Loyalty programs are undergoing a transformation, driven by shifting consumer expectations, technological advancements, and an increased focus on delivering real value. As brands navigate this evolving landscape, they’re making bold moves to refine, reinvent, and, in some cases, completely overhaul their loyalty strategies.
In this installment of Leaders in Customer Loyalty: Industry Voices, we sit down with Mladen Vladic, Head of Products and Services for Loyalty at FIS, to discuss what’s driving this industry-wide shift. From the growing emphasis on non-transactional rewards to the role of AI in shaping personalized customer experiences, Vlad shares key insights on where loyalty is headed in 2025.
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Transcript
Episode Transcript
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Speaker 1 (00:04):
Good afternoon, good morning.
This is Mark Johnson fromLoyalty360.
I hope everyone's happy, safeand well.
Welcome you to our new Leadersin Customer Loyalty series,
industry Voices.
This is the third episode inthe new series, which replaces
the original Loyalty Live series.
In this series, we spotlightinnovation and customer loyalty
(00:24):
through insights from leadingconsultants, agencies and
technology providers in customerchannel and brand loyalty.
Our guests will share expertiseon the emerging trends,
solutions and best practicesthat help brands navigate the
current market conditions.
Today, we'll be exploring keytrends and strategies shaping
customer loyalty in 2025.
(00:46):
And we had the pleasure ofspeaking with Mladen Vladek.
He is the General Manager ofLoyalty Services at FIS Mladen
how are you today?
Speaker 2 (00:55):
I'm doing great.
Thank you, Mark.
Looking forward to ourdiscussion and you know, before
we start, I do want to thank youfor everything you do for our
industry, day in and day out.
Speaker 1 (01:04):
Thank you very much.
It's a great industry to be inlots of changes, coming up and
looking forward to discussion,and looking forward to
discussion of what's going tohappen in 25.
One of the things that we sawin the 2024 State of Customer
Loyalty Report 79% of brandshave an interest in updating,
enhancing or redoing theircustomer loyalty programs.
Are there specific industries,you see, that are leading the
(01:27):
charge in loyalty programinnovation?
You know?
If so, which ones and what arethey doing differently?
Speaker 2 (01:34):
Yeah, that's a great point, data point.
I say let's start byacknowledging that 79% of brands
are looking to update andenhance the program.
To me that's very telling andit's really exciting time, to
your point, to be part of thisindustry because we have rapidly
shifting consumer experienceswhich effectively then kind of
(01:57):
affects or impacts the way thatthe brands think about their
loyalty program.
I would say the overarchingfocus is on the enhancing the
customer experience because ofthe evolution of the preferences
.
And then many brands arelooking at the same time to, if
you will right-size, theeconomics side, to the value
(02:18):
prop related to their loyaltyprogram.
And there's some really goodexamples out there.
I would say in the banking space, you know there's a lot of
emphasis on importance of themerchant funded rewards all over
again so that merchants canhelp fund some of the expenses
related to loyalty where theprograms are including
(02:42):
subscription access to streamingas a value prop.
I would say that the Starbucksis a good example of I would
call it going back to basics interms of easy to understand,
easy to use and always focus onvalue.
I just learned a couple of daysago that they announced in
their earnings call that they'recutting their menu by 30%,
(03:05):
which to me is very, verytelling.
So there are really some niceexamples in terms of what we
have seen in 2024.
And certainly some of thosetrends will carry into 2025.
Speaker 1 (03:18):
Okay, in hindsight, what predictions about customer
loyalty in 2024 do you believeturned out to be accurate, and
how are these developmentsimpacting brands and their
customer loyalty programstrategies?
Speaker 2 (03:32):
Yeah, I would say that that's a great question is
the biggest thing that provedout accurate is a quest, ongoing
quest to reimagine, redesignthe loyalty program for those
brands that already have one inplace and then for those that
(03:57):
don't have, they're juststarting out that they're doing
lots of research and analysisbefore they decide to put the
value prop in terms of loyaltyin front of customers.
So I would say reinvention as ateam is probably the biggest
prediction that we, as theindustry, envision is going to
take place in 24.
And I would say, as we go into25, to me that's going to
(04:21):
continue to be the team, becausewe definitely see ongoing
disruption and evolution, whatcustomers expect from brands,
and so all of the brands arethinking about what changes they
need to make to what theyalready offer and support for
customers okay, excellent, youknow.
Speaker 1 (04:39):
Alternatively, when you look at some customer
loyalty trends or predictionsthat you expected to see, that
you did not see did notmaterialize, you know what
happened there and and you knowwhy do you think influenced that
yeah, I would say, if I have topick one, it's just, you know,
I think.
Speaker 2 (04:55):
I think that we all had a little bit bigger
expectations when it comes tointegration of social media, if
you will, into the whole loyaltyyou know kind of reward scheme,
and I would say there areexamples out there, but you know
certainly, I would say, clunkyat best in terms of what the
experience looks like.
And then, as we start havingconversation, why, I think that
(05:18):
there's a, you know, there's atechnology component, there's a
shifting priorities on thebrands, you know kind of you
know side, in terms of where thefocus is.
And then you know, certainly,going into 25, there was a lot
of regulatory uncertainty and Ithink that that also impacted,
you know, the focus that thebrands were putting on this
(05:38):
aspect.
Speaker 1 (05:39):
uh, all the programs okay, when you look at uh kind
of the social programs,non-transactional rewards are
very important, right, gettingpeople to refer or like or
afford.
Uh, as you mentioned, it didn'tnecessarily take off as much in
in 2024.
You know how can brandseffectively incorporate
non-transactional rewards, suchas exclusive experience or
(06:01):
benefits or getting them to takea survey?
You know how do theyincorporate that into their
loyalty strategies to strengthencustomer engagement and
differentiate the program.
Speaker 2 (06:13):
Yeah, I would say let's start first by
acknowledging that we as theindustry and I would say over as
an industry definitelyover-indexed on transaction
loyalty for too long, Like,let's just say too long.
You know, look, I'm the firstone to say that.
