#02 How Payback scales with Partner Marketing | with Torsten Hautmann
SPEAKER_1
[ 00:00:00 ] Warm welcome to today's Partner Marketing Podcast. How has Payback grown to be the largest loyalty community in Europe? And what role plays partner marketing in this success story? In today's episode, Torsten Hautmann, VP Digital Sales at Payback, will share with us insights into how partner marketing creates success. Let's get started. Welcome to the Partner Marketing Podcast. Welcome, Torsten. Great to have you here today.
SPEAKER_0
[ 00:00:34 ] Hi, Matthias. Thank you for having me.
SPEAKER_1
[ 00:00:37 ] You are VP Digital Sales at Payback. What does a VP Digital Sales at Payback do every day?
SPEAKER_0
[ 00:00:46 ] Basically, I'm responsible for the whole of the digital partner management at Payback, which consists of three pillars. One pillar is our official partnership business. The second pillar is our whole rewards business, so basically the place where our members redeem their points for and then get a great voucher or get a great physical good as a reward. And the third part is our affiliation business, our partnership business, which you know very well as an expert.
SPEAKER_1
[ 00:01:21 ] I do. I do. We used to work together. We still work together. Can you describe a little bit what Payback is in general? Obviously, everybody knows, but we have, I think, quite an international audience. What is Payback? What problem do you solve?
SPEAKER_0
[ 00:01:37 ] Payback is the biggest loyalty program in Germany, by far the biggest loyalty program.
SPEAKER_1
[ 00:01:43 ] I think you have something like 30 million subscribed users, 40 million users and 20 million online users. Was that right?
SPEAKER_0
[ 00:01:51 ] We wish. That would be like even a greater number, which we currently have. We have like 30 million subscribers. We have like 32 million active members. Which is impressive, right? Which is like a great number. Almost everybody. Mostly every household is using Payback. And if you would look into the cards, we gave out during a big time frame, 25 years next year. It would be about 70 to 75 million cards, which Payback gave out, which basically then is every household in Germany has as some Payback card in some cupboard. Yeah, that's basically great, great reach.
SPEAKER_1
[ 00:02:44 ] I guess we have two or three at home or something like that. How many of these users are online as well? How many online users, active online users do you have?
SPEAKER_0
[ 00:02:53 ] So basically, if we look into the reach, we have about 12 million newsletter reach. And we have about 11 to 12 million members, which have downloaded the app. So if we look into basically, activeness in online reach and mobile reach, basically, it's those 12 million newsletter reach and about 11 million average. So of course, they use both newsletter and average. So it's something between. Something around that. 10, 10 million, 12 million commerce users, Payback commerce users.
SPEAKER_1
[ 00:03:34 ] That is probably, I think it's fair to say, to say that's the largest shopper community in Europe, I would say, isn't it?
SPEAKER_0
[ 00:03:41 ] I don't know if it's the largest, but for sure, it's one of the largest. And I mean, the impressive number is, I mean, the reach is an impressive number. What impressed me even more is the daily activity. Of those members. So if you look into the Payback app, and basically that's where the action happens, we have up to 1. 8 million daily uniques in the Payback app. So basically, it's like in Hamburg, like opening the app every day frequently, and that's the impressive combination of a good reach and a high frequency. So a high attractiveness of the program. And in the daily usage.
SPEAKER_1
[ 00:04:28 ] So with this community, I guess there is really something that you can do from a business perspective. But what's the core business model of Payback? How do you earn money?
SPEAKER_0
[ 00:04:38 ] I mean, there are there are there's not only one one business model there. There's just like a bundle of business models we provide. So payback started as a classic loyalty program by addressing offline partners. And offline behavior. So we started like with with the grocer and with the fuel station, and with the supermarkets, basically, that's the core still today, our so-called classic business, this is basically where where the action happens and where the reach builds up because like this, these companies are using Payback as a loyalty scheme and steering and binding their customers. Then we have a second, then we have a second business, which is our digital business. So basically, that's that's a variety of business models as well in the digital business. There's our so-called online official partner business, basically, it's the digital analogy to the, to the, to the offline partners, which are using loyalty, that's about 25 to 30 partners. Then we have the affiliation business where basically, we use the Payback marketing platform to to provide great offers towards our customers from a variety of partners. Um, we will come to that later for sure um and then we have a bundle of of services around the marketing platform because you know payback is for sure one of the biggest marketing platforms in Germany and it's not only like a platform with great digital reach but also a platform with great offline reach so our so-called punkty this is basically the point statement which we send out once a month has a reach up to 18 million send-outs. So, if you see the machine where this one is produced in, basically in four-color printing completely personalized, you would be impressed because it's big as a house and I think it's just it's just like a variety and a bunch of different models and different channels so you have the from my perspective to say offline activities, you have digital activities, you have the affiliate partner marketing part, and you have other services.
