Just how popular are loyalty programs in the U.S.? Consider this: there are almost 10 times as many loyalty programs in the country than people – a whopping 3.3 billion loyalty programs. The average American household lists 29 loyalty programs, although consumers are actively using only 12, says the 2015 COLLOQUY Loyalty Census. If your brand’s loyalty program is one of the 17 just twiddling its thumbs, you might be interested in understanding how the benefits of a program like Plenti might help invigorate your program – loyalty coalitions.
Loyalty coalitions are alliances between two or more brands that have banded together to offer a single rewards program. (If you’d like a more in-depth primer, check out our post on the basics of coalitions.) The structure of a coalition allows customers to pool their points and use them at any of the participating retailers, so for those brands that are struggling with engagement in a solo program, a coalition could be a catalyst to drive participation with inactive members since users will have more ways to both earn and burn points.
If you think a loyalty coalition might be right for your brand, here are some other points to consider.
4 brand benefits of loyalty coalitions:
- Share costs – Brands that belong to a coalition share administrative costs like initial program development and launch as well as ongoing costs like operating and advertising initiatives.
- Increase engagement – The magic behind coalitions is that customers can accumulate points by shopping at a variety of places, so by entering into an alliance with other brands, you increase the incentive for customers to make you a part of their network of favorite, point-generating brands. And because shoppers will be more apt to stay within their coalition, engagement with your brand is bound to go up.
- Appeal to consumers – Loyalty coalitions offer a higher level of flexibility to consumers who can earn points more quickly and redeem for a wide range of rewards. This also can alleviate “points purgatory” – when a user doesn’t have enough points from a single retailer to earn rewards, so points go unused or expire. This is a major selling point for customers who are avid rewards program users.
- Gain competitive advantage – This is especially true for retailers where shoppers make infrequent purchases. Most of us shop for groceries or fill up our gas tank more often than we buy clothing or shoes. If a customer knows they’ll add points to their rewards bank by shopping at a retailer within the coalition, they may be more likely to choose that brand over the competition.
Internationally, loyalty coalitions have been successful for years. (Humble brag: We recently announced our partnership with one of Brazil’s premier coalition loyalty programs, SMILES.)
Nationally, in the U.S., coalitions are still very new and while we’ve just gone through a whole host of benefits to joining a coalition, it isn’t the right move for every brand. Before you jump into a coalition, consider whether it aligns with your business and loyalty program goals. You’ll also want to be sure you have access to the user data that’s most important to you and that you’re aligning