In this podcast episode of Let's Talk Loyalty, Paula Thomas interviews our client, Mitch Kennedy, the Global Loyalty Strategy Lead at Dell. We all know Dell as one of the world’s best known computer companies, and Dell looks to the future as "powering the next technological revolution."
With a laser focus on driving clear and measurable business outcomes, Mitch discusses with Paula his key insights on the impact of transactional rewards, the power of gamification, understanding the importance of human psychology, as well as the increasing importance of the Advantage Rewards program and loyalty initiatives in Dell worldwide.
Epsilon's PeopleCloud Loyalty is a market leading end to end solution. And it is in fact, the only company that has been named a leader in both the loyalty technology platforms and the loyalty services providers, Forrester waves in 2019. As you can imagine, I'm delighted to be working with Epsilon and creating awareness of their people cloud loyalty solution. So if you want more information, visit their epsilon.com forward slash let's talk loyalty, or drop me an email, and I'll put you in touch that website again is emea.epsilon.com forward slash let's talk loyalty.
Now let's get on with the interview.
So welcome...To the latest episode of let's talk loyalty. And before I get into introducing my guest today, I first of all, wanted to celebrate a mini milestone in that I've been able to get out of lockdown and get into my professional recording studio. So for the first time in three months, it's fantastic not to be just working from home and to be back in a professional environment, obviously with mask in hand. But I have to say it feels really good to have a sense of normality. And the other thing I wanted to say is just a huge thanks to my friends and Epsilon who introduced me to the fantastic guy.
We're going to have a conversation with today. And I think all of you probably appreciate the amount of time and effort. It takes really just to get somebody of this caliber on a call and particularly from a global brand and one that you all know and love. So without further ado, I am going to welcome Mitch Kennedy, who is the global loyalty strategy lead for Dell based in Austin, Texas to let's talk loyalty. Thanks for the invite. I appreciate it. Great to have you here, Mitch. And I know you've been off on leave, so it's probably crazy busy on your end, but I'm, I'm super happy to get into your calendar before anything else does it's adjustment coming.
Back from having taken a week off that just mentally get yourself to reengage and yeah.
Don't open the email for awhile. I think that's my advice. Great stuff. So Mitch listen, and there's so many fantastic subjects we've talked about before offline, and you're doing some amazing work there with, and the Dell advantage loyalty program. And, but before we get into all of your kind of career background and some of your favorite loyalty topics, I just, first of all, wanted to start with my usual question, which is what is your favorite loyalty status?
You know, it's funny, the, and this is an old statistic and it's not one of like sort of earth shattering insider revelation, but I always come back to the idea and like I said, the statistic is old, but I read a number of years ago that in the US the average person is a member of 18 loyalty programs and engaged in one. And I always try to keep that in mind, because it's very easy, particularly in a larger organization, when you have people trying to sort of push down KPIs on you and membership is one of them.
And I always have to sort of use that statistic. It's like the one that I throw out all the time to say, listen, membership is in the KPI. I don't really care how big the program is that doesn't speak to efficacy. I could streamline membership. If you, if you want to pay me a bonus on how many members I have, I'll be a rich man. Right. I can write, I can make that work, but that doesn't mean that I'm driving positive outcomes.
Sure, brilliant. Well, my God, 18 to one, and I know they they're very around the world, Mitch, but certainly, you know, I know how few loyalty programs I engage with, and this is our profession. So you're absolutely right. We often sign up and we don't, we don't bother after that. So did the top job (or doing).
Right. And I always think it's interesting too. And I'm not, I'm curious if you and the people listening are the same way when you're in a store and they asked you, do you, do you want to join the loyalty program? Someone who actually manages loyalty programs? Yeah. If I sign up, it's out of curiosity, but for the most part, I'm like, no.
You know, I see it as a direct challenge, Mitch. So I use that particular question to test whether they've executed well. So whether they've trained their staff. So, so I'm a nightmare customer. If you want to ask me to join your loyalty program, I'm going to ask why, and I'm really going to dig into, can they articulate that? Because again, there's no point building a loyalty program if they're not passionate about it at the point of sale. So yeah. I'm a tough customer.
Yeah, exactly. I was at a store yesterday, actually, and I had a very unique experience where as I was checking out, it came up on the screen to join the loyalty program. And the person checking me out told me to click now. Yeah. They just said, Oh, you know, cause you know, you go through the screens and then the other person was like, check.
Yeah, exactly. Like you guys have gotten off the rails somewhere here. I don't think that was the preferred customer experience.
Oh no, my God. That's hilarious. Well, hopefully nobody does that with the Tel program.
It just goes to show too, when you have a retail outlet at the end of the, you know, you can sit back and have all of these very imaginative, very innovative processes. But at the end of that, that trail is going to be an employee that probably didn't care all that much. And so to take that new account.
Yeah. Brilliant. Brilliant. So I'd love to get a sense of your program. First of all, Mitch and I know you've done, I think it's over five years now in a number of roles with Dell am and the advantage program. I didn't know a lot about actually, it's not M a program I'd seen in my home country of Ireland. For example, I don't think it's live here in the UAE, but obviously it's a massive program in the U S Canada, I think Brazil and lots of other countries around the world. So tell us exactly about the program.
Well, it does, from a loyalty perspective, Dell is sort of a unique entity in that we have a, a really kind of long purchase cycle. And, and so the Dell advantage program, it has evolved quite a bit over the last number of years. And it's about to evolve a great deal more as it's currently constructed, it's basically a transactional rewards program. We, we pay out transactional rewards at sets amounts based on revenue generated from select customer groups.
The outcome of that, you know, the objectives as currently constructed are pretty straight forward, right? We're looking to drive a transaction velocity, maintain some level of engagement in between large purchases and, and get loyalty outcomes, basically out of that very narrow sort of defined program benefits. We're evolving that to a much more nuanced, much more expanded program.
