Soaring High in Customer Loyalty: Lessons from the Airline Industry
CEO & Founder
Today on the show we have Mark Ross-Smith, CEO and co-founder of Loyalty Status. Mark, an expert in travel technology and former head of Loyalty at Malaysia Airlines, shares his journey from running Australia's largest youth social network, SMS Fun, to pioneering the field of airline loyalty.
In this episode, Mark offers unique insights into the evolution of customer loyalty programs in the airline industry. He discusses the strategies behind successful customer retention, the psychological impact of status in loyalty programs, and the parallels between customer loyalty in the telecom and airline sectors.
Mark also reveals the behind-the-scenes mechanics of airline loyalty programs and their significant impact on both customer experience and airline revenue. This episode is a peak into the world of customer loyalty, providing valuable lessons for businesses striving to enhance their customer engagement and retention strategies.
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[00:00:00] Mark Ross-Smith: And as part of that social network in the telco business, I was going to all these events. I was going to media type events, telco events, bunch of, actually churn events. And I was flying a lot, I was traveling a lot. So I had status with an airline at this point. I had, like super platinum with an airline. I thought this travel stuff's cool. But now someone coming, I don't have a company to pay for my travel anymore. And I don't want to pay for it. So how do I get cheap flights?
[00:00:37] Andrew Michael: This is Churn.fm, the podcast for subscription economy pros. Each week we hear how the world's fastest growing companies are tackling churn and using retention to fuel their growth.
[00:00:49] VO: How do you build a habit forming product? We crossed over that magic threshold to negative churn. You need to invest in customer success. It always comes down to retention and engagement. Completely bootstrapped, profitable and growing.
[00:01:03] Andrew Michael: Strategies, tactics and ideas brought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode.
[00:01:14] Andrew Michael: Hey, Mark, welcome to the show.
[00:01:16] Mark Ross-Smith: Andrew, it's fabulous to be with you today.
[00:01:18] Andrew Michael: Thank you for joining. For the listeners, Mark is the CEO and co-founder of Loyalty Status, a travel technology company that powers custom acquisition and loyalty products for the world's largest travel bands. Prior to Loyalty Status, Mark was the head of Loyalty and Enrich at Malaysia Airlines. And prior to that, Mark founded Australia's largest youth social network, SMS Fun, which was acquired and is now part of Crowd Mobile. So my first question for you, Mark, is, what is the best way to travel in style and who offers the best loyalty program?
[00:01:48] Mark Ross-Smith: Best way to travel and start–
[00:01:49] Andrew Michael: Without putting you on stop. Yeah.
[00:01:50] Mark Ross-Smith: Super easy. Best way to travel and start is, take a credit card and just pay for it. Better way to do that. Obviously points and miles have become very popular over the last maybe a couple of decades where, you know, you can get the right credit cards, spend the right type of money and fly in business and first class for a fraction of the price. You otherwise might be paying on a cash ticket, especially that's a big thing these days because adding on it's traveled in the last year or two knows that it's ultra expensive, a lot of places today.
[00:02:19] Mark Ross-Smith: So points and the loyalty programs can really offset some of that financial pressure that folks are seeing when they go to travel. In terms of my favorite loyalty program, I'm an airline guy. I like airline, like points and miles. Actually, my favorite program changes over time. Currently it's the Etihad Guest program, which is the program of Etihad Airways. Big fan of that. It's just something new I've been getting into. I like it's a little different flavor than some of the others. So right now that's my favorite.
[00:02:45] Andrew Michael: And flies out of Australia regularly as well, I guess is a big point.
[00:02:48] Mark Ross-Smith: I mean, most of these Middle East airlines fly pretty much everywhere, to be honest. So it's… it doesn't really matter where you are. It's kind of one stop almost anywhere in the world, which I really appreciate. Cause sometimes, you know, it's, you want to get somewhere a bit obscure as three or four stops. And I don't know about you, but I don't like layovers and transiting at airports.
