In this edition of Leaders in Customer Loyalty: Industry Voices, Loyalty360’s Ethan Perry spoke with Jim Sturm, President of North America at Capillary Technologies, about the company’s aggressive growth strategy, its differentiators in the crowded loyalty technology marketplace, and how artificial intelligence is reshaping loyalty programs for 2025 and beyond.
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Speaker 1 (00:04):
Good afternoon and good morning everyone.
This is Ethan Perry fromLoyalty360, welcoming you to
another edition of our Leadersin Customer Loyalty Industry
Voices series.
In these episodes, we talk tothe leading agencies, technology
partners and consultants incustomer and brand loyalty about
the tech trends and bestpractices that are impacting
(00:24):
brands and affecting theirability to drive unique
experiences, enhance engagementand cultivate customer loyalty.
Today we have the pleasure ofspeaking with Jim Sturm,
President of North America atCapillary Technologies.
Welcome, jim, I'm so glad youcould join us today.
Speaker 2 (00:41):
Thank you, Ethan.
Always good to talk with theteam at Loyalty360.
Speaker 1 (00:46):
Well, we always love having folks from Capillary on
because you guys always have alot to say.
Can you tell us a little bitabout yourself and your role
with Capillary Technologies andkind of your background in
loyalty?
Speaker 2 (00:58):
Sure, I've been in the loyalty industry for quite a
long time, Previously workedfor Briarley and Partners for
quite a period until we sold thecompany, and then I've been
with Capillary now for the lastfive years.
I say that I was employeenumber one here in North America
when I met the founders ofCapillary.
(01:19):
They had a strategic initiativeabout growing into the US
market.
So in a very serendipitous wayI met Anish Reddy and Anant, the
co-founders, and we've been ona very aggressive growth plan
here in North America to thepoint that now gosh about 65% of
the company's revenues are nowout of North America.
(01:41):
So we've grown significantly.
I think we're around 200employees here in North America
out of North America.
So we've grown significantly.
I think we're around 200employees here in North America.
A lot of it has come throughacquisitions that we have made,
but growing quickly and having agood time in the process.
Speaker 1 (01:55):
Excellent.
Well, we know you recently wereelevated to a new role, so we
want to say congratulations onyour new appointment as
president of North America atCapillary Technologies.
What does your new role meanfor that continued North
American expansion strategy?
Speaker 2 (02:12):
I don't know how new it is, it's really, you know,
those that know me know titlesreally don't matter.
What's important is the growththat we've been seeing.
So there's a need to reallyestablish even a greater
presence in the North Americamarket, whether it's through our
analyst relationships withForrester and Gartner and folks
like that, or whether it'sthrough third-party partners,
(02:35):
but, most importantly, when it'sby working with clients.
So the role is not that new,but what it is is
acknowledgement of how importantthe US market is to us and how
important it is to continuegrowing across the globe.
You know, there's a lot of firmsI've been around the industry
(02:56):
for quite a while and there's alot of firms in the space
whether they're agencies,whether they're technology
companies that serve onlycertain markets.
They're technology companiesthat serve only certain markets.
Some serve the US.
There's a lot of companiesthroughout Europe.
There's companies throughoutAsia, all who have strengths and
weaknesses, just like we do,but our presence is very global
and we are very honored to servethe many, many clients that we
(03:19):
do across the globe.
Speaker 1 (03:21):
Awesome.
Well, for those who may not befamiliar, can you explain a
little bit more about howCapillary supports a brand's
customer loyalty efforts andkind of give us a little
overview of what you guys do andsome of the industries you work
with?
Speaker 2 (03:32):
Sure, you know, what I want our clients to know is,
as trusted advisors whether weare trusted technology advisors
or whether we are trustedbusiness advisors we will always
have an opinion and a point ofview and be an advisor to our
clients.
So what we provide clients isstrategic thinking first and
foremost.
So when a client comes to usand most companies these days,
(03:55):
across all industries, typicallyalready have some kind of
loyalty initiative in place, ata minimum, they have significant
marketing initiatives in place.
So companies come to us lookingfor how to either make those
initiatives better or how tolaunch something new, be it a
loyalty program, be it a CRMinitiative.
But that's primarily what weprovide is thought leadership on
(04:18):
how to elevate whatever a brandhas in market today or how to
launch something new for them.
And then we also have atechnology capability that I
think is unmatched in theindustry, which can then enable
the strategies that we discusswith our clients together.
So look, at the end of the day,we're here to help our clients
(04:40):
be more successful, to generatemore incremental revenue, to
find more customers, to getthose customers to visit more,
shop more.
It's done with strategicthinking, which is what we are
first, and foremost, but it'senabled through our technology.
Speaker 1 (04:55):
Awesome.
So you kind of touched on thisalready, but we see that the
MarTech, especially in loyalty,the MarTech landscape is very
crowded.
What would you say setsCapillary apart from your
competitors within thetechnology space?
Speaker 2 (05:09):
You know, feature functionality wise.
There's a lot of companies, asyou say, that can launch a
loyalty program that can put inplace tiers and points and
currency and gamification andall of those kind of typical
loyalty constructs.
