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Soaring High in Customer Loyalty: Lessons from the Airline Industry with Loyalty Status CEO, Mark Ross-Smith

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 Ross-Smith (00:00):

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, a 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 super platinum with an airline. I thought this travel stuff’s cool, but now summer 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?

Audio (00:29):

… magic threshold.

(00:30):

How do you build a habit forecast product?

(00:32):

You need to invest.

(00:33):

You saw these different…

(00:33):

You don’t just gun for revenue in the door.

Andrew Michael (00:37):

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.

Audio (00:49):

How do you build a habit-forming product?

(00:51):

We crossed over that magic threshold to negative churn.

(00:55):

You need to invest in customer success.

(00:57):

It always comes down to retention and engagement.

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Completely bootstrapped, profitable and growing.

Andrew Michael (01:03):

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. Hey, Mark. Welcome to the show.

Mark Ross-Smith (01:16):

Andrew, it’s fabulous to be with you here today.

Andrew Michael (01:18):

Thank you for joining. For the listeners, Mark is the CEO and co-founder of Loyalty Status, a travel technology company that powers customer acquisition and loyalty products for the world’s largest travel brands. Prior to Loyalty Status, Mark was the head of Loyalty & Enrich at Malaysia Airlines. And prior to that, Mark founded Australia’s largest youth social network, SMS Fund, which is 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?

Mark Ross-Smith (01:48):

Best way to travel in style-

Andrew Michael (01:49):

Without putting you on stop here.

Mark Ross-Smith (01:50):

Super easy, best travel style is take a credit card and just pay for it. There’s no better way to doing that. Obviously points and miles have become very popular over the last maybe couple of decades where you can get the right credit card, spend the right type of money and flying 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 anyone that’s traveled in the last year or two knows that it’s ultra expensive a lot of places today. So points and the loyalty programs could 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, I like points and miles. Actually my favorite loyalty program changes over time. Currently, it’s the Etihad Guest Program, which is the one of Etihad Airways. Big fan of that. It’s just something new I’ve been getting into. I like, because it’s got a little different flavor than some of the others. So right now that’s my favorite.

Andrew Michael (02:45):

And flies out of Australia regularly as well, I guess is a big point of course.

Mark Ross-Smith (02:48):

They do. I mean, most of these Middle East airlines fly pretty much everywhere to be honest. So it doesn’t really matter where you are. It’s kind of one stop almost anywhere in the world, which I really appreciate, because sometimes you want to get somewhere a bit obscure. There’s three or four stops and I never Uber, I don’t like layovers and transiting at airports.

Andrew Michael (03:06):

Yeah, I think it’s tough as well. I am based out in Cyprus and here there’s a 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 is normally quite long. But generally as well, I think as an airline, it’s one of my favorite ones to fly on those longer distance flights.

(03:29):

So excited to chat to you today, because I think you have quite a long history of focusing on churn and rotation 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 engagements, trying to drive virality 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. 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.

Mark Ross-Smith (04:08):

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-founder at the time… You remember back in the day when you used to send text messages and they used to cost money. We were in Australia, it was like 20 cents to send a text and everyone wanted free SMS. So we started, it was a free SMS site. Effectively we could go onto the web or the mobile version and send free texts to anyone in the world for free and it was a cost saving for people that were just looking to save money effectively. What we ended up figuring out is mostly people that had prepaid plans in Australia prepaid under telco that were joining the site, because they would just run low on credit or they’d run out of credit and their parents wouldn’t top off their card for another two weeks, and so I need to text my friend.

(04:54):

Of course, everyone back then still today is just totally addicted to chatting, texting each other. So that’s kind of where that started. We realized very quickly that we had hundreds of thousands of people in Australia using this service. Got quite expensive for us and it’s a bit geeky here, but we started looking at all these SMS costs that were incurring and what network we were delivering these SMSs to. And that got us into looking at what mobile network people, what their home network, who this impact was with. And that really got us into the whole churn customer retention game with the telcos. We’d realized at the time, and this has going back a few years, this is 2009 at this stage, so it was a fair while ago, but similar problems exist today where telcos, especially in that part of world, especially on prepaid, had a massive churn issue. It was something like 60% churn per month. It was just ridiculously huge.

(05:45):

So we were thinking, how do we help the telcos keep customers? How do we stop them from porting between mobile networks? And so we realized that we knew what mobile network these users were with. We knew that they were with, for example, Vodafone and they’d ported this number to this one. We could see all 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? It was kind of like that. Cool, funky for the youth at the time 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.

