Customerland

Navigating AI-Driven Loyalty Shifts

• mike giambattista • Season 2 • Episode 51

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Erin Raese is CRO at Annex Cloud and Erin "gets" loyalty.  In this episode we explore the shifting tides of brand loyalty across generations, we'll see why the loyalty game is not just about keeping customers engaged but also about staying relevant. We uncover why almost half of Gen Z and millennials abandon brands due to boredom and how influencers and gamification might be the keys to keeping them interested. Learn from industry leaders like Footlocker and Duolingo, who are successfully engaging these audiences through creative marketing and gamified experiences, while also understanding the broader loyalty trends from boomers to Gen Z.

Discover how brands can captivate the elusive Gen Z demographic by leveraging innovative strategies that cater to their unique preferences. With insights from our special guest from Emarsys, we unveil the fascinating world of loyalty personas such as the "points geek," "gamer," and "socialite," offering brands a roadmap to tailor loyalty programs that genuinely resonate with young consumers.

Then we dive deep into the AI revolution as we discuss its integration into everyday operations and market research. Drawing parallels to the dot-com era, we emphasize the necessity for smart AI adoption and the challenges of navigating its limitations. Hear our reflections on AI's role in enhancing productivity, its quirky failures, and the importance of customer-centricity in harnessing AI's potential. From quirky design failures to the shift from traditional search engines, explore how AI is reshaping the way we work and interact with brands. Join us as we navigate the opportunities and hurdles AI presents and uncover the secrets to aligning with companies that truly value loyalty.

Mike Giambattista:

Specifically, 33% of Gen Z, compared to 28% of all demographics, have tried a new brand because of its creative marketing or creative approach. Again, we don't really know what that looks like, but creativity plays here.

Erin Raese:

Yeah, there you go, make it interesting, yep.

Mike Giambattista:

Right.

Erin Raese:

And if you're bored with your competitor, they'll come to you. Word with your competitor, they'll come to you. We are launching loyalty personas today. This is where people can take a quiz anybody you, me, but any consumer. So I've already given it to my mother, my child and one of our folks is giving it to her mom and they posted it on Facebook just as we were getting ready for this.

Erin Raese:

Yeah, all the different personas. We have the points geek, so the person that's always looking for points and how do I get more Right? Where do I get the value the most? We did a gamer, so I think sometimes people think of like points gamers. This gamer is more.

Erin Raese:

I really like the interactivity of a program, I like to get challenges, I like to enjoy the game of it.

Erin Raese:

We have a socialite, so the VIP status person.

Erin Raese:

Always, I want status, I want easy or early access, I want to meet designers, that type of thing. We have the shopaholic, so that's the person that's shopping around trying to get the best deal. We have the lazy loyalist, so that's the one who joins a restaurant program and you just keep going back to the same restaurant because you know you're eventually going to get a free meal and we have the hero and really loves your brand, is committed to your brand, likes a good deal but really wants to align with your values, or know that the brand aligns with their values and has that emotional connection and, above all, that's what's most important. And so, yeah, hopefully it's something fun that will go a little viral for us, but we also see it as a way to support our clients. So if somebody has a program and they give the survey out to their members and the members come back and say they all love, they're all the socialite and they all want VIP status, well, and if the program doesn't offer VIP status, maybe you should do more of that.

Mike Giambattista:

If everybody comes back yeah.

Erin Raese:

Yeah, so we'll see how that goes.

Mike Giambattista:

That's really, really interesting. I mean, you know, I like the idea of putting it out there just in public. This is kind of, you know, user generated research, and sometimes that's where the gold is. You know the formalized, really expensive consultative driven.

Erin Raese:

You know, a couple hundred thousand dollars later Not saying that's bad, by the way, but you just never know what you'll find- yeah, yeah, and we're collecting a little bit of demographic information just ages and ages, gender, location so that we'll have some of that. So we can slice and dice a bit as we continue to do it. But, yeah, we see something that can be out there for a long time and where an A brand can pick it up and take the survey and and see what their members are, how they're behaving. So it'll be really fun to see.