SPEAKER_1
[ 00:06:56 ] What role has partner marketing?
SPEAKER_0
[ 00:06:59 ] Played when building this large shopper community, PayBack has played a big part, a very important part, because, because, basically, um, it gave PayBack the possibility and the opportunity to build up interesting offers from interesting partners to to its community, and this besides of the official partnerships which are of course a little bit complicated or a little bit more complicated than an affiliation partnership, because you know the partner has to implement a loyalty scheme like PayBack completely on its side, has to decide if it wants to do a loyalty scheme, so this is like a long process, and with With some, some few, partners just, just a bunch of partners which are very important but it's, it's a bunch of partners.
SPEAKER_1
[ 00:07:56 ] It's not like the complete portfolio so you could say do you have some partners where you are working directly with that are deeply integrated with you I guess they are in your checkout pro in their checkout you are in their checkout process and then you have a bunch of other partners not official partners but obviously a large volume of these that are connected through partner networks. Is that right?
SPEAKER_0
[ 00:08:21 ] Absolutely. So the biggest part of partners are connected via partnership models via performance models. via affiliation models, and the smaller part is is connected via direct implementation. This is basically natural, I mean it's very very normal that it's their way. And by discovering affiliates, it's very very normal that it's their way. And by discovering affiliates for payback, a long time ago, I think it was about 20 years ago when payback started affiliation and partnership models. Basically, the portfolio was built up very nicely and very interesting um for for the payback customers. And they could could then shop with a lot of shops which would not be possible to offer um in a direct partnership.
SPEAKER_1
[ 00:09:15 ] At one point, like from working with Payback and obviously knowing Payback now for a very long time, you focused a lot-at least that's how I recognized it on these official partnerships. And you were very selective when working with different brands, onboarding only a few or only in different categories. Is that still the same, or do you work with many brands now, or with basically everybody? What does a brand have to do if they want to work with Payback?
SPEAKER_0
[ 00:09:50 ] Yeah, you're right; we were a little bit more exclusive in our view and we decided to to go a little bit broader for most, for most, for most-industry and most categories. We still have um, exclusive partnerships. um, we have exclusive partnerships in grocer; we have exclusive partnerships in the supermarket segment. uh, we are exclusive in in the fuel station. so, there, there are still um, a lot of segments and categories where we have exclusive partners, and this makes absolute sense. then, we have a lot of industry and categories which we call verticals, where we decided that we have to offer a variety of partners. if you're looking to travel or if you're looking to retail and fashion, of course it doesn't make sense to just offer one partner in an exclusive deal, even though one partner would wish uh. that we would offer like this possibility but in a sense of offering a broad ecosystem and a broad variety of partners to shop it makes absolutely sense to to open to open the the vertical and basically to um to try to to acquire the most important partners in this vertical in the segment when you when you break it down in a nutshell when you have all these like the the official direct partnerships as well as the um i would say network partnerships affiliate partnerships um what is the overall target is it the volume of offers and products that you want to offer to your community or how do you measure that how do you?
SPEAKER_1
[ 00:11:39 ] Measure success, what is driving you, what is defining the strategy you're applying?
SPEAKER_0
[ 00:11:45 ] Yeah, I would say it's mostly attractiveness towards our customer.
SPEAKER_1
[ 00:11:50 ] So you want to have offer products for them that they come back to pay back, that they whenever they want to buy something, basically have the opportunity to reward, payback points absolutely so, basically we strive to, to offer everything over payback.
