Len Covello Of Engage People On The Future Of Retail Over The Next Few Years
An Interview With Ben Ari
Published November 6, 2022
Don’t forget about customer service. Especially now. Now is the time to over deliver on customer service to grow brand advocates, like Urban Outfitters continues to do.
As part of our series about the future of retail, I had the pleasure of interviewing Len Covello.
Len Covello is CTO of Engage People, the only loyalty network that enables program members to pay with points directly at checkout. Len leads the long-term technology vision of the company and is responsible for driving continued innovation in the loyalty sector. He is an innovator in the technology space and a thought leader in loyalty, who started his first technology company at the age of 18.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
I originally started working in the web space in my mid-teens as the internet was still a bit of the wild west. I started taking on contract work to build web applications for North American companies, and this led to the creation of my first web development agency specializing in e-commerce development. From there, we began doing work for a client in the loyalty and incentive space, which we eventually acquired (The Fairlane Group), and that is where my focus on the loyalty sector really began. I’ve always had an eye for the creative user interface/user experience, which I think has coupled very well with my love of technology and building things.
Can you share the most interesting story that happened to you since you started your career?
I’ve had a lot of incredible experiences in my career. I’ve been able to travel the world, design and build solutions for tier-one companies and work with an incredible team of individuals here at Engage People. But I think one of the most interesting stories stems from our work to design a solution that was a precursor to our fintech-powered loyalty network, Access Plus.
The ability to pay with loyalty points at checkout didn’t catch on quickly at first, so we worked day and night to build a solution that would still accomplish our goal without needing to involve major retailers first (in this case, our goal was Amazon). Instead, we built a solution that generated a tokenized card that allowed Marriott Reward members to pay with points on Amazon. Within one week, the volume we generated caught the attention of the global online retailer and served as a key building block of our Access Plus product today. It’s funny how building a complex path can help you open the front door.
Are you working on any new exciting projects now? How do you think that might help people?
As much as we are a loyalty company, we see ourselves as a technology company that delivers solutions in the loyalty space first. Today, we akin ourselves to a payments company as it relates to loyalty currency. That’s the value proposition we bring to the market.
Taking a step back, loyalty is such a broad term. It can be as simple as swiping your credit card to earn, but it’s also that feeling of being special through a one-to-one relationship with a brand. It’s about personalization when you’re interacting with a retailer.
Over the years, we’ve delivered loyalty solutions in the traditional sense through redemptions, travel bookings and gift cards. Now we have a product called Access Plus that allows us to integrate into any ecommerce checkout screen or checkout flow to give loyalty program members the ability to pay with points as easily as selecting their credit or debit card. I think the best description I’ve heard is that we’re the horizontal line in an “H.” We’ve been building a network, akin to Visa or Mastercard, and creating that handshake between retailers and customers.
Our main focus as a company is to continue to expand our loyalty network. That includes adding new retailers and new loyalty program sponsors to provide consumers with the flexibility to pay where and how they choose, including with loyalty points.
None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?
As an entrepreneur, you are always learning, being flexible and resilient, and listening to others. These traits are a necessity for long term success. Your team is your most valuable asset with significant expertise from diverse backgrounds. Utilizing these skills fully can help separate a good team from a great team.
I remember early on in my career when I didn’t have the professional experience and did not deal well with conflict. A new client Vice President was in our office, and I wasn’t at my best as I was frustrated with the overall relationship and how it was proceeding. He could tell there were systemic issues, and rather than push back or engage in an argument, he used that moment to teach me about being measured and working through conflict. I look back on that day fondly, as I feel I grew considerably and will always remember and thank Michael Konikoff for that moment.
How have you used your success to bring goodness to the world?
I’ve been fortunate enough to leverage our capabilities and experience to maintain a team of good people. Our team continues to donate to charities both financially and with services in kind. While this is the traditional approach of doing good for others, we truly embody having compassion.
We provide a healthy and agile working environment for everyone at Engage People, which allows our team members be parents, children and friends first. When something personal comes up, we support our team — and I believe this is the karma that we put out into the world. Build a team of good people, treat them well, and together you will do great things.
Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?
Since I work in the loyalty space, it’s easy for me to point to the trend around loyalty programs — both revamps and new program launches. We’re seeing loyalty programs emerge where redemption can happen both instore and online at the same value. There’s also the emergence of new program perks, like offering the ability to pay with points both online and instore as easily as swiping a card.
New ways to pay at checkout also include cryptocurrencies and buy now, pay later. Of course, there’s been a huge shift toward the acceptance of cashless payments, like Apple Pay or Google Pay, at the point of sale.
Retailers have also implemented flexible returns where online purchases can be either returned in store or via return delivery with no restocking fees.