[00:03:06] Andrew Michael: Yeah. I think it's tough as well. I… I'm based out in Cyprus and yeah, there's like, limited number of direct flights. So it generally is a stopover or a layover. When I used to go back to South Africa quite frequently, like there's normally an Etihad, is a stopover and it's normally quite long, but generally as well, like I think as an airline, it's one of my favorite ones to fly on those longer distance flights.
[00:03:29] Andrew Michael: So excited to chat to you today because I think you have quite a long history of focusing on churn and retention throughout your career. You built, obviously, as I mentioned at the start, one of Australia's largest social networks for youth. And I'm sure in that stage, there was a lot of focus on activation and engagement, trying to drive a variety within the product. Later, you then went into Telco where you focused on churn and retention for those businesses and then now have settled in the travel industry.
[00:03:59] Andrew Michael: So I'm keen to maybe get started at the telco and maybe give us a little bit of an overview of what your role was and how you focused on retaining customers.
[00:04:08] Mark Ross-Smith: Well the telco and the social network kind of go together hand in hand. It all started back in the day, 2006, me and my co-friend at the time. You remember back in the day when you used to send text messages and they used to cost money. Like we were in a store, it was like 20 cents to send a text and everyone wanted free SMS. So we started, it was a free SMS site effectively where you could go onto the web or the mobile version and send free text to anyone in the world for free. And it was a cost saving for people that were just looking to save money effectively.
[00:04:39] Mark Ross-Smith: What we ended up figuring out is mostly people that had prepaid plans in Australia, prepaid under telco, that were joining a site because they would just run on credit or they'd run out of credit and their parents wouldn't top off their card for another two weeks. And so, like I need to text my friend. Because of course, everyone back then, still today, is just totally addicted to chatting, texting each other.
[00:04:58] Mark Ross-Smith: So that's kind of where that started. We realized very quickly that we had hundreds of thousands of people in Australia on… using this service got quite expensive for us. And a bit geeky here, but we started looking at all these SMS costs that we're incurring and how they would, like what network we were delivering these SMS is to, and that got us into looking at what mobile network people, like what their home network was kind of was with.
[00:05:23] Mark Ross-Smith: And that really got us into the whole churn customer retention game with the telcos. We'd realized at the time, and this has gone back a few years, this is 2009 at the stage, so it was a fair while ago, but similar problems exist today where telcos, especially in that part of the world, especially on prepaid had a massive churn issue, it was something like 60% churn per month. It was just ridiculously huge. So we're thinking, how do we help the telcos keep customers? How do we stop them from moving, porting between mobile networks?
[00:05:52] Mark Ross-Smith: And so we realized that we knew what mobile network these users were with. We knew that they were with, for example, Vodafone, and, you know, that ported this number to this one. We could seal this in the background. So we, at that point, turned this website at the time into a full fledged social network, sort of like the old MySpace. Remember the old one where Tom was everyone's friend and he had the top friends, like it was kind of like that. Cool, funky for the youth at the time.
[00:06:17] Mark Ross-Smith: And we would incentivize you to switch or stay with a mobile network. So we sort of acted kind of on behalf of the telco, but independently. So it's like, Hey, if you stay with this network, you get this benefit over here with us, or if you switch, you get this benefit over here with us. And that was really effective. We made a lot of money out of that. Very effective. Telcos seemed to like it. It had a very real impact on reducing churn for them. What we found out was actually more money in custom acquisition, which is really interesting.
[00:06:46] Mark Ross-Smith: Effectively, Telcos, maybe things have changed. They seem to have more money in acquiring a customer acquisition and sales and new stuff than in money to invest in keeping customers on their network. Obviously as an entrepreneur to start up, we follow the money, which is, you know, how do you get new customers for them? And so that worked out pretty well for them, pretty well for us. And that's kind of how I got started in the social network and Telcos [part of it].
[00:07:08] Andrew Michael: It's very interesting. I think definitely those trends have slowly started to change and speaking to others in the space where, yes, definitely everything was all about acquisition and slowly now people are understanding the power of retention and how that can be full to growth, especially in Telcos. Obviously in SaaS businesses, it's a staple, like you can't build a business without it. But in some of these other industries where B2C, large audiences, like there's just a neverending volume of leads that you can go through. So custom acquisition tends to be a huge, huge focus.