That's, that's more focused on the customer experience, but it's currently constructed. It's a very transactional program now to be fair, it does that effectively, right? Like I'm not on yeah. Not discounting the impact of that, but realistically, right now, as, as we're currently constructed, we're buying transactions, we're doing that thoughtfully and selectively, but at the end of the day, that's what we're doing. Okay.
And it is a consumer program and a small business program. Am I right?
Correct. Correct. Currently active in us, Canada, Brazil, UK. Okay, fantastic. We have them, we have some like mini programs in other markets that I'm using to test some new concepts or I'm about to use it to test new concepts, wonderful stuff.
Okay. Well, we'll definitely get in. I think we, we discussed, I think we're both mutually fascinated by the concept of gamification. And as you said, transactional programs, they have a logic, they have a function, they definitely drive some behavior. And, but I think as the world evolves, there's definitely a need to be more engaging. So are you at the early stages of that? Or, or where are you at.
Very early stages, but we have a sort of organizational commitment to walk that path. And given that's a Testament to Dell in that given Dell size and complexity of the business, that's not an easy path to walk right there. You're committing to some level of pain in the short term to make that, that level of change. And one of the things I like about Dallas is organizationally I've, I've seen a lot of courage.
You can be, you know, I come from sort of an entrepreneurial background and I was really worried about working for a large company. Cause I was afraid that I couldn't be innovative. And what I've been pleasantly surprised by was still sort of willingness to take a unique look at something. I mean, to sit in a meeting and have, and to be able to say, I don't know that we're asking the right question and to have people stop and go, okay, well, let's talk about that. What, what is the right question?
And, and to me, that's where innovation comes from is the ability to step back and redefine the question. And Dell has an organizational willingness to do that, that I found very surprising. And that for me, that makes it very exciting because I can be innovative at scale though. I was laughing the other day. I said, when I sold Dell on the idea of, of making some pretty dramatic changes, having a point of view is all well and good until tell them a hundred billion company goes, okay, let's do it.
Then you're like two guys talking here. I'm not willing to go that far. I mean, I'm not saying I'm right. I just it's. So it's exciting times where we're in the process of sort of re-imagining ourselves.
It takes a lot of courage as well for you Mitch, even to take that approach because as you said, you know, the, you know, the whole thing, you know, it can go, you know, lots of different ways. There's lots of unforeseeable factors. I know you're a very curious man. And you've told me, you read a lot and, and there's, there's some amazing concepts out there, which I know you're just dying to try.
Yeah. You know, my, my wife had argued that on, on often wrong, but never uncertain. And so yeah, I have a willingness to say, actually, you know, it's funny. I think there's, there's a, loyalty's an interesting thing to me and that there's been a lot of very smart people that have done a great deal of research. And so there's a lot of knowledge. There's a great deal of a knowledge base out there that you can tap into. I would argue that, that my, my skill set is just basically a willingness to, to comb through that find something that resonates with me and having willingness to apply.
Some of that comes from, from an entrepreneurial background, you know, to get, to get clients. Basically you had to be willing to propose a course of action that wasn't apples to apples. I always laughed, you know, no one got fired for hiring IBM. They hired Joe blow and his Merry band of, of consultants, you know, from some, no name agency they could get fired. And so that sort of work.
And Dell hard, Mitch Kennedy well done Dell.
Yeah. It was funny, you know, I, I started to dial and I was just doing analytics and so sort of an interesting experience to, to sit down and, and, you know, they, they, my first day they gave me this, these, all these dashboards and it was very interesting. And then I'm like, these aren't the right questions. Like, you're not, you're not looking at the right data here, you know, like, what are your, what are the objectives here? What are you, what are you trying to accomplish?
And then let's talk about whether there's a path to get there. And so pretty quickly I think I sort of migrated out of that role, but yeah, it was interesting, you know, I was the first big boy company I worked for where, you know.
Where you were led to have a, an entrepreneurial mindset, because I know that's where you came from, tell us exactly, you know, the kind of background. It was much more startup land, wasn't it? In terms of your career?
Oh yeah, no. Yeah, actually it was interesting, you know, my, my first foray in anything similar, close to loyalty, I had started a yield management company in the travel industry, specifically golf. And, but we, we envisioned ourselves as a software company and we had to make a pretty rapid transition when we ran out of money. And we had the choice between having to go home and tell our wives that, Hey, we want to come make the house payment or find a new way to do this.
And what we figured out was that no one really knew how to use this great software. And so we flipped it on its head and turned it into basically a, we will use the software in your behalf. And, and as little as we knew, we'd seem to know more than anybody else. And that was, that was disturbing on one level and an opportunity on another. And so that's sort of what opened it up to sort of number based efforts to, to drive loyalty outcomes.
You know, how do I drive freak? And I didn't, I didn't recognize it as loyalty at the time I just do now do looking back, how do I drive frequency? How do I drive sort of engagement with my clients and all of that.
Wonderful. And I used to work in the airline industry actually Mitch many years ago. And I always said, it's the yield management guys have all the power.
Yeah. You know, what was funny? We did, we were so wrong about so many things. And, but it was funny because you, you, if there's great outcomes in being wrong, sometimes what we found was that we could not get somebody to spend more money on, on golf. We could just shape where they spent it. And I can remember talking to I'm the one that did all the business development.
And so I, I remember talking to the guy and he was like, Oh my gosh, that's extortion. And I was like, no, no, it's not. And then, then I remember getting in my car going, I mean, like who owns the customer, owns a great deal. And, and by applying sort of best practices from a loyalty and engagement perspective, you own the customer. And that, that was sort of the objective. And that kind of opened my eyes to that. And then once I moved from there, I started seeing, and then I started getting some exposure to point based systems.
And, and then that sort of opened up gamification and, and some other things very easy and appoint based system to get off track.
