How Loyalty Programs Can Help You Retain Customers

[00:00:06] Jon Penland: Hey everyone. My name is Jon Penland and Reverse Engineered is brought to you by Kinsta, a premium managed hosting provider. In today’s episode, I’m speaking with Zsuzsa Kecsmar, who heads marketing and partnerships and is also a co-founder of Antavo. Zsuzsa, welcome to Reverse Engineered. 

[00:00:24] Zsuzsa Kecsmar: Thank you. Hi there. Hi everyone.

[00:00:25] Jon Penland: So, to get us started, Zsuzsa, for any of our listeners who may not be familiar, tell us a bit about Antavo. What is Antavo? 

[00:00:30] Zsuzsa Kecsmar: Antavo is a loyalty management platform. It means that with our technology, brands and retailers can run customer loyalty programs. We work with great partners all over the globe, solution partners, system integrators, who would implement these kinds of loyalty programs for partners, and also loyalty consultants, who’ve determined what is the best loyalty logic. That’s what fits our clients, and of course our amazing clients like BMW or LaGuardia or Benetton… All over the world. 

[00:01:05] Jon Penland: Yeah. That’s interesting. So when I was looking at your website, I got the impression that on top of it was primarily a technology program, but as I hear you speak about it, it sounds like it is a technology platform, but it is also a bit of a, it almost sounds like you do a bit of consulting almost for your clients and helping them set up a loyalty program, not just providing the software behind the program. Am I hearing that correctly? 

[00:01:30] Zsuzsa Kecsmar: No, unfortunately not. We are pretty focusing on technology and we don’t want to step on the toes of our partners. So we are focusing only on the technology to build this best-in-class loyalty platform, which is actually recognized by Gartner and Forrester, these global consulting companies who really keep track of the list of who are the best to count on in terms of technology. And we only focus on the tech, so our partners can focus on the services and the consulting, and the clients can focus on what they do best. 

[00:02:06] Jon Penland: Awesome. So, as I mentioned at the top of the show, you are one of Antavo’s co-founders. So tell us a bit about Antavo’s origin story. How did Antavo come to be? 

[00:02:17] Zsuzsa Kecsmar: We founded Antavo back in, we started to work on Antavo back in 2011. And initially, it was a different product. We knew that we came from an environment where we had great complimentary skillsets among the four co-founders. One was a great entrepreneur, who built websites with a boutique agency. And then the other one was one of his former employees, who is still our CTO. So he was a technology person. The third person came with the sales approach, who work with the software, the software company before. And I came with the marketing guy and this international vision saying, “Why not do it as a global company? Why stay in our local market?” So, we together thought to build the marketing product, marketing software as a service, but it was focusing on gathering new customers, new leads which 10 years ago in the age of when social media started, it was a very viral. It reached like 30,000 marketeers.

[00:03:32] We were able to grow, even though we had quite a big churn, like 30% of our customers would leave us every month because it is a seasonal product that we had. It’s about contests and sweepstakes. So after like five years, we decided that we need to change after Facebook’s IPO, they were under the pressure to make money.

[00:03:53] There were Facebook ads, they considered sweepstakes and contests as their own competitors to their ads. So this is why we switched to an area, which we thought was very close to what we did originally. You couldn’t have been more mistaken because it’s a completely different area, a completely different target audience, but we didn’t know that.

[00:04:14] And thankfully ignorance is sometimes the key to, you know, keep going because you don’t know what the, what is that you don’t know. We don’t do that it’s very difficult to do. So we just pivoted and from this lead generation, small business software we pivoted into a customer retention, loyalty management platform. And that was not for the small businesses but for the mid-market. And now today, these, these days to the enterprise. 

[00:04:41] Jon Penland: Yeah, that’s really fascinating. Kinsta had kind of a similar trajectory. Kinsta was initially launched as a CRM, or launched is too strong, was initially conceived as a CRM. And then eventually, I say eventually, very rapidly pivoted into being a web hosting provider. It sounds like your story is different and that you actually ran a business for a number of years in a completely or in a different space. So if you started working together in 2011 and then it was five years later, if I’m hearing right, that was around 2016 before you pivoted into the focus that Antavo is working towards today.

[00:05:25] And that sounds like a wholesale change. You went from this kind of seasonal social-media-focused projects or software, and then you switched into something that was very enterprise-focused and is… So I’m curious about that transition. Did you guys, was it a point where you simply drew a line in the sand and said, “We used to do this. Now we do this?” Or was there a time where you’re doing both things at once for a while, as you use one model to fund the setup of the next model? 