What sets us apart is thefoundation being data.
So the foundation of theplatform we have today is highly
(05:34):
flexible.
It serves multiple industriesand therefore data is one of our
unique differentiators.
Just like I mentioned before,there's a lot of companies that
serve different regions ordifferent geographies.
There are also companies thatserve specific industries.
We are global and we servemultiple industries today and
(05:56):
you cannot do that unless youhave a very flexible data
environment.
Second thing that sets us apartis our established capabilities
with artificial intelligence.
So we have a lot of artificialintelligence that's been in the
platform for greater than sevenor eight years now and it's
really making loyaltyinitiatives work harder for our
(06:19):
clients.
It brings to bear intelligence,it brings to bear best
practices through an AI layerthat's built within the platform
.
So that's the twodifferentiators Capital Area has
over the others.
Speaker 1 (06:31):
Awesome.
Well, one thing you touched onearlier was how you guys have
expanded and part of yourstrategy was through
acquisitions.
We know that you recentlyacquired Cognitive.
How do you see that acquisitionenhancing your capabilities and
playing into your growthstrategy in North America?
What synergies do you seebetween Capillary and what they
(06:51):
were already doing?
Speaker 2 (06:53):
Look, the companies we've been buying are
established loyalty firms thatbring to bear many of the things
that we have today strategicthinking and technology
capabilities.
So we've actually made fouracquisitions.
They've been very similar inmany ways, but the thesis behind
all of them has been if we'regoing, you know, remember I said
I was employee number one herein the US that doesn't mean
(07:16):
number one in terms of goodness,it means number one in terms of
physical.
I was just the first guy, butin order to establish a presence
somewhere, it is very hard forbrands to get to know you.
So we took a strategy of directselling and acquiring companies
.
We've acquired four companiesPersuade, briarley Partners,
(07:38):
digital assets of a companycalled Tenarity and now
Cognitive and all have broughtvery similar things more
strategic thinking, morecustomers, more technology
capabilities.
It's just more of what we havedone to date.
It's established us with even agreater presence here in North
America and across the globe.
Speaker 1 (07:57):
Awesome.
Well, speaking of all thethings that you guys are doing
for brands, we saw in our mostrecent State of Customer of
customer loyalty report, we'restill seeing 64% of brands
reported that they have aninterest in updating, enhancing
or completely redoing theircustomer loyalty offerings.
Since you guys have a seatacross so many industries, do
(08:17):
you see any specific places orindustries where they're really
leading the charge in loyaltyprogram innovation?
Speaker 2 (08:24):
Yeah, you know almost every industry.
I will say every industry hassome type of loyalty initiative
today, so I don't see any asfurther ahead than the others.
You know the history of theindustry.
I've talked about this amillion times but the you know,
the airlines and the hospitalitycompanies went first and
retailers quickly came along andthen it's growing throughout
(08:49):
every industry.
You know you see CPGinitiatives, you see B2B
companies with initiatives.
There's no one company that Ithink is doing anything uniquely
better than the others, and inlife you learn from watching
others.
So I don't think there's onethat's any better.
It's been a game of catch upfor many industries.
If anything, those companiesthat have come more recently are
(09:14):
probably on a more advancedtechnology capability, so
they're using artificialintelligence, machine learning
and advanced data practicesbetter.
Speaker 1 (09:23):
Interesting.
So one of the areas that wecontinue to see interest in is
gamification and otherexperiential rewards.
How is Capillary leveragingthose to drive deeper customer
engagement with your clients?
Speaker 2 (09:36):
Yeah, in all ways.
So, first of all, there'straditional gamification.
Gamification is a strategy forkeeping a customer engaged
between what I call between thetransaction or between the
purchase.
Okay, so it may be a case ofhere's a scratch off to get an
extra, uh, an extra coupon or uh, or an extra reward, um.
(09:57):
But gamification does not takejust the form of playing games
or scratch off or spend, win, um.
Gamification also comes in termsof things like leaderboard, um,
and in terms of you know,starbucks has done things like
purchase three times a week andget something extra right.
So gamification comes in termsof challenges, it comes in terms
(10:19):
of leaderboards, it even comesin the form and you mentioned
the word correctly and that'sengagement.
So engagement throughparticipation in surveys, and
that's engagement.
So engagement throughparticipation in surveys,
completing a profile, completingyour preference center, it's,
it's.
Gamification has become a wordthat's oftentimes misinterpreted
(10:39):
.
What it really means is how tokeep a customer engaged between
their purchases so that they canexpress their desire to have a
relationship with the brand,they can learn more about the
brand, but from a brand'sperspective, it keeps the
relationship active.
Cool.
Speaker 1 (10:57):
Awesome.
Well, going back to some of ourresearch from the State of
Customer Loyalty Report, we sawthat 58% of the brands that
responded mentioned that newreward options are a focus for
them this year.
Responded mentioned that newreward options are a focus for
them this year.
How are brand and customerexpectations evolving when it
comes to more personalized orflexible reward offerings in
(11:17):
2025?