Mike Giambattista:

Yeah, I mean, if listen, if we can help put it out, you're welcome to use our channels too, because it'd be fun, you know send it over for sure. Yeah, shoot me an email. So your colleagues over at Emarsys, who set this conversation up like I don't know two months ago or something, trying to get this together, had just released the customer loyalty index for 24.

Erin Raese:

Yeah, their loyalty study yeah it's really good stuff.

Mike Giambattista:

I was able to talk to them I think I've talked to emar says the past couple years, just as they released it, and it's it's first of all. It's just, if you're a loyalty geek, customer engagement geek, on any level, this is it. You know. Let's just go, let's dive in deep here and just wrestle with this stuff.

Mike Giambattista:

Um, so if, if you're prepared to do a little wrestling, so I think for me let's just start like really, really high level, because a lot of the report focuses on how different Gen Z is from past generations, prior generations, and how they view brand loyalty and what you can do with that and like, first of all, that's universal. Every single brand out there is going like what do I do? I've spent decades building, you know, my brand and Gen Z could care less. So you know, or or care in diminishing amounts. So, um, high level stats here, here, right off of your report Almost half of United States Gen Zers, 43% and 41% of millennials have abandoned a brand they were once loyal to because they grew bored of them, which is like the worst thing you can say. I think To admit that you're just boring is pretty, pretty condemning. You know that's damning stuff.

Erin Raese:

It is, and it's one of those that I wish we could double click into to really understand I think maybe to your point what board means? Is it the product set that's boring Like they're not being innovative enough to keep these people interested. They buy one thing and then there. Keep these people interested, they buy one thing and then there's nothing else there. It's blah. Or is it the fact that their marketing is boring? One of the other stats in there is a lot about influencers and how influencers are really having an impact on these groups. Is it that they don't have the right influencers either, so that doesn't seem interesting to them? I think there's a lot that, uh, you could unpack and just that.

Mike Giambattista:

You could do whole research on just that one um piece I mean I'm thinking about I was talking to the head of research for footlocker recently and footlocker's core demo are gen z's right now, you know that's the people who are buying their products.

Mike Giambattista:

So they're really. They need to understand these people and they're. It's an overstatement to say they were panicking, but what they were saying is like look, gen Z has all these criteria for brand loyalty. You got to meet my values, you got to be cool, you got to speak my language, you got to be where I am and all that stuff. And yet if they see something cooler or better deal, like especially a better value, they're gone, like all that stuff you just worked on to meet their needs, it doesn't matter.

Erin Raese:

They're very flighty generation apparently. So, yeah, I think they are. I think another stat in there, though no-transcript, um, so maybe there's something to that too. Being able to demonstrate more quality, uh, to them could be interesting as well.

Mike Giambattista:

Um, yeah, you know the other side of value there, right, and I think in the the footlocker conversation, they're really just talking about price per se. So, yeah, interesting. Well, uh, next phone will be to connect with your people over at Amarisess and see if we can get some more. Go deeper, right, yeah.

Erin Raese:

Yeah well, gamification might be an interesting thing too, and we certainly are hearing so much more about gamification. Obviously it was pretty hot about 10 years ago and it kind of went away. And now it's coming back, and not necessarily the spin and win kind of things, but the um, the challenges, and maybe there's something to to that with this group of keeping it more interesting. So if they have to, uh, do four things to get something else, would that keep them more interested? Um, so it actually having a loyalty program does that help stem the boredom?

Mike Giambattista:

Yeah, well, that could work. That could really be interesting to see. And you know, just like thinking about gamification and the gaming world that so much of Gen Z is is is a part of, I think I saw somewhere that it's like 70 to 80 percent of gen z is are are active gamers. Like that's, that's a huge statistic, that's, it's a giant, it's a world out there that's like, okay, it exists, I'll never get there, but um, seeing a couple of really interesting um, loyalty plays, gamification plays within the gaming world, because you're already in this competitive environment, so they kind of layered in.

