Loyalty 3.0 with Euromonitor International’s Nadejda Popova, PhD

Robbie K Baxter
20 min readMar 21, 2024

Loyalty programs seem to be at a crossroads. Industries including hospitality, financial services, and retail are going beyond the points-based programs we’re so familiar with and exploring more personalized, emotionally engaging programs. Some, like CVS, Inspirato, and of course Amazon with Amazon Prime have even incorporated paid loyalty subscriptions which provide benefits in exchange for an annual fee instead of requiring customers to earn benefits through their spending and behaviors.

Euromonitor International’s Nadejda Popova, PhD

My guest, Nadejda (known as “Nadia)” Popova of Euromonitor International, follows the loyalty trends and provides insights across industries regarding best practices in building long-term relationships with customers.

In this wide-ranging conversation, we talk about how consumer expectations have changed since COVID, why personalization is so important, and where subscriptions fit in the broader loyalty landscape.

The following interview is adapted from my podcast, Subscription Stories: True Tales from the Trenches.

Robbie Baxter: Nadia, welcome to the show.

Nadia Popova: It’s nice to be here. Thank you so much for the invitation, Robbie.

Robbie Baxter: I’m really looking forward to this. I wanted to start by asking you how you came to be a loyalty expert generally, and then specifically in loyalty programs.

Nadia Popova: It’s sort of a natural evolution of my work at Euromonitor International. I have been working for a number of years within the travel and tourism industry and loyalty has been evolving and transforming so much that it led me to a nice change of path of career development. I love it. The engagement, the interaction with different clients across different industries is definitely benefiting me a lot just to see different practices and strategies being implemented by these leading players.

Robbie Baxter: Yeah, interesting. You came from the tourism industry. We all collect points on our airlines and with our hotels. And you came from that background and then expanded to look more broadly at a lot of different industries.

Nadia Popova: Exactly. And it’s such a fascinating industry, isn’t it? Because, as you’ve pointed out, travel and tourism have been one of the main sectors that have been driving that evolution of loyalty. It’s a great place to start. And just see how these new business models are transforming the loyalty space altogether.

Robbie Baxter: Yeah, loyalty programs are everywhere, and it seems like they’re at a crossroads with almost every retailer. Lots of manufacturers getting into the game and moving beyond the point space programs that we’re so familiar with. Why is there so much going on in the loyalty space right now?

Nadia Popova: Absolutely. I agree with you entirely. We’re seeing a lot of companies revamping their existing loyalty programs or those that have not yet launched are thinking about launching new loyalty schemes. And I think it’s very much because the consumer has changed coming out of COVID, the preferences, the sentiments, the requirements, the lifestyle needs of the consumers have changed. And as a result of that, loyalty programs have been transforming.

Traditionally, if you think about a couple of years ago, transactional loyalty has been very dominant and continues to be. Especially now that we are talking about the rising cost of living. But there is a major shift towards emotional loyalty, and the heart of that is the consumer and the requirement to have much more engagement with the brand and the demand if you want added value. As a result, we’re seeing an increasing need for experiential rewards if you want gamified type of rewards to make those loyalty programs more fun, more rewarding, and at the same time to deliver that instant gratification which is not necessarily all these traditional or legacy types of programs are able to deliver in this environment which has been shaped by the digitalization and digitally savvy consumers as well.

Robbie Baxter: Yeah, really interesting. There are a couple of things that I want to follow up on. The first thing is you talked about how consumers have changed as a result of COVID. What are the changes that you’re seeing in terms of consumer demands and consumer expectations?

Nadia Popova: For example, when we talk about transactional loyalty where you have discounts or monetary-based benefits. That must strategy. That passive engagement that we usually tend to associate with transactional loyalty is no longer relevant for these consumers. They want something that is very personalized to their shopping preferences. This is where these brands need to take into consideration their preferences, the frequency that they shop, the type of products that they’re really interested in, and the values that are important for these consumers. And a result, as a result of that, you know, the need for these programs to transform, to change, to adapt to these needs of the consumers.

That passive engagement that we usually tend to associate with transactional loyalty is no longer relevant for the consumers. They now want something that is very personalized to their shopping preferences. — Nadia Popova

I think as we came out from COVID, we’ve seen that we’ve started to reevaluate what is important for us. When we talk about health and wellness for instance, the priorities that we want to drive as a family, with your peers, and how you want to kind of engage with these individual brands. So all these individual elements are coming to play an important role in terms of the level of engagement, the type of rewards that these consumers are demanding from loyalty to programs.