You know, when you think aboutreciprocity, you know, as the
loyalty construct it's importantbut I think we can all agree in
(06:36):
25 is simply not enough, Okay,so, that being said, you know
that holistic approach to thecustomer engagement is becoming
slowly the industry norm and theway that we think about this it
really starts with lookingholistically at the strategy and
map out the journey in terms ofwhat defines an ideal consumer
(06:58):
engagement, depending on thebrand, and to me, the exhibit A
for that effort is really tolook at the core driver or on
consumer engagement.
So, if you're in a financialinstitution, in finances it's
all about getting a DDA accountand then build and add other
(07:19):
products and services that youcan add to that relationship.
If you're in the retailbusiness, obviously securing the
payment information and thenpreferences is so important
because that allows you to addemotional loyalty components to
that relationship as itprogresses.
Speaker 1 (07:38):
Okay, perfect.
When you look at brandpartnerships, it's another area
of interest for brands who runcustomer loyalty programs.
They've talked about it a gooddeal.
It's kind of retrenched alittle bit because there's some
complexity, as you know, inmaking sure the programs work
from a financial perspective.
Is there alignment from aprogram perspective between the
two brands or three brands?
(07:58):
I know you guys are doing someunique things in that regard.
What is the state of customerloyalty program partnerships?
They can be very challenging toincorporate.
What is the state of a customerloyalty program partnerships?
They can be very challenging toincorporate.
Well, what are you seeing there?
Speaker 2 (08:10):
I would say brand partnerships are a big part, a
huge part of the loyalty rewardsecosystem to your point today,
and I only anticipate that therelevance of that type of
approach will continue toincrease in 25, and I would say
beyond, and there are a coupleof reasons for that right.
So, on a very high level, Ithink that you know when you
look at the you know valueconscious consumer that's
(08:32):
looking for additional, you knowvalue that can be delivered to
them in real time or in anyinteraction that they have with
the brands.
You know having the ability, orif I'm interacting with two or
three different brands and I seehow those two, three brands are
partnering in order to delivereven greater value.
For me as a consumer, that'svery appealing.
(08:53):
And I think that you knowbrands are certainly seeing an
upside in terms of theengagement KPIs you know from
those partnerships and certainlywe do at FIS and that actually
then helps us in terms ofbuilding the business case for
expanding the existingpartnerships and then looking
(09:14):
for additional partners.
And then I would say thesecondary reason is when you
think about the execution anddisruption that we are talking
about, that the whole industryis talking about, it's very hard
for any given brand you know,to really develop and deploy and
facilitate, you know, and keepup, if you will, with rapidly
(09:37):
evolving consumer preferences.
Yes, so there is, then you know, that philosophy and belief
that I specialize in, corecompetency that I can offer as a
brand, regardless of what thatbrand is, and then look for the
partners to augment, you know,experience or part of the
delivery or engagement with thecustomer, and do it in a
(10:00):
meaningful way where it stillallows me to convey the value
and sentiment about my brand.
So, all of that being said, Idefinitely you know it's a
tremendous part of the ecosystemand we only expect to see it
continue in 25 and beyond.
Speaker 1 (10:19):
Okay, you mentioned in your response that the
changing expectations that we'veheard about that for a number
of years.
We still believe at CustomerLoyalty 360 that customers and
brands aren't necessarily on thesame page.
Brands have a challengelistening to and understanding
their customers sometimes I'mnot sure if that's something you
see and truly making sure thatwhat they put forth is relevant
(10:42):
and engaging with the brand.
Is that something you see froma brand perspective that they
may not truly listen to andunderstand their customers.
Speaker 2 (10:49):
There are certainly examples of that, mark.
I would say that all of thebrands are doing conscious
effort to put the program in thevalue prop that's going to
resonate with consumers, withconsumers.
I would say that most of thebrands are doing conscious
effort to actually get to knowtheir customer and learn their
preferences before they decidethrough what channel to engage
(11:12):
with them and what product andwhat value prop to put in front
of them.
But there's certainly, to yourpoint, there is that disconnect
where there's a cohort ofcustomers, right, the segment of
the population is not reactingwell to the new or changed or
enhanced value prop or the waythat the program is structured.
And I call that an ongoingdialogue, if you will, with your
(11:35):
customer base.
Right, it's very hard, you know, to deliver the experience and
the value prop that's going toresonate with 100% of your
customers.
And to me that's really abeauty of the industry that we
are in, because I call that andI refer to that, and I'm a
strong believer in the conceptof mapping out a journey and
then, over time, making changesthat are going to become
(11:59):
relevant to even broaderpopulation of your customers.
And that's a journey, that's anongoing effort that doesn't
happen in one or two years.
Speaker 1 (12:10):
That makes perfect sense.
When you look at some of thenew technologies out there,
everyone's focused on AI, eventhough AI has kind of a number
of different connotative anddenotative meanings.
Is it just a regressionanalytics model that you've ran
in the past, that you've renamed?
Gamification is very hot rightnow.
Zero-party, first-party data.
Being able to leverage that,making sure that your CDP or
(12:31):
personalization engines canactually do that, is a big
challenge.
When you look at some of thesetechnologies out there, which
ones do you think will have thegreatest impact for those who
have customer loyalty programsin 2025?
Speaker 2 (12:43):
So let's start with kind of my take on this.
They're all cool, right,they're all relevant and they
all matter, right.
I am very bullish on AI.
I'm truly bullish on AI, andone of the reasons is, you know,
there's a cohort of customersout there and the way that
they're interacting with therest of the brands in their
daily lives they're going withthe rest of the brands in their
(13:04):
daily lives they're going to beexpecting that the rewards, the
loyalty kind of experience,follows that same model.
And so for that reason, I dobelieve that we are in early
days and with all of the recentdevelopments over the course of
the last six to nine to 12months, I think that we are
definitely in early days.
But I can see how havingautonomous decision-making
(13:27):
capabilities that can executecomplex tasks, that can
negotiate outcomes, that canadopt strategy based on the
contextual understanding andpredetermined goals is going to
have a tremendous impact on whatwe do in consumer loyalty.
You know, from the servicingstandpoint, in my opinion,
(13:48):
initially, but then think aboutsegmentation and personalization
capabilities down the road.
You know when it's fullyoperationalized.
To me, this is a dream of everymarketer out there.
You know, in terms of targetingthe right audience, you know,
with the right offer at theright time, and to me this is a
promise.
