Transforming Traditional Rewards into Community-Driven Loyalty

In this episode of our podcast, we sit down with Andy Hermo, the newly appointed Chief Operating Officer of iSeatz, to discuss the creative strides his company is making in digital commerce and loyalty technology. Andy highlights how iSeatz extends beyond typical travel offerings to include a variety of lifestyle rewards, enriching customer experiences and broadening opportunities for earning and redeeming loyalty points.

During our chat, Andy also shares insights from iSeatz’s latest membership survey. The data reveals significant differences between traditional loyalty programs and membership-based models, with an impressive level of engagement among members. We talk about how organizations across different sectors keep their members involved, with many reporting regular weekly engagement. Andy provides a thoughtful analysis on the challenges these organizations face and the potential opportunities for enhancing member loyalty, offering a clearer picture of the dynamics at play in customer engagement strategies.

Chapters

• 0:01 Understanding Membership Engagement and Loyalty
• 11:53 Challenges and Opportunities of Loyalty Programs
• 29:39 Membership Organizations Data Analysis Discussion

Transcript

Mike Giambattista: 0:01

Customer Land is a podcast about customers how to get more of them, how to keep them, what makes them tick. We talk to the experts, the technologies and occasionally actual people. You know customers to find out what they're all about. So if you're a CX, pro a loyalty marketer a brand owner, an agency planner, if you're a CRM and personalization geek.

Mike Giambattista: 0:23

If you're a customer service, csat, nps nerd, you finally have a home. I'm Mike Giambattista. Welcome to Customer Land. Andy Hermo is Chief Operating Officer, recently named, of iSeats. And we've done. We've published a handful of the materials and the surveys and the research from iSeats. And we've done. We've published a handful of the materials and the surveys and the research from iSeats over the past couple of years, but this is the first time I've had the opportunity to speak with an actual human there. We've traded millions of emails on this stuff, but, andy, it's good to meet you and thanks for joining me.

Andy Hermo: 0:59

Yep Mike. Thank you very much. I appreciate the opportunity, Mike.

Mike Giambattista: 1:02

thank you very much. I appreciate the opportunity. Yeah, so just by way of introduction, maybe tell us what iSeats is all about, and then we can start talking about this membership survey, which I think is going to be really eye-opening for a lot of people, sure, so iSeats kind of keeping it simple.

Andy Hermo: 1:18

So we provide digital commerce and loyalty tech solutions to our clients so that they can offer travel and lifestyle, booking and reward opportunities to their customers. So the big difference is where many of the players in our space will offer kind of traditional travel products like air car hotel. We kind of go beyond that. Products like air car hotel, um, we kind of go beyond that. Um, we introduce, you know travel and lifestyle and experience, uh, you know products, um, so that we can, you know, help our, our clients to create experiences for you know their customers. So, and what that you know enables them to do is to offer many more options for you know earning and redeeming um, uh, offer many more options for you know earning and redeeming um uh, loyalty points, yeah, Like uh, just, for example.

Mike Giambattista: 2:08

What would some of those kinds of more robust experiences look like?

Andy Hermo: 2:17

Uh, so you know, of course you've got air car hotel, and then and then there could be activities. Right, and activities can be the full gamut of tours excursions. Um, you know, full gamut of tours excursions. You know any, you know local activities that you might do in a local market. There's also, you know, adding in, you know dining and you know food delivery services. It could be. You know the intention is that Air Car Hotel, you know, once you're in the destination you fly to the destination you're staying in, the destination is to be able to engage members more frequently throughout their stay, to create a you know a far more you know, engaging experience for them throughout the entire trip. Gotcha, yeah, true confession.

Mike Giambattista: 3:05

I was aware of that engaging experience for them throughout the entire trip. Gotcha, yeah, true confession. I was aware of that, but I'm not sure our readers were, so I I kind of set that one up there. Um, thanks for the softball, mike. Yeah, my pleasure. You'll owe me for that later. Um so, uh, ics just came out with a membership survey, which is pretty interesting just by virtue of the fact that we, that our audience, listenership, readership, hails from the loyalty space, in large part loyalty and CX. Really, this is pretty important because you know you've been operating in this space for quite a while. Loyalty loves buzzwords, especially empty ones. It's a better buzzword if there's no substance behind it. This, on the other hand, there's actual data here. So I think it's going to be interesting to just kind of open that up and see where it goes. But let me just throw a couple of things your way. Sure, first, membership-based organizations can have a lot of different flavors, but how do they differ from traditional loyalty programs? Just give us that as a starting point.