[00:07:38] Andrew Michael: I was also, while you were talking, I was trying to think like the transition and the timing moving from sort of that SMS paid where you had to pay per SMS versus everything switching to free, like, the likes of SMS Fun and those obviously then WhatsApp and others. I wonder if there's some sort of correlation between that and how grammar went down over time.
[00:07:57] Andrew Michael: Cause I think back in the day, if you were paying per SMS, like you really needed to get as much as you could into a single SMS where, afterwards, like you could just send one liners or like even a dot’s, and that you wouldn't care at the end of the day. So it'd be interesting to see if that whole sort of had, like, a big impact as well on how we communicate the change.
[00:08:13] Mark Ross-Smith: This is really interesting. Actually speaking personally here. Yes. Actually to be fair, my grammar has improved quite a lot because I use Grammarly for example, and all the stuff that I write. And you know, it's just, it prompts you to, Hey, you've done this wrong, put a semicolon here. Try this word instead. I found that as, probably done a bit of an advertisement for Grammarly here. It's done more for my… improve my grammar over the years and writing than anything else. But I still, you know, type messages almost as if I'm on a T9 keyboard. You know, I'm still shortening things. I'm still one word, one word, one word, one word. I mean, my wife hates it.
[00:08:49] Mark Ross-Smith: But I think this is kind of flowing over to the younger generation these days. You know, I've got young children at school, for example. And I see how they interact. And one of them is, she's almost eight now. So she's learning to type right now and seeing how she goes to type words versus write words versus how she says them, super interesting. It's like, she'll explain. It's like, she'll say like, kangaroo was a word and then she'll spell it out. And like, you look at it, you go, yeah, it makes sense.
[00:09:16] Mark Ross-Smith: But like, in terms of, like the English language, it's not quite correct, you know, the word quality, putting use after things like this. Super interesting that she's technically right, but actually wrong. Anyway, yes, I think is a major impact on definitely, use of today.
[00:09:32] Andrew Michael: Yeah. It's, and maybe it's not even like the, it's abbreviating and shortening everything and I think like, that's like the one word answer is now making it like quick and easy to reply, which obviously we all enjoy doing, but maybe in the past you would spend a little bit more time to get more into that single message so you didn't have to go backwards and forwards in a conversation. Nice.
[00:09:51] Andrew Michael: And so at the time then as well, you've gone through the acquisition then with the Telco, you ended up joining and you continued there working in a role for the Telco. Like what happened next?
[00:10:03] Mark Ross-Smith: I thought it was pretty easy. It was a sort of cash sale walk away. Very easy. Had a bit of time off, which is, for the first time about six years after working in the business. As a sort of internet entrepreneur, we'll say having downtime is unusual. So it was kind of weird not to have any email to check or any meetings to do or anything to do. It was a very strange feeling, a good feeling though. Missed that obviously. And then I needed to get back in the game, want to do something new, what to tackle next. And as part of that social network and the telco business, I was going to all these events. I was going to media type events, telco events, a bunch of actually, churn events.
[00:10:46] Mark Ross-Smith: And I was flying a lot. I was traveling a lot. So I had, you know, status with an airline at this point, I had like super platinum with an airline. I thought this travel stuff's cool, but you know, now someone, coming in, like I don't have a company to pay for my travel anymore. And I don't want to pay for it. So how do I get cheap flights? No kidding. This is how it went. So I'm like, well, I need to work for an airline. That's how you get cheap flights. They will fly pretty much for free, right? They don't by the way. But, so that sort of started the journey on, you know, I need to get into the airline industry and you know, I'd seen how the Telco world, especially in the Oceania region, had been approaching customer acquisition and retention.