(14:08):
Ai is the promise of that.
So I am, and we are, definitelybullish on that technology.
The biggest unknown and thebiggest question right is that
something that we deploy and we,as the industry, embrace this
year or 26.
That's hard to pinpoint, but Ihave no doubt that it's going to
(14:29):
change what we do and how we doit.
Speaker 1 (14:32):
Excellent when you look at the balance of investing
in these technologies but alsoensuring that these innovations
deliver highly measurable value,because value is a big
discussion right now.
In customer loyalty we hearfrom our brands value in the
program, value to the customer,value of the brand.
Value is taken on a whole newlevel of importance in our
(14:54):
discussions with our members.
I mean, it's probably thenumber one word we hear right
now because the economy isuncertain.
Some brands are doingexceptionally well, some are not
.
So when you look at how brandshow do they balance these new
technologies with making surethat they're delivering the
measurable results that theyneed around customer experience,
it's a great question, mark.
Speaker 2 (15:15):
So I think you use the key word balance, right, and
I think that there are manybrands out there I would think
that we would agree on thiswhere they had the real struggle
to kind of balance, if you will.
You know the benefits,measurable, quantifiable
benefits, you know, versus theinvestments in technology and
(15:36):
then proving the ROI.
And so, that being said, I dobelieve that this absolutely
starts with the buy-in from allof the stakeholders, from the
top of the house, in terms ofwhat the end goal or the
strategy looks like, because inmany instances, as you know,
this is a multi-year approach,right?
So if you purely measure ROI ina 12-month budget increments,
(16:02):
you will end up in trouble,right, because it's going to be
hard.
And so, to me, that's why, youknow, getting that buy-in, you
know, from the top of the houseon the holistic strategy that
gets executed in multiple phasesis the key.
I'm a strong believer inevolution versus revolution,
right, you know leverage, youknow what you have versus
(16:24):
revolution, right, you knowleverage.
You know what you have, take,keep everything that works and
then figure out the ways toevolve the pieces, that where
you're clearly getting thefeedback from the market from
your customers, that you need todo something different.
I also believe that this also,you know, becomes an opportunity
for you know, for brands tofocus on those in-between
moments where technology canenable certain, you know,
(16:45):
becomes an opportunity for youknow, for brands to focus on
those in between moments wheretechnology can enable certain,
you know, feature functionality,offers.
You know that could drive youthe engagement that you didn't
necessarily even consider orthink about in the path, and to
me that is an opportunity.
That is an incrementalopportunity to make your
(17:06):
business case that much morecompelling so that you can, to
your point, find the balance,improve the ROI and get the
buy-in from the top of the houseto continue to execute.
Speaker 1 (17:17):
And we did a research paper last year on the
opportunities for AI andcustomer loyalty.
Many brands, as we've discussed, are in the early stages of AI.
Around the technology, I thinkthere's a higher threshold or
benchmark where brands have toget things bought off on it.
I liken it to autonomous cars,autonomous vehicles right,
they've killed, not the meaningof people.
(17:39):
They've killed like four orfive, six people.
Right, not many, but there's13,000 car accidents in the USA,
13,000 on average.
So we're worried.
Same thing with AI right, aimesses up one email that goes
out.
Well, now teams are having tobuild teams to prove what AI
does, and there's a balancebetween proving it versus
learning from it.
So what do you see in thatregard?
(18:03):
What are some of the risks andchallenges associated with
implementing AI in customerloyalty strategies and how can
brands mitigate that?
Speaker 2 (18:10):
Yeah, I would.
Just before I even answer thatquestion, you just made a really
great point that I want toreiterate.
Like, just remember the earlydays of Internet or email
marketing or all of the newtechnologies that come out there
, right.
So you know, we live in an agenow where those you know
components are really perfected,right, but in early days they
(18:30):
were learning.
So the fact that you know AI isnot perfect to me is just
normal because it's part of theevolution.
So you know, in a couple ofyears it's definitely going to
be a different story in terms ofthe you know to your point, the
accuracy and perfection of theexpectation.
Now, as I think about AI andrisks with all of those, I would
(18:52):
say we need to balance all ofthat excitement about what it
could mean and what it could dofor our industry.
You know, with kind of some ofthe you know risks and, I would
say, responsibilities, that theplayers have to make sure that
you know they implement this ina responsible way.
And when I say responsible way,like to me, there's a
(19:14):
technology component and thenthere's a compliance right,
regulatory component.
So when you think abouttechnology, there's so many
companies out there to choosefrom, many of whom do not have,
you know, the track record interms of their performance right
.
So to me, choosing the rightpartner is very, very important
(19:36):
first step, and it's not an easyone.
And so just last week, as youknow, we all heard the news
about, you know, deep seek rightwhen they can do things that
are, you know, much cheaper.
There's a quote to 6 million toget to where they are today.
I certainly don't have you knowall of the information, but to
me this is just yet anothervalidation of how you know,
(19:57):
fluid that industry is, and sofinding the right partner, you
know, not only for the early usecases but for ongoing strategy,
is the key, and it's not aneasy one.
The second one is, and Ialluded to that, it's compliance
and regulatory right componentof it, and I think about this in
terms of look, just becausetechnology can support right,
(20:21):
that doesn't mean that weautomatically, you know, deploy
without additional considerationin terms of regulatory, and
there is going to be a lot ofscrutiny on that component, as
those, to your point, as thosemodels learn and truly can, you
know, make decisions inmilliseconds and change the way
(20:43):
what we are putting in front ofthe customer in terms of the
value prop and what channel weare engaging the customer.
So that's really exciting.
But you know, technology andregulatory are going to be a big
, big discussion point for theindustry in the next couple of
years.
Speaker 1 (21:00):
Absolutely.
You know, as customerinteractions continue to span
across both the physical anddigital and environment channels
, you know how should loyaltyprograms look to integrate both
in-store and online experiencesfor a more seamless and cohesive
customer journey for customers.
You know how can brands createloyalty programs that work
across these disparatetouchpoints mobile app, in-store
(21:22):
websites, social media whilemaintaining that unified
experience for their customers.
