Beyond Discounts: The New Era Of Customer Loyalty — Jed Strong | Why Loyalty Programs Fail, Why Loyalty Goes Beyond Discounts, How To Reward Without Discounts, How Games Drive Loyalty, How Engagement Drives Growth, Why Engagement Boosts LTV (#457)

In this episode, we explore how to fix loyalty programs that rely too much on discounts. 

Jed Strong, the Enterprise Sales Director at Adjoe, explains how brands can move past simple transactions. He shares how "rewarded engagement" allows customers to earn points by playing mobile games instead of just spending money.

Jed breaks down how this strategy helps brands stay relevant every day without hurting their profit margins. He also discusses why modern loyalty needs to be fun and how to build a deeper connection with customers through their phones.

Topics discussed in this episode:  

• Why traditional loyalty programs often fail 
• How to stay top-of-mind between purchases
• How rewarded engagement builds durable bonds 
• What makes points-earning feel too difficult 
• How mobile games fuel new loyalty habits 
• Why game studios fund your customer rewards 
• Why over-discounting hurts your bottom line 
  
  

Links & Resources 

Website: https://adjoe.io/
LinkedIn: https://www.linkedin.com/in/jedstrong/
Instagram: https://www.instagram.com/adjoe.io/

Get access to more free resources by visiting the show notes at

https://tinyurl.com/szue9yy3

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Transcript

00:00:00:00 - 00:00:25:05
Unknown
Hello and welcome to another episode of the E-commerce Coffee Break podcast. Today we're diving into a big topic how to reinvent customer loyalty beyond discounts. Loyalty on simple coins, discounts, rewards. But in reality, it's broken. Customers sign up for dozens of programs and barely used them. So here's to real questions How do you build loyalty that works even when customers aren't buying?

00:00:25:07 - 00:00:45:15
Unknown
To break this down, I'm joined by Jed Strong. He is the enterprise sales director at Chew, where he helps brands drive real engagement and long term loyalty. Before adjoe, he helped scale playback rewards and co-founded a venture backed loyalty startup. You also work with brands like Visa, Xbox and PlayStation. You have a lot to cover. Jed, welcome to the show.

00:00:45:19 - 00:01:06:06
Unknown
Thanks so much for having me. Let's dive into it. Why do most loyalty programs start off wrong or start strong and then stop working completely? Yeah, I think that's a great question, and I think it's really rooted kind of in the history of loyalty programs, right. Which is most merchants, retailers, brand leaders, they are looking to reward for purchases.

00:01:06:06 - 00:01:37:15
Unknown
And that makes complete sense within the context of driving their business forward and their PMO. And there's clear signal there you can reward very clearly and plainly for a transaction. I think what has really evolved over the last couple of years is that first, I think we can agree we've reached a tipping point in promotional saturation, right? And you are training your customers to act in a certain way or expect certain things that might ultimately not benefit your bottom line.

00:01:37:15 - 00:02:01:01
Unknown
It might benefit the top line, but not so much the bottom line. And then, of course, there's the notion of this relationship is very transactional. It is 1 to 1 rewarding a purchase and getting points or some other kind of reward for a purchase. That's all fair and well. But I think as we look forward, particularly for ecommerce leaders, it's how do you create a deeper and more durable relationship with your customer?

00:02:01:03 - 00:02:28:07
Unknown
And so I think what's beautiful now is there's really been a step change in the ability to accurately track and reward actions beyond purchases and what that's enabled is leading brands are shifting towards rewarded engagement, right? Rewarding time and attention and micro actions to stay relevant between transactions and avoid, quite frankly, over discounting. And that's one of the ways Ajo comes in, right?

00:02:28:08 - 00:02:56:03
Unknown
Our primary product is Arcade, and we're able to reward engagement and rather than spend so that brands can really create these kind of habitual touch points with customers without eroding their margin. Okay, let me cut in there. But was interesting. You mentioned a couple of very important things there for our listeners. First of all, you train your customer for a certain way of to achieve discounts or get a loyalty points or whatever is behind your loyalty program.

00:02:56:03 - 00:03:21:09
Unknown
And obviously there's everyone is doing basically the same. So you're not really standing out in the market. It's just like the same all over again. And people might just be annoyed or just not using it. What frustrates customers the most when it comes to really classic loyalty programs and apps? It is the classic, I'd say, balance between earn and burn right?

00:03:21:11 - 00:03:47:04
Unknown
And from what I see in the market and talking to leaders, not just within the context of e-commerce, but whether it's brands like McDonald's, whether it's airlines like Delta, etc.. Right. Is that there is a general frustration from their customers with respect to their ability to earn at scale, quite frankly, the difficulty in achieving a meaningful earn in points.