[00:11:25] Mark Ross-Smith: And they seemed to be doing an okay job at the time. And then I looked at airlines and how they were doing it and how I was being treated as a top tier customer. Like I was in that sort of year before I saw one business, I was probably spending hundreds of dollars a year just on flights alone. And so that now looking back, that's in the top, you know, less than 1% of travelers globally at that point. And so you would think that airlines would want to retain the business of these people. They think they'd be going out proactively trying to woo them and stop them from looking at other airlines.
[00:11:57] Mark Ross-Smith: To get straight to the point, airlines are not that great at this, most airlines globally. When you get to the sort of the higher, higher echelons of the frequent flier world, airlines do wake up and they go, well, you're spending millions of dollars a year, okay, we'll dedicate a person on you or your account just to make sure everything is seamless. And at that point, it's really about customer experience, less so than miles of status and lounges, priority boarding and upgrades. That's kind of the middle rank stuff. At the top end, it's about, seamless customer experience.
[00:12:28] Mark Ross-Smith: If you miss a flight, they just automatically rebook you to the next one, put you in the best seat. They'll maybe kick some other people out to make sure you're on that flight. They'll transfer you to the aircraft. They just make it as, I know we don't really see it, but they try to make it as much like a private jet experience as they can within the commercial environment for their top flies. And that effectively is there, that is their retention strategy at that point. That and discounts, which as you know, discounts are not always the best thing to offer and when you've got a lot of money, don't really care what discounts do.
[00:12:57] Andrew Michael: No, you want to get down time and you don't want to miss your flights.
[00:13:00] Mark Ross-Smith: Exactly. You don't miss flights. You want to get home early. You want to see your family. You want to, you know, it's actually funny. The more you fly, the less you want to fly.
[00:13:06] Andrew Michael: Yeah.
[00:13:07] Mark Ross-Smith: You realize that it's about, you know, spending time at home and quality time with people and doing the things you love. And–
[00:13:14] Andrew Michael: Yeah, I definitely see that from my like, path as well of traveling, it was always I could start out wanting to get the cheapest tickets. And now it's definitely like the fastest ticket. Like I would never prioritize the money now over the time that you spend flying. But it's super interesting. There's quite a lot of parallels, I think, to the customer success space in like a software business in the sense that you sort of, what you're talking to now and alluding is like the enterprise clients that you would have where you typically have a handheld approach, like dedicated customer success managers looking after these clients, understanding their needs.
[00:13:46] Andrew Michael: And then now you have sort of the mid-market where you're still giving a little bit more of a, like high touch experience, but a lot of automation coming in. And then obviously at the low end, everything's just like fully automated, your support and everything from that side. So it's interesting to see that’s like… these run across different industries as well, and the sort of segmentation of the audience.
[00:14:09] Mark Ross-Smith: I think it's true. I mean, at the end of the day, we're there, all these businesses are servicing humans, you know, and we all have innate sort of ways of working and things that we want. And, you know, there's that common approach that I think that human touch works really, really well. You know, I think, I mean, obviously, I focus on travel and airline, and the airlines know a lot of that really well, but just because they are interacting with you. I mean, it could be stuck in a metal tube for 12 hours with them. So they have to get it right. They've got no choice.
[00:14:37] Mark Ross-Smith: Whereas like a SaaS business, you don't really see people. You're kind of interacting with a subscription or a website or some sort of product interface. So it's a little different. And so I think there's probably some, to be fair, there's probably, each industry could learn a little bit from each other. How do you humanize?
[00:14:54] Andrew Michael: That was going to be my next question.
[00:14:55] Mark Ross-Smith: How do you humanize more of the digital experience where there's no real people involved and it's just a product that sits in the background? And at the same time, how do airlines scale some of their business stuff a little more? And if I look at airlines and how they would achieve that, fun fact here, some airlines, American Airlines, I'm looking at here, for example, operationally not always turning a profit. Their loyalty program is ridiculously profitable to the point where I view them more as a marketing organization than an airline. So they're a marketing company that flies planes, not an airline that has a marketing division. It's kind of the other way around, just because that's where the money is.