Speaker 2 (21:27):
Yeah, I would say I will probably refer to a couple
of themes that I already coveredso far, but the most important
thing for me, for us, the waythat we think about this
industry, is that to startthinking about share or mind
before you start thinking shareor wallet, right, and so when
you think about share of mind,then you're really going back to
(21:48):
mapping out the journey,getting to know your customer,
having the feedback loop, tolearn about their feedback,
which is very important so thatyou can continue to evolve and
then, based on their preferences, right, they're telling you
what is the, you know, the rightway, the proper way, timing
wise, um, and everything else.
They engage with them, not onlyabout the purchase, but but
(22:10):
about the return process andeverything else that matters to
them.
Because, at the end of the day,when they, you know, when they
go out there to give a reviewabout the brand and engagement
with the brand, they're lookingat the holistic relationship
that they have with the brandversus one interaction through
(22:30):
one channel on a single purchase.
That makes sense.
Speaker 1 (22:34):
When you look at some of the challenges that customer
loyalty programs have.
What are one or two reasons whyloyalty programs fail to meet
their goals and how can brandsaddress?
Speaker 2 (22:45):
these issues.
So there's a famous writer thatonce said that all happy
families are alike and eachunhappy family is unhappy in its
own way.
And if I think about thatanalogy and I think about the
you know, consumer loyalty, youknow, I think about, you know,
(23:05):
every program has, you know,some very unique things.
Right, if you will that causethem to fail, not drive the
adoption and things like that.
But then, on the flip side toyour point, there are some
commonalities that areabsolutely that you can see the
trend right when you evaluatethose programs and I would say
they're probably on a high level.
(23:26):
Three of them that areabsolutely crucial.
So the first one is reallyhaving a poor understanding of
the consumer behavior and theirpreferences.
If you don't start with reallygetting to your customer and the
problem ultimately that you'resolving, you have no chance of
being successful.
That being said, and I alludedto that at the beginning of our
conversation, I think that mostof the brands are really doing a
(23:48):
much better job, and good jobunderstanding, spending time on
the front end to survey, tounderstand, to interview and to
learn about what matters totheir customer before they even
start the whole development anddeployment process.
So that's the first one.
The second one is, you know,not understanding economics, or
getting economics wrong.
(24:09):
Maybe put it that way.
You know, if you don't get theeconomics model right, it's not
sustainable.
And then it's a matter of, likeyou know, changing the value
prop as you go which may impactyour you know the perception of
the customer about your programin the first place.
And then the second.
(24:42):
The third one is having thepoint where you're not driving
incrementality with thetremendous investment and that's
a recipe for, you know, nothaving a bright future when you
think about the prospects ofthat program.
So those three are probably,you know, main drivers that we
see all the time right, eventhough there are going to be
some unique things across all ofthese programs that struggle in
(25:06):
some respect.
Speaker 1 (25:07):
Okay, how do you think customer expectations will
evolve in 2025?
And how should brands beprepared to meet that?
Speaker 2 (25:14):
Yeah, I would say what's interesting there.
You know, in my opinion,they're going to change, they
will continue to change, butthen I can also argue at the
same time time they will staythe same.
They will stay the same interms of, you know, and you
alluded to that as wellcustomers.
You know they continue to lookfor value, right?
So how do I get value?
You know, from engaging withthis brand and their program.
(25:36):
So value will continue to be abig, big, big topic throughout
2025.
And then I would say technologyis probably second Technology
in terms of as theseexpectations, in terms of
preferences, evolve, technologyneeds to be there to evolve that
experience so that brands canstay relevant.
So I would say CX, mostly tiedto technology capabilities and
(26:01):
value, are two things that wewill continue to see in 25, top
of the list from the consumerstandpoint.
Speaker 1 (26:11):
That's awesome.
Well, blen, thank you very muchfor taking the time to speak
with us.
It's always great to hear fromyou.
Now we have our wonderfulquickfire questions.
It's actually the second timeyou've done this.
We've updated the questions, sohopefully you like them.
We're trying to make these alittle more.
Speaker 2 (26:24):
I'm sure I changed some of my answers, so let's do
it.
Speaker 1 (26:27):
That's good.
That's good, that's good.
How would you describe yourwork life?
Speaker 2 (26:32):
Evolution and constant learning.
Speaker 1 (26:35):
Okay, if you have a day or a week off from work,
what are you doing?
Uh, hiking, there you go.
What are your new year'sresolutions?
Speaker 2 (26:45):
uh, live in the moment.
Every day matters excellent.
Speaker 1 (26:49):
If you could live in any other city or country, what
city or country would that be?
Speaker 2 (26:55):
that one probably changed.
I would say sedona, arizona,for a season okay, there you go.
Speaker 1 (27:01):
If you go back to school, what would you study?
Psychology, okay.
Is there a facet of your job, apiece of your job, that you
maybe like to do a little less,maybe not like to know as much
about?
Speaker 2 (27:13):
or be involved in?
Speaker 1 (27:15):
Yeah, yeah, compliance, Okay.
Is there a facet of your jobthat you'd like to maybe do more
with?
Be more involved with?
Speaker 2 (27:23):
AI and definitely learning.
I think that that answer isprobably universal these days.
Speaker 1 (27:28):
Okay, what motivates you in tackling challenges at
FIS?
Speaker 2 (27:34):
I would say impact of our work on our clients and
then end user.
Speaker 1 (27:39):
And what do you draw inspire from inspiration, from
what lights your fire?
Speaker 2 (27:47):
Prospects of evolving the industry that I'm part of.
That's awesome.
Love that.
Speaker 1 (27:52):
What is your favorite sport or hobby these days?
Pickleball.
Speaker 2 (27:56):
Oh, okay.
Speaker 1 (27:58):
And, I think, the fastest support.
We'll ask you what do youtypically think about at the end
of the day?
Speaker 2 (28:04):
How do I make better decisions tomorrow?
Speaker 1 (28:07):
Mladen, I want to thank you very much for taking
the time to speak with us todayon the third edition of our
Leaders in Customer Loyaltypodcast series Industry Voices
podcast.
It was great getting yourperspective on the upcoming
trends that are going to impactcustomer loyalty in 2025.
And we look forward to learningmore from you and your team at
FIS throughout the remainder ofthe year.
Thank you, mark.
I totally enjoyed it,absolutely.
(28:28):
I also wanted to thank everyonefor tuning in to this Leaders
in Customer Loyalty podcastseries.