Sure. Oh, of course. Absolutely.
And I always say in loyalty, like it's very easy to change. It's just very hard to change back. So you've gotta be really careful. Like people go, Oh, how hard would it be to do whatever it's not a problem at all. It's very hard to get out of that. If we're wrong, though, you have to be a little careful.
So how did you end up in Dell and, and, and really, I mean, it's such a different lifestyle and a corporate experience, you know, I mean, what tempted you there and how does it compare?
You know, it's funny. I took the job to be Frank Adele. I didn't, it was a test. I just wanted to see what it was like. And then I found out that I really liked it at the time. I just, I needed something. I needed a break from doing the entrepreneurial bit, you know, having an yeah. And having employees is I can remember we had a technical problem and I had to go and, and visit clients and explain what was happening. And I remember being on the plane thinking I have the, the livelihood of all of the, my employees, families in my hand.
And I had one key employee whose was very excited because their daughter was going off to college. And the weight of that was so great. I don't know if you've never been in that position. You, you may not realize just how all encompassing that is. But I remember being on the plane thinking if I can't deal with this problem successfully, I'm going to have to let some people go. I mean, yes, it's going to impact the finances of my family, but it's going to impact more than, I mean, even more than that. And so that was an experience.
And I, and to be honest, I needed a little bit of a break. I'm sure I can remember when I started at Dell coming out of a meeting with someone saying, Oh boy, that was stressful. You may not be used to that. And I was like, Oh my gosh, that was war with Nerf guns. It's like, there's no stress there. And no one's losing their job. I'm not like if I'm wrong, I don't have to look at someone and say, I'm very sorry, but I, I, I don't, I can't keep you, you know what I mean? Like, nah, it's a whole different discussion. Yeah. It is totally different. And, and solving problems with almost no resources.
You mean like my, the first loyalty platform I put together, it was like, our gamification is the best example someone was saying, well, how do we know this works? And I'm thinking, because I've done millions of entries. And I did them on a system that was like a caveman drawn pictures in the dirt with a stick compared to what's available now. And so, you know, the psychology behind it is strong. I promise you because what I had lacked nuance and to me, it was pretty rough.
So I know you found gamification and I know that's your core passion now in terms of loyalty. So that's the direction I gather. You're going to take the Dell program. So tell me how you got into the game of vacation sided and why is it that you believe that that's, I suppose that the next big thing and the model that's going to be most effective for you?
Yeah, I, you know, it's funny. I gamification for me is it's it does a couple things amazingly well, by leveraging gamefication, you can get members to engage in content more frequently and more deeply than they would otherwise. And you can create a varied reward structure in any type of cash based reward structure. It's been my experience and research shows that that it's an amazing short term driver of behavior, but only for the short term and that it gets more expensive over time.
I'm making it variable. You can extend that. I got into gamification, to be honest with you, because I had a client without naming names or even what the name of my agency was. Cause it was somewhat come back into it, but they had, they had released a cash base reward into a point system and they needed some way to lower the cost of points issued and redeemed. And like I said before, you can't just, you can't like put an Amazon card in there and go, Oh gosh, we shouldn't have done that.
We're going to take it back. Members tend to frown on that. And they express that by going elsewhere. And so I needed a way to sort of relieve that pressure. And so I made a number of changes, but one of the things I did is I actually released entries to games of chance as a redeemable reward option. And so people were redeeming two and $3 worth of points for something that costs 10 cents, 8 cents. And I had done a bunch of research before doing this.
I didn't know to be Frank. I didn't know anything about it. I had the idea of sitting on a plane. And, and so when I got to my hotel that night, I started doing all this research and, and there's a great deal of research out there. And I found this fantastic Dissertation written by, and I've always laughed because dissertation written by a PhD student in behavioral psychology. And I based massive program changes on this dissertation.
And I remember as I was doing it thinking, I don't know what grade she got,
Yeah, this isn't even close to being true. And yet I was basing all of this stuff on, but it was just, it was just such a compelling. She cited all this research going back generations, and I can save that reservation. It's proven to be completely true. The idea behind it was basically this concept of Brussels.
If you take a game entries to a game of chance and you put them in front of you put two entries to two different games of chance in front of somebody and you ask them, what's the better game. They will say the one with the best odds of winning. But if you ask them to put a monetary value on entries to the games of chance, they put the higher monetary value on the game with the greatest, the most appealing grand prize, regardless of lots of money. And I've found that to be amazingly true to the point where the odds of winning are meaningless and beyond a willingness to look at yourself in the mirror the next day.
And so it allowed me a great deal of flexibility in controlling cost controlling, sort of what's there and shaping games based on sort of what's the underlying psychology and how they're going to respond to it. And what was interesting is that the psychology behind it is so great. And, and I'm a big believer in that having people lose, isn't a bad thing, but a lot of people will have a few talk to people about a game of chance. They have a heart attack.
Well, Oh my gosh. What about the people who lose? Are they going to be mad? No, no, exactly, exactly. And so the, the difference for me is it's that engagement, it's that sort of interacting with that, that content that allows them to be more fully engaged in what's there, you know, if you send an email out with content, we all do it, right? Like it's the subject line and maybe, and I, and I made the first Sam a bit cynical on a lot of this, largely because it's not my area of expertise, therefore, but it was the game.
I mean, I sent out a change in terms of conditions embedded in, in the game. And I had tens of thousands of people play the game, Gates content and answer questions about program terms and conditions on the backside. They would never have done that. If I'd sent that in an email, people would have thought I was crazy, but in indicating game, no one even, and my reward mix was, I mean, it was so small, but as a matter of sport, people engaged and they were happy.
So what do you think is the key success factor then in gamification? Like, is it the big dream, you know, as you said, that reward mix and just getting one big prize, is it about the visual design of the game and how easy it is to understand, or tell us a bit about how, how you would design something like that?