Speaker 2 (11:19):
58% even seems low to me.
That's a high number, but iteven seems low because every
human being wants look, we're atime star, our attention spans
are zero, you know, we watchvideos as opposed to reading two
lines of text, and we wanteverything personalized for us.
So rewards flexibility, rewardspersonalization, reward
selection is incrediblyimportant to today's loyalty
(11:42):
initiatives and those brandsthat are doing it well
understand they collect enoughdata, not just transactional
purchase data, but I mentionedbefore preference and profile
and attitudes and beliefs.
You collect this data so thatwe truly understand what reward
will motivate you.
The idea of rewards is tomotivate someone to do something
(12:04):
more, to visit more, to spendmore to complete a survey, to
fill in a preference center, tospend more to complete a survey
to fill in a preference center.
So the idea of a reward is verysimple.
It's about motivating aconsumer to take a certain
action that a brand wants you totake, and the need and the
advancement in the industrytoday is such that making those
(12:25):
rewards highly personal iscritical.
It is a differentiator for onebrand versus another, definitely
.
Speaker 1 (12:33):
Well, we couldn't have an episode of a podcast
about loyalty in 2025 withouttouching on AI.
It seems like everyone'stalking about it every day.
How do you see those advancedtechnologies like AI, machine
learning and real-time analyticsreshaping the loyalty landscape
this year and for 2026?
Speaker 2 (12:54):
It's already changed the game.
As I mentioned before, we'vehad AI on the platform for seven
or eight years, and sotraditionally, agencies brought
human beings who took months tospin through data and look and
get diagnostic data about what'shappening with consumer
(13:14):
behavior, and then humans wouldstrategically make
recommendations.
Technology is eliminating allof that.
We have predictive models.
In our platform.
We have a feature called Nudge,where Nudge actually is doing
what humans of the past would do, and that was analyzing data.
Nudge actually is doing whathumans of the past would do, and
that was analyzing data,understanding what's happening
behind the scenes and makingrecommendations.
(13:35):
So AI is also not only makingrecommendations on how to make
the program work better, butit's also making recommendations
around what is happening withyour consumers today.
Are consumers buying certainproducts versus others?
Are some products more popularthan others?
Are consumers churning?
Are consumers in certainregions shopping more than
(13:57):
others?
And it's getting to the rootcause and it is then making
recommendations and, afterrecommendations are made, it is
actually building the campaignsor the new loyalty rules for you
.
So today in the platform, wehave an ability where it will
say hey, your customers arechurning at an alarming rate.
Press here and we have acampaign that we can build
immediately for you and it canbe put in market this week,
(14:22):
tomorrow, later this afternoonto address this issue.
So AI is completely changingthe game and it's not just
eliminating human things thathumans did before, but it's
doing the deep thinking around.
What is the data saying?
So analytics is four.
I talk about four phases ofanalytics descriptive,
(14:42):
diagnostic, predictive andprescriptive.
Ai has enabled all of that Veryquickly.
Ai can present to you your keyKPIs How's the program
performing?
What's working, what isn't?
Ai can compare it to benchmarkswithin your industry.
Ai can then say let's get tosome diagnosis of those things
that aren't working or thosethings that are working.
(15:03):
Let's then take that diagnosisand let us predict what's likely
behaviors and then let usprescribe some solutions for how
to make the program work better.
Speaker 1 (15:18):
That's amazing and it's so cool to see how fast
things are changing there, andyou briefly mentioned they're
talking about KPI and usingthose tools to help you measure
it.
That's something that wecontinue to hear about.
As these new technologies arecoming online and loyalty is
kind of changing, how are youhelping brands better measure
loyalty program effectivenessand be able to go back and
(15:41):
demonstrate clear ROI to theirinternal stakeholders?
Speaker 2 (15:45):
We have something called the value delivery
framework and sometimescompanies overcomplicate this.
It's actually quite simple.
Let's look at consumer behavior.
Are they purchasing more?
Are they not purchasing more?
You can do this over periods oftime, you can do it versus
control groups, but we startwith looking at incrementality
incrementality in terms ofvisits, incrementality in terms
(16:05):
of revenue.
We also look at importantmeasures around how many
customers are earning rewards,how many customers are redeeming
rewards.
We look at we have a proprietarymeasure called BALOR, b-a-l-o-r
how many customers are becomingactive in a program versus
lapsing out.
Those are allfinancial-oriented,
transactionally-oriented,revenue-oriented measures.
(16:28):
Along with that we have anemotional loyalty gauge where we
are looking at the sentiment,the heart and the passion of the
consumer towards a brand.
So we're helping brandsunderstand number one
transactionally, is this working?
Are people purchasing more?
Are they purchasing at a highervalue?
In other words, not just buyingdiscounted items or not just
(16:49):
buying things off the shelf thatare inexpensively priced, but
are they really transactionally,a value customer?
And then we're helping, alongwith that, look at the emotional
engagement of a consumer,because transaction you cannot
guarantee a consumer is going tocontinue transactional behavior
(17:09):
In other words, shopping,visiting and purchasing until
you also understand their heartand soul and how they feel about
a brand.