[00:15:34] Mark Ross-Smith: And from a loyalty program perspective with an airline brand like this, their customer base is virtually unlimited because they could capture a global audience that could sign up to that. Whereas an airline, they're limited by seats and capacity and planes and pilots and landing slots and all these kinds of things. And so I think there's a lot airlines could definitely learn from, especially SaaS businesses on, in terms of scale and how to operationalize things more efficiently. On the digital side, not so much the flying side. Definitely a lot could be learned there.
[00:16:04] Andrew Michael: Could you explain how American Airlines is a marketing team and not an airline?
[00:16:08] Mark Ross-Smith: It's got blow arounds in mind, right?
[00:16:10] Andrew Michael: Yeah, I just understand that a bit.
[00:16:12] Mark Ross-Smith: So I'll give you this backstory. So in 2020, something happened to the world, apparently, and airlines, funny enough, didn't have any cash. And so they're going out there basically trying to secure government loans, private funding, just raising funds just to stay alive. Almost all airlines globally had the same problem. So the three big US airlines, American, United, Delta. They all secured government loans, but they got government loans secured by their loyalty program. So effectively, they got the loyalty business, they got the independently valued as if it was his own standalone business. Got them valued and what the world found out for the first time is these loyalty programs.
[00:16:48] Mark Ross-Smith: Those three airlines, their loyalty program, were all valued somewhere between $22 and $30 billion at the time. The same time, the airlines’ market capitalization was somewhere between $10 and $12 billion. So what it meant is the loyalty program was worth double the triple, what the entire down group was worth. And so everyone's looking and going, well, hang on, are you an airline or are you something else? Because the profits are not in flying people through the air in the sky. The profits are in, you might have seen the credit cards that airlines have, you know, get those credit cards.
[00:17:18] Mark Ross-Smith: Every time you transact, you earn like one mile, one point per dollar, per euro that you spend. Airlines make a lot of money out of this. And it's what we call the right type of money. It's high margin revenue. Margins can be anywhere between 30% and 70% on that versus when you buy a ticket to fly somewhere, like if you're an economy, cheap economy ticket, which most people are, the margin's like what, 3%, you know, 4, 5% depending. So, and, they've got to get you there and things go wrong and they lose your bags and they got to compensate you and there's weather and there's all these risk factors attached to that low margin ticket that they're selling you.
[00:17:55] Mark Ross-Smith: Versus if you just get their credit card and you spend two, three, whatever thousand a month, just on your normal living expenses, they're making what, between 30% and 70% margin and all that. So, you know, they make a little bit from you, a little bit from me, a little bit from John, a little bit from Mary, a little bit from everyone else. Suddenly there's millions of people. And that can add up to a heck of a lot of money really fast. And so that's why the airline alter programs are valued higher than airlines because they have sustainable revenue, it's high margin revenue, and it's not affected by the action during 2020-21. Some of the airlines had record profits in loyalty, even when they weren't flying as much.
[00:18:29] Andrew Michael: People were spending more because they were bored at home.
[00:18:31] Mark Ross-Smith: Yep, exactly.
[00:18:32] Andrew Michael: Yeah, so that's so interesting. I never knew this before as well. So these airlines, actually issuing credit cards and then basically people are just using those credit cards. They're earning money from them. They’re using those credit cards because they want to get the miles for the loyalty program so they can, so at the end of the day, and I love what you mentioned as well, like they just, they're a marketing agency that just happens to have a, alliance, because I think it was very, something very similar. The founder of Red Bull once said, he's like, we're a, what is it? We're a media company that just happens to sell an energy drink.
[00:19:00] Andrew Michael: And that always got me as like, when you, in like B2C world, you're trying to build, like you're trying to sell your product and you make everything about your product, but if you can sort of find other ancillary services and ways to deliver value to your users at the end of the day, you can end up building these incredible businesses where the actual product itself ends up just becoming something in the background and everything else around it drives revenue and growth for the business of that.