It's interesting to me is it's definitely about the instant gratification. If you look at a sweepstakes, I don't consider sweepstakes to be sort of viable gamification because I described sweepstakes as it's like a casino that has a blackjack table or a roulette table. For those of you who aren't gamblers, you know, you drop the ball and spend some lands on them. It's like you walked up through roulette table and you said, listen, here's a hundred dollars, put it on red. And then you went up to your room and you may or may not have one.
And if you didn't, no one will ever talk to you again. And you'll never hear about it, not a very engaging game and not one you're going to play very frequently. It's a difference between that and then spinning the wheel. You watch the ball drop and see whether you one right there. If that's the case, then we're willing to do that over and over and over again. One of the things that stunned me about gamification is that people will engage it over and over again. I'll never forget. We had one person redeemed, $3 worth of points to play one of the games 67 times in a month.
Wow. My first thought was, my first thought was, Oh my gosh, we had a technical issue. And we just drain points out of this poor guy's account by that. No, there's no tactical issue. This guy did a willingly. I'm like, okay, well then let's call this guy and figure out sort of what the, no, he's totally fine with the experience. And the interesting thing is for $3, I mean, he could have redeemed for most of the prizes in the game anyway. And that kind of keyed me into sort how strong the psychology is on that.
It just allows me to sort of breadcrumb behavior through a larger ecosystem because my cost for people will do so much more for an entry to a game, the costs you pennies than they will for a $4 reward, $5 reward. And, and so it allows me to solve problems at scale move members through sort of complex decision trees, you know, identify points in the customer experience where people stall out and give it a little boost to get them through to the next level, to get them to engage in content that they wouldn't have.
Otherwise it's fantastic for training, but to be clear, it is a tool in a larger program as opposed to a program in, and of it self. Sure. You know what I mean? Like you can overdo it, you can take it too far. It can become too frequent. And the psychology behind it. It's a bit binary in that, in my experience for those it engages, Oh my gosh was engaged. I mean, it can engage them to a frightening degree for some people.
It doesn't really resonate with them. So you have to be a little, a little careful anyway, that's, that's been my, I'm a huge proponent of it and I, and I use it all the time, but, but definitely as one piece of a larger puzzle. Yeah. Yeah. But what's interesting. What I think most people don't realize is they think of it as the psychology behind it to be like computer gaming. And it's a little less of that.
And more obviously that's not probably the best way to put a button, but it's more akin to gambling then. And if you think about the, if you walk into a casino in any casino in the world, you see sort of a pretty broad based cross section across ethnicity, gender, everything. And so it has a really broad based appeal. And that helps.
Exactly. Yes. So it is personality. It's not a particular income or rock or anything else or demographic it's it's very much. Yeah. Yeah. Because for example, I went to Vegas and I was bored out of my tree. I was just like, when can I get out of here? I mean, literally does it appeal to me?
Yeah. It's funny too. Cause I'm a huge proponent of gamification and I'm not someone who gamble in Vegas. We've all. If you, if you do any business in the U S and you go to any conference you you're in and out of Vegas somewhat frequently. And I remember I was just walking up to my room and I don't normally carry cash, but I had 20 bucks. I stopped at a, at a blackjack table, played like four or $5 hands or something, lost my money in about 30 seconds. And I remember getting in the elevator going. That was so exactly.
Yeah, exactly like that did absolutely nothing for me that could have. Yeah. I just spent that money in almost any other way and gotten a better outcome, but for some pretty strong, sorry.
Totally. But no, what I really like about what you're saying though, is its relevance, particularly in industries that have a very tight margins and I've seen, you know, gamification working super well, particularly in fuel retail programs. And I mentioned one in Ireland, for example, coal player park, which was an extraordinary program. So, and that's clearly what's happening in Dallas as well. You know, you're moving in the direction of engagement when literally the margins are tight.
Also too. I think that's absolutely true. But also too, we live at we're, we're entering this sort of big data world where we all have access to so much more data and we can apply machine learning to it and take much more nuanced looks at at the customer journey. And so we can identify non transactional behaviors that are incredibly valuable, could incredible indicators of potential value or drivers of number value that are too far removed from the transaction to directly reward at a level that would actually drive the behavior.
And gamefication allows you to lean on that, that behavior in a way that's economically viable. You know, if I know that you updating your profile within the first 30 days, for instance of signup, it makes you more likely to be engaged at a year. I can't really, I can't, it's unlikely. I should say that I can reward you at a level. That's gonna make you do that.
But the using gamification, I can sort of lead you through that and do that in a way that's economically viable.
Okay. And there is still, I guess, then a value exchange as well. Whereas at least I get the fun to go. Okay, cool. That was, that was really good fun. And I like this brand more so there's kind of a halo effect and you get the data that you need without any investment.
Absolutely. And it's funny Mo that's exactly the way I describe it too. That's why I started kind of smiling. Yeah. There's there is a value exchange and for people who don't, they, they look on the go, it's just a silly little game. You have any idea how much time the average person spends on their phone doing some there's a value to it and if structured correctly. And so one of the things that I always do is, is I go through sort of a set when I'm working with, with stakeholders to build a game, always starting with the objective, because sometimes it's just for it to be fun, we'll do that in our and our gaming community.
Right. Sounds like there's no value to them other than it's just sort of fun. And it's a way for them to interact with a brand that's positive, it's not earth shattering, curing cancer or selling computers. Right. I think at the end of the day, sometimes it's just being fun is okay. And yeah, sometimes I want them to engage content. Sometimes it, you know what I mean? Like there is even for the losers, there's a value exchange and we see an increase in positive outcomes, even from those who lose. But, Oh my gosh, did I have to document that?