Robbie Baxter: Interesting. And can you give our listeners an example or two of existing loyalty programs that have evolved? Maybe a couple of experiments that you’re seeing that exemplify this move from what you call transactional and financially oriented to more emotional and relationship-driven.

Nadia Popova: Sure. They’re different of course, across the board when we look at different industries, but one that I particularly like is ANA which is the airline in Japan, and they have been very much kind of thinking of developing a lifestyle ecosystem, that type of reward. And and it’s very much allowing members to earn miles for non-air travel activities. For example, this could be walking, taking public transit, transportation, or any other aspects that could be included as part of that. ANA is one of the several airlines that has increased its partnership with non-travel companies since the pandemic began. The more travel companies that are offering these types of benefits, the more pressure their competitors will face to revamp their loyalty programs in a similar way. And I think why this is interesting for me is because traditionally, you would associate, for example, car rental companies working with airlines or airlines with hotels. Right? So here, you’re coming out of that network and thinking about what else is important for for my members, and how I can relate to their needs. How they’re traveling and the importance of sustainability, for example, their day-to-day commutes, and how I can bring my company to contribute and support them, but at the same time receive rewards on the back of that. So that’s one example that for me is quite interesting.

Robbie Baxter: Yeah, that is a great example. And it’s interesting to me that ANA is expanding the Forever Promise. They’re tying their benefits around health and well-being in terms of lifestyle with walking, taking public transit, sustainability, and health. They must know their customer very well, and know that aligns. But it’s not an obvious one to me from the airline to wellness and lifestyle. I find that interesting that they’re expanding into that.

Nadia Popova: Absolutely. Another example that I really like is Vitality by Discovery in South Africa, which is an insurance company. What is interesting and quite kind of motivating is when you read and see how they position their product is that they are promoting a healthier lifestyle, and they’re rewarding their members for the behavior rather than spending. So they would encourage their members to exercise, to drive safely to shop. Thinking about health and wellness again, and also incorporating behavioral economics as part of their platform. In a way incorporating hyper-personalization, tailoring the individual offers to that individual member and listening to some of the interviews of their leadership, I could hear examples of how they’ve launched a booking platform where members can book their flights and have a very big discount, but also they can use their face as an ID to book that travel. So again, making sure that the whole process is seamless, that it’s easier. That they take into consideration all these important aspects for the end member. Using gamification as well as part of that.

Gamification in loyalty programs adds fun game-like elements — scoreboards, challenges, badges, even metaverse tournaments — making rewards more engaging and interactive

For example, you can have rewards, multiplier, and stuff like that. So this is an example of a company that is thinking outside of the box, going beyond their immediate industry, and segment of operation, and at the same time very much supporting the healthy lifestyle of their members.

Robbie Baxter: A quick definition of gamification for our listeners. When you think about gamification, I think about it as when a company introduces artificial ways of driving engagement and habit formation before the actual organic benefits kick in. So I sort of think of it also sometimes as a stopgap measure to drive the right habits. How do you think about gamification and when it should be used?

Nadia Popova: I think for me, gamification is when these different companies for loyalty programs are using game-like types of elements as part of the proposition of their rewards. Whether they are using video games or any other fun elements to drive that engagement and that experience. This is where your scoreboards are coming to play, challenges, different badges, and metaverse, where you’re bringing those different tournaments, and you’re weaving into that immersive experience as well. So that is my take on gamification and the use of different types of game elements in the loyalty program.

Robbie Baxter: Yeah, interesting. Now, I know you told me you’re based in London. You have a very global perspective. In a previous conversation, you mentioned some of the gamification you’re seeing in the Middle East, and I’d love for you to share what you’re noticing in that part of the world with regard to loyalty generally. But more specifically, this idea of gamification to create excitement and and fun in loyalty programs.