00:03:47:04 - 00:04:09:18
Unknown
And if you're using airlines as the example. Right. There's only so many of us that take enough flights per year to really generate meaningful rewards or miles. And so you're just never kind of quote unquote, reaching scale as an end user with your rewards. Or if you are on the other side of the ledger, there is the quote unquote, burn side of the ledger right.

00:04:09:20 - 00:04:33:01
Unknown
Are you able to redeem those points for something that is meaningful to you? And that is the other evolution within the space. And what I see in the market as well is brands that are looking not only to solve for their customers earning power and give them more ways to curb, but give them more meaningful ways to use their points that might not have historically been directly tied to their core product or value product.

00:04:33:03 - 00:04:59:00
Unknown
Right. So airlines, how do we expand that? You know, you look at a partnership like United and Left, right. How do we create a partnership where there's now new ways to earn by linking the programs together? And then you, as the end customer, can therefore decide I can use my mileageplus miles for my Lyft rides and my Lyft points for potential flights downstream, makes perfect sense.

00:04:59:02 - 00:05:24:05
Unknown
I smile because airlines I'm the worst example of that. I have traveled for the last eight years. Basically, I'm a digital nomads. So many airlines. Every time I want to have reward points, it's on a different carrier. It's a different thing. So I never really can use them. And that creates frustration. And I have some very favorite airlines where I would be more in contact with them that will bring me to the next thing.

00:05:24:07 - 00:05:56:04
Unknown
But I do not really have a reason if I'm not buying a ticket from them. Now, you mentioned reward for engagement. In simple terms, what does that mean? Yeah, absolutely. In this can really take a variety of forms, but I think I'll ground this in the context of what we do at Ajo. Right. And at a high level, you can think of Ajo and really a platform that we call our Cade as a rewarded engagement layer that sits between a brand's app or a merchant's built in loyalty experience on web, right?

00:05:56:06 - 00:06:32:10
Unknown
So instead of asking customers to buy something to earn value, customers can earn rewards for engaging with. In the case of Ajo, an arcade playing their favorite mobile games. So think major titles like Candy Crush, Monopoly, go, and quite frankly, thousands more. Then they're playing only for a few minutes at a time. They're completing event milestones within these games, things like that, and they're earning rewards for that behavior and I think what's important about how that economics are, how the economics flow out for our partners.

00:06:32:10 - 00:06:58:05
Unknown
So again, whether it's a QSR like McDonald's, whether it's an airline like United Right, is the rewards aren't funded by the merchant themselves. They're actually funded by the mobile game studios who are paying for that engagement. So the brand or the merchant in this case is deciding how much of that rewarded value to share with their customers as rewards and also how much they want to keep for themselves.

00:06:58:06 - 00:07:20:21
Unknown
So you're not training customers to wait for a sale, but you're also not eating into your margins. So in many cases, what you'll see and this is starting to happen with reward at engagement, which is this is not only a new product value prop that you're bringing into your platform as an e-commerce leader, etc., but you're actually generating incremental revenue while giving customers.

00:07:20:21 - 00:07:45:16
Unknown
That's fun to engage with. I like this approach because a lot of people are playing games and permanent in context, but not with your brand. Now this gives it a way to show your brand while they're doing something very different. Talk me through about how does my brand come into the game. I mean, obviously that's the main thing that brands want to have there must be some AI in the background.

00:07:45:18 - 00:08:11:07
Unknown
How does that work? Yeah, absolutely. Yeah, there's there's there's a lot we can unpack there. We'll start with how your brand kind of comes to life within the context of Arcade, right? And for Ajo, Arcade is a white label solution. So if you're again using an example like McDonald's, right, by partnering with Ajo, you will create within your app the McDonald's Arcade.

00:08:11:09 - 00:08:33:12
Unknown
And it is a fully branded McDonald's experience that's creating this very much own kind of mobile gaming hub within your app or website. And so what that then launches is you have dozens of titles that are service to the end user and it's very clear to the end user what rewards they're able to earn for playing each game.

00:08:33:16 - 00:09:02:00
Unknown
And so they can decide not only what to play by what game appeals to them. Of course, from maybe a genre perspective or otherwise, whether it's a puzzle title or a strategy title, but also they clearly understand upfront before they decide to play what their earning opportunities are. And I think it's really clear to reinforce that when these rewards are surfaced to them, in the case of this example being McDonald's, it's it's McDonald's points, right?

00:09:02:01 - 00:09:25:08
Unknown
This is integrated directly into their core loyalty system in rewards ledger. It's not a competing ledger, so to speak. But then the user experience when you ultimately through the McDonald's arcade, select a game like Monopoly, go if you are an iPhone user, this leads you right to the App Store as it would otherwise, as if you were going to play that game.

