Hi Guys, welcome to the Fintech Coffee Break. I’m your host, Isabelle Castro. This week I shared my coffee break with Len Covello, CTO of Engage People.
Customer Loyalty programs are an area that has become increasingly important to brands, in the US, an Accenture report found that there are 3.3 billion loyalty memberships and customers interact with an average of more than six on a regular basis. Studies have found that loyalty programs can boost customer engagement and business revenue, providing a platform for businesses to reward and encourage ongoing relationships with their customers.
Engage People focuses on creating impactful loyalty programs. Spanning different verticals from financial institutions to hospitality, they work to create connections between customers and their clients, lowering costs of redemption and enhancing data management.
I spoke to Len about how they were doing that, and what he sees for the future of the booming sector.
Isabelle Castro – Hi, Len. Nice to meet you.
Len Covello – Hey, Isabelle, pleasure to meet you.
Isabelle – Good to have you on the show. So to begin with, what gets you up in the morning?
Len – I’m, I’m an early riser. So I get up. No alarm, I’ll start with that. But I’m really driven and passionate about ideation and solving problems. I think that’s the core Max really marry technology with that. So while most people shy away from issues or problems, I see them as opportunities to bring solutions. So that’s really what excites me.
Isabelle – Nice motivating, I like it. What brought you to Engage People?
Len – So, probably a long story, I’ll shorten it up for you, but one of the founders here at engage people and the predecessor to it, again, loving technology and diving into it. Just personally, you know, building websites, initially with very basic functionality. We were introduced to someone running legacy loyalty programs, so think of the old school, you know, warehouse catalog world and kind of saw what they were doing. And started to bring innovation to that organization. And it’s that industry in general. And it just, it captivated myself and our company. And slowly over time, we ended up acquiring that company as our services began to grow and then started began to grow. And then we ultimately rebranded as engaged people and went to market as a full loyalty technology solution provider.
Isabelle – Nice. Okay, cool. So to begin with, maybe define a loyalty program that seems very broad, what is it? What does it seek to achieve?
Len – So essentially, loyalty is a relationship between a consumer and a brand. And that relationship is I’m going to give you some information. Typically, that’s data that’s an engagement with you purchasing, promotion to that brand and in return, you know, they’ll give you discounts, points, things of that nature. If you go back Back to really the start of loyalty programs, they used to be those little stamps, you would get on cards. Whether you were at a subway shop, ordering seven steps, you get the eight, three, or even before that little post it notes from being at grocery stores. So loyalty at the end of the day is really just a relationship. And it’s the exchange of a service or data or something from a consumer and a brand giving them something in return. Typically today measured in points or miles or things of that nature.
Isabelle – Okay, so in the digital landscape, it’s more about kind of points digital points, right? Correct. Okay, cool. And what appealed to you personally to focus so fully on loyalty programs and rewards?
Len – It’s, we always saw this as a currency. So it’s really payments and e-commerce in our eyes. And everything around that tangental whether it’s the proverbial toaster, or the digital gift card, is just a mechanism to facilitate that. So the amount of interactions, the engagement, the data, the capabilities that you can introduce to this niche industry is what really appealed to us. And we thought, again, there was so much opportunity, think of the advent of going through the advent of the internet, but the evolution of the web into bringing web applications and that was at the forefront and we saw this, I’ll call it archaic industry. And I don’t mean that in a disrespectful, but just an industry that had been running a certain way. And we thought we could bring so much to that industry and continue to see so much opportunity.
Isabelle – Okay, cool. What are the current trends that you’re seeing in rewards and loyalty programs?