Speaker 1 (17:19):
Definitely Well.
Speaking of emotional loyalty,are there any loyalty programs
that you personally admire orthat you're loyal to, and what
do you like about theirofferings?
Speaker 2 (17:32):
You know almost when it comes down to a personal
preference here, I mean, I likeprograms that you know there's a
pub around the corner that I'mpart of the program and they
know my name and it's importantthat they know me and they know
my preferences.
You know I really like AmazonPrime.
I think that any program thatcan get you to spend money
because of the benefits thatyou're going to accrue as part
(17:53):
of that spending is a reallystrong program.
I think Amazon's one of themost well-done programs.
I had the unique opportunity tomeet an individual who started
the Amazon program and startedsome of the unique features.
I think one of the most amazingthings about Amazon was when we
all got that first email longago when it said, hey, you
(18:14):
bought this and people similarpeople bought things, bought
these kind of things, and sothey were developing these
models that were predicting whatmore you would likely be likely
to purchase, and this is goingback 20 years ago.
So I had the unique opportunityto meet the person to launch
the prime program and put inplace many of these predictive
(18:36):
models.
But I think that's a programthat's a shining example of it
learned from the predecessors.
It learned from the hotels andthe airlines and the retailers,
launched a unique thing at thetime in terms of a subscription
type program and had veryadvanced use of data.
Speaker 1 (18:54):
Interesting Well, so, looking ahead, how do you think
that consumer expectations willcontinue to evolve in 2025?
, and how should brands beprepared to meet them?
Speaker 2 (19:05):
Consumers, as I said before, are time starved.
Attention spans are are zero,so their expectation is
personalization and speed.
So how quickly can I earn inthe program?
How quickly?
It's a two-way street from aconsumer perspective.
If I give you my hard-earnedmoney, I expect you to give me
(19:26):
something of value, and so,therefore, how quickly am I
going to earn something as partof a loyalty initiative, and how
personalized is that reward forme?
Speaker 1 (19:37):
Awesome.
Well, do you have any closingadvice or thoughts, and can you
tip your hand a little bit towhat's next for Capillary
Technologies as we head towards2026?
Speaker 2 (19:48):
More advancements in our platform.
So Capillary continues.
We invest heavily in theplatform.
We're ahead of the others interms of artificial intelligence
and you're going to see evenmore cool stuff coming out.
You know, the tips I give everybrand are number one.
It's still human beings want tobuy from human beings and so
(20:11):
whatever that frontlineassociate is for your brand,
whether it's an in-storeassociate, whether it's a
customer service agent, whetherit's a chat agent make sure that
they are heavily focused on theconsumer.
They understand the consumer'sdesires and the consumer's
behaviors.
So always focus on the customerexperience as opposed to the
(20:38):
structure of a loyaltyinitiative.
Speaker 1 (20:41):
That's great advice.
Well, that brings us actuallyto our famous quickfire
questions, so that the audiencecan get to know you a little bit
better.
So we ask that you just limityour answer to one word or a
short phrase for each of these,and I'm just going to dive right
in what is your favorite word.
Speaker 2 (21:00):
Oh, I don't know if I have a favorite word.
I use the word interesting alot because it can mean a lot of
things in a lot ofcircumstances, and I'm sorry
that wasn't a one-word answer.
Speaker 1 (21:10):
What do you find tiresome Spreadsheets?
Speaker 2 (21:13):
What profession other than your own would?
Speaker 1 (21:14):
you find tiresome Spreadsheets.
What profession other than yourown would you like to attempt?
Speaker 2 (21:20):
So I completed my essentially the majority of the
requirements to be a lawyer.
So if I wasn't in this industry, I would be a lawyer.
A lot of people would find thatoffensive.
However, I find it's very.
It's a very logical industryCool.
Speaker 1 (21:40):
What do you enjoy doing that you don't get to do
as often as you'd like?
Speaker 2 (21:48):
Just I would say reading.
Who inspired you to become theperson you are today reading who
inspired you to become theperson you are today.
Speaker 1 (22:01):
You know my parents and a couple of mentors that
I've had in my career.
What do you typically thinkabout at the end of the day?
Speaker 2 (22:06):
If I can fall asleep or not.
I try to think about nothing sothat I can have a clear mind
and get rest.
Rest is important for us.
Speaker 1 (22:15):
Yeah, and how do you want to be remembered by your
friends and family?
Speaker 2 (22:20):
You know it's a matter of doing what you said
you would do.
So to me it's important that ifI say I'm going to do something
, then I do it.
Speaker 1 (22:26):
Awesome.
Well, jim, thank you so muchfor taking the time to speak
with us today and for giving usa great episode of Industry
Voices.
It was really great gettingyour perspective on customer
loyalty and we look forward tolearning more from you and the
team at Capillary Technologiesthroughout the rest of this year
and beyond.
Speaker 2 (22:43):
Thank you, Ethan.
It's good to spend this timetogether.
Speaker 1 (22:47):
Awesome, and thank you everyone for tuning in to
Leaders in Customer Loyalty.