Nadia Popova: Absolutely. Looking at some of the statistics from our research at Euromonitor International, we’re seeing a lot of developments and potential double-digit growth within the gaming industry, online games and video games. Middle East is one of the biggest regions that by 2027 that is expected to show that growth and as a result, of course, there is a huge demand, a lot of investment, but also a lot of companies incorporating those gamified type of rewards as part of their proposition. A lot of banks have been kind of toying with gamification and trying to kind of nurture that engagement with the end consumer, with the members in UAE in particular, but also Saudi Arabia. For example, if you reach a particular goal in terms of exercise, whether you want to swim and this is something that I’m seeing across the board, it’s not necessarily only to provide rewards, offers, or incentives that are falling within your immediate kind of industry, segment or category that you’re operating. But about going broader, thinking about what is important for my customer base, what is their profile. Right? From that kind of thinking, what can I do as a brand or as a company to facilitate support, and also drive more engagement with my product? So I think a lot of these banks I’ve been seeing, they could provide rewards or savings accounts that they can have discounts or any other benefit that could come as part of that, and it has been fantastic. In some cases the uptake was growing double digits in terms of promotion and in terms of acquisition of new members. Very successful strategy for that part of the world, not least because you have a very dominant young population which appeals. And these strategies are appealing with consumers. Whether these are the millennials, or generation Z. So all that resonates with them very well, and organizing different tournaments or competitions brings that fun element that I was telling mentioning earlier. That transforms and makes those loyalty programs more dynamic and more kind of up to date rather than just kind of the strict platforms for business models that we’re used to as consumers from years ago.

Robbie Baxter: I’m hearing this theme of of health and this theme of sustainability and sort of in more environmental well-being as trends from industries as disparate as insurance, air travel and now banking and even video games and gaming. All thinking about these things, maybe as a means of attracting this younger audience.

Nadia Popova: Definitely. I think that is our kind of observation, and the results from our different surveys that we conduct and also our research. And it’s very much about those consumer segments, whether, as I said, millennials that strongly favor those experiences and they demand more customized experiences that are tailored to their preferences and to their tastes. That diversification of the types of experiences that we’re seeing, that are evolving as part of the proposition and the reward structures of loyalty programs.

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Robbie Baxter: You mentioned research. You’ve done it. You’re a Euromonitor International and it’s your job right to notice and track trends and also develop insights and perspectives on what those trends mean. What are some of the pieces of advice that you might have for organizations thinking about building deeper loyalty with their consumers? Especially those who’ve been using points based programs and maybe those who haven’t haven’t done it yet, and are building.

What are kind of the the big ideas that you would that you would be recommending right now?

Nadia Popova: That’s a great question, Robbie. And first and foremost for me is, understand your customers, create a big data, use your big data to understand, profile them and and see what are the requirements, the preferences and how they behave when they interact with your brand. How often they shop. Once you build that picture, then you can start kind of strategizing. And then you can start developing that key areas and those priorities. If we talk a little bit more general, reviewing what is happening today, and how loyalty is being transformed with on the back of the impact of Web 3.0 or ditch donatives, or how we interact with loyalty programs hold together.

Understand your customer, gather data, use your data to understand, profile them and and see what are their preferences and how they behave when they interact with your brand. Once you build that picture, then you can start strategizing. - Nadia Popova

A couple of key aspects come to mind. The first one is rethink your reward pyramid. Embrace emotional loyalty to drive more added value and exclusivity within the social impact in your programs. In order to kind of deepen that engagement and that brand advocacy. Think about, what are these local communities that you can potentially support, help, and allow your members to contribute as part of that. Think about bringing more experiences. But they need to be more exclusive, more more entertaining. It depends on the industry that you are. For example, co-creation of a product. A lot of consumers are very interested in co-creation. It could be that it is something related to more travel experiences, an exclusive event, or a meet and greet. Opportunities with people that are important that your members can learn about or learn from. It could be anything else that your members are asking for. And I think that’s where would provide better opportunity to understand how you want to shape those experiences and what type of experiences you offer. It could be that it is a workshop, something related to arts and cuisine and entertainment. We’re seeing a lot of hotels bringing those experiences because they directly speak to to the travelers who go on holiday, and perhaps that might be something in addition that they would like to kind of experience behind the scenes tours. There is so much when we talk about experiences for sure.

I would say, aspire to create a loyalty ecosystem where you can have multiple services that go beyond the immediate industry of operation that you have as a brand work with more partners but also think about how you can drive that interoperability of your rewards, ie. That you can allow your member to collect these rewards, but able to exchange or use them with another brand outside of your vertical, outside of your ecosystem, or outside of your industry that you operate, or immediate ecosystem that you’re operating and that would make your reward more relevant and that would speak directly to your member.