[00:19:23] Andrew Michael: And then, so these loyalty programs as well, I think there's definitely something in here as well, like for SaaS businesses to take back and think about. I think when you, the idea as well is like, how can you provide value to end users to become loyal customers, but then deliver value back at the end of the day to them and what are the services that come from? So I'm keen to hear a little bit about, like how you help with loyalty status and the airlines that you work with today.
[00:19:49] Mark Ross-Smith: Primarily we do two things. And to be fair with how we work with mostly airlines, some hotel brands, is… these are things that airlines could do themselves. We're sort of offering it as an external service because airlines are not really known, being the most tech forward thinking businesses on earth. You know, they've typically got this risk aversion approach to everything they do. To be fair, this is a good thing because it's about safety, safety, safety, safety. That flows over into the rest of the business.
[00:20:16] Mark Ross-Smith: We all want airlines to be safe. So that's the culture they have. That flows over into marketing and digital parts of the organization as well. Hence they're just a little, could be faster. Let's put it that way. And so primarily we do two things. You know, I took some inspiration from the Telco days on helping, you know, Telcos acquire new customers. So we do customer acquisition for a bunch of major airline brands today. That works very well, obviously, because they want new high value customers. These people spend more, they spend more frequently, they spend the right type of money, typically in business or first class.
[00:20:48] Mark Ross-Smith: And so these are the customers… would be spending, you know, probably somewhere north of $5,000, $10,000 a year on flights every year, or hotels over and over. So we have a bunch of airlines do that. We've just launched a subscription. The world's, or I think, is the first loyalty subscription product with an airline brand. It's a fairly okay well-known brand in the… sort of Europe, Africa part of the world. It's a subscription product. I think no one's really seen this before in terms of airline loyalty and some sort of, because they've been trying to crack it for a long time. Because everyone's thinking, what's the subscription I can have? Because I want this recurring revenue. They don't think about, hey, you don't start with the model, you start with the product.
[00:21:27] Mark Ross-Smith: What can you solve for the customer first? What value can you bring to their experience, bring to their life? And then if some subscription thing laid on top of that makes sense, then go for it. So we think we've cracked it with this brand. We've worked with them for a while. It's pretty interesting. I mean, time will tell if it works out or not. But this kind of product, it's about bringing value in terms of elite status. And when you fly, doubling or tripling the status miles that you earn when you fly. So it's easy to obtain that silver, the gold, platinum type status that you have within, airline. And a lot of people are drawn to the status benefits of airline. So it is a real value add.
[00:22:06] Mark Ross-Smith: Cause you know, when you're a gold or platinum of the airline, suddenly you're flying in your economy class and you're in the business class lounge and you're first aboard the airplane and you're getting a better seat and the manager's coming down and saying, welcome back. You know, here's a glass of champagne, even though you're in the middle row in the back of the plane and got a terrible flight ahead of you. So it's, if you know, airlines really, it's about making that experience for their most important customers as best possible. And I believe there's a bunch of products that, I mean, we're creating, airlines are creating as well, that sort of layer on top of that to bring more value to their customers. And I think customers are willing to pay for it as well.
[00:22:40] Andrew Michael: Yeah. And I think it's, interesting sort of these services and the point you made as well earlier in, how to humanize sort of, this approach. And obviously you don't need to share too much details about the specific program, but in terms of airlines themselves and the loyalty programs like, what are some of the services that stand out to you that you think could be replicated within the SaaS or software space?
[00:23:03] Mark Ross-Smith: So in an airline loyalty business, to think, the business of airline loyalty and not from a customer perspective is generally two parts. So one is the points and miles. So the points and miles you get in your account from flying or from renting a car or hotel or credit card. And then there's the elite status part, which is gold, platinum type thing. And it comes with additional perks like lounge access, priority boarding. So the point of miles drives cash for the loyalty program because they're effectively selling points of miles to a third party. So it's good for working capital, high margin money effectively. And the status portion over here, this is what sells more product.