If you haven't already, pleasesubscribe to the Leaders in
Customer Loyalty podcast belowand follow Loyalty360 on YouTube
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(28:49):
our leaders and customerloyalty industry voices podcast.
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Thank you.
Good afternoon, good morning.
This is Mark Johnson fromLoyalty360.
I hope everyone's happy, safeand well.
Welcome you to our new Leadersin Customer Loyalty series,
industry Voices.
This is the third episode inthe new series, which replaces
the original Loyalty Live series.
In this series, we spotlightinnovation and customer loyalty
(00:24):
through insights from leadingconsultants, agencies and
technology providers in customerchannel and brand loyalty.
Our guests will share expertiseon the emerging trends,
solutions and best practicesthat help brands navigate the
current market conditions.
Today, we'll be exploring keytrends and strategies shaping
customer loyalty in 2025.
(00:46):
And we had the pleasure ofspeaking with Mladen Vladek.
He is the General Manager ofLoyalty Services at FIS Mladen
how are you today?
Speaker 2 (00:55):
I'm doing great.
Thank you, Mark.
Looking forward to ourdiscussion and you know, before
we start, I do want to thank youfor everything you do for our
industry, day in and day out.
Speaker 1 (01:04):
Thank you very much.
It's a great industry to be inlots of changes, coming up and
looking forward to discussion,and looking forward to
discussion of what's going tohappen in 25.
One of the things that we sawin the 2024 State of Customer
Loyalty Report 79% of brandshave an interest in updating,
enhancing or redoing theircustomer loyalty programs.
Are there specific industries,you see, that are leading the
(01:27):
charge in loyalty programinnovation?
You know?
If so, which ones and what arethey doing differently?
Speaker 2 (01:34):
Yeah, that's a great point, data point.
I say let's start byacknowledging that 79% of brands
are looking to update andenhance the program.
To me that's very telling andit's really exciting time, to
your point, to be part of thisindustry because we have rapidly
shifting consumer experienceswhich effectively then kind of
(01:57):
affects or impacts the way thatthe brands think about their
loyalty program.
I would say the overarchingfocus is on the enhancing the
customer experience because ofthe evolution of the preferences
.
And then many brands arelooking at the same time to, if
you will right-size, theeconomics side, to the value
(02:18):
prop related to their loyaltyprogram.
And there's some really goodexamples out there.
I would say in the banking space, you know there's a lot of
emphasis on importance of themerchant funded rewards all over
again so that merchants canhelp fund some of the expenses
related to loyalty where theprograms are including
(02:42):
subscription access to streamingas a value prop.
I would say that the Starbucksis a good example of I would
call it going back to basics interms of easy to understand,
easy to use and always focus onvalue.
I just learned a couple of daysago that they announced in
their earnings call that they'recutting their menu by 30%,
(03:05):
which to me is very, verytelling.
So there are really some niceexamples in terms of what we
have seen in 2024.
And certainly some of thosetrends will carry into 2025.
Speaker 1 (03:18):
Okay, in hindsight, what predictions about customer
loyalty in 2024 do you believeturned out to be accurate, and
how are these developmentsimpacting brands and their
customer loyalty programstrategies?
Speaker 2 (03:32):
Yeah, I would say that that's a great question is
the biggest thing that provedout accurate is a quest, ongoing
quest to reimagine, redesignthe loyalty program for those
brands that already have one inplace and then for those that
(03:57):
don't have, they're juststarting out that they're doing
lots of research and analysisbefore they decide to put the
value prop in terms of loyaltyin front of customers.
So I would say reinvention as ateam is probably the biggest
prediction that we, as theindustry, envision is going to
take place in 24.
And I would say, as we go into25, to me that's going to
(04:21):
continue to be the team, becausewe definitely see ongoing
disruption and evolution, whatcustomers expect from brands,
and so all of the brands arethinking about what changes they
need to make to what theyalready offer and support for
customers okay, excellent, youknow.
Speaker 1 (04:39):
Alternatively, when you look at some customer
loyalty trends or predictionsthat you expected to see, that
you did not see did notmaterialize, you know what
happened there and and you knowwhy do you think influenced that
yeah, I would say, if I have topick one, it's just, you know,
I think.
Speaker 2 (04:55):
I think that we all had a little bit bigger
expectations when it comes tointegration of social media, if
you will, into the whole loyaltyyou know kind of reward scheme,
and I would say there areexamples out there, but you know
certainly, I would say, clunkyat best in terms of what the
experience looks like.
And then, as we start havingconversation, why, I think that
(05:18):
there's a, you know, there's atechnology component, there's a
shifting priorities on thebrands, you know kind of you
know side, in terms of where thefocus is.
And then you know, certainly,going into 25, there was a lot
of regulatory uncertainty and Ithink that that also impacted,
you know, the focus that thebrands were putting on this
(05:38):
aspect.
Speaker 1 (05:39):
uh, all the programs okay, when you look at uh kind
of the social programs,non-transactional rewards are
very important, right, gettingpeople to refer or like or
afford.
Uh, as you mentioned, it didn'tnecessarily take off as much in
in 2024.
You know how can brandseffectively incorporate
non-transactional rewards, suchas exclusive experience or
(06:01):
benefits or getting them to takea survey?
You know how do theyincorporate that into their
loyalty strategies to strengthencustomer engagement and
differentiate the program.
Speaker 2 (06:13):
Yeah, I would say let's start first by
acknowledging that we as theindustry and I would say over as
an industry definitelyover-indexed on transaction
loyalty for too long, Like,let's just say too long.
You know, look, I'm the firstone to say that.
You know, when you think aboutreciprocity, you know, as the
loyalty construct it's importantbut I think we can all agree in
(06:36):
25 is simply not enough, Okay,so, that being said, you know
that holistic approach to thecustomer engagement is becoming
slowly the industry norm and theway that we think about this it
really starts with lookingholistically at the strategy and
map out the journey in terms ofwhat defines an ideal consumer
(06:58):
engagement, depending on thebrand, and to me, the exhibit A
for that effort is really tolook at the core driver or on
consumer engagement.
So, if you're in a financialinstitution, in finances it's
all about getting a DDA accountand then build and add other
(07:19):
products and services that youcan add to that relationship.