(06:26):

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 and very effective. Telcos seemed to like it. It had a very real impact on reducing churn for them. What we found out, there’s actually more money in customer acquisition, which is really interesting, because effectively telcos, maybe things have changed. They seem to have more money in acquiring customer acquisition and sales and new stuff, then the money to invest in keeping customers on their network. Obviously as an entrepreneur and a startup, we follow the money, which is 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 telco side of things.

Andrew Michael (07:09):

Yeah, space. It is 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. How that can be [inaudible 00:07:24] growth, especially in telcos, because obviously in SaaS businesses it’s a staple. You can’t build a business without it. But in some of these other industries where B2C large audiences, there’s just never ending volume of leads that you can go through. So customer acquisition tends to be a huge, huge focus.

(07:38):

I was also, while you were talking, I was trying to think 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 Fund. There was obviously then WhatsApp and others. I wonder if there’s some sort of correlation between that and how grammar went down over time, because I think back in the day, if you were paying for SMS, you really needed to get as much as you could into a single SMS. Where afterwards you could just send one-liners or even dots and that you wouldn’t care at the end of the day. So it’d be interesting to see if that all sort of had a big impact as well on how we communicate the change.

Mark Ross-Smith (08:13):

This is really interesting. Speaking personally here, yes. My grammar. Actually, to be fair, my grammar’s improved quite a lot. I use Grammarly for example, on all stuff that I write and it prompts you to-

Andrew Michael (08:24):

Yeah, trains you.

Mark Ross-Smith (08:24):

… “Hey, you’ve done this wrong, put a semicolon here, try this word instead.” I found that has probably done, it’s a bit of an advertisement for Grammarly here, but that’s done more for my improvement on grammar over the years and writing than anything else. But I still type messages almost as if I’m on a T9 keyboard. I’m still shortening things. I’m still one word, one word, one word. I mean, my wife hates it. [inaudible 00:08:50].

(08:49):

But I think this is kind of flowing over to the younger generation these days. I’ve got young children at school, for example, and I see how they… 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 right words versus as she says them, super interesting. I’ll explain, it’s like she’ll say kangaroo is a word and then she’ll spell it out and you look at it, you go, “Yeah, it makes sense.” But in terms of the English language, it’s not quite correct or the word quality or putting U’s after things like this. Super interesting that she’s technically right, but actually wrong. Anyway, my point is, yes, I think there’s a major impact on definitely youth of today.

Andrew Michael (09:32):

Yeah, it’s abbreviating and shortening everything. And I think that’s the one word answer is now making it 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. 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. What happened next?

Mark Ross-Smith (10:03):

It was pretty easy. I sold the company, 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 very strange feeling, a good feeling though. Missed that obviously and then needed to get back in the game, wanted to do something new, what to tackle next. 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, a 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.

(10:50):

I had super platinum with an airline. I thought this travel stuff’s cool, but now summer 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? 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 for that sort of start of the journey, I need to get into the airline industry. And I’d seen how the telco world, especially in Oceania region, had been approaching customer acquisition and retention 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.

(11:34):

I was in that sort of year before I saw one business, I was probably spending $100,000 a year just on flights alone. And so that now looking back, that’s in the top, less than 1% of travels globally at that point. And so you would think that airlines would want to retain the business of these people. You think they’d be going out proactively trying to effectively woo them and stop them from looking at other airlines. To get straight to the point, airlines are not that great at this, most airlines globally. When you get to the high, high echelons of the frequent flyer world, airlines do wake up and they go, “Well, he’s spending a billion 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 and status and lounges and priority boarding and upgrades.

(12:23):

That’s kind of the middle ranked stuff. At the top end it’s about seamless customer experience. 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. 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 flyers. 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, you don’t really care about discounts, do you?

Andrew Michael (12:57):

No, you want to get there on time and you don’t want to miss your flight.

Mark Ross-Smith (13:00):

Exactly. You don’t want to miss your flight, you want to get home early, you want to see your family, you want to… Actually funny, the more you fly, the less you want to fly. You realize that it’s about spending time at home and quality time with people and doing the things you love and…

Andrew Michael (13:14):

Yeah, I definitely see it from my path as well of traveling. It was always I could start out wanting to get the cheapest ticket and now it’s definitely the fastest ticket. I would never prioritize the money now over the time that you spend flying and stuff. But it’s super interesting. There’s quite a lot of parallels I think to the customer success space in a software business. In the sense that what you’re talking to now and alluding is the enterprise clients that you would have where you would typically have a handheld approach like dedicated customer success managers looking after these clients, understanding their needs. Then now you have sort of the mid-market where you’re still giving a little bit more of a high touch experience, but a lot of automation coming in and then obviously at the low end everything’s just fully automated, your support and everything from that side. So it’s interesting to see that these run across different industries as well and these sort of segmentation of the audience.