Because I'm sure people were very, and I always say to you, if everybody wins, did anybody do you mean if I play a game and I won, but everyone else did as well. It's not the same charge as if somebody lost. I mean, that sounds terrible. And you think, gosh, are we really that bad? But yeah, we're a competitive species, Mitch. There is absolutely no dash.
Yeah. And you know, it's funny, one of the first books I read on gamification, they talked about sort of that competitive drive and they always talked about the, one of the, I just don't always remember this because I'm a avid recreational tennis player and I want to stress avid as opposed to accomplished or good, but I am habits. And that's one of the key indicators of some reason. Tennis is one of the key indicators of a competitive personality. Really. Yeah. I always thought that was somewhat interesting, but anyway, totally, totally off topic, but yes, we're all competitive.
And so for it to be really effective, you need to have, in my opinion, you need to have losers in my experience, I should say. Yes. And so there are times when I'll set up a game and everybody wins. And then to be honest with you, my objective is to issue the rewards. I'm just layering in the game to get them to gain a little bit of content and to create some breakage, to make them take a step towards me before I give them something in return. Sure. But the reality is I'm not my objective, isn't brand engagement. I'm trying to give you a transactional reward and I'm gonna follow up with, I have a marketing plan for how I'm going to follow that up.
And I'm going to, I want to issue rewards in a broad based way. And I want to get you to take a step towards me so I don't have to issue quite, I don't have quite the liability out there. And so that's the one time I won't have winners or excuse me, I won't have losers, but for the most part, I like having losers start a little bit more engaging.
Yeah, no, I totally get it Mitch. But what, what kind of resistance internally would you expect? So again, thank you about people listening to the show and who may not have considered gamification as a strategy previously, you've mentioned the casino piece. And I think there's sometimes a bit of nervousness. Obviously legality has to be checked every country's got its own, you know, ins and outs and complexity, but what, you know, just from a purely strategic perspective, what should they be thinking about in terms of a gamification loyalty strategy?
It is a way for you to the way I sold it internally was that you tell me what you want more of and I'll get it for you and I'll do it cheaply. And I'll do it in a way that, that people will enjoy, which sounds strange, but getting someone to interact with your brand in a way that they enjoy is a win in and of itself, that's the value exchange. And so that's kind of how I sold it internally. And I, I walked people through sort of a waterfall.
This is how many people would like send out an email for instance, right? This is the waterfall would expect this open rate, this, this game engagement rate we would expect. And it was very interesting, you know, to watch people sort of have their eyes open to sort of the possibilities. But even at that, they, they allowed me to test it. And that's one of things I like about Dell. They'll allow you to test it. And I'm a big believer in and testing ideas and concepts. Because if, if, and I even say, listen to, to be innovative, you have to be willing to fail.
And so you needed to structure tests in a way that give you a way to back out. And so when I first started testing gamification, I did it in our game. Community, not gamers are actually the worst audience for it. So it was not that interesting. Yeah. They're not the game. Cause they were like, Hey, I did really well in this game. I don't understand why I didn't get more rewards. Like it's a game of chance.
Yes. Yeah, they're too well-educated.
Oh exactly. I know they had much higher expectations for the graphics for the game and everything. Wow. I tested it in a way that I could back out of. I didn't get the outcome I wanted. And so I just, I have slowly sort of pushed it out into more and more parts of the business. And as we sort of evolve the program, it will, it will play a larger role in how we collect data and how we, because one of the things to remember about gamification is it allows you to ask something in return for giving them a reward.
I asked you to opt in. I asked you to answer to question, you know, we all have marketing programs based on predictive models, those predictive models, hinge on a handful of data points. This allows you to collect meaningful data at scale, the one challenge I would, the one for visa, I would say, and this isn't just me. I hate when someone asks me for a data point and then they don't use it. If you ask me for a data point, I want it to shape the customer experience. I want to shape how the brand interacts with me.
And so that's the one thing with gamification is that it's so easy to collect data the time you're collecting data, just because you can. And then the customer's like, well, I already told you that.
Exactly. Yeah. Yeah. You're not listening.
So it allows you to too. And that's one of the dangers. It is that you can sort of collect more data than you can use. And that's easy in today's world. It's much easier. We all, I think probably know more about our customers than we can actually act on it.
Absolutely. And like I said earlier, actually, Mitch, you know, is in the same way that I'm a difficult customer in retail. If loyalty comes up as a subject, cause I'll never am ask about it. And I'm also am on my birthday, very challenging to the brands that I'm a member of their loyalty program. Cause I'm sitting, waiting for something to happen. Usually I tell them, I don't know, it's like Jesus is my birthday and I get a little kiss on the cheek here. Come on, give me some.
Exactly, you know, the, the it's funny, you know, the, the challenge with being in, in loyalty is that you do have sort of weird. Like I will go through a game in excruciating detail making observations as I go to my wife's dismay. I'm sure about what's there and how they structured it. Why they shouldn't have done it this way or why they should have done it that way or, Oh my gosh, I really liked this. I never thought of doing it this way. Yeah. And yeah, so I never have an organic reaction to anything.
My reaction is always tend to like, will this make me look smarter if I could totally copied it? And I, and I'm so willing to do that by the way. So completely. Yeah, there is no, none of us need to be the ones that solve all problems, right? Like somebody else has had a great idea and all are part of it is probably applicable to what you're doing.
And there's a great phrase actually, which I really use regularly now. And it comes through and I told you, I'd do a lot of work in, in fuel loyalty and it's, it's literally copy with pride. And that is the way that entire industry approaches sharing of knowledge, sharing of ideas. And I just think it's extraordinary because again, I probably would have been a little bit guilty in the back kind of, you know, in the past to go, okay, maybe this is a my concept and whatever, but now I'm like, no copy with pride. We go, here we go.