Andy Hermo: 4:20

Yeah sure, that is a starting point. Yeah, sure. So I mean, you know, and in terms of, you know the flavors, right. So when we look at what is inclusive of our, you know our definition of membership organization, so there's, like you know, professional associations, so, like you know, american Medical Association, national Education Association. There are trade associations, there's social clubs like you know, rotary Club, elks, you know, et cetera. And then there's warehouse clubs and you know that is a kind of a big opportunity space, so the Costco's, bj's, you know Sam's, et cetera. And then, lastly, there are, you know more, you know, subscription-like service providers, so like the Amazon Primes, walmart Plus, et cetera. So that's kind of the definition.

Andy Hermo: 5:07

And at the end of the day, when you look at traditional loyalty programs and when you look at membership programs, they both place a high emphasis on value and cost savings. Okay, so all their members are looking for that opportunity to save money on travel and overall they're looking for value in the overall trip that they might be, you know, buying from, you know that provider. But the thing that is the big distinction is that for membership programs, you know their members are mostly driven by affiliation, you know, with the organization. So you know. So it's that organization affiliation, it's shared interest and values that drive their engagement, much more so than traditional loyalty programs, which are, you know, a lot more transactional oriented.

Mike Giambattista: 6:11

So there's a whole different kind of a relationship at play here.

Andy Hermo: 6:16

Sure, I mean it is about a, you know, in not all cases but many cases it's about a, you know, about a deep connection, right? So, for instance, I come from a military family. My father was in the military, my son is at West Point. I'm a USAA member, I am super loyal to USAA because of that affiliation and I know when I exchange or converse with other USAA members it's the same degree of loyalty to that brand. But there are other things that are unique in terms of people. You know people in membership. You know in in who, who are part of loyalty programs with membership organizations, versus you know your traditional loyalty programs. So you know they are far more engaged. So 80, you know our. Our. Our data showed us that 80% are engaged at least weekly in their loyalty program.

Mike Giambattista: 7:27

I think any other loyalty program would pay for that kind of engagement 100%, 33% engage daily.

Andy Hermo: 7:35

That's wild. So we're talking about an entirely different engagement model, and so that's why this is such an interesting space for us, because, wow, imagine if our clients fully leveraged all of that engagement and monetized that engagement by providing full experiences. It's an amazing opportunity. And then, when you look at, there's also kind of like within our definition. There's the subscription programs. With subscription programs, it's even a, you know, a more impressive story in that, first of all, they you know, people who belong to subscription programs belong you know, 56% of them belong to more than three programs. Right, and then they are more willing to spend because they are a subscriber. But the really interesting thing is 73% of them interact daily with that program.

Mike Giambattista: 8:35

That's just nuts.

Andy Hermo: 8:36

And so it is absolutely nuts. So trying to kind of, that's why this is such an interesting opportunity for us. I mean, we look at this segment and we say, wow, imagine if the you know the players that do loyalty really well, like in the financial institution space, right Like Amex, chase, citi, you know Capital One. Imagine if these membership, you know companies focused on loyalty, the way those companies do they have a, you know a, a what I believe that's kind of like the next big area of opportunity.

Mike Giambattista: 9:12

That's massive. Can we talk a little bit more about some of the, some of the distinctions? I mean we we mentioned the kinds of like it's. It's the nature of the relationship with these organizations is is different, engagement is different, but along the way you're probably picking up a lot of the nuances of how that engagement plays out. Yeah, because you know quantity of engagement is important, you know how frequent and all that. But you know, can we talk a little bit about what that engagement actually looks like? What are they engaging with and their preferences?

Andy Hermo: 9:46

Yeah, and I think what the key drivers are for that degree of engagement is it's all about having access to everyday discounts, right? Not like, oh, I got an offer for a trip or a component of a trip and it's discounted.

