaker 1:
Wow. My goodness, Elliot, there's so much going on. Um, as you said, I, I think I was a bit scared when I heard about the whole third party cookie, uh, piece, but I think at least I understand it now and probably slightly relieved. I'm not going to be followed around the internet with all these, you know, messages anymore. Are there any other kind of trends that you're seeing coming through Elliot that you think, um, you know, loyalty marketers should be thinking about, or, or even the messaging internally, I suppose, around this whole, you know, focus on driving investment in their marketing assets, let's be honest. Um, give it given the challenges of their colleagues in marketing are going to face.
Speaker 2:
Um, I, I, I just, just generally the move towards digital transformation of very, very large businesses, they kind of, they've, they've kind of, they've had to make those changes. Um, so I think that, um, within that the loyalty team have a very, very key role in talking to those businesses about how to talk to people on a one-to-one basis or how to drive value from a first party data asset. So, yeah, I think, I think the main trend I think is that there is going to be a lot more work done around loyalty and the way that loyalty works generally and how businesses are coming closer to their consumer, I think is it, I think that's, I think that's, that's the trends that I think are ongoing now for a few years, I think.
Speaker 1:
Absolutely. So my final question then is really just Elliot for you, as you said, your background's media, but, um, you know, very much a full, full systems ahead on the loyalty front now. So how are you staying up to date on the loyalty industry for, from, for your own knowledge?
Speaker 2:
Um, um, I dunno, there's this podcast let's talk [inaudible] um, I mean, th th the other one is we've, we've got a, a really, really strong team Epsilon and, uh, globally. And I think that everybody has done a lot of work to support with that. The other thing that I've, um, I'm always really interested in people just having a very high level of market knowledge. So we've committed to all of the kind of business filament team being certified law team marketing practitioners. Wonderful.
Speaker 1:
That's really cool. So we're both CLN PS. Absolutely. And we do loads with the loyalty Academy. So you're putting your whole team through that. That's amazing. Yeah.
Speaker 2:
Yeah. Everyone. So like everyone will come to the table with an understanding of a full understanding of, of how to support our plants, which I think is just critical.
Speaker 1:
Yeah, it is. Well, you know, at that that's a huge gesture for your clients to be reassured that, you know, you're all coming at it from this very commercial understanding of loyalty. So I think in the past, what we have struggled with as an industry is being able to, you know, prove the commerciality, prove the returns and, and as a digital marketeer, obviously you're extremely well-placed to have that level of accountability. Um, but it's important that your whole team does as well. Because again, I felt that was lucky my own background. So, um, so that's a huge decision. So that's it from my side. Elliot, is there anything else you wanted to mention as we wrap up? Nope.
Speaker 2:
Just thank you very much. It's been very interesting,
Speaker 1:
Wonderful Elliot. Listen. Thank you so much. Andy Elliott, Clayton senior vice president of media at Epsilon UK. Thank you so much. Let's talk loyalty. This show is sponsored by the wise market here. The world's most popular source of loyalty marketing news insights and research. The wise marketeer also offers loyalty marketing training through its loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals. For more information, check out the wise market tier.com and loyalty academy.org. Thanks so much for listening to this episode of let's talk loyalty. If you'd like me to send you the latest show each week, simply sign up for the show newsletter on let's talk loyalty.com and I'll send you the latest episode to your inbox every Thursday, or just head to your favorite platform.
Speaker 3:
Find let's talk loyalty and subscribe. Of course, I'd love your feedback and reviews. And thanks again for support.