If you're in the retailbusiness, obviously securing the
payment information and thenpreferences is so important
because that allows you to addemotional loyalty components to
that relationship as itprogresses.
Speaker 1 (07:38):
Okay, perfect.
When you look at brandpartnerships, it's another area
of interest for brands who runcustomer loyalty programs.
They've talked about it a gooddeal.
It's kind of retrenched alittle bit because there's some
complexity, as you know, inmaking sure the programs work
from a financial perspective.
Is there alignment from aprogram perspective between the
two brands or three brands?
(07:58):
I know you guys are doing someunique things in that regard.
What is the state of customerloyalty program partnerships?
They can be very challenging toincorporate.
What is the state of a customerloyalty program partnerships?
They can be very challenging toincorporate.
Well, what are you seeing there?
Speaker 2 (08:10):
I would say brand partnerships are a big part, a
huge part of the loyalty rewardsecosystem to your point today,
and I only anticipate that therelevance of that type of
approach will continue toincrease in 25, and I would say
beyond, and there are a coupleof reasons for that right.
So, on a very high level, Ithink that you know when you
look at the you know valueconscious consumer that's
(08:32):
looking for additional, you knowvalue that can be delivered to
them in real time or in anyinteraction that they have with
the brands.
You know having the ability, orif I'm interacting with two or
three different brands and I seehow those two, three brands are
partnering in order to delivereven greater value.
For me as a consumer, that'svery appealing.
(08:53):
And I think that you knowbrands are certainly seeing an
upside in terms of theengagement KPIs you know from
those partnerships and certainlywe do at FIS and that actually
then helps us in terms ofbuilding the business case for
expanding the existingpartnerships and then looking
(09:14):
for additional partners.
And then I would say thesecondary reason is when you
think about the execution anddisruption that we are talking
about, that the whole industryis talking about, it's very hard
for any given brand you know,to really develop and deploy and
facilitate, you know, and keepup, if you will, with rapidly
(09:37):
evolving consumer preferences.
Yes, so there is, then you know, that philosophy and belief
that I specialize in, corecompetency that I can offer as a
brand, regardless of what thatbrand is, and then look for the
partners to augment, you know,experience or part of the
delivery or engagement with thecustomer, and do it in a
(10:00):
meaningful way where it stillallows me to convey the value
and sentiment about my brand.
So, all of that being said, Idefinitely you know it's a
tremendous part of the ecosystemand we only expect to see it
continue in 25 and beyond.
Speaker 1 (10:19):
Okay, you mentioned in your response that the
changing expectations that we'veheard about that for a number
of years.
We still believe at CustomerLoyalty 360 that customers and
brands aren't necessarily on thesame page.
Brands have a challengelistening to and understanding
their customers sometimes I'mnot sure if that's something you
see and truly making sure thatwhat they put forth is relevant
(10:42):
and engaging with the brand.
Is that something you see froma brand perspective that they
may not truly listen to andunderstand their customers.
Speaker 2 (10:49):
There are certainly examples of that, mark.
I would say that all of thebrands are doing conscious
effort to put the program in thevalue prop that's going to
resonate with consumers, withconsumers.
I would say that most of thebrands are doing conscious
effort to actually get to knowtheir customer and learn their
preferences before they decidethrough what channel to engage
(11:12):
with them and what product andwhat value prop to put in front
of them.
But there's certainly, to yourpoint, there is that disconnect
where there's a cohort ofcustomers, right, the segment of
the population is not reactingwell to the new or changed or
enhanced value prop or the waythat the program is structured.
And I call that an ongoingdialogue, if you will, with your
(11:35):
customer base.
Right, it's very hard, you know, to deliver the experience and
the value prop that's going toresonate with 100% of your
customers.
And to me that's really abeauty of the industry that we
are in, because I call that andI refer to that, and I'm a
strong believer in the conceptof mapping out a journey and
then, over time, making changesthat are going to become
(11:59):
relevant to even broaderpopulation of your customers.
And that's a journey, that's anongoing effort that doesn't
happen in one or two years.
Speaker 1 (12:10):
That makes perfect sense.
When you look at some of thenew technologies out there,
everyone's focused on AI, eventhough AI has kind of a number
of different connotative anddenotative meanings.
Is it just a regressionanalytics model that you've ran
in the past, that you've renamed?
Gamification is very hot rightnow.
Zero-party, first-party data.
Being able to leverage that,making sure that your CDP or
(12:31):
personalization engines canactually do that, is a big
challenge.
When you look at some of thesetechnologies out there, which
ones do you think will have thegreatest impact for those who
have customer loyalty programsin 2025?
Speaker 2 (12:43):
So let's start with kind of my take on this.
They're all cool, right,they're all relevant and they
all matter, right.
I am very bullish on AI.
I'm truly bullish on AI, andone of the reasons is, you know,
there's a cohort of customersout there and the way that
they're interacting with therest of the brands in their
daily lives they're going withthe rest of the brands in their
(13:04):
daily lives they're going to beexpecting that the rewards, the
loyalty kind of experience,follows that same model.
And so for that reason, I dobelieve that we are in early
days and with all of the recentdevelopments over the course of
the last six to nine to 12months, I think that we are
definitely in early days.
But I can see how havingautonomous decision-making
(13:27):
capabilities that can executecomplex tasks, that can
negotiate outcomes, that canadopt strategy based on the
contextual understanding andpredetermined goals is going to
have a tremendous impact on whatwe do in consumer loyalty.
You know, from the servicingstandpoint, in my opinion,
(13:48):
initially, but then think aboutsegmentation and personalization
capabilities down the road.
You know when it's fullyoperationalized.
To me, this is a dream of everymarketer out there.
You know, in terms of targetingthe right audience, you know,
with the right offer at theright time, and to me this is a
promise.
(14:08):
Ai is the promise of that.
So I am, and we are, definitelybullish on that technology.
The biggest unknown and thebiggest question right is that
something that we deploy and we,as the industry, embrace this
year or 26.
That's hard to pinpoint, but Ihave no doubt that it's going to
(14:29):
change what we do and how we doit.
Speaker 1 (14:32):
Excellent when you look at the balance of investing
in these technologies but alsoensuring that these innovations
deliver highly measurable value,because value is a big
discussion right now.