00:09:25:10 - 00:09:59:11
Unknown
And then once you download that title, you're able to start earning those rewards that I mentioned previously. But the magic behind it for our partners is that through our technology, as you're playing that game, as the end user, you're going to be surfaced, whether it's push notifications, toast notifications, etc. when you have earned that is McDonald's points that redirects you ultimately back into the McDonald's app to then collect those points, etc. and then ultimately use them on perhaps your next Egg McMuffin, etc..

00:09:59:12 - 00:10:23:01
Unknown
Right. Or drive you to the store as a result. Right. So that's kind of the user experience and the magic behind it. Okay. I have so many questions. So the first, they're coming from the background of e-commerce and being a digital marketer. First of all, from the marketing side of things, I want to know what KPIs do I get back as a merchant?

00:10:23:03 - 00:10:52:14
Unknown
Yeah, no. And that I think is the critical question and it really depends certainly on, you know, what vertical you're focused in. But let's double click in the merchant specifically, right? And so when I'm in conversations with merchants, this really does tie back to how are we increasing or how am I increasing my customers lifetime value, Right? It is very much not about I would say, how do I just increase raw monetization of my end users, right?

00:10:52:16 - 00:11:29:19
Unknown
So it's how do we create these novel earning opportunities that empower your customers to have more loyalty points, etc., that them increase their order size through your site or drive greater frequency in going to your site. And then I would say a secondary consequence. I would always say customer lifetime value is first for merchants, but then the second would be creating a more sustainable, you know, I use that word durable relationship with your customer and keeping yourself top of mind for when your users aren't necessarily thinking about buying right.

00:11:29:21 - 00:11:53:19
Unknown
And I think that's really critical as merchants think about, okay, how do I evolve my relationship with my customer? Right. This is as you know, I like to think in numbers. And again, as a merchant, you're engaging your customer less than 1% of the time as is. That's just the simple fact of the way your business works. And so it's how do you inject yourself in a meaningful way in their lives, the other 99% of the time.

00:11:53:21 - 00:12:13:23
Unknown
And that's what I really think we thrive at doing here at Agile brings me to my next question also from the marketing side of things. Obviously you want to integrate this into your normal marketing flow, into your normal marketing messages from the e-commerce perspective, what's a good example or a case study that you can share with our listeners?

00:12:14:00 - 00:12:44:16
Unknown
A great example, quite frankly, would be our partners at Fetch here in the US. They're one of our biggest partners. They're a great example and I think for them their focus wasn't just growth, right? Like their primary value prop obviously is very focused on consumer packaged goods and retail. Right? And they empower their customers to earn rewards by scanning their receipts or sharing their receipts online.

00:12:44:18 - 00:13:10:14
Unknown
And their focus wasn't just growth, it was increasing How often users opened their app or came to their site and stay engaged between those receipt scans. And so after introducing Arcade, what Fetch saw was very meaningful lifts and engagement. And, you know, as I mentioned earlier, that customer lifetime value increased actually about 10% across their user base by integrating.

00:13:10:18 - 00:13:36:10
Unknown
Joe So again, because we were giving users more reasons to come back to their site and to their app when they even were actively shopping. And so we see similar patterns across a lot of our partners. And I think the takeaway again is that when customers earn value through their time and attention, their behavior changes. And once those new habits form, everything downstream tends to improve.

00:13:36:12 - 00:14:07:10
Unknown
I can see a lot of customer personalities out there where that would be a perfect fit. From your perspective, do you have any examples where you see the most results? What's beautiful about our technology and partners is that we tend not to discriminate by vertical, right? Because there really is an application, no matter whether you're an e-commerce leader, whether you're a brand or a loyalty leader at a fuel and convenience brand like 7-Eleven.

00:14:07:10 - 00:14:37:01
Unknown
Right. Because at the end of the day, the experience that we're powering is through mobile games. And that is an experience that, you know, two thirds of people across the globe play mobile games at least once a week. Right? It is a universal, universally engaging experience. And so a lot of my time is spent with our partners helping them understand the relationship between their audience and mobile games.

00:14:37:01 - 00:15:18:04
Unknown
Right. And I think what's always interesting to me, cos as you know, we have a lot of data at our disposal, right? And that's in some cases where the AI comes in and how we're able to make the experience, I would say more engaging and intelligent for our users. But pulling back from that, what we're really able to do and what I see really frequently with our partners pretty much across categories is that we and our users overindex in terms of having having visited a merchant site or having a brand partner's app on their phone as compared to the average US adult.