Mike Giambattista: 10:05

This is everyday discounts Also, you know it's Just because of the immediacy of the of of you know and its availability.

Andy Hermo: 10:14

Really it's a little bit of both, right, so, but it's. It's. It's because you know that, that you know the, the providers, um, that that's how they, that's how they drive that continuous engagement. Just like the reason why, you know, my wife is always shopping at Costco, right, and and coming home with an entire truckload of stuff and all my kids are out of the house, um, it's because every time you know those discounts you know are available. It's also, you know, exclusive offers, right, so exclusive access to you know, to content, exclusive access to you know events you know and experiences. And then the other piece that's important, when it kind of goes back to my point about USAA it's, you know, the opportunity to interact with people with shared interests. So, like mine's.

Mike Giambattista: 11:30

Interesting Are there from what your data shows, and this may not even be available to us, but are there distinctions? Well, so I get it, I completely get it. That's probably unique. I mean, you know that's probably, but you know, let's look at other verticals. Can you tell from from the data you have, uh, what kind of engagement levels are, kind of vertical by vertical or category by category?

Andy Hermo: 11:52

Yeah, sure, I mean. We so gosh our, you know, our report is inclusive of, you know, probably about 12 different categories, right and all of them. And what we measured was the percentage of the respondents who engage at least weekly, right. So back to that professional association group that I mentioned 58% engage at least weekly. For sports teams, this is another big thing, sports teams and season ticket holders they engage with those brands.

Andy Hermo: 12:31

85% of the respondents say they engage at least weekly. 25% of the respondents say they engage at least weekly. Probably the lowest but probably the largest membership group is like auto clubs, and still there you're talking about in the mid 40s in terms of engaging at least weekly. And then the subscription programs are 88% at least weekly. So, and then the subscription programs are 88%. So it's kind of mind boggling, you know, the level of engagement across all of these different segments of that category.

Mike Giambattista: 13:08

So so the opportunities are pretty much kind of self-evident when you look at that kind of engagement. I mean, you know you don't have to look too deep and ask too many questions and go, wow, this is a big deal here. But what about the challenges? I mean what you know. If you're a company, you know membership-based organization and you're considering this, what are the challenges you're going to face, or what are the challenges they need to consider, as I kind of go down that path.

Andy Hermo: 13:37

Yeah, I think, and this is one of the things that we focus on in most of our research. So we've always focused on this when we look at traditional loyalty programs. But, you know, what really stands out is that there is, you know, without a doubt, a disconnect between what the members' is, you know, without a doubt, a disconnect between what the members' preferences are, what they're looking for, versus what the you know the providers are focused on, right? So, for example, when we talk about, you know, discounts and how important discounts are, 48% of the consumers that we engaged in the survey, that's what they value most out of anything is the discounts. Yet only 11% of the organizations that we surveyed are focused on that as a top challenge. Interesting, so 48% to 11% is a material difference there.

Andy Hermo: 14:36

Engagement so 36% of the you know the consumer surveyed, you know they cited engagement-related reasons being things that they value the most. So, you know, is it an engaging user experience? Is it easy to understand how they can earn their points, how they can burn their points, what programs are available to them? So 36% say that those things are important, yet only 18% of the organizations show that that is a top priority for them. And then, lastly, is rewards, so reward types. So 31% of the consumers that were surveyed said they would engage more if there were more reward options and benefits available to them. Yet only 9% of the organizations were focused on adding or the types of reward options available to them.

Andy Hermo: 15:35

So you know, that disconnect piece is definitely a really important part of the challenges. I think the other thing is and this is kind of you know, kind of what I would say, like you know, self-inflicted to an extent and that is they have they're focused on. When we looked at how traditional loyalty programs invest their investment capital versus how the membership orgs are investing, there was definitely a discrepancy, and a discrepancy that demonstrates that kind of disconnect in terms of the preferences of members. So, for instance, for traditional loyalty programs, when we surveyed the top 10 things that they were going to invest their capital in in the next six to 12 months engagement features, so the user experience and being crystal clear about how you can earn and burn, what programs are available to you that was the number one investment category for traditional loyalty companies. It was ranked number five for membership orgs.