SPEAKER_0
[ 00:12:08 ] So, basically, you as a customer, you can use payback for every transaction you can imagine and this is basically from A to Z. So, the partner portfolio which Payback has it's from Amazon to so plus so, it's the pet food as well. As for the home electronics as well as your, your, and your favorite food or your your most loved travel destination, and if you if you wish to install a new, you know, solar a deck on the roof of your house, this can also be bought via payback, and is incentivized with payback points.
SPEAKER_1
[ 00:12:51 ] Now, you're speaking about payback points, so the user whenever they buy something using their payback account, they get loyalty points that they then can exchange again when buying something. Isn't that quite a technical challenge for you because you work with networks, you work with these partners, you have the sales how do you calculate how many points? Somebody gets how do you do this whole management um of of the rewards, so basically the the payback system is is very very easy and very clear.
SPEAKER_0
[ 00:13:25 ] So, it's one point equals one cent, so basically that's it and that is always the same, that's always the same.
SPEAKER_1
[ 00:13:32 ] But you have different activities where you sometimes say you get two points percent something like that, yeah you can earn like multiples on an offer.
SPEAKER_0
[ 00:13:42 ] So basically the the base incentive is always a one point um equals one cent um and the basically the the the calculator is um one point per two euros spent um this is basically the base incentive so it's 0. 5 which is our base incentive, which every customer gets for for every transaction out there, and then we're talking about the the multiples and the multiples are generated via the usage of of our coupons. So, for example, um if you buy um if you buy a pizza from one of our favorite food partners, so you get the base point which is one point per two euros spent, and then you activate and coupon would say like with a tenfold, so um out of this one point per two years we make like 10 points per two years. Um and basically that's the system and that's how we calculate the points depending on the commission we get out of the model, so all the technical capabilities are on your side you can connect partners you can connect brands um and the calculation is always done the clearance etc is always done on payback side the clearance is always done on payback official partners so partners which are using payback as a loyalty scheme on their sites they can calculate on their own big partners normally calculate on on their own on their site because they do a lot of promos they do a lot of activities on their site so they they they want to have and sometimes they need to have the calculation on their site but in the partnership models and in most of the official partner models we do the calculation on on the payback side and i think it's it's also a big advantage for for the partner because um the the system we we have at payback basically it's it's it's hardened and it's proven and it's it's working and and i think that's that's that's a big point in doing a loyalty scheme it has to work if customers experience a a point a point collecting which is not working properly where points are coming like late or if points are not coming um like how you expect that they come in in time and without with a high um with a high trust with a high trust worth um then you might have some problem in in establishing and in providing a good loyalty program and basically that's what what payback would with the rating we do is is providing like i would say nearly 100 okay what how many how many brands would you say are you connected with now through the payback platform or through the networks the official partnerships etc i think it's about 650 right now impressive not that not that big amount uh i think that comes a little bit yeah i think it comes a little bit in in the direction you asked previously about being exclusive um we're not in most parts we are not exclusive but we are very sensitive in what we um what partners we work with why are we so sensitive Because, basically, every partner we work with and um every offer we we do is a payback-approved so basically our our customers out there our members out there can trust 100% that if we send out an offer if we do a coupon they can buy there without thinking about it because we've made the thinking um and we decided uh about 650 partners around that um, we could have like 10, 000. We wouldn't, it would be no problem to like offer 10, 000 partners, but we decided to offer a hand-selected amount of partners and offers.
SPEAKER_1
[ 00:17:50 ] Now still, 650 is obviously quite a number. You have scaled a lot over the last years, and you have grown. How has partner marketing helped you to scale this business and come to that?
SPEAKER_0
[ 00:18:03 ] You know what I always loved about partner marketing was the high flexibility um in in this model, basically um you can decide, you can decide to to test a new partner and to show it to your to your audience and to the customers and just try out if if it works um and if it works we're fine, we can scale from there and we can have a look into deepening the partner model, deepening the the relationship, deepening the the the media um the media we show on the platform, partner, but also we can decide on it's not working, the partner or the product is is not uh it's not developing as we hoped so. i think one one one description for partner marketing is a highest flexibility another one is a broader spectrum of of partners and highly attractive partners out there um with with a really easy way to to to get to get on on on board to partner with so you know the the normal process on a loyalty partnership takes if it's fast it takes months if it's slow it take years um the the process for an an partner marketing uh partner partnership marketing or partnership model is like days days two to a few weeks uh and i think it's um it's fast um and uh uh it but it also gives you a big variety of partners When going a little bit more into.