Erin Raese:

You know, uh, just as you're saying, you know, you know, ring three bells and you get an extra, whatever power pack or something like that I'm laughing but that's dead serious stuff to that generation, Like yeah, so yeah, well, I was listening to a podcast with the founder of Duolingo and he said one of the things that they did was they put in streaks. So how long have you been? I don't know if you know about Duolingo, but it's learning a language, and so they made it really easy for you to engage. So lessons are a few minutes long. It's learning a language, and so they made it really easy for you to engage. So lessons are a few minutes long, and so if you could just do a few minutes every day, you'll ultimately get there. So not only did they shorten the sessions, but then they added streaks to keep you coming back every day for at least a little bit of time, and just watching that streak number was enough to just create so much more engagement.

Erin Raese:

So, gamification doesn't have to be this like huge strategy necessarily with all these multifaceted aspects. It can be something pretty simple that keeps people hooked.

Mike Giambattista:

Well, just from the study, the loyalty, the customer loyalty index, here apparently it works. I mean, there's backup here that says that that's pretty effective. Again, I'm just going to read Specifically 33% of Gen Z, compared to 28% of all demographics, have tried a new brand because of its creative marketing or creative approach. Again, we don't really know what that looks like, but you know, creativity plays here yeah.

Erin Raese:

There you go. Creativity plays here. Yeah, there you go, make it interesting.

Mike Giambattista:

Right.

Erin Raese:

And if you're bored with your competitor, they'll come to you.

Mike Giambattista:

So I hate cherry picking this stuff because you know there's just it's the context that really matters here. But listen, I'm going to cherry pick. So loyalty deepens across generations is the headline, and then, um, there's. There's no other context here but generationally, um, 74 percent of boomers are loyal to a brand. Pretty big statement, not a huge surprise. Um, and that's kind of a diminishing numbers. Gen x is 70 loyal to a brand, millennial 68. Gen z is 64, and I've seen numbers that are actually far lower than that for gen z. I mean, it's kind of surprising to me that they would hold that. I guess it kind of just depends on how the question was phrased too, but you can see that like generationally. You know, at some point, whatever the next generation is going to be called, brand marketers are going to be in some deep poo.

Erin Raese:

I'll edit that, you know you could say that this is a family show here. So no, okay, um, anyway. Um, it's interesting, does it? Does I don't remember this from um the reporting, because I looked at a lot of the raw data from this versus looking at it from previous years. Does it it talk about how that's changed over the last few years? Has it? Or have younger people just always, just by the nature of, maybe, age, wanted to try new things, so they don't tend to stay as loyal?

Mike Giambattista:

I mean, there's no other qualitative data here. I'd be really interested to find out, though. But I mean just anecdotally. I'm old, I have been loyal to certain brands along the way because that's just what we did. I like this brand because it speaks to me and makes me cooler by association me, and makes me cooler by, you know, by association but I don't. I just think that like again anecdotally like younger generations don't think that way. Even my kids are like yeah, they have some brand affinity, but it's nothing. Like you know what, in my generation, brands to a certain extent defined who you were.

Erin Raese:

Yeah, no, that's it. That's a good point. I feel like there's so many more options to even looking at my own behavior. I'm I'm old.

Mike Giambattista:

I'm trying to think of. What am I loyal to? Not really, but anyway, we can dispute that.

Erin Raese:

There's like toothpaste. Okay, well, it's. That's become habitual, so it's. It's the same thing thing, I don't, I just don't change because it, I just I pull off the shelf right, but when it comes to apparel and things like that, there are. So I feel like there's so many new brands that ones I loved two years ago aren't necessarily the same brand I'm. I'm in love with this now and I don't know if the access to information and how many more brands are out there, make it such that we just don't stay loyal.

Mike Giambattista:

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Mike Giambattista:

So, um, in fact, aside from this cherry, this highly cherry picked um stat I'm going to throw at you, I think it'd be really, really interesting to talk about how Annex cloud is deploying AI and how you're seeing it used to its best extent. But here, first, the high level stat 72% of us marketers have increased their investment in AI in 2024 and 78% have already experienced a rise in customer engagement after implementing AI-powered personalization. Wow, it's a big number. 78% kind of justifies the expense and the fear and all the other kind of logistical, operational stuff you've got to consider. That's a big deal.