Lastly, we’re seeing more robust inventory management and visibility to avoid customer disappointment, as well as increased communication for promotions and product availability via text and email. Many retailers are dropping shipping altogether from branded partner sites, as well.
The supply chain crisis is another outgrowth of the pandemic. Can you share a few examples of what retailers are doing to pivot because of the bottlenecks caused by the supply chain crisis?
One example of a pivot is creative warehousing, meaning placing smaller warehouses with high demand items closer to major centers. Retailers are also encouraging delivery and pick-up at stores.
In addition, having multiple manufacturers of high demand products to source from if an issue arises in one geographic area or delivery costs increase substantially.
How do you think we should reimagine our supply chain to prevent this from happening again in the future?
One way to help mitigate a similar scenario is digitization.
While the supply chain has been one of the most-hyped use cases for artificial intelligence and machine learning, fewer than 25% of companies say their supply chains have digital capabilities today. Digitization can enable operational leaders to access crucial data on supply and demand, and it can provide a lens into product availability, inventory, and order status of a company’s suppliers. And since many other industries have undergone some form of digital transformation in the past couple of years, there are best practices that can be built upon to move in this direction.
Another way is to maintain alternative sources of supply rather than relying on a single source.
In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?
In short, physical store locations and malls will remain, but there will be fewer in the future. The ones that remain will be larger and become true destinations.
Online competition will force malls and physical stores to evolve as social locations where people meet and explore new products and experiences. Retailers now have the opportunity to create the “lifestyle” they want to surround their products and customers with. In addition, these stores may have limited time offers only available through physical locations, which can help drive traffic — especially among the most loyal customers.
In this day and age, malls and physical retail locations will become less about inventory and racks of products, and price will not play a significant role because purchases can be made online for the lowest price. They will evolve into more of a social hub.
The so-called “Retail Apocalypse” has been going on for about a decade. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?
Brands such as these have a single product or lifestyle focus and continually reinforce it with the product mix, pricing and customer service — they do not waiver from their core brand proposition. That’s a great lesson for other retailers today: carve out a niche in highly competitive environments and work to develop high-quality, private-label products. This won’t happen overnight, but it’s certainly something for brands to strive for.
In addition, these brands have strong loyalty or membership programs that revolve around the customer, as well as stand-alone stores in good locations that aren’t subject to the same traffic issues that malls face.
Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?
The best advice we can give is to not compete on price, but rather offer services and experiences that go beyond that. Build a retail or ecommerce experience based on your competitive niche, and elevate with promotional offers and a robust loyalty program. And during a period of inflation, where prices are naturally higher, prioritize customer service to deliver high-quality customer experiences. Right now, it’s as important as ever that retail and e-commerce companies remain true to their core value proposition and reflect that in their product mix and pricing.
Based on your experience and success, what are the five most important things one should know in order to create a fantastic retail experience that keeps bringing customers back for more? Please share a story or an example for each.
Define your reason. Like the designer of outdoor clothing and gear for the “silent sports”, Patagonia, define your reason for being in business. Then consistently deliver against that core belief to connect emotionally with your target audience. This connection will fuel increased long-term loyalty and word-of-mouth marketing.
Create a lifestyle. With the influencer boom, especially among brands, many retailers have realized the importance of creating a lifestyle that delivers beyond the product. Lululemon is a good example of a company that is getting this right. It’s not just about clothing, shoes or other products, it’s about the way they make consumers feel and embody who customers are.
Don’t forget about customer service. Especially now. Now is the time to over deliver on customer service to grow brand advocates, like Urban Outfitters continues to do.
Revamp or launch a loyalty program. Developing a robust loyalty program and consistently rewarding customers’ commitment to your brand is paramount. Take Sephora for example. Communicate with members in personalized ways, and deliver that feeling of ‘specialness’ to your target consumers. And, avoid devaluing rewards whenever possible.
Listen. I can’t stress this enough. Listen to your customers and employees. Engaging with them will help you to gain valuable insights for today and for the future. Wegmans is one supermarket chain that keeps this top of mind.
Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Overall the world needs more positivity, and that includes taking care of the mental health of our youth — especially in the digital age. One of the biggest downfalls of social media is that people feel the need to cut down others in order to feel better about themselves. I’ve always loved the line, “Just because someone gets in line behind you, doesn’t make you any closer to the front”. If I could start a movement, it would be to recreate algorithms that promote content that celebrates accomplishments rather than content that makes others feel the need to compare or cut down their peers.
How can our readers further follow your work?
You can follow Engage People on social media; LinkedIn and Facebook: engageppl, and Twitter: @engageppl. We also just launched our new website that features all of our latest happenings: www.engagepeople.com. Lastly, I am a member and regular contributor to the Forbes Technology Council. You can check out my latest articles here.
This was very inspiring. Thank you so much for joining us!