SPEAKER_1
[ 00:19:48 ] The strengths of partner marketing, you work with different networks out there, right? Yeah. What kind of services do you use? How does it help you to connect with brands?
SPEAKER_0
[ 00:20:03 ] So basically we are working with, I think, nearly all public networks in Germany. I think nearly all. And we are working with private network solutions. We are working with private network solutions which are offered to us by partners. And we are working with a private network solution which we are offering towards partners. So basically we are using networks, public and that's it. And private network solutions across the board. So, I think we nearly know every possibility of connecting to a partnership model.
SPEAKER_1
[ 00:20:53 ] Perfect. You said in the beginning, you mentioned the app. How important the app is and the power behind the app and the usage of the app. Now working with networks, working with different brands. I assume that tracking is of the absolute essence for you, right?
SPEAKER_0
[ 00:21:15 ] Yeah, it's a topic which is basically daily business for us. It developed quite good. We had quite some headache like two or three years ago when payback was, I would say, like two or three steps ahead. Exactly. We were one of the first brokers. Exactly. Absolutely. I think we had a very clear. We had a vision and roadmap on being app-only, and like a few years ago when I started with the company, we had the claim that 'everything goes app' and we were focused on doing app business and building up app reach. And by doing that, we discovered that most of our partners out there weren't ready because basically there were no publishers out there with great app reach. So, so basically, I think we were one of the front-runners who were like pushing for like tracking, for app tracking, for quality in app tracking. And yeah, but it has developed greatly and I would say we're on a good track right now and getting there step by step.
SPEAKER_1
[ 00:22:30 ] It has developed greatly, I think as well, but still, I think it has developed greatly from a technical perspective. Mainly when you now think about adaptation, there are always hurdles, right? Obviously, with brands implementing the tracking in the right way, enabling mobile tracking, the whole consent management; whereas there is now, for example, this ICO ruling in the UK that says that cookies from cashback loyalty companies are strictly necessary. Still, this is not always respected, which I think then obviously is a direct damage to your business. And it's not only for a tracking perspective, but then as a community, you need to deal with your consumers as well that claim the purchase they have made. How do you deal with that? More from a non-technical, but more like from a collaboration perspective, yeah.
SPEAKER_0
[ 00:23:26 ] I mean, basically, it's the one-to-one discussion with the partners. We do an analysis. We do a research. We get into conversations. We do communication with the partners. And we show the partner what's happening by showing the customer path, what's happening on the cookie wall, what's happening when the cookie wall is declined and the content is not giving, and what percentage of sales are missed. I mean, look. In logic. In the loyalty system, I think you have a very, I think you even have a more complicated case as you have with other models because you have a target group in loyalty programs, which is mostly females. It's not that tech. It's not that tech experienced. The whole topic of cookie setting and cookie has to be has to be said that the tracking is working correctly and that the points arrive. That's not something which comes naturally because the customers know what they have to do, but they firstly say, OK, there's something if I if I if I have the chance to decline, I would rather decline than not accept. So this is this is a topic we really have to discuss with a partner and show show the consequences and and basically ask the partners. So just show us what happens. What happens on your site and what's the rate of of of declining on the content, for example, or what's happening in in in in in not providing up to app tracking if you if you steer directly to the app download on your mobile site.
SPEAKER_1
[ 00:25:25 ] And yeah, now you say you do that mainly with one to one conversations. Right. And then obviously payback has a has a big market power. Other publishers, I guess, would struggle more. Would you wish something in our industry or would you have any recommendation for our industry? How could we could change that in order to become better, have a better consensus across networks, brands, publishers to align on some kind of standards where we would say, 'OK, this is the tracking. This is how we deal with that.' I guess, you know, that even has this conversion protection initiative where they say they calculate sales and charge them then on top. If the tracking is not implemented in the right way, others go other ways. But would you have any recommendation about how to deal with this topic on a on a global basis?