Mark Ross-Smith (14:09):

I think it’s true. I mean, at the end of the day, all these businesses are servicing humans and we all have innate sort of ways of working and things that we want. And there’s that common approach that I think that human touch works really, really well. I think obviously I focus on travel and airline and the airlines nail a lot of that really well, just because they are interacting with you. I mean, you could be stuck in a metal tube for 12 hours with them, so they have to get it right, they’ve got no choice. 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, it’s probably each industry could learn a little bit from each other. How do you humanize-

Andrew Michael (14:55):

That was going to be my next question.

Mark Ross-Smith (14:56):

Yeah, 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 where the money is. 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.

(15:44):

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.

Andrew Michael (16:04):

Could you explain how American Airlines is a marketing team and not a-

Mark Ross-Smith (16:08):

It’s going to blow everyone’s mind. Yeah.

Andrew Michael (16:10):

Yeah, just to understand that a bit.

Mark Ross-Smith (16:11):

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.

(16:30):

So the three big US airlines, American, United, Delta, they all secured government loans. They’ve got government loans secured by their loyalty program. So effectively got the loyalty business, they got the independently valued as if it was its own standalone business. What the world found out for the first time is these loyalty programs, those three airlines, the loyalty program would’ve all valued somewhere between 22 and $30 billion at the time. At 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 to triple what the entire darn 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 mostly in the credit cards that airlines have.

(17:17):

Get this credit cards. Every time you transact, you earn 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% at 5% depending.

(17:45):

They’ve got to get you there and things go wrong and they lose your bags and they’ve 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 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 on all that. So 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 loyalty programs are valued higher than airlines, because they have sustainable revenue. It’s high margin revenue and it’s not affected by actually during 2020, ’21, some of the airline’s had record profits in loyalty even when they weren’t flying as much.

Andrew Michael (18:29):

People were spending more, because they were bored at home.

Mark Ross-Smith (18:31):

Yep, exactly.

Andrew Michael (18:33):

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, they’re a marketing agency that just happens to have airlines. I think it was 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.”

(19:00):

And that always got me as like when you in B2C world, you’re trying to sell your product and you make everything about your product, but if you can 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. And then so these loyalty programs as well, I think there’s definitely something in here as well for SaaS businesses to take back and think about. The idea as well is, how can you provide value to your end users to become loyal customers, but then deliver value back at the end of the day to them and where those services have come from. So I’m keen to hear a little bit about how you help with Loyalty Status and the airlines that you work with today.

Mark Ross-Smith (19:49):

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 offering it as an external service, because airlines are not really known being the most tech forward-thinking businesses on earth. 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. 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.

(20:28):

And so primarily we do two things. I took some inspiration from the telco days on helping 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. And so these are the customers that would be spending probably somewhere north of five, $10,000 a year on flights every year or hotels over and over. So we help a bunch of airlines do that.

(20:58):

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 in 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… Because I want this recurring revenue.” They don’t think about, hang on, you don’t start with the model, you start with the product. 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.

(21:36):

So we think we’ve cracked it with this brand. We’ve worked that with them for a while. It’s pretty interesting. 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 with an airline. And a lot of people are drawn to the status benefits of an airline. So it is a real value add, because you know when you’re a gold or platinum of the airline, suddenly your economy class and you’re in the business class lounge and you’re first to board the airplane and you’re getting a better seat and the manager’s coming down and saying, “Welcome back. 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.

(22:23):

So 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. I think customers are willing to pay for it as well.

Andrew Michael (22:40):

Yeah, I think it’s interesting, these services, and the point you made as well earlier in how to humanize 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, what are some of the services that stand out to you that you think could be replicated within the SaaS software space?

Mark Ross-Smith (23:03):

So in an airline loyalty business, I think the business of airline loyalty and not from a customer perspective, there’s 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 a credit card. And then there’s the elite status part, which is gold to platinum type thing. And it comes with additional perks like lounge access, priority boarding. So the points and miles drives cash for the loyalty program, because it’s effectively selling points and miles to a third party. So it’s good for working capital, I imagine money effectively. And the status portion of it here, this is what sells more product. So people don’t tend to book more seats because you say you’re going to get an extra 1000 points when you fly. They’ll book the extra seat, because they want to keep their gold status.