It's funny as I've gone through my career, I, I will ask somebody to send something to me and I will be completely transparent. Could you send that to me? Cause I'm going to totally plagiarize the crap out of that. Absolutely love that. And I'm going to take it and yeah, a guy in my, on my team made this comment one time and it was just so obvious, but I hadn't thought of it in that way. And it was just, I just it's totally changed how I think about transactional rewards. And he was just like, it's demand. And I now envision transactional rewards as, as demand.
But as a, this is gonna sound really strange. But as the fluid, the fluid that I can direct around an ecosystem. So I can time when it gets to a certain point, I can time what points it touches and what point it doesn't. And at first I gave him credit for that. And I now give him that time, like, listen, I'd run out of wasted to say, Hey, you're one that had this idea. It's now mine. Yeah. So just FYI and I use it all the time. So five years from now, if this, yeah, I could write a book and no one knew you existed.
Absolutely. But I'm curious, Mitch, in terms of KPIs within Dell, you know, running the loyalty for such a big global brand, what is it that you add that you measure that you am actively managed? I guess, because clearly, as you said, you can do all sorts of things. What is it that keeps you awake at night? And that you're really focused on driving.
I'm a huge believer in objectives. And I started almost any discussion about loyalty with the objectives, right? Customer value and customer retention. And I get asked to do all of these things. I get asked. We know when we have to report out outcomes or someone tries to direct us in a certain area. I always come back to that. Listen, I'm looking to drive longterm value and retention.
If what you're asking me to do is outside of those, we could conceivably do that, but it's not something that we're currently pushing. And we get asked that we're a large organization with a ton of teams. And so you knew you get someone that wants to know, like what percentage of your members do what I, you know, something like that. And I always have to say, listen, that doesn't dovetail with our objectives. It's not something we're trying to drive so I can give you the number, but it's just a number it'll go up or down based on things that are completely outside of the loyalty program.
And when I first started at Dell, it was interesting. You know, I had, I had run large point-based systems previously and the people that were running the program had, and they'd asked me for some numbers and I remember giving it to him and saying, listen, that I don't know you, but just take this piece of advice. You don't control any of those numbers. So they're good today. They're good. They're good. Because your organization as a whole is driving those numbers, do not claim these numbers, States them as numbers because the business will shift.
That number is going to go South and they're going to go, Hey, why, you know, what happened? What are you doing? And, and so, you know, you had to be a little careful in the large, large organization and that, you know, the KPIs are strange. So I, I, we have a very small set of what I would call a KPI. And then we have a ton of metrics that we use as sort of performance measurements that give us insight into what's happening.
But they're not a KPI. They're just, it's a number that tells us something about the program or it's time not to. Exactly. Exactly. And some of them are ones we don't even control, but it's just good to know. It gives you insight into what's happening in the business as a whole.
Wow. Okay. Well, I mean, I actually, can I ask Mitch M just occurred to me, how big is the team that runs loyalty for Dell? So how many are you managing? I guess directly.
We have loyalty is to think here five people.
My goodness. That's tiny. Yeah.
We met with, we met with another brand through Epsilon and it was like a clown car. I mean, they just a conference room door open and they just, they kept coming in and I was like, Oh my gosh, like they're so much bigger than ours. Wow. And I remember when I had my agency, they, one of the clients was like, Oh, I need to talk to the person who does this. Okay. And then I need to, you know, by the time he's done, he's like, wait, you're doing all of that. Yes, of course.
There's we have five employees. Yes. I'm the one that's going to do all of those things and that, and Dell's a little bit that way as well. We don't have very many people touching it. Now. Obviously we leverage a bunch of other teams and all of that. So if we need to do creative, we need to, but the actual loyalty team is, is, yeah. That's why people, wow, I will do this. They are good. It's a very high quality team and they do amazing work.
And indeed that is totally reflective of anyone I've ever met with Dell. And I'm not just saying that because you're on the call, Mitch. But as I said, I've had lots of friends work for Dell in Ireland. There's a huge center there that manages the UK as well as Ireland. And even actually I've worked in recruitment over the years and anyone who's come from Dell, Jill seems to be super sharp. So it's a credit to the company. Actually. I always like to know there's very few companies that I would genuinely say, actually, that's a really good pedigree to have. So there you go. You've, you've got a very good pedigree in my humble opinion.
I was due because prior to Dell, my pedigree was a bunch of companies. No one had ever heard of. So yeah. One of the interesting things that Dell is, is yeah, we do. Dell has an internship program where we do both undergraduate and graduate interns. And so we'll bring in really smart people coming out of college, very, very smart people. And they will be assigned a project. And then they will have to they'll have like five or six weeks to do this project. And then they present it to senior managers, senior executives.
I had a, it's an amazingly valued group at Dell. And it's this amazing source of innovation because they're giving really widely way to, to redefine their, their problems, their, their questions do all this research. There's an expectation. The one time I've been in trouble with Dell is cause no one explained to me how important the internship program was. And I was really busy and this intern was like, Hey, I need this, this data. I'm taking me a day. I'm like, no, I don't have time to do that. I'm sorry.
And I moved on with my life. Only the weight of the world fell on me. And I was like, Oh my gosh is like Michael. Dell's like personal project. Yeah.
And they're like, no, no, no, no, no. Someone had to pull me aside and go, no, no, no, no. It's the intern. The internship program is incredibly valuable a Dell. And they, they use it as a way of, of fostering innovation and identifying talent. But yeah, I totally restructured the consumer loyalty program in the U S based on an intern project. My goodness. And he was absolutely right. Yeah. I mean, it was astounding to me how right he was, but that's one of the things I like about Dell is that it values people at all.
The organization values people at all levels. And so you get a lot of talent because even if you are a fairly junior person, your point of view is, is for the most part, heard more than I would have expected. And so you see some dramatic changes coming from some interesting places. Yeah. That's that makes for a, I think a much more dynamic, they still work.
I think you get more innovation and, and you can recruit better talent.