[00:23:39] Mark Ross-Smith: So people don't tend to book more seats because you say you're going to get an extra thousand points when you fly. They book the extra seat because they want to keep their gold status. They book the seat because they want… they're too scared. They have no lounge access when they fly with their wife in six months from now. They'll do whatever they can to possibly protect that status. It's an emotional feeling. You don't go out and buy a Ferrari because it's the best car out there on the market. You buy it because it's a status symbol. It's what it represents you. It's, you want to show something to the world that does other things to your life, which are more important.
[00:24:15] Mark Ross-Smith: Status drives, especially males, I think in very unique ways to do things. And airlines have totally capitalized on this big time. And so it's about, you know, how do you keep that status? How do you get to the next high tier? How do you kind of show off a little bit? And that might be, you see people in the airport all the time, little things on their bag, you know, I'm a platinum member, it's on their bag for a reason, they're showing off, I do the same thing. So it works. It's very effective.
[00:24:43] Mark Ross-Smith: So if we think about what other businesses can learn, status is a major driver for it. People have status and, airline drives 30% to 40% of total revenue for an airline. And it's the high margin rates. It's the business, the first class type folks. So how would you put some sort of status element into a digital product or SaaS product? Or even better, maybe this is a step further, how do you partner with a brand that does it really well? How do you partner with an airline and leverage their brand, leverage their status? And it could be as simple as just buying points and miles from them.
[00:25:16] Andrew Michael: Yeah. Now it's very interesting and definitely like that status components. So the one element you mentioned sort of was like the building up points and it reminded me of an earlier episode with Jenna Basto where they sort of gamified their onboarding approach, where they originally started with 30 days and they were like, why do we give them so many days? Let's just cut it down to 15, but we'll give them extra days for activity that they do within the product. So it's sort of like unlock the experience for them. And if you put in a credit card, you've got an extra 35 days for the product. And it actually allowed them to sort of use the usage of the product to get them to use the product more, to get activated effectively.
[00:25:57] Andrew Michael: But the other side of it, what you mentioned now is that status component. Like what can products do to build the sense of product where people with, in terms of their usage and evangelization potentially go up in status within their product. I think actually Hotjar in the early days had a very, very successful referral program. And one of the things they just did was they got their person, whoever was one of the early adopters, part of the beta program, got their name up on the Hotjar website, I think it's probably still leaving there today, founding members of Hotjar and just that sort of little status symbol, like helped them grow enormously in the early days.
[00:26:33] Andrew Michael: I can't remember what the numbers were, but I think it was somewhere around 60,000 on the beta waiting list before launch, just due to this sort of, okay, you're a founding member, now we're going to recognize you, you're on our website for that, but there's probably a lot of other ways that you could think to provide status to your users that could essentially then drive them to want to stick around and want to maintain that status with you.
[00:26:57] Mark Ross-Smith: How do you make your customers look good publicly? How do you do more of that? And that could be like, to be fair, it's probably not little badges on their profile, it's got to be something that would be good. I've seen some airlines, like, put people's names on the side of aircraft. That's kind of cool. So that's my jet.
[00:27:14] Andrew Michael: But then you're probably not standing in line with a little badge on your bag when you've got a name on a plane. Yeah. They're picking up to our house and coming to get you.
[00:27:21] Mark Ross-Smith: You can go to a special entrance. It's your plane. They kick everyone else off just you flying.
[00:27:26] Andrew Michael: And this is what I love as well. And what I'm trying to do, I think over the next few months now with the show is try to speak to people in different industries a little bit more and see how they treat customers and what you can, like put over from different sectors and different industries. I think definitely as well, like the hotel space is something else where you have amazing customer experiences and service being created. And there's definitely, I think the status is something to look into and to start to see if we can uncover interesting stories from startups doing this really, really well.
[00:27:54] Mark Ross-Smith: Yeah. And what I've seen in… definitely in travel is how airlines are trying to improve here is actually, a really good takeaway for every industry is I talk about how management are trying to be customers of their own product. Now, typically if you work on, airline, you're not a frequent flier because you work in, airline and you're flying for free. So you're not out there spending $5,000, $10,000, $50,000, $100,000 on flights. Probably don't even earn that. So you're definitely not spending out the airline. But how do you encourage, especially management of the airline to earn goal status themselves legitimately on merit? Like how do you get them paying for tickets?