Len – So through COVID, what we saw is loyalty had been pretty, pretty obvious. You had core redemption is where people tended to redeem. So travel programs, which are very large programs, whether they be airlines or hotels, those rewards were ultimately used to book trips, very similar to the large branded credit card programs, so the financial institutions, and then COVID hit, and all of a sudden, you had this immense, immense amount of loyalty points. So I think about 200 billion points get issued every year just in North America. And now you couldn’t redeem any more for travel or hotels or for those big ticket items. And what we saw is consumers really looking to use those points as a ubiquitous form of currency. At the same time, we saw this really large push to BNPL. And it was another way to be in the checkout process and the way that brands were adopting that in the checkout process. But there was some risk with that, whether it was regulation or default rates. And then we had crypto as well. So we had this other currency out there. So people were getting more and more in tune to additional currencies, alternate currencies, all the while this loyalty currency has been there all this time, and it’s funded, it’s stable. So really, that translates to the ability to use your points more ubiquitously. So we think that’s been really the biggest thing you’ve seen in loyalty these days is no, it’s called Pay with points. Buy a lot of people you’ll see Amazon pushing that and a lot of a lot of large brands. But it’s been that ubiquitous use of loyalty currency probably been the biggest thing over the last couple of years. And again, tie that back to COVID is, you know, people were looking for additional sources of funds to pay for day to day items. So whether it was redeeming for your groceries redeeming for items on Amazon, so it was a great way for all these different things to come together to TCS points being used as a currency.
Isabelle – Okay, so the main instigator for this, you would say, is COVID?
Len – I think COVID accelerated as you saw companies touching this starting to see that it would be the future, but COVID accelerated adoption,
Isabelle – Okay. And at Engage People, where are you specifically engaging?
Len – So we’ve been, we run all aspects of a loyalty program, we provide the technology solutions that underpin a loyalty program for brands, so whether it’s points issuance, member management, communications, personalization, segmentation, that’s the foundation of a loyalty program, and we offer solutions there. Additionally, we’ve been building a network for this pay with points utilization. So to start in North America, working with some of the largest financial institutions, some of the largest brands and giving someone like Isabelle that opportunity to go online and see the value of your points right at checkout and use that currency. So that’s really where we’re engaging the whole industry right now and seeing a lot of uptake and a lot of interest and a lot of utilization in the programs we’ve already launched.
Isabelle – I’ve seen on kind of your socials Engaged People’s socials and your blog that you’re talking about AI. I mean, AI is very front of mind at the moment. Can you explain a bit about how AI kind of weaves into this?
Len – Sure. So the, the catch up to, we’re at 4.0. Now. And what it’s done is, you’ve seen a lot of very basic AI a lot of basic machine learning to handle the customer service side of loyalty program. So as people have questions, additionally, we use logic to build out segments of users or to create personalization. And being able to do that with some very basic or rudimentary AI has been there in the past, more advanced companies have used it a lot more efficiently. What we’ve seen is AI on steroids over the last year, so I think there’s still a lot to be learned about how it can be applied specifically to different areas of loyalty. We have a small innovation team playing with that right now. But the obvious things for us is the customer support side, the ability to generate kind of promotions, different opportunities, personalized messages for members, and to do that very quickly. So with loyalty, the last couple of years or last few years, there’s been a big push on personalization. And that’s been a buzzword in the industry. And you’re really limited to how you can manage that personalization. So the technology could theoretically give you a one-to-one relationship between the brand and every consumer. But now, being able to produce content that looks like it’s coming from a human, very specific to each of those individuals, is where AI is taking this industry. So I think you’ll see a lot more of that type of utilization.
Isabelle – Okay? And how will this kind of impact customers right now? Will it improve their lives?
Len – It’s really interesting. I’m following this quite closely. Because you kind of see you’ve got two different camps on this. Some are shutting this down, and with the audience, people that are very, very loud on Twitter. In fact, they may only organization is, you know, we need to stop and watch this. And there’s some validity to that. You always want to be mindful of what’s going on. And then there’s the other camp of, you know, this is game-changing. Let’s accelerate this. Let’s, let’s keep going. So, you know, we’re pretty also pretty focused on the fact that there is an opportunity for mistakes still, and the most important thing to a brand since its brand reputation. So implementing anything like this, we’ve seen people being able to gain these types of services to generate content that you would have thought it was protected against. No, we’ve seen everything like companies not allow you to use it, I think it was a few companies have already banned the use of chat GPT. And organizations countries such as Italy have banned the use nationally to use that. So I think from our standpoint, we’re gonna be very slow to adopt this because of the potential implications any brand damage is very hard to overcome. And in a world where everything’s captured, everything’s digital online. You want to be very careful as to what that AI is producing and ultimately pushing out to your member.