Yeah. And as you said earlier, as well mentioned, fact, like we're all so busy doing our day jobs that we just don't have the time to necessarily be creative and innovative. So you kind of need to be challenged externally. And whether that's the intern or the guys at Epsilon, I know you lean on them as well. So it really is important just to have people that you can kind of go give me an idea here. Cause you know, I need something new.
Yeah. We have, we have a couple interns doing a project this summer and it touches one part of the loyalty program and they were, they were kind of careful in their initial conversation with me. I think they worried about stepping on my toes and I'm like, listen, I'm praying for you. You guys are two geniuses. And because it doesn't matter, you have to understand it. Doesn't have you come up with something amazing that I've never thought of. Yeah. That's a win for me. I don't fantastic. Who has the idea?
It means nothing to me. And I'm like, besides I'm just going to steal it anyway. Don't worry about it. But no, it's interesting. You know, I mean, they are all over the loyalty program. I'm talking to a lot of the same people and Dell's a huge organization. Sometimes the hardest thing to Dallas, just knowing who to, like, I remember one time we had a problem with the flow of points and it was some decision made somewhere in it. The hardest thing was finding out who made it. I mean, Dell, is it 15,000 people at the times?
The biggest challenge is just knowing who to talk to.
Yeah. I'm hearing though, is that loyalty is very well respected in Dal. Am I right?
Yes it is. It's getting, it's getting even more. So I think people are seeing the value of loyalty outcome and I'm a big believer in that. My objective is our loyalty outcomes, whether that comes as the result of a structured program or something a little less fenced in is a different question, but without question and even more so moving forward, Dell values loyalty for all the obvious reasons, right?
It's incredibly expensive to get a new customer, all that kind of stuff, but it's, it's taken a little bit, but it's also expensive to run a loyalty program. So I think that's where the M the internal justification isn't always, and, and I heard you hesitate there, Micha, you know, and I hear that that's what's happening is that there's an amazing awareness of the outcomes being attributable to the work that's being done. And that does take time, but does it again, it's a credit to you and it's a credit to them, like, you know, and, and hopeful for the future.
For all of us, we've had to use. I started when I took over the program in the U S I started reporting out grudgingly at first, to be honest with you, it wasn't part of like my master plan to solve this problem. I just find that to put the thumb on me said, Hey, we need to see these numbers weekly. And I'm like, Oh my gosh. Like, I do not want to have conversations about weekly changes in redemption rates and all that kind of stuff. Like it's, yeah. It's just, it's so overly complex.
And in you and anyone who's, who's run up large points based systems, those conversations where someone will make a statement and you're like, they're like, is that true? Like ish kind of, it's like, kind of true, but what we've done is sort of report out with Epsilon's help. They've helped us sort of clean up the views of the program and get a more refined look at the flow of points and tie the flow of points to outcomes.
And that's helped us and ended get the company, the, the business to take a step back. Cause one of the challenges I think we all have is that the benefits of a loyalty program play out over time. And that time is rarely consistent with how the larger business views its own performance. And so they're saying, they're asking you for performance metrics within a time period where you're like, it doesn't look like without going into great detail. If, if for our current loyalty program, if we look at an active buyer we're not driving biggest value of the program is not that I'm driving value in an active buyer.
I'm keeping the active buyer for far longer period of time. And so the same value over a short period of time experienced over that same increment, many times over that of a nonmember. And it took a little bit to sort of educate the business that that's the form the value would take. And to do that in a way that was simple enough. I mean, if you talk to somebody who's senior, you, you have no time.
You, you have exactly. I always say it's like the big red crayon, right? You have to communicate concepts with a big red crown. Now at Dell, Dell has incredibly smart people. So it's, it's interesting, you know, you'll, do you report out something or you you'll present to somebody very, very senior at Dell and you will have one or two slides and then 50 backups based on, on how you answered their questions and you better know your numbers because they, I always laugh. I mean, they can sense fear and weakness, right?
Like if you have one number you're a little squishy on no, put it in there because you'll find yourself in a long, drawn out conversation about the one number you didn't want to talk about. And so it's funny, you know, the, the loyalty Adele is, is going to be an evermore expensive part of the business. And I'm excited to see the form that, that takes. And we're still early in the process. We're defining what that is going to look like. But when I'm excited about is organizationally, we are dealing with all the things we want to deal with.
How do we, how do we deal with the data? That's that lots of programs throw off a ton of data. How do we make certain throwing off the right data? And how are we managing that? How do we using this to shape the customer experience across the entire breadth of the business? And then you have to understand with Dell, we are global and we deal with everyone buying a tablet for streaming movies at home to a federal government buying mainframe computers, right? Like we were so broad.
Yeah. And so we have to have a system that is incredibly fluid that has sort of a rigid sort of exoskeleton. And then all of this flexibility on the inside that allows us to localize by region and by, by customer group and all of that, because the, just the margin rate between a consumer and you know what I mean? Like it's not even the same world. And yet we still have customers that sort of migrate up through that.
Now we don't have consumers, all of a sudden owning a banana Republic in there, but they migrate up into SB and all of that.
But it's, I can just imagine the complexity actually, of, of sourcing the platform originally, like when you did go and start working with that salon, like, like how could you even foresee the requirements for a company like Dell? Like, I mean, that's the extraordinary part in my mind in looking at the, the new structure. I mean, I'm a big believer because I've been on the other side of that conversation as well. Right. I'm pretty confident if I go to Epsilon and I say, listen, that I come up with the craziest thing you could possibly think of. Can you do that? The answer is not, it's not a question of yes or no. It's a question of how big the check is I have to write. And then I'm, I'm, that's what I want. And I mean, it's not to start with, that's what I want. Epsilon has been a great help in that they are a good sounding board for yeah.