Erin Raese:

Yeah, it is. I mean, I guess I look at AI, some of the things I've been seeing, and maybe I'll be going down a rabbit hole here a little bit but a lot of what I see now, in this age too, is back when com really became something. I don't know if you remember, but JCrew actually changed their name from JCrew to JCrewcom because everybody was going to shop on the web and they weren't going to go into brick and mortar stores anymore. And so now here we are with AI and everybody's like well, they're AI, AI, AI. And I think AI is certainly extraordinarily important and we will be using it, but I think it's going to be something that's just day to day in our everyday lives, that we're just. We all as organizations. We all need to adapt it, adopt it and make sure that it's part of what we do. Is it going to necessarily always stand out as to exactly what it is? That? That is, that it's that ai is doing this thing for us. Ai is doing this thing for us, ai is doing this thing for us. It's just going to be the way that we work. Ai is just supporting all of these different things that we do, and I don't think it's going to be, as I guess, blatant and specific, as we're seeing it today.

Erin Raese:

But I guess all that said again kind of jaded approach, I guess I think you've got to do it in a smart way. So where does it really make sense to use it? I've seen some technologies out there that are saying when somebody hits my website, you're going to have AI to tell you exactly what that person's going to do and their likelihood to make a purchase, their likelihood to make a referral. It's like they just hit your site. How can that possibly be? Perhaps, but you need enough data to make it really correct and make it relevant.

Erin Raese:

So I just I fear that there's a lot going on right now in a test and learn, and what are we going to really look at? How are we going to utilize it in really smart ways? So for us, we're looking at it from fraud prevention. So how can we watch those behaviors and really know what could be happening to help from that perspective? I think in some aspects of analytics and such, it works well when you have enough of the data components. Certainly, we're crawling before we run, but our friends at Amarsys are doing a lot from that perspective and they have a lot of data and the way they're watching customer behavior when they're sending out communications and being able to be smarter with it, I think makes great sense Again carefully how we're testing and learning of it all.

Mike Giambattista:

I mean it does seem to me a little bit like you know it is, the idea of AI is moving out of the shiny object phase to the. You know it's the cool thing that nobody really understands. Everybody wants and has to talk about to kind of like what you're saying, like let's figure out what its real utility is here and move it off of the pedestal as some really cool concept and maybe we can actually use this to move the ball forward. And I've talked to a handful of people that feel the same way. But there is a bit of a wrestle.

Mike Giambattista:

I think People who are looking at AI in more utilitarian ways have to convince whoever it is and it might be somebody in the C-suite that's just enamored with the whole thing or think it's a load of BS, and you know we'll wait and see what happens with this idea. But I mean there is. There is true utility out there now for people who are doing any kind of customer engagement work, for sure. But but there's a there's still a giant, you know spotlight shiny object. Ooh, I got to have it and look, I can prove that out. Every time we publish almost anything with AI as the theme, we get a lift. I mean it's crazy, you know. Try it yourselves, you'll see. I mean I mean it's crazy.

Erin Raese:

I'm, you know.

Erin Raese:

Try it yourself, you'll see.

Erin Raese:

It's like at some point that has to wear off, because you know, yes, we try and publish useful stuff, but we're not publishing junk, but is everybody's very curious and everybody's giving it a shot. I know our team. We're small, we're lean, and it is amazing what more we can get done because of AI and how we're using it and how we're using it to do research and how we're using it to help educate our team on, like I'm thinking the sales team about what could we learn more quickly? Being able to feed a question, feed the different bots about different I don't know books that are out there and help summarize those for us. Now put a lesson plan together for that that we can learn and teach from. I mean, you could do that so quickly when something like that you may not have even been able to do because it would have taken you a few weeks, and who has time in your schedule to be able to do that? But being able to lean into it, we're so much more efficient in so many different ways.

Mike Giambattista:

So let's take this down to street level. How often do you in your daily life use chat, gpt or one of the others versus in place of what you might've been using Google for one of the search engines?

Erin Raese:

or one of the search engines. Well now Google's trying, as is Microsoft, so you don't have to necessarily go as far away in order to get served up some kind of AI. I would say I don't do as much writing. I end up in a lot of conversations, so I would say probably a lot of more. I spend my day on the like this in conversations. So I would say I'm probably every couple of days, but I know people on my team. They're in there every day for multiple hours, utilizing it just to get more done.