Isabelle – Where do you see loyalty programs going this year?
Len – Though the pay with points is still going to be a big thing and will continue to grow, you’ll see more and more people that demand will continue to rise. So as I see, competitors offering this more and more programs will bring this. We’re seeing a lot of partnerships and loyalty. So there was being from Canada, we were kind of this test case and actually successful in what was just partnered loyalty programs. So we actually had coalitions in the forms of air miles and Aeroplan that were pretty successful. I think the evolution of that is brands being very comfortable in the role they play and having partner brands. So you’ll see grocery gas, maybe hotel, maybe airline come together and create a relationship so you can earn a currency or utilize a currency across all of those brands. And I really see a push in that. So you’ll see more and more partnerships be presented to consumers so that they’ll, you know, they’ll be able to interact with a number of brands and keep a consistent currency or a consistent reward structure together.
Isabelle – Okay, that sounds pretty exciting. It kind of reminds me of kind of, and I use AirFrance quite a lot. And they’ve got Flying Blue. And you can go with other brands so is it something like this? Are you saying?
Len – Yeah, and you’ll see Flying Blue continue to evolve. So, those points will be, you know, potentially, you’ll be able to earn them in different areas, those that have nothing to do with the airline and growing more and more and even utilized outside of the airline as well.
Isabelle – Okay, well, awesome. Sounds great. So moving to my own questions, getting a bit more personal. What’s your favorite quote?
Len – I’m a bit of a superhero guy. And if you were in the office, you would see I’ve got a whole bunch of Marvel stuff. So I think that with great power comes great responsibility is a big quote for me. Also, it’s probably polarizing for people, but it’s something that I live with. And it’s if you want to see a great idea, bring it to the boardroom. And I think, just historically, being an innovative type of person, removing the barriers and the politics from getting ideas created, is something that I’ve always pushed within the organization. That’s what engaged stands for as well. So that’s a quote that kind of lives on my shoulder.
Isabelle – Nice. I like that, quote. It’s what you need to get done, I guess, and innovate, right. So curveball question now that I know that you’re a superhero guy, I wish it was. What’s your superhero power? But it’s not. It’s – In the news story about your life? What would the headline say?
Len – That’s a really good question. I’ll say personally, fundamentally, well, you know, loyalty and payments is the world in which we operate. What’s really important to me is something I’ve learned over time. And I’ve been fortunate enough to have some really good mentors, and people helped me with that. But I think the storyline is to really just be a good person. And you know, you’ve built culture. The people at our organization are incredible. The success of Engage really comes from the people. And I know, that’s kind of cliche. Everyone says that, but the culture that we have within our organization is amazing. And it’s a testament to everyone there. So if anything, I think it’s, you know, you may not be able to use this, but we always look back and go, it was like Don’t be evil, was kind of their tagline? And I think that’s something we indirectly require at Engage. And it’s something I stand by is, you know, you can do a lot of things with a lot of good people.
Isabelle – Nice. Okay, well, it’s good that something a company that is so kind of focused on people and kind of customer engagement does have that as a focus. So that’s a nice one. How can people get a hold of you?
Len – Social channels always work. I’m on Twitter at Len Covello. You can see me on LinkedIn. And then you can visit our website. We’re constantly posting, whether it’s blog posts on the latest happenings, and then ultimately around different payment and fintech shows predominately in North America, but we’d love to get over to the UK. It’s a personal favorite place of mine as well. So anytime we can be in Europe, you’ll find us there as well. So any of those channels. Happy to discuss anything.
Isabelle – Okay, cool. Thank you so much. And thank you for your time. I’ve really enjoyed having you on the show.
Len – Great, thank you for the time as well as it was a pleasure is mine.
Isabelle – As always, you can chat with me on my LinkedIn or Twitter at @IZYcastrowrites. But to access great daily content, check out Fintech Nexus on LinkedIn, Twitter, Facebook, or Instagram. You can also sign up for our daily newsletter, bringing news straight to your inbox.
For more fintech podcast fun, check out the website, where you can find more fascinating conversations hosted by Peter Renton and Todd Anderson.
That’s it from me. Until next time, enjoy your downtime.
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