In customer loyalty we hearfrom our brands value in the
program, value to the customer,value of the brand.
Value is taken on a whole newlevel of importance in our
(14:54):
discussions with our members.
I mean, it's probably thenumber one word we hear right
now because the economy isuncertain.
Some brands are doingexceptionally well, some are not
.
So when you look at how brandshow do they balance these new
technologies with making surethat they're delivering the
measurable results that theyneed around customer experience,
it's a great question, mark.
Speaker 2 (15:15):
So I think you use the key word balance, right, and
I think that there are manybrands out there I would think
that we would agree on thiswhere they had the real struggle
to kind of balance, if you will.
You know the benefits,measurable, quantifiable
benefits, you know, versus theinvestments in technology and
(15:36):
then proving the ROI.
And so, that being said, I dobelieve that this absolutely
starts with the buy-in from allof the stakeholders, from the
top of the house, in terms ofwhat the end goal or the
strategy looks like, because inmany instances, as you know,
this is a multi-year approach,right?
So if you purely measure ROI ina 12-month budget increments,
(16:02):
you will end up in trouble,right, because it's going to be
hard.
And so, to me, that's why, youknow, getting that buy-in, you
know, from the top of the houseon the holistic strategy that
gets executed in multiple phasesis the key.
I'm a strong believer inevolution versus revolution,
right, you know leverage, youknow what you have versus
(16:24):
revolution, right, you knowleverage.
You know what you have, take,keep everything that works and
then figure out the ways toevolve the pieces, that where
you're clearly getting thefeedback from the market from
your customers, that you need todo something different.
I also believe that this also,you know, becomes an opportunity
for you know, for brands tofocus on those in-between
moments where technology canenable certain, you know,
(16:45):
becomes an opportunity for youknow, for brands to focus on
those in between moments wheretechnology can enable certain,
you know, feature functionality,offers.
You know that could drive youthe engagement that you didn't
necessarily even consider orthink about in the path, and to
me that is an opportunity.
That is an incrementalopportunity to make your
(17:06):
business case that much morecompelling so that you can, to
your point, find the balance,improve the ROI and get the
buy-in from the top of the houseto continue to execute.
Speaker 1 (17:17):
And we did a research paper last year on the
opportunities for AI andcustomer loyalty.
Many brands, as we've discussed, are in the early stages of AI.
Around the technology, I thinkthere's a higher threshold or
benchmark where brands have toget things bought off on it.
I liken it to autonomous cars,autonomous vehicles right,
they've killed, not the meaningof people.
(17:39):
They've killed like four orfive, six people.
Right, not many, but there's13,000 car accidents in the USA,
13,000 on average.
So we're worried.
Same thing with AI right, aimesses up one email that goes
out.
Well, now teams are having tobuild teams to prove what AI
does, and there's a balancebetween proving it versus
learning from it.
So what do you see in thatregard?
(18:03):
What are some of the risks andchallenges associated with
implementing AI in customerloyalty strategies and how can
brands mitigate that?
Speaker 2 (18:10):
Yeah, I would.
Just before I even answer thatquestion, you just made a really
great point that I want toreiterate.
Like, just remember the earlydays of Internet or email
marketing or all of the newtechnologies that come out there
, right.
So you know, we live in an agenow where those you know
components are really perfected,right, but in early days they
(18:30):
were learning.
So the fact that you know AI isnot perfect to me is just
normal because it's part of theevolution.
So you know, in a couple ofyears it's definitely going to
be a different story in terms ofthe you know to your point, the
accuracy and perfection of theexpectation.
Now, as I think about AI andrisks with all of those, I would
(18:52):
say we need to balance all ofthat excitement about what it
could mean and what it could dofor our industry.
You know, with kind of some ofthe you know risks and, I would
say, responsibilities, that theplayers have to make sure that
you know they implement this ina responsible way.
And when I say responsible way,like to me, there's a
(19:14):
technology component and thenthere's a compliance right,
regulatory component.
So when you think abouttechnology, there's so many
companies out there to choosefrom, many of whom do not have,
you know, the track record interms of their performance right
.
So to me, choosing the rightpartner is very, very important
(19:36):
first step, and it's not an easyone.
And so just last week, as youknow, we all heard the news
about, you know, deep seek rightwhen they can do things that
are, you know, much cheaper.
There's a quote to 6 million toget to where they are today.
I certainly don't have you knowall of the information, but to
me this is just yet anothervalidation of how you know,
(19:57):
fluid that industry is, and sofinding the right partner, you
know, not only for the early usecases but for ongoing strategy,
is the key, and it's not aneasy one.
The second one is, and Ialluded to that, it's compliance
and regulatory right componentof it, and I think about this in
terms of look, just becausetechnology can support right,
(20:21):
that doesn't mean that weautomatically, you know, deploy
without additional considerationin terms of regulatory, and
there is going to be a lot ofscrutiny on that component, as
those, to your point, as thosemodels learn and truly can, you
know, make decisions inmilliseconds and change the way
(20:43):
what we are putting in front ofthe customer in terms of the
value prop and what channel weare engaging the customer.
So that's really exciting.
But you know, technology andregulatory are going to be a big
, big discussion point for theindustry in the next couple of
years.
Speaker 1 (21:00):
Absolutely.
You know, as customerinteractions continue to span
across both the physical anddigital and environment channels
, you know how should loyaltyprograms look to integrate both
in-store and online experiencesfor a more seamless and cohesive
customer journey for customers.
You know how can brands createloyalty programs that work
across these disparatetouchpoints mobile app, in-store
(21:22):
websites, social media whilemaintaining that unified
experience for their customers.
Speaker 2 (21:27):
Yeah, I would say I will probably refer to a couple
of themes that I already coveredso far, but the most important
thing for me, for us, the waythat we think about this
industry, is that to startthinking about share or mind
before you start thinking shareor wallet, right, and so when
you think about share of mind,then you're really going back to
(21:48):
mapping out the journey,getting to know your customer,
having the feedback loop, tolearn about their feedback,
which is very important so thatyou can continue to evolve and
then, based on their preferences, right, they're telling you
what is the, you know, the rightway, the proper way, timing
wise, um, and everything else.