If you haven't already, pleasemake sure that you subscribe to
the podcast, follow Loyalty360on YouTube and connect with us
on LinkedIn.
And then don't forget to joinus every Tuesday for another
edition of Industry Voices.
Good afternoon and good morning everyone.
This is Ethan Perry fromLoyalty360, welcoming you to
another edition of our Leadersin Customer Loyalty Industry
Voices series.
In these episodes, we talk tothe leading agencies, technology
partners and consultants incustomer and brand loyalty about
the tech trends and bestpractices that are impacting
(00:24):
brands and affecting theirability to drive unique
experiences, enhance engagementand cultivate customer loyalty.
Today we have the pleasure ofspeaking with Jim Sturm,
President of North America atCapillary Technologies.
Welcome, jim, I'm so glad youcould join us today.
Speaker 2 (00:41):
Thank you, Ethan.
Always good to talk with theteam at Loyalty360.
Speaker 1 (00:46):
Well, we always love having folks from Capillary on
because you guys always have alot to say.
Can you tell us a little bitabout yourself and your role
with Capillary Technologies andkind of your background in
loyalty?
Speaker 2 (00:58):
Sure, I've been in the loyalty industry for quite a
long time, Previously workedfor Briarley and Partners for
quite a period until we sold thecompany, and then I've been
with Capillary now for the lastfive years.
I say that I was employeenumber one here in North America
when I met the founders ofCapillary.
(01:19):
They had a strategic initiativeabout growing into the US
market.
So in a very serendipitous wayI met Anish Reddy and Anant, the
co-founders, and we've been ona very aggressive growth plan
here in North America to thepoint that now gosh about 65% of
the company's revenues are nowout of North America.
(01:41):
So we've grown significantly.
I think we're around 200employees here in North America
out of North America.
So we've grown significantly.
I think we're around 200employees here in North America.
A lot of it has come throughacquisitions that we have made,
but growing quickly and having agood time in the process.
Speaker 1 (01:55):
Excellent.
Well, we know you recently wereelevated to a new role, so we
want to say congratulations onyour new appointment as
president of North America atCapillary Technologies.
What does your new role meanfor that continued North
American expansion strategy?
Speaker 2 (02:12):
I don't know how new it is, it's really, you know,
those that know me know titlesreally don't matter.
What's important is the growththat we've been seeing.
So there's a need to reallyestablish even a greater
presence in the North Americamarket, whether it's through our
analyst relationships withForrester and Gartner and folks
like that, or whether it'sthrough third-party partners,
(02:35):
but, most importantly, when it'sby working with clients.
So the role is not that new,but what it is is
acknowledgement of how importantthe US market is to us and how
important it is to continuegrowing across the globe.
You know, there's a lot of firmsI've been around the industry
(02:56):
for quite a while and there's alot of firms in the space
whether they're agencies,whether they're technology
companies that serve onlycertain markets.
They're technology companiesthat serve only certain markets.
Some serve the US.
There's a lot of companiesthroughout Europe.
There's companies throughoutAsia, all who have strengths and
weaknesses, just like we do,but our presence is very global
and we are very honored to servethe many, many clients that we
(03:19):
do across the globe.
Speaker 1 (03:21):
Awesome.
Well, for those who may not befamiliar, can you explain a
little bit more about howCapillary supports a brand's
customer loyalty efforts andkind of give us a little
overview of what you guys do andsome of the industries you work
with?
Speaker 2 (03:32):
Sure, you know, what I want our clients to know is,
as trusted advisors whether weare trusted technology advisors
or whether we are trustedbusiness advisors we will always
have an opinion and a point ofview and be an advisor to our
clients.
So what we provide clients isstrategic thinking first and
foremost.
So when a client comes to usand most companies these days,
(03:55):
across all industries, typicallyalready have some kind of
loyalty initiative in place, ata minimum, they have significant
marketing initiatives in place.
So companies come to us lookingfor how to either make those
initiatives better or how tolaunch something new, be it a
loyalty program, be it a CRMinitiative.
But that's primarily what weprovide is thought leadership on
(04:18):
how to elevate whatever a brandhas in market today or how to
launch something new for them.
And then we also have atechnology capability that I
think is unmatched in theindustry, which can then enable
the strategies that we discusswith our clients together.
So look, at the end of the day,we're here to help our clients
(04:40):
be more successful, to generatemore incremental revenue, to
find more customers, to getthose customers to visit more,
shop more.
It's done with strategicthinking, which is what we are
first, and foremost, but it'senabled through our technology.
Speaker 1 (04:55):
Awesome.
So you kind of touched on thisalready, but we see that the
MarTech, especially in loyalty,the MarTech landscape is very
crowded.
What would you say setsCapillary apart from your
competitors within thetechnology space?
Speaker 2 (05:09):
You know, feature functionality wise.
There's a lot of companies, asyou say, that can launch a
loyalty program that can put inplace tiers and points and
currency and gamification andall of those kind of typical
loyalty constructs.
What sets us apart is thefoundation being data.
So the foundation of theplatform we have today is highly
(05:34):
flexible.
