In this edition of Loyalty360’s Executive Spotlight, we speak with Don Smith, Chief Consulting Officer at Capillary Technologies. With nearly two decades of experience at Brierley, now part of Capillary, Don offers unique insight into the evolving loyalty landscape — from program design and advanced analytics to the role of AI-driven personalization and member-controlled experiences.
During this conversation with Mark Johnson, Loyalty360 CEO, Don shares his perspective on the future of customer loyalty, the importance of building programs around customer choice, and how loyalty strategies must evolve to address shifting customer expectations. He also discusses the challenges and opportunities of coalition loyalty in the U.S., the potential for innovation in the automotive sector, and the critical importance of listening to customers and acting on that feedback to build authentic, data-driven relationships.
For loyalty professionals, brand leaders, and those shaping customer engagement strategies, this episode offers valuable insights and actionable takeaways to apply in your own programs.
Read the excerpt below and listen to the full episode to hear Don Smith’s full perspective on what’s next for customer loyalty and how brands can better prepare for the future.
Mark Johnson: First off, for those who may not know, can you tell us a little bit about Capillary and your role with Capillary?
Don Smith: Capillary is a leading marketing services agency and a full stack solution provider specializing in customer loyalty and engagement. We handle everything from program design to execution, offering a rich consultative experience with a strategic perspective.
In addition to program design, we also provide comprehensive technology that includes a CDP, a communications solution, and a rewards platform for sourcing catalogs and gifts. We really do it all - providing back-end analytics and strategic support to optimize and improve loyalty programs.
Capillary has been around for about 15 years. Some may be familiar with Brierley, the agency I come from, where I have spent almost 18 years.
Two years ago, Capillary purchased Brierley. Part of that acquisition was focused on bringing our strategic and consulting perspective with respect to program design. It's been a really great fit and we're still Brierley, but now a wholly owned subsidiary of Capillary. We are the global consulting arm of the agency. My role is leading the consulting practice, which is advanced analytics, data science, but also strategy, program design, optimization, and all of our voice of customer research as well.
M.J.: What do you think is the next big trend in customer loyalty? What are you most excited about as an opportunity to show customer loyalty and how is Capillary preparing for it?
D.S.: The trend I'm most excited about is member choice. More and more we're seeing loyalty programs tailored to the preferences of members and they're going to be in control, not just in terms of their redemption or what they earn with the program they're also going to be in control with respect to their accrual and the perks that they select and the benefits. I think this is exciting.
The trend that everyone would have talked about last year was hyper personalization driven by AI. I've said this before, the problem is we did not hit that trend. As an industry, I think we're very hyper but not personalized enough. That's where I'm excited because this notion of choice for members and letting them be in control of their destiny and really enjoy the program and have a reason to stick with the brand is going to come back to the level of personalization that they received. The more authentic it is and the more data driven it is honors the promise of the data those members are sharing. Programs are finally realizing that we have to embrace clientelling as a possibility and start arming the people who deal with customers and members.
You asked how Capillary is preparing for it. Well, we're designing programs that have all of these features. Most importantly we’ve set aside a large portion of our operating budget just for AI and product enhancement. We're really going at that and we're seeing incremental lifts. No one has perfected the AI solution. There's a lot of noise around AI, not a measured strategy. That's what Capillary has.
M.J.: If you could collaborate with any brand or industry to create a groundbreaking customer loyalty program, what would that be and why?
D.S.: My number one answer is I want it to be a coalition. Ideally it would be inter-brand or inter vertical, because I see that the rising tide of coalition loyalty can lift all brand boats if it's engineered correctly.
If I had to pick a vertical right now where I think loyalty is under penetrated and not working very well at all, it's automotive. It’s less about the automotive retailers and more about the dealers, the brands that are selling new cars and new vehicles. There's a lot of programs out there, but they tend to be focused on the next sale or just generating the next service visit and generating those revenues. They're not facilitating the driving experience and helping you plan out your larger experience as a driver. it's an opportunity to do something amazing across the board with a number of partners. When I look at that one where we need the most innovation, that's clearly one of the verticals for me. I hope we see someone step up and just knock it out of the park soon.
M.J.: In your opinion, what is the single biggest factor that drives a great customer experience?
D.S.: Great customer experience is a function of planning what customers want. There are some prerequisites to that for sure. Things like competent employees, do what you say you're going to do, deliver a high-quality product and service. Those are prerequisites for programs to work as best they can. For us, when we think about engineering customer experiences, we've stood in the shoes of the customer. We're talking to them in focus groups. We're bouncing their feedback off of customer panels and asking, “Where is a friction point where customers stub their toe? How can we rise up at a real-time inflection point and potentially solve it or make it better? Where are places where folks would love to get something, a benefit, a perk or just some help from a brand?”
Identify the places where you can take a bad experience or a mediocre experience and make it great. Those are the places we focus our efforts. You also have to do financial modeling and make sure that we're not prescribing too much or doing something that becomes dilutive or breaks the bag. We want to deliver meaningful experiences, high perceived value benefits, but do it in a very responsible way so that it can get traction and be sustained.
M.J.: What's the best work advice you've ever been given?
D.S.: I was working as a graveyard cook in college in an IHOP. It was tough. I really needed this graveyard cook job and it paid better than most jobs for a college student did. There was an owner/operator of this franchise, and I saw how hard this guy worked. I'd started as a dishwasher, one of the cooks quit and they promoted me to cook. It was taking me a while to multitask and to learn to prepare all the stuff quickly. It may sound ridiculous, but I was very slow in my first couple of days. On the third day, the owner said, "Look Don, it's time to light a fire under your butt and improve your learning curve or get out." That may not be beautiful advice that would be on the cover of a book, but I think it is advice people need to hear.
What I realized was, “Well, how do I do that then?” He says, “When your shift is over, stay because the more experienced cooks are going to be there. Follow them, shadow them, watch them, and get better.” He was absolutely right. I was sitting there going, “Oh, yes, I can do four things at once instead of two. I can think through a sequencing of this.” What I learned from that was, you have to invest in your own success. You can't assume that a training manual is going to teach you how to do something. You have to jump in, get that learning and be willing to learn from others. I think that is the best advice. You're making your own investment in yourself and just about everything in life. Hard work and willingness to learn has to be right at the center of it.
To hear more from this in-depth interview with Don listen to the entire podcast here.