Mike Giambattista:

Right, a lot more, but not not because it's replaced, you know whatever I was going to be Googling, but, like you said, it's made my production work a lot more efficient, like way more efficient, exponentially. Um, I, so I, uh, I guess, through our, our corporate Google plan, I now have access to whatever it is that they're calling their version. And a couple of days prior I was working on something and I had asked chat GPT to design a digital looking carrot, just you know, and it designed something that looked like a carrot shaped robot with all kinds of lights and dials and stuff on. It was really bizarre looking and I thought, when Google offered me like hey, try it out on Google. I gave the exact same instruction, in fact, I copied and pasted and what I got was it looked like a line drawing from a dot matrix printer from like 1980, something Like that was it. That was it.

Erin Raese:

They're not there yet.

Mike Giambattista:

They're not there yet. Still working out some k change on that one.

Erin Raese:

Yeah, but I imagine you too. Where we are as well is definitely as an organization. How are we using, how are we fixing up our website and our content to be more readily picked up in those areas? Because why would somebody want to go, let's say, search for a loyalty platform on Google if they can go into chat, GPT or somebody more, somebody that's got current data? But what are the top loyalty platforms? What are their biggest feature sets? Which one, what are their different price points? They could just feed it so much information that all the stuff that would have taken them three or four weeks or months to research can now just be spit out in seconds.

Mike Giambattista:

Right there.

Erin Raese:

It's so different.

Mike Giambattista:

Pretty remarkable. Have you found the thresholds of efficiency yet for any of your chat, gpt or AI work? I'm throwing that out as a bit of a softball because I have, okay, I can't make a statement that definitive.

Mike Giambattista:

I was working on a large project and I thought we did this a couple of years ago. We analyzed the top Fortune 50 companies. We went through their 10 Qs, 10 Ks in annual reports and we were looking for references to customer centricity or customer experience or customer engagement or customer loyalty anything that would indicate in their investor materials that they were real about pursuing customer engagement. Is it there? It's not very scientific, but the idea was look, if you're going to put it in your investor materials, it's at least important, important enough to to make that kind of spin.

Erin Raese:

Yeah.

Mike Giambattista:

So, um, ended up being really, really interesting but also like, really costly to do. You had a couple of researchers, a couple of writers on the project for what ended up being kind of just interestingly anecdotal stuff, um, but I thought, well, this is amazing Um use case for chat GPT. So I basically framed that whole project up and fed into chat GPT and it came back. This is really interesting. It came back and said yes, this is how you should do it. And I said, no, I want you to do it. This is your job. Please do that. Okay, got it, let me get to work and I'll get right back to you. I thought this is amazing, this is so amazing.

Mike Giambattista:

And like a day went by and I was like this hasn't returned anything yet. So I was like, hey, what's up? What's happening here? Sorry, it's just a lot of data to parse through. We're going through this stuff. I'll get back to you soon, maybe by the end of the day, next day, nothing. Hey, bro, can you tell me what's happening here? And I it said, well, it's still, it's a bigger job than we thought. We'll get right back to you. Um and it I think it was like four or five days later I was like I really need to know what's going on here, like this is becoming a bad employee. And it came back and it said okay, we got it done. And it gave me a paragraph of maybe I don't know 40 or 50 words that said here's how you do it. So basically it was trying to shirk its duties back on me the whole time.

Mike Giambattista:

It just didn't have the backbone to do so, so I would have reported that employee to HR.

Erin Raese:

Yeah, wow, wow, that's interesting. Yeah, wow, wow, that's interesting. I would wonder there's so many people have different approaches and get different results. It's all in the prompts is from what I guess I can gather and and stepping them into that, if, if it would, if you'd come out with it, but I actually I love that exercise. It's. It's certainly what we do when we go look for, when we're prospecting. If they're not talking about customer centricity, if they're not talking about loyalty, if they're not talking about that importance, well, they're at the bottom of the list. Convincing a management team that the customer needs to be the center of your world is a lot harder than you think it is.

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