SPEAKER_0
[ 00:26:19 ] I mean, the A-Win initiative is great and basically it's the way we did it one-to-one with our 'We All' publishers saying like, so come on, if 15 percent are declined on the cookie consent, you have to compensate with 15 percent or. Fix the fix the cookie wall, because basically the legal perspective, I think, is is quite clear. The BVDV, like the German organization as well, has a position paper and a statement on that. And so I think position is very clear. If you have like a loyalty and a cashback system, your customers are taking part in the system because they want to receive points or cashback or whatever. So I would. I would ask the networks really to make it as a standard that tracking is working 100 percent. Basically, that's the base of the business. So having a much more bold position when speaking about this topic. If if if an advertiser asks me to do to do like a media campaign for him, I'm not doing 85 percent of the media campaign, which he bought. With me. But I'm doing like 100 percent. This is natural. This is like the business. That's what we agreed on and that's what we are doing. So basically, that's what what my expectation towards the advertiser is as well to guarantee me in his own interest to track 100 percent of of the sales we are generating and not and not like generating 85 percent and saying, OK, 15 percent is untracked. So. Sorry for that, but it's it should be it should be the absolute base by taking part in an in a partnership model.
SPEAKER_1
[ 00:28:16 ] Very clear. Have you ever stopped a collaboration based on this topic with a brand?
SPEAKER_0
[ 00:28:22 ] Yeah, we did. OK, good. We did. But I mean, we have a long we we always have a long way until we come to the point where we stop. We try. We really try to speak. We try to to bring in the arguments with we we bring the data where we we allow the shop to bring his data to show us we go into the calls with with legal we go into the calls with with the data security officers from from the from the from the countries from Bundesländer. So basically, we have a lot of experience in our team and in our legal out of years of discussion. And basically. When we come to the point where we have to end a partnership, basically, then it's at that point where a partner says, OK, listen, I'm not going to to fix it. And then the partner is very clear in I'm not able to fix it because I have legal restriction or whatever. And then basically we have to end it because, as you said previously, at the end, it's it's at a customer because the customer doesn't receive his points, his complaints. And then we have to go to the customer center. And basically, in the end, the customer is saying, 'All right, the program is not working. Payback is not doing a good job because the points are coming in frequently-one time it's working. The other time, it's not working. But you know, by taking part in the program, it has to work 100 percent.
SPEAKER_1
[ 00:29:57 ] Thank you, Torsten. When you've worked in partner marketing now for almost or exactly 20 years, how would you say partner marketing has changed?' Evolved over these years, oh has evolved greatly.
SPEAKER_0
[ 00:30:12 ] When I started a partner marketing, there was a website and doing marketing was a send-out of the newsletter and that basically that was it. And you know, if you look how how it works today in a real multi-channel environment with tracking and consent and in-depth web tracking and attribution models, we're all the channels. It's gained it's gained a lot of complexity; it also gained a lot of reach. You know, when I started the business was nice; was was cool. When I look into the business today, but I don't think it's going to be as successful as it used to be. But I think we will end the year with about six billion of e-commerce revenues in in payback e-commerce GMB and GBV, so I mean this is just it's just fantastic; it's a fantastic development and if I look into the team I think we we have like four four colleagues only working on network on on partnership model on network and providing the quality boarding new partners and and caring for the system when we started basically it was part of of the IT and some colleague helped us out and now it's all it's an own tech department with an own development own IT resources and and so on and so on so it's it's grown it's growing into it's grown into size but it's also grown and and and being really really professional what would you say is the biggest strengths of partner marketing especially when You compare it to other digital channels, I would say it's the flexibility again, but it's also its 100% performance-driven approach, so the win-win. Absolutely, you see what you get and you see what you get on an hour basis, on a minute basis, especially with payback. You know if if we go out and we do a campaign on on the payback platform then you generate sales immediately and the big strengths of affiliation businesses that you get is the feedback and you see the sales and the clicks and the GMB or the GBV and the leads and everything, you have is in the highest transparency which which you can get and and and that's for me one of the big advantages in partner marketing flexible highly transparent and and a part and powerful I mean all the all the systems which which are provided are are are capable of doing like small business if you test a partner but are also capable of like the biggest business like with Amazon or or or with other big partners where you where you generate really really big volumes where you generate volumes which are as big as in an official partnership but in an affiliation partnership when coming a little bit to the end now I have a few questions going a bit more on the personal side when you think about yourself.