[00:28:27] Mark Ross-Smith: And there's a bit of magic here because imagine if you have a manager at an airline that are paying for their own tickets. They're just buying the cheapest because they want to save money as well. You know, they're in the back of the plane on a Friday night with screaming kids next to them. You know, something doesn't work in the process or they see an opportunity to fix something. Things magically get fixed really fast because they're then solving their own problems. And when they solve their own problems, they're solving it for millions of other travelers as well, which benefits you and me and everyone else. So I'm a huge fan of, Be a customer of your own product, you know, use it every day, cause then you start to, don't even need to run surveys and focus groups and stuff. It's like, what do I need to fix to make it better myself?
[00:29:07] Andrew Michael: There's definitely some airlines that are not adopting that approach. We're flying with them because if they did, there'd be a lot better experiences with them. But yeah, I think that's definitely like they're all eating your own dog food sort of analogy, which is like nobody eats dog food, but we said all the time. But yeah, it's definitely like those, the way you can empathize better with your end user and really seeing the pain points and see even better if it's you yourself is experiencing that pain and then seeing, okay, wow, like I really understand now why that person or this X, Y number of people complained about this, it really is a pain.
[00:29:41] Andrew Michael: Nice Mark. Well, I see we're running up on time, so I'm going to ask a question I ask every guest. What's one thing that you know today about churn and retention that you wish you knew when you got started with your career?
[00:29:52] Mark Ross-Smith: If I rewind my career a few years ago, it would be that in the industry I was in, they cared much more about new sales than customer retention. So I would have focused on… I would have followed the money a little bit faster and done that. However, you know, fast forward to where I am now, knowing how to model and predict retention, I mean, in churn, in different ways. If I'd known more of this back then, I think that would have been very helpful because then it's something more interesting to show my clients.
[00:30:20] Mark Ross-Smith: This is how you do it, guys. Like this is how we're going to predict these things. This is how it's working right now. And this is why you should be putting some of your sales budget into, retention budget, because having been in this space in multiple industries for a long time and being a customer product in both airline and telco stuff, I see it. I see what would work and what wouldn't work. And knowing that upfront would have been pretty helpful. Would have saved a bit of pain and heartache, I think.
[00:30:46] Andrew Michael: And listens along the way. Very nice. Well, it's been an absolute pleasure chatting today, Mark. It's been great hearing a little bit about the telco industry and then later in the travel, how different practices from these industries can potentially be adopted in the software space. And obviously with Loyalty Status, excited to see where things go from here. Is there any final thoughts you want to leave the listeners with, like anything they should be aware of, or how can they keep up to speed with your work?
[00:31:11] Mark Ross-Smith: Being a customer of your own product, definitely start there. I'm on LinkedIn, I’ve been there. I'm pretty active. Otherwise check out loyaltystatus.com.
[00:31:20] Andrew Michael: Awesome. For the listeners, we'll make sure to leave everything we discussed today in the show notes so you can check that out later. Thanks again for joining, Mark and wish you best of luck going forward.
[00:31:28] Mark Ross-Smith: Thanks, Andrew.
[00:31:29] Andrew Michael: Cheers.
[00;31:37] Andrew Michael: And that's a wrap for the show today with me, Andrew Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business. To keep up to date with churn.fm and be notified about new episodes, blog posts and more, subscribe to our mailing list by visiting churn.fm. Also, don't forget to subscribe to our show on iTunes, Google Play or wherever you listen to your podcasts.
[00:32:03] Andrew Michael: If you have any feedback, good or bad, I would love to hear from you. And you can provide your blunt, direct feedback by sending it to email@example.com. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.
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My name is Andrew Michael and I started CHURN.FM, as I was tired of hearing stories about some magical silver bullet that solved churn for company X.
In this podcast, you will hear from founders and subscription economy pros working in product, marketing, customer success, support, and operations roles across different stages of company growth, who are taking a systematic approach to increase retention and engagement within their organizations.