They engage with them, not onlyabout the purchase, but but
(22:10):
about the return process andeverything else that matters to
them.
Because, at the end of the day,when they, you know, when they
go out there to give a reviewabout the brand and engagement
with the brand, they're lookingat the holistic relationship
that they have with the brandversus one interaction through
(22:30):
one channel on a single purchase.
That makes sense.
Speaker 1 (22:34):
When you look at some of the challenges that customer
loyalty programs have.
What are one or two reasons whyloyalty programs fail to meet
their goals and how can brandsaddress?
Speaker 2 (22:45):
these issues.
So there's a famous writer thatonce said that all happy
families are alike and eachunhappy family is unhappy in its
own way.
And if I think about thatanalogy and I think about the
you know, consumer loyalty, youknow, I think about, you know,
(23:05):
every program has, you know,some very unique things.
Right, if you will that causethem to fail, not drive the
adoption and things like that.
But then, on the flip side toyour point, there are some
commonalities that areabsolutely that you can see the
trend right when you evaluatethose programs and I would say
they're probably on a high level.
(23:26):
Three of them that areabsolutely crucial.
So the first one is reallyhaving a poor understanding of
the consumer behavior and theirpreferences.
If you don't start with reallygetting to your customer and the
problem ultimately that you'resolving, you have no chance of
being successful.
That being said, and I alludedto that at the beginning of our
conversation, I think that mostof the brands are really doing a
(23:48):
much better job, and good jobunderstanding, spending time on
the front end to survey, tounderstand, to interview and to
learn about what matters totheir customer before they even
start the whole development anddeployment process.
So that's the first one.
The second one is, you know,not understanding economics, or
getting economics wrong.
(24:09):
Maybe put it that way.
You know, if you don't get theeconomics model right, it's not
sustainable.
And then it's a matter of, likeyou know, changing the value
prop as you go which may impactyour you know the perception of
the customer about your programin the first place.
And then the second.
(24:42):
The third one is having thepoint where you're not driving
incrementality with thetremendous investment and that's
a recipe for, you know, nothaving a bright future when you
think about the prospects ofthat program.
So those three are probably,you know, main drivers that we
see all the time right, eventhough there are going to be
some unique things across all ofthese programs that struggle in
(25:06):
some respect.
Speaker 1 (25:07):
Okay, how do you think customer expectations will
evolve in 2025?
And how should brands beprepared to meet that?
Speaker 2 (25:14):
Yeah, I would say what's interesting there.
You know, in my opinion,they're going to change, they
will continue to change, butthen I can also argue at the
same time time they will staythe same.
They will stay the same interms of, you know, and you
alluded to that as wellcustomers.
You know they continue to lookfor value, right?
So how do I get value?
You know, from engaging withthis brand and their program.
(25:36):
So value will continue to be abig, big, big topic throughout
2025.
And then I would say technologyis probably second Technology
in terms of as theseexpectations, in terms of
preferences, evolve, technologyneeds to be there to evolve that
experience so that brands canstay relevant.
So I would say CX, mostly tiedto technology capabilities and
(26:01):
value, are two things that wewill continue to see in 25, top
of the list from the consumerstandpoint.
Speaker 1 (26:11):
That's awesome.
Well, blen, thank you very muchfor taking the time to speak
with us.
It's always great to hear fromyou.
Now we have our wonderfulquickfire questions.
It's actually the second timeyou've done this.
We've updated the questions, sohopefully you like them.
We're trying to make these alittle more.
Speaker 2 (26:24):
I'm sure I changed some of my answers, so let's do
it.
Speaker 1 (26:27):
That's good.
That's good, that's good.
How would you describe yourwork life?
Speaker 2 (26:32):
Evolution and constant learning.
Speaker 1 (26:35):
Okay, if you have a day or a week off from work,
what are you doing?
Uh, hiking, there you go.
What are your new year'sresolutions?
Speaker 2 (26:45):
uh, live in the moment.
Every day matters excellent.
Speaker 1 (26:49):
If you could live in any other city or country, what
city or country would that be?
Speaker 2 (26:55):
that one probably changed.
I would say sedona, arizona,for a season okay, there you go.
Speaker 1 (27:01):
If you go back to school, what would you study?
Psychology, okay.
Is there a facet of your job, apiece of your job, that you
maybe like to do a little less,maybe not like to know as much
about?
Speaker 2 (27:13):
or be involved in?
Speaker 1 (27:15):
Yeah, yeah, compliance, Okay.
Is there a facet of your jobthat you'd like to maybe do more
with?
Be more involved with?
Speaker 2 (27:23):
AI and definitely learning.
I think that that answer isprobably universal these days.
Speaker 1 (27:28):
Okay, what motivates you in tackling challenges at
FIS?
Speaker 2 (27:34):
I would say impact of our work on our clients and
then end user.
Speaker 1 (27:39):
And what do you draw inspire from inspiration, from
what lights your fire?
Speaker 2 (27:47):
Prospects of evolving the industry that I'm part of.
That's awesome.
Love that.
Speaker 1 (27:52):
What is your favorite sport or hobby these days?
Pickleball.
Speaker 2 (27:56):
Oh, okay.
Speaker 1 (27:58):
And, I think, the fastest support.
We'll ask you what do youtypically think about at the end
of the day?
Speaker 2 (28:04):
How do I make better decisions tomorrow?
Speaker 1 (28:07):
Mladen, I want to thank you very much for taking
the time to speak with us todayon the third edition of our
Leaders in Customer Loyaltypodcast series Industry Voices
podcast.
It was great getting yourperspective on the upcoming
trends that are going to impactcustomer loyalty in 2025.
And we look forward to learningmore from you and your team at
FIS throughout the remainder ofthe year.
Thank you, mark.
I totally enjoyed it,absolutely.
(28:28):
I also wanted to thank everyonefor tuning in to this Leaders
in Customer Loyalty podcastseries.
If you haven't already, pleasesubscribe to the Leaders in
Customer Loyalty podcast belowand follow Loyalty360 on YouTube
and Twitter for everythingregarding customer channel, and
follow loyalty 360 on YouTubeand Twitter for everything
regarding customer channel andbrand loyalty.
The links are provided below.
Also, please join us everyWednesday for another edition in
(28:49):
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