[00:05:57] Zsuzsa Kecsmar: Well, well both. So till one point, we thought that there is not much difference between the two, and we were mistaken. We thought that this new thing is just a little extension of the old thing. But then the more we worked on it, we realized that and that line needs to be drawn and we need to start something new. And fortunately, we had the trust of investors, and they were able to finance our operations. Still, we were finding new ways in developing the new product. So we were not under the pressure to develop the old product and make money out of it.

[00:06:37] It’s very, very great that we had the support from them. And then after we started growing, even more, we had another round, larger round and this is where we are now. We are just before a hyper-growth. As last year we doubled our revenue and this year we at least will double our revenue. 

[00:06:58] Jon Penland: Right. I was actually curious about that relationship to investors. So that, it sounds like, if I’m hearing correctly, you actually have investors that predate the current loyalty infrastructure that your infrastructure platform… I’m sorry. The current loyalty technology that you’re developing, you have investors that predate that transition. Is that right?

[00:07:20] You had investors that invested in the original business model as well? Wow. Okay. Yeah. So it sounds like one of the things I was going to ask about is what are some of the things that have been instrumental in Antavo’s success? And I will ask about that more generally, in just a second. But it sounds to me like we’re already kind of hitting on something that has been instrumental for Antavo’s success, which is having the sort of safety net or assistance to help you develop the product as you built the revenue to support the company. Has that been a kind of a critical part of Antavo’s story? 

[00:07:55] Zsuzsa Kecsmar: Well, thinking back, I think yes, it was a critical help back then at that point, for sure. And I still think today that our investors are great and they always acted… I’ve always considered our board meetings as a support group, when, you know, we could tell what’s going on and they would tell how they can help. These days it’s starting to change. Now we are getting more serious, but back then they really supported us this way. So what were the critical factors that got us where we are? I think, as my co-founder likes to say, like, “A hundred percent of businesses fail because the people in it stop doing it.”

[00:08:39] And we just simply didn’t stop really. So there were times when it is really difficult financially. I think all businesses go through these kinds of phases, but we just simply didn’t stop because we handled it somehow or the founders, we didn’t pay salaries for ourselves. And then we did it for our own good time because we believed in the larger goal, and we still believe in the larger goal.

[00:09:07] Jon Penland: Yeah. So pivoting a little bit away from that area of focus, so I’m curious though, for somebody who is looking at Antavo from the outside, what are the benefits of a loyalty program? Why should a company, and I’m just thinking of Kinsta, as an example, why should a company like Kinsta consider launching a loyalty program? 

[00:09:30] Zsuzsa Kecsmar: I think B2B loyalty programs are also great, but what we are really good at is B2C loyalty programs. And B2C loyalty programs should be launched because caring about your own customers, keeping them happy, it really pays off financially.

[00:09:51] And actually 79% of CEOs, according to Gartner, find a way to cater to existing customers in 2021. That’s the research that we read, very much like because it really resonates with what we also working towards, and working with a loyalty program can help retain customers.

[00:10:20] And one of our consultant partners likes to put it, “When the economy suffers, loyalty thrives.” And this is what we experienced actually in the past one year or one and a half years when we started this large, large growth. We had this interest coming from so many companies and we see it in the industry from consultants to they see that they get inquiries.

[00:10:47] So when one of them said that this year they’ve got as many inquiries as in the past suite years combined. So there is a large growth now in this era, when we’re just after a pandemic. 

[00:11:04] Jon Penland: Sure. If there is a company and that’s an interesting distinction between B2B and B2C. And I think that’s something, you know, as, as somebody who hasn’t spent a lot of time thinking about loyalty programs, I think that’s an interesting distinction, and makes a lot of sense. But I’m curious, you know, if you’re in a B2C business, do you think there’s a right time and a wrong time, to launch a loyalty program?

[00:11:28] For example, can you, can you launch a loyalty program too early? Is, Is that something that businesses need to be thinking about? 

[00:11:35] Zsuzsa Kecsmar: I don’t think that you can launch a loyalty program too early, but you need to start with an easy one.

[00:11:41] And there are these tools for small businesses to launch a loyalty program. You can think of them like punch cards that could exist in a paper, but you do it maybe in a digital way. But if the company size grows and if you think of more mid-market and enterprise needs, it’s a more sophisticated solution that’s needed.

[00:12:04] For example, we set this rule for ourselves that we don’t work with clients under a certain revenue that they have, annual revenue. Because that number, that number pretty defines their preparedness towards how we would work together. And we really work together and with many small clients, it is oftentimes so much difficult because they simply don’t have the personnel inside their organization.

