What major impact will the Covid-19 crisis have on loyalty and marketing? For two different perspectives, ESM turned to Michelle Holmes, Senior Director of Travel and Transport Loyalty, who has over 30 years of experience in financial and related loyalty platforms, and Allan Steinmetz, CEO of Inward Consulting, an executive with 30-plus years in advertising and marketing, including senior marketing positions at Young & Rubicam Advertising, Accenture, Arthur D. Little, and Parago. Their views are supported by a recent PepsiCo study about the state of empathy in America. 

Authenticity is the common theme that immediately emerges when comparing the reflections of a loyalty professional who has worked on hundreds of financial services loyalty programs and those of an advertising and marketing executive who was among the first to embrace the concept of connecting employee and customer engagement. Both agree that marketing will require a new level of authenticity and engagement that many organizations may not be ready for. 

“This pandemic blasted us into a focus on providing good to others,” says Travel and Transport’s Holmes. “There is a warmth in response to this crisis that I have never seen before, except perhaps to some extent after 9/11 and the financial crisis in 2008 and 2009. With many of our financial institution customers, we are seeing a genuine interest in making a difference in the lives of their customers. They are reaching out to ask if people need help. They are watching, being proactive. I think companies genuinely understand that this is a extremely hard time for many people.” 
 

To help their customers, some of her company’s clients have deliberately put some items in their loyalty programs on sale, notably essentials or simple comforts. Redemptions have gone up, she says, as more people are using their points for groceries, necessities, and everyday spending items. 

 

“There is a general understanding that companies are going to be remembered for how they treated people during this time, and it must be genuine. They aren’t selling it; they are doing it. There are companies out there that truly are trying to help their customers.” Those that build trust, she suggests, will have more success in fostering relationship as the economy recovers. 

 

The focus on people, she says, is putting more emphasis on personal communications. “Companies in general, no matter what industry or sector are taking more time to pause and truly listen to the needs of their customers, but it has to be reciprocal to be effective. This is a great time to listen. If you act upon what you learn in those conversations, and that is critical, people will be even more engaged.”

 

Will the lessons about good will, listening and reciprocity carry on after the pandemic is behind us? Holmes believes it’s possible. “The crisis could result in more personalization and interactivity in loyalty programs to engage and communicate with customers to enhance the sense of connection more emotionally.”

 

To Allan Steinmetz, the issue of authenticity “is very real and extremely relevant right now. Advertisers are struggling with this, as can be seen with the series of Covid-19 ads right now that are almost all the same —you could replace one brand with another—all telling us they are here for us now or that we’re all together in this with music that sounds like an ad for Muzak. If anything, these ads should make people wonder why these companies are spending money during a near Depression.”
 

On the other hand, he points to a Burger King ad advocating that to stop the spread of the disease people should become ‘couch patriots,’ stay inside, and of course order their burgers for home delivery. “It’s really funny; the tone is just right, it reinforces the brand, and it drives sales.” 
 

 

Despite the enormous pressures on advertising agencies, whose business is being commoditized by young digital agencies, Steinmetz believes that advertising has an enormous role to play when the ads tell an authentic and compelling story that has a value to the consumer with promises that get delivered at every step of the customer experience. Advertising that authentically informs, provides brand differentiation, and whose promises get delivered heighten and connect brand purpose for “both customer and employees in a way that provides a high level of strategic competitive advantage,” he says.

 

An early advocate of the need to focus on employee engagement to deliver brand promises, Steinmetz remains skeptical that most CEOs finally recognize that people truly are their No. 1 asset, but he sees positive signs.  “Many CEOs are beginning to see that how you engage your customers, distribution partners, and employees now is going to determine what your reputation and your brand is going to be when all this is said and done. How you come out will be a direct reflection of how you treated your people and that will be apparent in how you articulate your culture, your brand purpose and your corporate why.”

 

He warns that CEOs who take employee engagement for granted are running a potential risk. “While many employees right now are happy to have their jobs, on the other hand many have had their wages cut or are upset because they are working their tails off with long hours and with minimum resources and budget cutbacks, and they know that at the end of the day they could still be let go.” This crisis promises to be a huge talent disruptor as business begins to come back, he suggests.  

 

This enormous potential reshuffling of the people deck applies to all stakeholders, he emphasizes. “I am seeing a few large banks in the real estate mortgages business doing irreparable damage to their relationships with real estate brokers by reneging on commitments of otherwise viable deals simply because of the sudden general uncertainty. Those banks will for years feel the effects from the people they alienated,” especially because many of the smaller regional banks stepped up, he points out.

 

Steinmetz notes that even before the crisis, business leaders were beginning to recognize the importance of culture. Even before the new charter from the Business Roundtable and World Economic forum espousing Stakeholder Capitalism, he cites a blue ribbon report from the National Association of Corporate Directors published in 2017 stating that: “Corporate culture can no longer be considered as a soft issue by management and boards. Its strength or weakness has a lasting impact on organizational performance and reputation. The oversight of culture must be a key board responsibility, as it is inextricably linked with strategy, CEO selection, and risk oversight.” He notes that the malfeasance at Wells Fargo, the events that caused the BP oil spill, and the challenges at Boeing related to the 737 Max aircraft were all the product of a poor culture that isn’t connected to core values and purpose. “If those companies had a strong moral fiber and alignment of their human capital objectives to their company purpose and culture, people involved with these events would have asked themselves if they were doing the right thing.” 

 

Steinmetz echos Holmes’ views about the importance of relationships. “I think we are going back to the old ways based on relationships, and that this is especially true with customers. It increasingly will not be just about price or features but also the quality of the relationships and level of trust.” This, he says, will put a lot of pressure on sales organizations, “because it’s about taking the time to get to know people. This is not necessarily compatible with the traditional sales-call metrics and features-benefits approach common at most organizations,” he adds. 

 

If there is hope for a new brand of leadership, Steinmetz believes it will come from a new generation of leader and innovator for whom human capital and analytics are a key resource, “because it’s in their blood and guts to be a new breed of creative, innovative, and purpose-driven CEO.” These new leaders, he says, understand that when “the entire company culture is focused on the employee and innovation, you will have better products delivered by harder workers who will provide better customer service and build better relationships that will result in more customer engagement.” 

 

The views of Holmes and Steinmetz about the changing mood of the country are echoed in a recent PepsiCo study. It finds that four in five respondents believe that empathy has become important because of the crisis, and that 94% overall believe that empathy is important. The number describing America as empathetic rose to 50% from 43% before the crisis. The most valued form of brand empathy identified in the study is responding to the needs of workers and the community. Over half say that brands using their marketing to address the crisis is an act of empathy, and that the top five ways to demonstrate empathy are: treat people with respect (52%); treat them as human beings (50%); listen to people (43%); care about people (41%) and acknowledge when the brand is wrong (37%). 

 

According to Greg Lyons, CMO of PepsiCo’s North America beverage division, “the findings suggest companies will need to not only evolve their consumer-facing communications around empathy, but also their support for workers, other businesses and the community at large.” 

 

For More Information

 

Michelle Holmes

Travel and Transport Loyalty

A full-service loyalty agency

Tel. 402-255-7874

mholmes@tandt.com

 

Allan Steinmetz

CEO

Inward Strategic Consulting

A 360-degree branding agency

Tel. 617-308-3017

asteinmetz@inwardconsulting.com

 

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