Also leverage hyper-personalization, because in the past a lot of the propositions of the loyalty programs were very much one size fits all. This is no longer viable, isn’t it? It’s more about knowing what is the purchasing history, social media interaction. Are you rewarding your members for providing their opinion and their feedback? And then tailored that loyalty offer to those needs. Drive that seamless and instant redemption, and reduced friction. A lot of the feedback and insights that come through our loyalty survey is that it takes too long to earn the rewards, or there is too much communication, or they’re not fun loyalty programs. Right? What they demand from these loyalty programs is to make shopping experience better. So for me that’s the feedback. So how do you act on that? Reduce the friction across all the channels. Right? Don’t forget. If you’re operating online, don’t forget the High Street, or if you’re on the High Street, consider that is replicated as a strategy online and drive that instant gratification. Don’t allow or facilitate for your member to have access to the information about their rewards instantly. They purchase something, and immediately that information is on the app. How much they have saved, what they can instantly use as a result of that, rather than to wait at the end of the month or you know, quarterly to be able to check how many points or what what they have as part of their profile. So I think these are some of the areas that I would say would be a great opportunity for companies to think about with a caveat that it all depends on the type of industry that you are, the type of product, the consumer element that I have mentioned and what they require. But on a more general level for me, these are the key focus areas.

Aspire to create a loyalty ecosystem where you can have multiple services that go beyond the immediate industry of operation that you have. — Nadia Popova

Robbie Baxter: To summarize. This is gold. This last answer talking about co-creation, hyper-personalization and reducing friction and getting rewards faster and letting them know what they’re earning. Those are all so important. And I want to ask you about a company that I think is doing a bunch of these things pretty well, which is Nike. I mean, they’re kinda out there. But you know the non-fungible token (NFT) based program with customized shoot design. Can you talk a little about that, and sort of what you’re seeing them doing, and and what might be useful takeaways for our listeners?

Nadia Popova: Well, Nike is a great example of how they’re tapping into the Web 3.0 spac and how they’re expanding their loyalty program. And what are the steps that they taking to to get there, right? I think they’ve launched a Web 3.0 ommunity platform, swoosh.com which is about supporting and driving more inclusivity but also providing this really important marketplace where their members, creators, and consumers can share opinion, they can explore, they can engage, but also use those different types of digital tools that Web 3.0 is famous about. Whether these are NFTs that allow for those folks to kind of have an opportunity to have that peer to peer interaction with like minded individuals and nurture that which is so essential for a big company as Nike. Having that blend if you want between physical and virtual immersive experience is a fantastic opportunity for them to kind of reiterate the importance and the power of of their brand. The authenticity. Creating different real life events, not only on Web 3.0 but also in the physical world. They have been thinking all these aspects of it in order to create that fantastic community that Nike is so famous. That is the part that really stands out quite strongly. This is why we’ve seen that they have so many followers and people who are really appreciating what the company is doing. And it’s very much about driving that engagement that I’ve mentioned earlier in our conversation when I said that more and more emotional loyalty is becoming so critical in the loyalty space. And how essentially loyalty is transforming today.

Robbie Baxter: Everybody should go look at swoosh.com, and take a look at what Nike is doing as an inspiration. As you know, this show is called Subscription Stories and I think that loyalty and subscriptions are really all about building a formalized contractual loyalty relationship. And so I’d be remiss if I didn’t ask you what you think about the subscription based loyalty programs the ones where the consumer is asked to pay upfront to get special benefits in order to shop more effectively and get a more personalized experience. Like Amazon Prime and Walmart+ and RH Gray. What’s your thought about the role of these premium subscriptions, where you pay upfront for those benefits rather than earning them over time.

Nadia Popova: It depends again on the consumer preferences, and I would say in time when the cost of living in some markets continues to be a drag, this is quite important. I’m based here in the UK, in Europe. And this is an important question today when you talk about consumers and how they feel and how they’re budgeting and how they’re thinking about their shopping basket. And of course, that leads a completely different approach when they interact with brands and how much they can allocate for something like that. Other parts of the world, the situation is slightly different. I think it’s about differentiation, exclusivity, and delivering a product or service that their members might not have if they’re not subscribing to that company, or that service. Depending on what it is being offered. So for me, it’s about that standing out from the crowd, but also delivering that exclusive service and product. It gives another element of the premium aspect especially rather than for the luxury segment. And we’ve seen different examples of companies towing with that, and introducing this as part of of their offer in order to widen their reach in terms of consumers, but also to ensure that their product stay relevant. We’ve seen here in the UK, one of the luxury departments, Liberty London. They have been introducing a subscription and loyalty as part of their loyalty program which offers rewards, exclusive content, invitations to events, and you also receive complimentary discovery boxes. I think it was four complementary discovery boxes per year with worth over 300 pounds. Trial-size products curated by Liberty Beauty buyers. So it’s very much about kind of what I said, widening your reach and making sure that your members really enjoy their interaction with your brand and experience new products as part of your offering, like the discovery type of boxes while saving funds towards larger ticket items because you acquire these different points, and at the end you can buy something that is a higher price ticket product. So for me, it is very much about which segment and which category subscriptions work really well in the travel and tourism industry.