[00:12:32] Typically, the person who would use Antavo within an organization sits in the marketing team and its loyalty manager or CRM manager. And it takes a certain preparedness for someone to have this job title in their organization. 

[00:12:48] Jon Penland: Yeah. I’m glad you pointed that out. One of the things that I was curious about, as I think about Antavo and the way that you work with your customers… It strikes me as a really complex and challenging space to enter.

[00:13:04] Both in terms, as you mentioned of the sophistication of the customer. And also in terms of the complexity of what it is you do. I was looking at your website and it seems that the loyalty programs can span you know, across websites, apps, storefronts, events. They’re very far-reaching. So it just strikes me as a very challenging thing to do, to enter this space, and then you’re working with enterprise brands that everybody knows like BMW and Pepsi. So I’m curious how has Antavo been successful, in entering this complex market and working with these enterprise customers? 

[00:13:46] Zsuzsa Kecsmar: I think it’s a great observation that you have. And it took some time for us to realize how complex it is. It’s not like an email tool that is sold to the marketing department. Here is the marketing department, their finance, digital or IT, however we would call them, is involved, sometimes with the product and product packaging. So it’s really a holistic program. And if you see on the other side the benefits of having such a complex sales process is that once for example, BMW decides that yes, they want to have loyalty program, then they stick with it and we have a great very low churn number right now. Our clients don’t really leave us, fortunately, because once they’ve made the decision that they want to go over to a loyalty program, they don’t really shut it down. They had some clients leaving because of COVID they went bankrupt.

[00:14:52] But that’s an edge case, I would say, because it’s really hard to stop a loyalty program. If you just think about it, there would be those customers inside who have this disappointment of where their, I don’t know, points and benefits go. So the real threat for ourselves is to be substituted with someone else, but until we do our job well, we can stay as this technology vendor to our clients.

[00:15:22] Jon Penland: Right. Yeah. That’s really interesting. I think about it in the context of Kinsta and we think of what we do sometimes as a complex sale because we sell hosting for websites. And websites can vary dramatically in the needs of customers and their sophistication can vary dramatically, but in contrast, it feels like a relatively straightforward, right?

[00:15:44] Like, “We’re selling hosting for a website.” That’s quite a bit different than saying, “You’re going to integrate our technology into all of your customer-facing interactions and systems.” Right? That’s an entirely different process. And I can see the flip side there, of course as you highlighted, which is, you know, as long as you guys deliver a quality product, your customers are going to have a lot of motivation to continue working with you. So something else I noticed on Antavo’s website is that Antavo spends 64% of its budget on R&D. And so I’m curious, one, can you put some context around that number for our listeners, so they understand what is R&D in the context of Antavo? And then why do you play such a heavy emphasis on R&D?

[00:16:30] Zsuzsa Kecsmar: Well, we always came from a product background and we want to keep this level to be the best product for loyalty management on the market. In order to do that, we need to reinvest into the product and R&D means developing the product itself instead of just developing for clients or serving clients or keeping salespeople or keeping accounts people and so on.

[00:16:59] We have a very strong developer base. We’re actually based in Hungary. I’m also Hungarian and my colleagues do a great job, developing the product itself. That’s what we want to be the strongest about because the product is our strength and focus and core. We don’t want to do other things.

[00:17:23] This is how we are embedded into the great ecosystem of how business is done and the systems are introduced to clients. 

[00:17:32] Jon Penland: Yeah. You mentioned there that your company has developers there in Hungary and that’s, Kinsta actually has a large developer base in Hungary as well. We actually have over the last few years gone remote with our developer team. So now we have developers in a number of different countries, but we do still find Hungary to be a uniquely interesting place to hire developers and valuable place to find developers. We have found the market for developers tightened down unbelievably in the last year. And I’m curious if you guys have experienced the same thing, since we’re actually, operating and competing in some ways for talent. I’m curious if guys have seen the same thing there with your developer workforce. 

[00:18:15] Zsuzsa Kecsmar: Ten years ago when we started off there was a difference between Hungary’s capital and Hungary’s countryside in terms of developer talent. Here in the countryside, it’s this great that education, but costs were lower. And then in the capital costs were higher, and then over time it just really evened out and it was the same kind of expensive everywhere.

[00:18:39] And now within this post-pandemic era, it’s evened out not at the country level but on the global level. So these developers are more and more expensive, I would say, but incomparable to the big hubs like San Francisco or London is still so much better to work with someone who is not there, but here.

[00:19:06] And they’ve made this decision that like, til this point, our development team is Hungarian. But now we work with so many multiple nationalities in all the other positions. We have, I think like eight nationalities right now. And we work now, remotely from all over the world. Even our developers are working remotely now. It’s like two people in our office, in our amazing development office in Hungary. It’s just really all remote these days. 