It serves multiple industriesand therefore data is one of our
unique differentiators.
Just like I mentioned before,there's a lot of companies that
serve different regions ordifferent geographies.
There are also companies thatserve specific industries.
We are global and we servemultiple industries today and
(05:56):
you cannot do that unless youhave a very flexible data
environment.
Second thing that sets us apartis our established capabilities
with artificial intelligence.
So we have a lot of artificialintelligence that's been in the
platform for greater than sevenor eight years now and it's
really making loyaltyinitiatives work harder for our
(06:19):
clients.
It brings to bear intelligence,it brings to bear best
practices through an AI layerthat's built within the platform
.
So that's the twodifferentiators Capital Area has
over the others.
Speaker 1 (06:31):
Awesome.
Well, one thing you touched onearlier was how you guys have
expanded and part of yourstrategy was through
acquisitions.
We know that you recentlyacquired Cognitive.
How do you see that acquisitionenhancing your capabilities and
playing into your growthstrategy in North America?
What synergies do you seebetween Capillary and what they
(06:51):
were already doing?
Speaker 2 (06:53):
Look, the companies we've been buying are
established loyalty firms thatbring to bear many of the things
that we have today strategicthinking and technology
capabilities.
So we've actually made fouracquisitions.
They've been very similar inmany ways, but the thesis behind
all of them has been if we'regoing, you know, remember I said
I was employee number one herein the US that doesn't mean
(07:16):
number one in terms of goodness,it means number one in terms of
physical.
I was just the first guy, butin order to establish a presence
somewhere, it is very hard forbrands to get to know you.
So we took a strategy of directselling and acquiring companies
.
We've acquired four companiesPersuade, briarley Partners,
(07:38):
digital assets of a companycalled Tenarity and now
Cognitive and all have broughtvery similar things more
strategic thinking, morecustomers, more technology
capabilities.
It's just more of what we havedone to date.
It's established us with even agreater presence here in North
America and across the globe.
Speaker 1 (07:57):
Awesome.
Well, speaking of all thethings that you guys are doing
for brands, we saw in our mostrecent State of Customer of
customer loyalty report, we'restill seeing 64% of brands
reported that they have aninterest in updating, enhancing
or completely redoing theircustomer loyalty offerings.
Since you guys have a seatacross so many industries, do
(08:17):
you see any specific places orindustries where they're really
leading the charge in loyaltyprogram innovation?
Speaker 2 (08:24):
Yeah, you know almost every industry.
I will say every industry hassome type of loyalty initiative
today, so I don't see any asfurther ahead than the others.
You know the history of theindustry.
I've talked about this amillion times but the you know,
the airlines and the hospitalitycompanies went first and
retailers quickly came along andthen it's growing throughout
(08:49):
every industry.
You know you see CPGinitiatives, you see B2B
companies with initiatives.
There's no one company that Ithink is doing anything uniquely
better than the others, and inlife you learn from watching
others.
So I don't think there's onethat's any better.
It's been a game of catch upfor many industries.
If anything, those companiesthat have come more recently are
(09:14):
probably on a more advancedtechnology capability, so
they're using artificialintelligence, machine learning
and advanced data practicesbetter.
Speaker 1 (09:23):
Interesting.
So one of the areas that wecontinue to see interest in is
gamification and otherexperiential rewards.
How is Capillary leveragingthose to drive deeper customer
engagement with your clients?
Speaker 2 (09:36):
Yeah, in all ways.
So, first of all, there'straditional gamification.
Gamification is a strategy forkeeping a customer engaged
between what I call between thetransaction or between the
purchase.
Okay, so it may be a case ofhere's a scratch off to get an
extra, uh, an extra coupon or uh, or an extra reward, um.
(09:57):
But gamification does not takejust the form of playing games
or scratch off or spend, win, um.
Gamification also comes in termsof things like leaderboard, um,
and in terms of you know,starbucks has done things like
purchase three times a week andget something extra right.
So gamification comes in termsof challenges, it comes in terms
(10:19):
of leaderboards, it even comesin the form and you mentioned
the word correctly and that'sengagement.
So engagement throughparticipation in surveys, and
that's engagement.
So engagement throughparticipation in surveys,
completing a profile, completingyour preference center, it's,
it's.
Gamification has become a wordthat's oftentimes misinterpreted
(10:39):
.
What it really means is how tokeep a customer engaged between
their purchases so that they canexpress their desire to have a
relationship with the brand,they can learn more about the
brand, but from a brand'sperspective, it keeps the
relationship active.
Cool.
Speaker 1 (10:57):
Awesome.
Well, going back to some of ourresearch from the State of
Customer Loyalty Report, we sawthat 58% of the brands that
responded mentioned that newreward options are a focus for
them this year.
Responded mentioned that newreward options are a focus for
them this year.
How are brand and customerexpectations evolving when it
comes to more personalized orflexible reward offerings in
(11:17):
2025?
Speaker 2 (11:19):
58% even seems low to me.
That's a high number, but iteven seems low because every
human being wants look, we're atime star, our attention spans
are zero, you know, we watchvideos as opposed to reading two
lines of text, and we wanteverything personalized for us.