SPEAKER_1
[ 00:34:02 ] And your career, what would you say is the key learning that you want the listeners of us now to remember?
SPEAKER_0
[ 00:34:13 ] The key learning for me was basically that I stumbled a little bit into the right profession, into the right business, because I, I always was like, 'like a player you know. I love to play Sim City and Command & Conquer, and all the other simulations when I was young. And by starting in in this business, and basically, I started with affiliation and partnership marketing for me, it was like expanding my player career into into business because it was life, it was like, 'you could see what was happening and I would Say, like it it was a game, it was a play for me, and it was like this hustle, like to reach something, and to really, to really generate generate GMV. Look into it, and having fun with it, and that was really, really what got me, like doing business, doing business in real time, doing business with partners in real time. Talk about it, and scale, scale, scale from there. And yeah, I would say the biggest, the biggest thing is like being playful, having fun by doing business.
SPEAKER_1
[ 00:35:39 ] Sounds good, sounds good in the beginning or in the trailer of this podcast series. We promise the listeners some kind of untold story. From you, so is there any experience or finding that you would want to share where you say this was a unique experience that inspires others that is maybe a little bit different and maybe not the usual stuff that you told anybody else?
SPEAKER_0
[ 00:36:08 ] Wow, that's a hard question. I have to think about that. I think, I think really it's it's the topic about um about finding, finding, finding your strengths um in a in a in a business which I never thought before that that would be my business so if if you would have asked me like 30 or 35 years ago um what's what you're going to do um after after you finish your study I would never I would never have said it's going to be partnership marketing or something you know what it is no no no no I wouldn't even know what it is so I would say maybe the biggest experience is that um the life and basically the surprises which come in life um are really surprises thank you what what looking forward now a bit what would you think will be the key impact on partner marketing in the future I think in like for us at payback in the size we got and and the strong growth we see is getting it's getting even more personal and it's getting even more in a one-to-one relationship with with the advertisers um i think this is like absolutely key to which is one of the essential things in partner marketing anyway right yeah it is but i think we we have to have absolute clarity in in in in in the partnership we have we have to we have to speak about the topics which are running good but we also have to speak very clear about the things which are not running that good where we have challenges um and i would say um let's get let's get an on the table let's get in contact and and push the business forward um it's great channel um i think has a lot of potential um and um as as more clear um we are and as more open we are in the discussion uh the better and then my final question for you for the marketers that.
SPEAKER_1
[ 00:38:42 ] Are listening to us, what would be your key recommendation when working with partner marketing?
SPEAKER_0
[ 00:38:48 ] I would also say, 'Look into the data, look into what's running good, look into what's not running good,' and then I would say, 'And have an open word, what you like, what you don't like.' I think you will always find a way to work with partner marketing because it's so flexible. It's not like there's only one way to work or there's only one commission model or there's only one way how you can look onto different types in partner marketing. But there's a lot of ways and a lot of possibilities. For me, basically, partner marketing is like a base of a way of partnering and working together. And there's a lot of evolution and there's a lot of chances where you can use this model. I think it's flexible like 10 times. I think that's the biggest advantage for me. It's so flexible that you can discuss it. It's not rigid. It's not like there's no way to discuss or that's the way it is. We work. We've done that for like five years in the past and we're doing it that way. But it's a way to work. It's a layer to work which has endless possibilities to work with depending on the demands which the advertiser has and the advantages a publisher has.
SPEAKER_1
[ 00:40:16 ] Super interesting insights into Payback and how Payback works with partner marketing. Thank you so much, Thorsten.
SPEAKER_0
[ 00:40:23 ] Thank you so much, Matthias. It was great. Great to talk to you today. Great to have you. Thank you.
SPEAKER_1
[ 00:40:29 ] Thank you very much for listening to this episode of the Partner Marketing Podcast. Stay tuned for the next session. You find us wherever you get your podcasts. This podcast is produced by TLDR Studios.