[00:19:42] Jon Penland: Yeah. We went through a very, I mean, just a very, very similar path, where our developer team was there and Hungary and there are some very unique benefits to… For all of the advantages of remote work, there are some unique benefits to developing, sitting in the same office and we did take advantage of that for a long time. And then really in the interest of having application support 24 hours a day, we started branching outside of Hungary and building up our developer workforce. And then of course, you know, COVID hit and everybody went home and we’re just in a, a lot of similarity to the place that Antavo is where a lot of our developers or even, you know, those who previously worked in an office are choosing to say, “I would really rather stay home.” And we’re happy to offer that option to them as well. So, so I did have a question though, something we’ve talked about a little bit is Antavo’s roster of globally recognized brands. And I’m thinking again of companies like BMW and Pepsi. How does Antavo start a conversation with a company like that?

[00:20:45] There are a lot, a lot of businesses that would love to work with enterprises like BMW and Pepsi, and they just don’t even know how to start the conversation. And I’m just curious what Antavo’s approach has been to having conversations with these multinational enterprises? 

[00:21:02] Zsuzsa Kecsmar: So I think it’s been two things which helped us very well. The first is that we always put a lot of effort into great content. So, if you went to antavo.com, you would see right now, I think 206 articles, all about loyalty programs. I know the exact number because we just recently renewed our website, and maybe that has grown since then in the past weeks. We were over the writing thought leadership content and educational content about customer loyalty before we had the product. Because it was like a year around 2015 when we were in between products, but we already positioned ourselves and spread the word as experts in customer loyalty. And I think that truly helped because most people, when they are researching an answer to their problem, they’re just typing into Google, and then this is how they find answers.

[00:22:00] And our main goal is that Antavo pops up among their results. And then we can impress them with our expertise. And then when the time is right and they have this loyalty project and they’re recruiting, when there is something to consider, then they will consider Antavo too. So that’s one thing. The other thing that I think was successful like that, that led us to be able to talk to companies like BMW, is that we started to have these more enterprise clients and our first enterprise client was Toys ‘R’ Us.

[00:22:39] Unfortunately, they went down since then, but they still taught us so many things. And then we were able to win them because we had, one of our partners… So they were the clients with one of our partners and this partner brought us in and with their credibility, we were also considered credible, even though we just started off recently before that.

[00:23:02] And we were able to learn a lot from these clients and then we were able to win the next client with this case study. And then as these events followed each other, now we are able to go after larger clients ourselves or with the help of partners because this whole route of introducing technology to clients, it’s really an ecosystem.

[00:23:30] It’s not single companies existing alone. It’s really a cooperation between companies to, for example, launch a loyalty program or deliver any kind of digital transformation. 

[00:23:43] Jon Penland: Something that I feel like, I hear as a recurring theme in your answers is the importance of patience. So something that you hit on just a minute ago was content marketing. And I, Kinsta content marketing has been a cornerstone of what we’ve done since our founding as well and something that I think a lot of companies get wrong in content is that they start writing content and they look for results after three months or after six months, or even after a year.

[00:24:12] And it’s really something where you have to back up and be I mean, really patient. We’re seeing dividends paid now for choices that were made in the content space five, six years ago. And again, something you mentioned early on is that another one of your co-founders said one of the reasons you’ve been successful is you didn’t quit, right? Which I view kind of as another indication of just the importance of taking the long view of being patient. And so, I’m just curious as you think about Antavo’s success, to what degree do you think simply, you know, patience, taking the long view has been kind of a critical component of the company’s success over time? 

[00:24:51] Zsuzsa Kecsmar: I think that patience plays a role not just in company-wise, but in a person’s personal life, too. So if you think about it how patient you are as a person to, to wait till this company of yours with grow and then you will feel happy about it. It’s really, sometimes it’s not about the company, but the person itself. Not everyone is, not everyone would like this.

[00:25:18] I’m sure there are people who would like to see the work of their results more immediately. And sometimes I wish for that, too. Sometimes I’m jealous of hairstylists, you know, because they can see their work immediately. Like after an hour here is a delivered job. And for me, it’s hard to see that because what I do is really on the long run.

[00:25:43] But I don’t mind it because I like to reflect not in my past hour, but in my past week or year. And I see the progress. I still don’t think that Antavo is successful because we are still on the way, but we are starting to become successful as we are able to help our clients to be successful.

[00:26:04] So I would consider that as a great start. Also, I know that most of our colleagues, they are with us for a very long time, since, I don’t know our longest colleague, who’s not a founder, she’s been with us for eight years already. And, and that’s something when you have people on your side for a long time because you can grow together, and then you can stay together and double up together. So that’s also something that I consider success. 