So rewards flexibility, rewardspersonalization, reward
selection is incrediblyimportant to today's loyalty
(11:42):
initiatives and those brandsthat are doing it well
understand they collect enoughdata, not just transactional
purchase data, but I mentionedbefore preference and profile
and attitudes and beliefs.
You collect this data so thatwe truly understand what reward
will motivate you.
The idea of rewards is tomotivate someone to do something
(12:04):
more, to visit more, to spendmore to complete a survey, to
fill in a preference center, tospend more to complete a survey
to fill in a preference center.
So the idea of a reward is verysimple.
It's about motivating aconsumer to take a certain
action that a brand wants you totake, and the need and the
advancement in the industrytoday is such that making those
(12:25):
rewards highly personal iscritical.
It is a differentiator for onebrand versus another, definitely
.
Speaker 1 (12:33):
Well, we couldn't have an episode of a podcast
about loyalty in 2025 withouttouching on AI.
It seems like everyone'stalking about it every day.
How do you see those advancedtechnologies like AI, machine
learning and real-time analyticsreshaping the loyalty landscape
this year and for 2026?
Speaker 2 (12:54):
It's already changed the game.
As I mentioned before, we'vehad AI on the platform for seven
or eight years, and sotraditionally, agencies brought
human beings who took months tospin through data and look and
get diagnostic data about what'shappening with consumer
(13:14):
behavior, and then humans wouldstrategically make
recommendations.
Technology is eliminating allof that.
We have predictive models.
In our platform.
We have a feature called Nudge,where Nudge actually is doing
what humans of the past would do, and that was analyzing data.
Nudge actually is doing whathumans of the past would do, and
that was analyzing data,understanding what's happening
behind the scenes and makingrecommendations.
(13:35):
So AI is also not only makingrecommendations on how to make
the program work better, butit's also making recommendations
around what is happening withyour consumers today.
Are consumers buying certainproducts versus others?
Are some products more popularthan others?
Are consumers churning?
Are consumers in certainregions shopping more than
(13:57):
others?
And it's getting to the rootcause and it is then making
recommendations and, afterrecommendations are made, it is
actually building the campaignsor the new loyalty rules for you
.
So today in the platform, wehave an ability where it will
say hey, your customers arechurning at an alarming rate.
Press here and we have acampaign that we can build
immediately for you and it canbe put in market this week,
(14:22):
tomorrow, later this afternoonto address this issue.
So AI is completely changingthe game and it's not just
eliminating human things thathumans did before, but it's
doing the deep thinking around.
What is the data saying?
So analytics is four.
I talk about four phases ofanalytics descriptive,
(14:42):
diagnostic, predictive andprescriptive.
Ai has enabled all of that Veryquickly.
Ai can present to you your keyKPIs How's the program
performing?
What's working, what isn't?
Ai can compare it to benchmarkswithin your industry.
Ai can then say let's get tosome diagnosis of those things
that aren't working or thosethings that are working.
(15:03):
Let's then take that diagnosisand let us predict what's likely
behaviors and then let usprescribe some solutions for how
to make the program work better.
Speaker 1 (15:18):
That's amazing and it's so cool to see how fast
things are changing there, andyou briefly mentioned they're
talking about KPI and usingthose tools to help you measure
it.
That's something that wecontinue to hear about.
As these new technologies arecoming online and loyalty is
kind of changing, how are youhelping brands better measure
loyalty program effectivenessand be able to go back and
(15:41):
demonstrate clear ROI to theirinternal stakeholders?
Speaker 2 (15:45):
We have something called the value delivery
framework and sometimescompanies overcomplicate this.
It's actually quite simple.
Let's look at consumer behavior.
Are they purchasing more?
Are they not purchasing more?
You can do this over periods oftime, you can do it versus
control groups, but we startwith looking at incrementality
incrementality in terms ofvisits, incrementality in terms
(16:05):
of revenue.
We also look at importantmeasures around how many
customers are earning rewards,how many customers are redeeming
rewards.
We look at we have a proprietarymeasure called BALOR, b-a-l-o-r
how many customers are becomingactive in a program versus
lapsing out.
Those are allfinancial-oriented,
transactionally-oriented,revenue-oriented measures.
(16:28):
Along with that we have anemotional loyalty gauge where we
are looking at the sentiment,the heart and the passion of the
consumer towards a brand.
So we're helping brandsunderstand number one
transactionally, is this working?
Are people purchasing more?
Are they purchasing at a highervalue?
In other words, not just buyingdiscounted items or not just
(16:49):
buying things off the shelf thatare inexpensively priced, but
are they really transactionally,a value customer?
And then we're helping, alongwith that, look at the emotional
engagement of a consumer,because transaction you cannot
guarantee a consumer is going tocontinue transactional behavior
(17:09):
In other words, shopping,visiting and purchasing until
you also understand their heartand soul and how they feel about
a brand.
Speaker 1 (17:19):
Definitely Well.
Speaking of emotional loyalty,are there any loyalty programs
that you personally admire orthat you're loyal to, and what
do you like about theirofferings?