(23:48):

They book the seat, because they won. They’re too scared, they don’t want to 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 represents you, you want to show something to the world that does other things to your life which are more important. So status drives, especially males, I think, in very unique ways to do things and airlines have totally capitalized on this big time. So it’s about how do you keep that status? How do you get to the next higher tier? How do you kind of show off a little bit?

(24:32):

You see people in the airport all the time, little things on their bag, “I’m a platinum member.” It’s on their bag for a reason, they’re showing off. I do the same thing. It works. It’s very effective. So if we think about what other businesses could learn, status is a major driver for… People have status on airline drives 30 to 40% of total revenue for an airline, and it’s the high margin, right? It’s the business, the first class type folks. So how would you put some sort of status element into a digital priority 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? It could be as simple as just buying points and miles from them.

Andrew Michael (25:16):

Yeah. No, it’s very interesting, and definitely that status component. So the one element you mentioned was the building up points, and it reminded me of an earlier episode with Jana Bastow where they sort of gamified their onboarding approach. Where they originally started 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 sort of 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 use the usage of the product to get them to use the product more to get activated effectively. But the other side of it, what you mentioning now is that status component. What can products do to build this into a product where people within terms of their usage and evangelization potentially go up in status within their product?

(26:10):

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 even there today. Founding members of Hotjar and just that sort of little status symbol helped them grow enormously in the early days. 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 websites.” 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.

Mark Ross-Smith (26:57):

How do you make your customers look good publicly? How do you do more of that? And that could be, to be fair, it’s probably not little badges on their profile. It’s got to be something a bit bigger. I’ve seen some airlines put people’s names on the side of aircraft. That’s kind of cool. It’s like, “That’s my plane. That’s my jet.”

Andrew Michael (27:14):

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.

Mark Ross-Smith (27:18):

No, [inaudible 00:27:19].

Andrew Michael (27:18):

They’re picking you up at your house and coming to get.

Mark Ross-Smith (27:22):

You got a special entrance, it’s your plane. They kick everyone else off, just you flying.

Andrew Michael (27:26):

Yeah. 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 port over from different sectors and different industry. I think definitely as well, 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.

Mark Ross-Smith (27:54):

Yeah. And what I’ve seen in definitely in travel is how airlines are trying to improve here… It’s actually a really good takeaway for every industry, is I talk about how management are trying to be customers of their own product. Typically, if you work an airline, you’re not a frequent flyer, because you work an airline and you fly for free. So you’re not out there spending five, 10, 50, $100,000 on flights. Probably don’t even earn that. So you’re definitely not spending at the airline. But how do you encourage, especially management at the airline to earn gold status themselves legitimately on merit? How do you get them paying for tickets?

(28:27):

And there’s a bit of magic here, because imagine if you’ve got 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. They’re in the back of the plane on a Friday night with screaming kids next to them. Something doesn’t work in the process or they see an opportunity to fix something. Things magically get fixed really fast, because they’re just 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, use it every day, because 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?”

Andrew Michael (29:06):

Mm-hmm. There’s definitely some airlines that are not adopting that approach and speak of flying with them, because if they did, there’d be a lot better experiences with them. But yeah, and I think that’s definitely the old eating your own dog food sort of analogy, which is like nobody eats dog food, but we say it all the time. But yeah, it’s definitely the way you can empathize better with your end user and really seeing the pain points. And it’s even better if it’s you yourself who’s experiencing that pain and then seeing, “Okay, wow, I really understand now why that person or this XY number of people complained about this. It really is a pain.”

(29:41):

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?

Mark Ross-Smith (29:52):

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’ve followed the money a little bit faster and done that. However, fast-forward and where I am now, knowing how to model and predict retention, I mean churn in different ways. If I’d known more of this back then, I think that would’ve been very helpful, because then it’s something more interesting to show my clients that this is how you do it, guys. 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 of their own 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’ve been pretty helpful. It would’ve saved a bit of pain and heartache I think.

Andrew Michael (30:46):

And lessons along the way. Very nice. Well, it’s been absolutely 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? Anything they should be aware of or how can they keep up to speed with your work?

Mark Ross-Smith (31:11):

Big [inaudible 00:31:12] on product, definitely start there. I’m on LinkedIn. Add me there. I’m pretty active. Otherwise, check out loyaltystatus.com.

Andrew Michael (31:20):

Awesome. For the listeners, we’ll make sure to leave everything we discuss 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.

Mark Ross-Smith (31:28):

Thanks, Andrew.

Andrew Michael (31:29):

Cheers.

(31:37):

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.

(31:57):

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(32:13):

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