Mike Giambattista: 16:51

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Mike Giambattista: 17:40

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Andy Hermo: 18:37

I mean, the first thing is it comes down to what your strategy is right and then, based upon your strategy, what you're going to be investing in. So we're super familiar with the financial institutions and how they are investing in developing these capabilities. They have got rock solid strategies, all driven by and informed by data. They are building out the talent base they have. I mean, they have got rock star organizations and they've got big organizations, so they're investing in the people that do these things. And then technology right, they are.

Andy Hermo: 19:20

If you look at, you know the players that are doing it best. They've moved on from you know, kind of using homegrown and they're partnering with best in class providers. So you know that's how they're driving these things. And then you know and then there is how they are you know how these companies are kind of focusing on things that are becoming increasingly more looked at, like you know, table stakes, right? So kind of back to investment. The number two category after engagement was AI and machine learning Right, right. Yet that's number four for membership orgs four for membership orgs and number one for membership orgs was just marketing. We're investing in our marketing right.

Andy Hermo: 20:26

So there definitely is a little bit of behind the times and that it's the focus on personalization and AI and machine learning. These are all things that, and as fast as that space is moving, you could be left behind pretty quickly.

Mike Giambattista: 20:48

Well, let's talk about we've talked about some of the hurdles, but if you're assessing a program of this sort, can you pinpoint identifiable opportunities? Identifiable opportunities Because, as you know, and I know, if you're pitching or presenting some kind of a project like this, some kind of initiative like this, it goes a lot easier if you can point towards look, there's an opportunity over here and this is what it looks like and this is what it's going to drive for us. What are some of those opportunities that companies might be looking towards to say, listen, there's leverage here that we can apply and this is what it's going to deliver.

Andy Hermo: 21:29

Well, I mean, obviously I need to pitch the types of things that we're doing, right, but for everybody-.

Mike Giambattista: 21:35

Did I just give you another softball? You did that's two in one conversation. That's way over the limit here.

Andy Hermo: 21:40

But for everybody, there is such an opportunity to not just drive. You know incremental revenue opportunities by. You know adding, you know lifestyle and experience type. You know ancillary opportunities to their booking paths. You know it is a. It's also a big opportunity to drive additional layers of, or opportunities for, engagement.

Andy Hermo: 22:07

Think about how, like, what drives increased brand loyalty and engagement? If you're just engaging with a consumer at the time of purchase, you're really missing out on an opportunity, right? So if you can engage with them when they're dreaming, when they're shopping, when they're booking, when they're in market, right during their trip and then after the trip following up on, hey, you know what worked well, what was great about the trip, what wasn't, what would you like to do next? Right, focusing on that end-to-end it's a big opportunity. So you know, and those are the types of things, that types of things that we help our clients with but it also comes down to other fundamentals.

Andy Hermo: 22:53

So, back to what I was saying about the strategy having talent, really focusing on the resources that are driving these programs is super important. And the investment right, investing in the right things. I mean, if you're going to invest in anything, invest in a great user experience right, invest in a user experience that's crystal clear, that helps your members clearly understand what are the benefits available to me and how can I use my points Right, how can I? You know what are the clear, you know directions behind, how do I earn, how do I burn my points, and you know continuing having a roadmap where you continue to, you know, build out or expand your offering, because we do know from our data that having additional opportunities to earn and burn is highly desirable.

Andy Hermo: 23:55

And then, lastly, back to that artificial intelligence, or AI, and personalization. Many companies, from a personalization perspective, they're becoming what I'd say proficient. They're using historical data that they know about their customers, but it's very quickly getting far beyond that. It's getting into what is more commonly referred to as hyper-personalization, and that's all about having real-time data from multiple sources so that you can determine what's behind the behavior, what's behind the intent. So these are all things that companies really need to be focusing on if they're going to have a leading program.

Mike Giambattista: 24:42

You know, as you're as you're, as you're talking about this, it occurs to me that, like, look, membership organizations come in all shapes and sizes, and the bigger, more sophisticated ones. We've talked about a few of them here. You know USAA, think about AAA, or or you know, and it you know, there's people with you know, millions of plus members.