Speaker 2 (17:32):
You know almost when it comes down to a personal
preference here, I mean, I likeprograms that you know there's a
pub around the corner that I'mpart of the program and they
know my name and it's importantthat they know me and they know
my preferences.
You know I really like AmazonPrime.
I think that any program thatcan get you to spend money
because of the benefits thatyou're going to accrue as part
(17:53):
of that spending is a reallystrong program.
I think Amazon's one of themost well-done programs.
I had the unique opportunity tomeet an individual who started
the Amazon program and startedsome of the unique features.
I think one of the most amazingthings about Amazon was when we
all got that first email longago when it said, hey, you
(18:14):
bought this and people similarpeople bought things, bought
these kind of things, and sothey were developing these
models that were predicting whatmore you would likely be likely
to purchase, and this is goingback 20 years ago.
So I had the unique opportunityto meet the person to launch
the prime program and put inplace many of these predictive
(18:36):
models.
But I think that's a programthat's a shining example of it
learned from the predecessors.
It learned from the hotels andthe airlines and the retailers,
launched a unique thing at thetime in terms of a subscription
type program and had veryadvanced use of data.
Speaker 1 (18:54):
Interesting Well, so, looking ahead, how do you think
that consumer expectations willcontinue to evolve in 2025?
, and how should brands beprepared to meet them?
Speaker 2 (19:05):
Consumers, as I said before, are time starved.
Attention spans are are zero,so their expectation is
personalization and speed.
So how quickly can I earn inthe program?
How quickly?
It's a two-way street from aconsumer perspective.
If I give you my hard-earnedmoney, I expect you to give me
(19:26):
something of value, and so,therefore, how quickly am I
going to earn something as partof a loyalty initiative, and how
personalized is that reward forme?
Speaker 1 (19:37):
Awesome.
Well, do you have any closingadvice or thoughts, and can you
tip your hand a little bit towhat's next for Capillary
Technologies as we head towards2026?
Speaker 2 (19:48):
More advancements in our platform.
So Capillary continues.
We invest heavily in theplatform.
We're ahead of the others interms of artificial intelligence
and you're going to see evenmore cool stuff coming out.
You know, the tips I give everybrand are number one.
It's still human beings want tobuy from human beings and so
(20:11):
whatever that frontlineassociate is for your brand,
whether it's an in-storeassociate, whether it's a
customer service agent, whetherit's a chat agent make sure that
they are heavily focused on theconsumer.
They understand the consumer'sdesires and the consumer's
behaviors.
So always focus on the customerexperience as opposed to the
(20:38):
structure of a loyaltyinitiative.
Speaker 1 (20:41):
That's great advice.
Well, that brings us actuallyto our famous quickfire
questions, so that the audiencecan get to know you a little bit
better.
So we ask that you just limityour answer to one word or a
short phrase for each of these,and I'm just going to dive right
in what is your favorite word.
Speaker 2 (21:00):
Oh, I don't know if I have a favorite word.
I use the word interesting alot because it can mean a lot of
things in a lot ofcircumstances, and I'm sorry
that wasn't a one-word answer.
Speaker 1 (21:10):
What do you find tiresome Spreadsheets?
Speaker 2 (21:13):
What profession other than your own would?
Speaker 1 (21:14):
you find tiresome Spreadsheets.
What profession other than yourown would you like to attempt?
Speaker 2 (21:20):
So I completed my essentially the majority of the
requirements to be a lawyer.
So if I wasn't in this industry, I would be a lawyer.
A lot of people would find thatoffensive.
However, I find it's very.
It's a very logical industryCool.
Speaker 1 (21:40):
What do you enjoy doing that you don't get to do
as often as you'd like?
Speaker 2 (21:48):
Just I would say reading.
Who inspired you to become theperson you are today reading who
inspired you to become theperson you are today.
Speaker 1 (22:01):
You know my parents and a couple of mentors that
I've had in my career.
What do you typically thinkabout at the end of the day?
Speaker 2 (22:06):
If I can fall asleep or not.
I try to think about nothing sothat I can have a clear mind
and get rest.
Rest is important for us.
Speaker 1 (22:15):
Yeah, and how do you want to be remembered by your
friends and family?
Speaker 2 (22:20):
You know it's a matter of doing what you said
you would do.
So to me it's important that ifI say I'm going to do something
, then I do it.
Speaker 1 (22:26):
Awesome.
Well, jim, thank you so muchfor taking the time to speak
with us today and for giving usa great episode of Industry
Voices.
It was really great gettingyour perspective on customer
loyalty and we look forward tolearning more from you and the
team at Capillary Technologiesthroughout the rest of this year
and beyond.
Speaker 2 (22:43):
Thank you, Ethan.
It's good to spend this timetogether.
Speaker 1 (22:47):
Awesome, and thank you everyone for tuning in to
Leaders in Customer Loyalty.
If you haven't already, pleasemake sure that you subscribe to
the podcast, follow Loyalty360on YouTube and connect with us
on LinkedIn.
And then don't forget to joinus every Tuesday for another
edition of Industry Voices.
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