[00:26:39] Jon Penland: Yeah. So in addition to, you know, patience being an important personal virtue, there within, you know, an entrepreneurial endeavor, something else that you’ve personally advocated in the past is the idea that as an entrepreneur, it’s important to put your own mask on first. And so for our listeners, can you explain what that means? What does it mean to put your own mask on first? And then what are some choices that you’ve made to do that yourself? 

[00:27:07] Zsuzsa Kecsmar: Yeah. So, you know, when you’re traveling, you’re on the flight, there is this video that would say that you should put your own mask on first and after that to help your child or other people who are struggling with that.

[00:27:20] And I found this a very compelling idea, not just on a flight, but in general, which means that you need to feel good with yourself in order to be productive, in order to be helpful for others. And there was one time when I considered my time off also as working. I should, I should do that again because when I’m recharging, when I’m sleeping, I’m still contributing towards my working hours being rested. So when I actually sit at the computer, I will be super effective.

[00:28:00] Jon Penland: Yeah. I found that time off is a huge energy reset for me, in terms of both calming the chaos that can tend to crop up over time, just in terms of day-to-day tasks and in giving me kind of like a clear perspective on what I need to be focused on. So, like for myself, I’ve found that over time as, as somebody who was involved in a lot of different things at the company, tasks kind of build on top of each other and you reach a point where it’s like, “I have these 50 different things.” And, and what’s amazing is that you go away for a week and nobody needs you.

[00:28:38] Right? And it’s like, “What in the world happened? When I was here a week ago, I had so much stuff going on. I couldn’t find time to take lunch, but suddenly I take a week off and actually the company does fine without me being here.” Right? And it’s, it’s just such a, you come back with such a, you have a, kind of a clean slate to some degree on what you’re going to work on, and you have just kind of renewed focus on, “All right. I want to focus on these things.” I just echo just the importance… I’m not an entrepreneur. I didn’t found Kinsta, but just as somebody working in that startup environment, of taking time away to recover and make sure that you’re bringing your best self to work…

[00:29:18] Zsuzsa Kecsmar: Yeah. But I also think that it shouldn’t be also day off. It can also be just finishing time during the day. I’m pretty not great at taking time off, like taking days off. This year I’m trying to have more days off, but last year it was only kind of around Christmas. But I think that stopping work in the afternoon is great because then you have the whole afternoon for you and your family. And I found that having children also helps with that because if you have children, then there is like no way that you cannot stop. You can’t really overwork because you need to go and pick them up. They would be there. You can’t work if you’re with them. So I really found having children healthy for my, like supportive for my mental wellbeing. 

[00:30:06] Jon Penland: Yeah, that’s so funny because in culture at large, you won’t hear that  children are good for your mental health, but I will echo that sentiment. Right? I have kids and a lot of them swim and they are in the pool at 4:45 and that means I’ve got to stop and get them in the pool. Right?

[00:30:22] So it does kind of put a hard stop at the end of my day, that forces me to remove myself. So I will, I will echo the mental health benefits of having children. So that’s awesome. So as we wrap this conversation to a close, I have a couple of wrap-up questions for you. So first, what is a go-to resource you would recommend to our listeners?

[00:30:42] So this is just something you found useful in your own life. It could be a blog. It could be a newsletter, an event, a book, just something that you would say listeners of Reverse Engineered should check this out. 

[00:30:53] Zsuzsa Kecsmar: Well, I’ve been following Marie Forleo for a long time. Her website is marieforleo.com and she shares really useful business advice. And also often about things that I already know, but her way of thinking helps me to restructure my way of thinking. And I find that oftentimes very helpful.

[00:31:17] Jon Penland: Okay. Awesome. And then final question. Where should we send folks if they want to connect with you or learn more about Antavo? 

[00:31:25] Zsuzsa Kecsmar: Please send them to antavo.com if they are interested in launching a loyalty program. And I can be personally reached on LinkedIn, happy to connect. 

[00:31:36] Jon Penland: Okay. Well, thank you so much for joining me on Reverse Engineered today, Zsuzsa. 

[00:31:40] Zsuzsa Kecsmar: Thank you very much for having me. 

[00:31:42] Jon Penland: All right. And thank you to our listeners. That’s all for today’s podcast. You can access the episode show notes at kinsta.com/podcast. That’s K I N S T A.com/podcast. If you enjoyed this episode, don’t forget to subscribe to Reverse Engineered and leave us a review on Apple Podcasts or the platform you’re listening on right now. See you next time.