Andy Hermo: 25:02

Yeah, aarp, aarp, good one.

Mike Giambattista: 25:04

Yeah, I mean, these are sophisticated people, sophisticated operations, they have sophisticated systems, they have mature data processes.

Mike Giambattista: 25:13

But below that layer of super sophistication there are a lot of companies out there, a lot of organizations and, I'm sure, a lot of membership-based organizations that are really lagging in sophistication. They're, they're just way behind it. And it seems again, this is just my perspective from what I think I see out there but like there's the super sophisticated enterprise level operators here, yeah, and then there's a giant gap between them and the next layer and the and that, that maturity gap layer, and that maturity gap, I think one is a huge opportunity because these companies might have hundreds of thousands of members or whatever it happens to be, but with a little bit of education and kind of eye-opening and, of course, investment, it's not that difficult to see great returns on the horizon. But the question there is you know, as somebody who looks at these organizations, who deals with them, who is selling into them and implementing and managing and looking at their data, you know what is it. I mean what? How do you, how do you go about that? Because you know.

Andy Hermo: 26:50

I mean, how do you go about that? Because education is expensive Educating people capabilities but at the same time they have their own super robust capabilities behind the scenes. So it is a super complex thing pulling together programs like that For the smaller players. They're not going to have these super robust platforms behind the scene. So the number one thing is finding the right partnerships to get you started. You have to start somewhere.

Andy Hermo: 27:21

When we talk about, hey, our big differentiator is we go beyond air car hotel. Well, guess what? You need to start somewhere, right. And the big ticket drivers are air car hotel, right. And there are all kinds of partners, you know, like iSeats, that can get you going right, like I see it's that can get you going Right. And and then it's you know and and you know having partnerships also, who can help you, uh, help you with your systems? You know, you know your, your backend systems, and and and how could I better understand the data you know that I'm getting from? You know my customers or my members, um, so you know, you know my customers or my members, so you know they. There are all kinds of partners out there that can help, that can move them up that learning curve. As they move up the learning curve you start to take on you know more yourself but you know there are some you know really small companies that we engage with, who you know. They just start small but they start to see the value you know very quickly.

Mike Giambattista: 28:30

Yeah, you get it pretty soon.

Andy Hermo: 28:32

You get it soon and and you know they like us, you know they, they just they need to have a strategy. They need to have a roadmap for how they are going to, you know, continue to engage their members, how they're going to continue to deliver value for their members and and and how they are, you know, ultimately, why they will retain those members.

Mike Giambattista: 28:52

So another little plug here the the membership survey that I seats has just come out with. We'll have a link to it below this. This podcast Awesome. You can pick it up there. I encourage everyone who's listening and who's going to read the article. Uh, check it out. Uh, you know we, we, we see a lot of research. I mean, everybody's sending us their latest whatever, and um, not all of it's great research, if not all of it's really worth looking at. A lot of it's regurgitating stuff that somebody else produced or it's just not really data-based. On the other hand, iseats has consistently delivered, uh I would consider, uh, eye-opening, surprising and actionable stuff, and I think this is another, another one of those examples. So, andy Hermo, uh, thanks for your time. This is huge and, um, you know, next couple of times we, of times we talk, we'll have new data. It'd be great to talk about the past surveys and what they're looking like now. But, thanks a million.

Andy Hermo: 29:56

Yeah, I mean my pleasure, mike, and this particular survey. This is kind of our first venture into trying to start to crack the code on on membership organizations and and, by the way, we have not been able to find, you know, great data out there which was the impetus for us to just go out and, you know, get it ourselves. So, um, but yeah, I, I appreciate the opportunity, look forward to, uh, you know, the next one.

Mike Giambattista: 30:21

So, thank you. You know the, the, you know, I'm sure, that the insights will kind of morph, change as the data matures, you know. So it'd be great to kind of touch base on what we think we know now versus what we actually know then. So what?

Andy Hermo: 30:35

you're saying is I'm not going to get any softballs in the next one.

Mike Giambattista: 30:38

I don't know. You know it's the nature of the conversation, but you do owe me another conversation.

Andy Hermo: 30:42

Awesome, Good. Well, I appreciate the time, Mike very much.