Sort of directions. We need to take. Anything you do in the modern world obviously has rides on support system of technology. And so I needed a partner that would work with us, has the flexibility to sort of step back at times. And they've been good at that and saying, listen, I don't care what your system does currently. I don't care what we are doing currently. This is the problem I'm trying to solve. Let's find a way to do that.
And they're very good at stepping back. And then once we identify that, then trying to apply their, their technology to that solution. And the times we'll adjust sort of how we're going to go do something based on what's more easily done, but I've, I've found that that's the best way to be innovative, right? Like don't, don't worry about all the constraints, find the solution and then apply the resources to it.
Amazing, amazing Mitch. The last thing I wanted to ask you about is, is really just, I suppose, more on the education side, I know you confess to being an avid reader slash cigar smoker. I'm not sure which, which we want to highlight.
Yeah. Which is causal in, which is—
Exactly. But, but clearly you're very well read. Clearly you have a real passion for loyalty. I'm sure you have great fun in the office. And I'm sure there is plenty of stress along the way, but just in terms of, again, listeners, you know, if they're looking to grow their knowledge about loyalty, what would you suggest they be doing in terms of educating themselves?
It's funny, you know, I'm a huge believer in the psychology behind rewards. I believe that if you understand that, then you, you can sort of innovate based on foundational truths that remain unchanged over time. One of the hard things about how people interact with rewards, well, two things, one, the minute you insert any rewards into any system, you've changed it. Yeah. And so you have to sort of have some awareness of, to what impact that's going to happen.
The second is people are full of crap, right? Like if I, if I ask you what you want, what you tell me is not what actually drives your behavior. And so too often, like I'll have people in the organization come to me and they say, Hey, I want to do this. I want to pay out rewards to do this and for this behavior to get this outcome. And I'm like, it's not going to have the cap. It's not going to do what you think it's going to do.
You know, there's either unintended consequences or that's just not how it works. And so I would strongly advocate, like one of the first books I read is a book called drive and it talks in there about cash based system. And it's theirs. It was just the first one I read. And so it's kind of, kind of a positive place in my heart from it. Okay. I read, I skim fast. Like if I'm reading something and I go, ah, okay, I'll move on.
I'll blow right through. I don't like try to get weighted down with some esoteric discussion of something that I, I know I'll never use. And so I will go through books fairly quickly, but, but for me, anyway, my journey started with a book drive by Daniel pink. There was this, it was gonna sound really interesting, but there was one study in there. And I don't know why. I just, even all these years later, it just so resonates with me. But they went to a preschool and they had the measured, how many pictures kids were drawing.
They put out on a table, paper and crayons, and then just kind of, we pitched people and they divided the kids into two groups and one group got a cookie or something for every picture they drew and the other one got nothing. And the groups that got nothing continued on at the same rate and the one that got a cookie do more pictures in the short term. And then eventually it took two cookies to get them to draw more pictures. And he took away the cookies in dry, any pictures.
And I can, I've used that. It sounds great. There's a, there's a foundational truth there. And it's, and it's absolutely accurate in my experience. And so I've had that conversation where for part of the business, they said, Hey, we want to, you know, for budgetary reasons, we don't wanna pay rewards on this anymore. I'm like, okay, that's fine. But please understand you, you, aren't going to go back to the baseline. You're going to go below the baseline. That's what happens when you start paying a reward out on something. And I use that explanation when people want to start paying rewards out, transactional rewards out on something new.
I'm like, listen, that's great. We can do that. You will give more of it, but please understand there is a predictable cycle to this and it holds true. Anytime you release rewards out into that, if anybody has anybody listening has a book or any content like that, please let me know. I, I, Paula has sent me some stuff and I've started to devour it. Wonderful. It's actually hard on my, I just spent a week off and I had made myself read something else.
But yeah. But yeah, I I'm, there's so much great work out there and I sort of find it just in this endlessly. Fascinating.
And actually, Mitch, have you heard of a gentle by that gentleman by the name of Ukiah Cho from Stanford university, he lectures and gamification there. No. Okay. So I am going to make your day hopefully, but yeah,
I'm writing it down to three streets,
You know, and I, I won't do, Oh, I know what he calls it. framework. He has literally captured what you've been describing Mitch in terms of the drivers of human psychology and human behavior. And I totally agree with your point, if I was to go back and redo my career, I'd probably start with a degree in psychology. And in fact, I might do one at some other point. I just think it's so fun.
It's definitely, I'm the same way. I'm the same way. If I could go back in time, they would be a behavioral psychology and economics. Yeah. To me. Yeah. Because the interplay between we all want to be rational. Yes. I didn't. And, but we're not. Yeah. We're just not totally. No, no, no. And so I love the fact that, that if I ask a group of people a question, the answer I get is what they wish to be true rather than what's actually none of them actually like, actually it's not them. It's us. Yeah. You're totally right.
Well, no, no, exactly. I'm not. I'm excluding to say I am no better. Right, right. I like to think I'm self aware, but the reality is yeah, no, no, No brilliant. So I will link to that when I've remembered, it's called actionable gamification. So I'll make sure to link to that in the show notes and the book that you mentioned also drive as well. Mitch. I'll definitely link to that and I don't have any more questions from my side. I have loved hearing about all of your work in Dell and your career and your insights. Is there anything else you wanted to mention Mitch before we wrap up?
No. Other than, like I said, if anyone has any content out there, please send it, sends it over. I would love to see it.
Okay. Brilliant. Well, listen, obviously I'll make sure to link to your LinkedIn profile as well, Mitch. And just to make sure that people can connect with you because I do believe in the power of sharing. So you're absolutely right. The resources we all need to, to recommend them to, with each other. So listen, without further ado, I know you have a busy week to get back to so Mitch Kennedy from Dell loyalty, thank you so much. Let's talk loyalty. This show is sponsored by “The Wise Marketer”, the world's most popular source of loyalty marketing news, insights and research.
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