Here is a riddle for you: what’s that technology sector that is expected to grow by 250% at a global level and by 100% at national level in the next five years? You’ll probably be tempted to say Artificial Intelligence, but it is in fact the loyalty and promotion management sector. In other words, the futuristic evolution of promotional and engagement campaigns that stemmed from traditional loyalty cards, first introduced by the VéGé group in the ‘50s. Today things are different. Loyalty programs rely on user behavior data to develop personalized relationships with consumers.
Founded in 2006 by Fulvio Furbatto, Advice Group is the Turin-based market leader in the loyalty marketing field. “We started off in the promotional field – Furbatto explains – and not much later we realized that the key was for brands to break free from retail intermediaries and build a direct relationship with consumers. Smartphones were not as popular in those days so we would send text messages to test the possibility to collect virtual points. And we succeeded. The first digital collection was launched in collaboration with Lavazza – the only big company in Turin at the time – and it reported results ten times greater than usual. That’s when we started broadening our client base and reaching out to leading companies like Barilla and Coca-Cola.”
How did 2019 go for Advice?
2019 was a successful year that saw the consolidation of Advice’s progressive growth (+ 34% Cagr) and scalability (+60% Cagr Ebitda) in a crowded and competitive market. These numbers reflect our vertical positioning in the behavioral loyalty field. We redesign loyalty processes starting from the traditional transactional models based on purchases and create new relational models based on consumer behavior and the analysis of consumers’ purchasing power.
In 2019 we also won 9 prestigious awards at national and international level. We’re particularly proud of our victory in 3 categories at the 2019 Loyalty Magazine Awards, which is the most prestigious acknowledgement in the EMEA region, with a project developed for AS Roma. Our projects buck the trend as they help brands assess the purchasing power of consumers and the possibility to build a direct relationship with them. The focus is no longer on purchase-related data but on user behavior. We analyze how users behave in social media, how they interact with content, whether they make content go viral. We also analyze the data generated from all the actions that users take regarding the brand that fail to be tracked, even though the technology is there to collect it, analyze it, and use it in real time.
How do you see business developing in this critical time? Will the crisis pave the way to new services?
The time we are living is marked by widespread uncertainty which will impact the future of different sectors in Italy. The current crisis is nothing like previous economic crises. In 2002 and 2008 the economic depression was the result of a clear financial and economic situation; we knew it would only last for so long and we knew it would not reshape people’s lifestyle and buying habits. The whole economy right now is going through a deep identity crisis, one that will change the business world as we know it and will force us to rethink the distribution chain and the relationship with end consumers.
As a company specialized in loyalty programs based on behavioral data, this is a favorable time not necessarily to offer new services but to emphasize the importance of understanding the purchasing power of consumers and their inclination to modify their relationship with the brand, hence their buying habits. The current crisis will have a profound impact on the brand-consumer relationship. We have already seen the pendulum swinging in favor of online shopping, and many other things will change including the way people spend their money, use social media, communicate, move, use services, and attend crowded events. All these changes will have to be analyzed in terms of behavioral marketing, which has been Advice’s core for 10 years.
A cross-sectoral revolution then?
The current situation will profoundly influence consumers’ habits and behaviors. Today, people’s choices are driven by the need to save money and prevent health risks; this trend will become tomorrow’s way of life, and it will bring awareness to the fact that we have moved on to a new way of using services. What is certain is that there will be major changes in all sectors. Just think of the travel industry where the use of means of transport and places of transit will have to be redefined; or think of the fashion industry that after losing an entire season is questioning the very role of seasons and retail stores. And there is more. Store layouts will have to be redesigned and the dynamics of in-store assisted shopping redefined. Online stores will have to improve their performance as they didn’t always live up to the sharp increase in traffic, in fact, more often than not, they were not reactive enough to meet customers’ needs. Not to mention the food industry. Offline and online sales have rocketed, and they put a strain on online stores and logistics, including orders and delivery.
What’s next then?
New opportunities are emerging for brands. When consumers don’t find the product that they typically buy, they replace it with a similar product from another brand. In this context, it is true that brands can easily gain new customers, but they need to be proactive in getting to know them and retain them. Added to that, brands will also have to find new ways to communicate with consumers in order to remain close to them, even when apart. The companies that will succeed in building, keeping, and managing a solid customer base will likely be the market leaders of the future. Brands need to learn how to be relevant in people’s lives without being intrusive. This is the key to make sure that consumers remember a certain product or service and make a purchase or confirm their brand of choice. Prize catalogs and point reward systems will have to be replaced with constant care and attentiveness. Loyalty needs to become an attitude, a principle, not a mere marketing model. A loyalty revolution is coming up, one that will reshape not only technology but also the way we think of loyalty marketing.
How are you supporting your clients?
We’re offering them immediate solutions to re-engage with their consumers at a time of complete standstill and we are writing with them the future model of loyalty. We’re offering plug&play software packages that serve a double purpose. On the one hand they make sure that brands don’t miss any opportunity in the immediate future – which means strengthening the relationship with consumers – and on the other, they collect information on customers’ expectations to foresee their behavior once all purchase channels will be reopened. We’re helping our clients set their priorities when it comes to the analysis of loyalty processes, it is important that they understand that what really matters is no longer “what” consumers buy but “how” they buy.
What’s the role of technology in this?
We decided to step up and make our technology available to face this unprecedented crisis. Through the National Association of Italian Municipalities Advice has offered Italian towns My Price, a loyalty currency platform that is typically used to redeem prizes in loyalty campaigns. In this new scenario, My Prize will be used to facilitate the distribution of food stamps to families in need. We’re also offering retail stores a tool to manage store traffic safely. Users register and book their store visit by selecting the store, the day and time of the visit; they will receive a digital ticket that they will show at the entrance of the store. This tool, who was originally developed to manage waiting lines and the booking of medical visits in the health care sector, is particularly useful in the current post-emergency phase as it helps manage store traffic while ensuring social distancing. Moreover, building on our experience with the Azerbaijan pavilion at Milano Expo2015, we are promoting a digital platform to experience sport events, music events and live events in general. Nothing to do with live streaming, though, whose rights belong to major broadcasting networks. We’ll offer an immersive experience in the backstage of the event; users will be able to access exclusive content and seize the opportunities that will arise from the event. Users will sit in their custom (and customizable) control room and they will enjoy their personalized backstage experience without having necessarily to buy the ticket for the show. We are also collaborating with a prestigious consulting firm on a new service that is meant to strengthen civic mindedness, something that has never been so topical, but it’s too soon to talk about it.