00:15:18:08 - 00:15:42:14
Unknown
By way of example, when I'm speaking to US based brands. And so the quote unquote penetration of mobile gaming is extremely strong and really extends across verticals. And the last thing I would say about that to cost is that there's usually a conception or sometimes a conception. And this I get it. I've spent most of my career in and around gaming of who gamers are.

00:15:42:16 - 00:16:12:17
Unknown
Right. And I think that comes from strictly from like PC and console gamers. Right. And that's traditionally skews heavily male, right? Younger people perceive the earning power is a little bit lower. With mobile games, it is almost completely inverted. 60% of our audience in terms of arcade users through our partners are women. And then our core demographic are women between the ages of 25 to 44.

00:16:12:19 - 00:16:40:00
Unknown
And I think that surprises a lot of people. And certainly they have not only significant earning power themselves, but really control kind of the household pocketbook. Right. And that's another reason a lot of partners engage with us. That's a very interesting finding that you have there. I'm in the core, as I said, a marketer, and what I do in the subway or wherever, I just look around because I'm curious and I want to find out what people do on their phones.

00:16:40:00 - 00:17:03:00
Unknown
I do this regularly. That might sound creepy, but for me it's market research, and I'm not surprised by your results because I can see that a lot of people are playing games now. I want to dive a little bit deeper into the implementation and the technical set up. How does that work? Yeah, sure. I would say we take pride in the fact that onboarding is usually measured in weeks, not months.

00:17:03:02 - 00:17:27:08
Unknown
Most of the work is actually alignment, so deciding where arcade fits in the customer journey rather than necessarily the heavy technical lift. So it's designed to be lightweight and flexible. It typically integrates into either a brand's existing app or, you know, a merchant e-commerce merchant's loyalty experience, often usually based via web based mobile or SDK within their native environment.

00:17:27:10 - 00:18:02:15
Unknown
And then on the back end, we integrate through a standard set of APIs for rewards issuance and tracking. So it works alongside existing loyalty programs or CRM systems rather than replacing them, which I think you know, is really important both to us but also to our partners as well. And I think a couple other call outs. Archer One, I think what brands appreciate is that they don't need to re-architect anything you can start with a single placement, you know, in this case the arcade placement that would launch a mobile games experience for your customers, learn how those customers engage and then scale over time.

00:18:02:20 - 00:18:29:00
Unknown
This is very much intended to be kind of a crawl, walk, run approach. And the other thing I would call out is pricing, because that's always the question, right? And I'll briefly answer that because it's simple. There's no flat license or upfront cost. So we operate on a revenue share model and merchants, all of our partners do. But I think merchants in particular appreciate this because it's very low risk rate, the economics scale with engagement and not ahead of it.

00:18:29:00 - 00:18:52:19
Unknown
So you're never paying for something before your customers are actually using it. And that's the way we operate. Okay, so you answered already my next question. I like the approach that implements with what you already have, so you don't need to rip everything off that you have or get rid of software that you love and adjust just adds on and gives you a additional chance to to make it work and to reach your customer more often.

00:18:52:19 - 00:19:23:06
Unknown
So I like really this approach makes really sense. Now, before our coffee break comes to an end today, is there anything you want to share with our listeners that we haven't covered yet? You know, when I think of our partners and our customers and what advice I would give, particularly to e-commerce merchants, right as I suppose I and we not just me, but I think we as a company really encourage our partners and specifically e-commerce players to focus less on squeezing the next conversion and more on how they earn the next interaction with their customer.

00:19:23:06 - 00:19:50:04
Unknown
Right? I think we can all agree e-commerce is really great at efficiency, but durable brands are built by showing up with value even when their customers aren't ready to buy. And to do that, you need real systems and not just campaigns, right? Your habits and your customers habits compound. So if your customers have reasons to come back regularly, you know, and I mentioned this earlier, really everything else downstream tends to follow.

00:19:50:06 - 00:20:10:22
Unknown
Yeah, I like this approach because obviously it's very expensive to acquire a new customer and just throwing more money on ads doesn't really make sense. If you have customers that you can sort of activate and continue to serve in different ways of communication and just build up a relationship with them and I think actually is a perfect example on how you can do this.

00:20:11:00 - 00:20:40:03
Unknown
Now final question, where can people go and find out more about you? Yeah, so our website is WW Ajo adj0eio. And of course they can always feel free to reach out through the blog post or the podcast, etc. They can always find ways to reach me. I'm always happy to have conversations with prospective partners. I will put a link in the show notes and you just one click away that I hope a lot of people will reach out to you.

00:20:40:04 - 00:20:57:10
Unknown
I think that's a very brilliant way to start a communication with your customer. And a lot of e-commerce merchants are basically the perfect platform to use that. Thanks so much for your time today. Thanks very much, class. Take care.