Luxury Departments are widening their reach with premium loyalty programs by offering rewards, exclusive content, events, and luxury discovery boxes

They have been an area that a lot of companies have been implementing as well. It’s all about how do you stand out from the crowd? What works for your audience and for your members? What you really want to achieve out of that? When we talk about subscriptions in certain aspects for me is all about exclusivity, quality, heritage. The storytelling combined as part delivering that service.

Robbie Baxter: Is there room in this new world for organizations, whether they’re in travel, tourism or retail for them to have points-based programs, premium subscription programs coexisting within the same organization? Or if you’re a luxury brand, you should be thinking about a premium subscription where you can really offer depth of benefits. And if you’re in a more cost-sensitive space, you should do points. Is it either, or is it both?

How would you advise companies to think about how far and how broad they should go with their loyalty strategy?

Nadia Popova: It all depends on the company itself. And what exactly they’re trying to achieve. Is it to retain members, or is it to acquire new members. Right? My assumption would be to retain a customer base, to convert them into a brand loyalist. I think that there is a space for the two under one umbrella. Provided that these are managed in a very well and efficient way and there is a good and clear differentiation what one provides and what the other delivers, and why it is a subscription. Because a normal question of a member would be, “I’m not subscribing, but I’m a member, and I receive this reward. What is the extra that I was I would receive if I were to subscribe to that service and this added value. So what is it for me that I can benefit from that?” Of course, how the financial results stack up there, and in terms of revenues, and whether this is cost-effective for the company itself. But to me, it’s an opportunity to test and allow those two to live together under the umbrella of a particular loyalty program.

What do you think, Robbie?

Robbie Baxter: Well, I used to think one or the other but I’m realizing that the points program is traditional. So a lot of traditional audiences are familiar with them, and like them, and have already established the habits of point tracking and exchanges. There are lots of ways to layer in additional emotionally fun, unique and personalized rewards in that structure. So there’s a lot of room for creativity there for a particular segment. And I think that there’s room for a lot of organizations for this premium paid subscription certainly for luxury brands, as you mentioned, because it gives you a little more space for exclusivity and really special experiences but also, Walmart just introduced a premium subscription, and they’re famously for everyone. Right? They’re very much to the average person. And what they’re trying to do is, say, “Hey, if this is already your habit, if you are already committed to Walmart as your primary place of shopping, raise your hand and let us know by paying us this premium up front and you don’t have to go through all the trouble of of earning the points. We’ll just give you the best experience from day one. Every time you come we’ll give you free delivery, we’ll give you special discounts or we’ll give you early access to highly sought-after products.”

So I think you’re right that it starts with knowing your audience. Doing careful segmentation and also understanding the levers you have at your disposal with a free program versus a paid program and then using them accordingly.

The last thing that I would say that I would really advise listeners to think about is the more programs you have, the more people you have to manage, the more different channels of communication that you have to get right. And then you also have to deal with confusion in the marketplace. So it’s an expensive thing to have multiple programs so go into it with your eyes open.

Nadia Popova: Very well said.

Robbie Baxter: Okay, we could keep going forever. love talking to you, and I’ll definitely be inviting you back.

So one last thing, if you have a minute or two more I would love to do a speed round with you if you’re up for it.

Nadia Popova: Of course. Go ahead.

Robbie Baxter: First subscription you ever had?

Nadia Popova: Amazon.

Robbie Baxter: Your favorite subscription today?

Nadia Popova: Netflix.

Robbie Baxter: The best perk of a loyalty program that you’ve seen?

Nadia Popova: That’s a difficult one. They were quite a lot, but I think free flight tickets was probably the one that tops my ranking

Robbie Baxter. Free flight ticket, me too. As a member of the World Tourism Forum Advisory Board, what’s your favorite travel destination?

Nadia Popova: Brazil.

Robbie Baxter: One piece of advice for a company trying to improve customer lifetime value through loyalty?

Nadia Popova: Know your customers and what you really want to achieve. That for me really summarizes it.

Robbie Baxter: Yeah, I love that. Thanks so much for being a guest. It’s been a pleasure.

Nadia Popova: Thank you for having me.



Robbie K Baxter

Author of THE FOREVER TRANSACTION & THE MEMBERSHIP ECONOMY; Leading expert on membership models and subscription pricing. http://www.robbiekellmanbaxter.com