Linking brands from different industries to create an “umbrella” value proposition for consumers is known as a Multi-brand or Coalition loyalty program.
This structure is the dominant one in many geographic markets outside the US. There are over one dozen coalition programs that have successfully operated for more than 15 years, and Hanifin Loyalty has had the opportunity to work with several of these programs as well as contribute to the launch of newer programs.
Coalition Loyalty Programs
A quick list includes:
- Aeroplan (multiple markets)
- AirMiles (Canada)
- Bonus Peru (Peru)
- Dotz (Brazil)
- Grace Kennedy Value Rewards (Jamaica)
- KickBack Rewards (US)
Building coalition loyalty programs successfully requires a fresh look at the strategic planning process. The programs are complex, there are competing interests, and the financial modeling which underlies business case development and budget procurement is complicated.
With more Coalition Loyalty activity in the US than ever before, we thought it a good time to share our view of 8 Best Practices for Building Coalition Loyalty, based on our accumulated experience.
8 Coalition Loyalty Best Practices
Customer Experience – The value proposition offered (as with any loyalty program) should communicate simplicity and transparency. It must be easy to understand, and members should quickly identify benefits. There should be multiple earn and burn opportunities across the partner network.
Common Currency – A shared monetary system must be the coin of the coalition realm. It should be available on a consistent bases across the network of participating merchant.
Partner Diversity – Optimal structure includes well recognized brands in key daily spending vertical markets. Fuel, retail, grocery, pharmacy, banking are all important to include over time. A sufficient distribution of physical outlets will stimulate member engagement.
Open Tender – Program members (people like you and me) should be able to complete transactions with their preferred payment method. A Cobrand payment card is an important part of growth trajectory and should be positioned to accelerate earning for members.
Funding Rate – There must be sufficient opportunity for members to earn value in the program to maintain activity levels. See # 4 above as Open Tender fosters stronger earning velocity. Merchant partners can tailor offers to add or take away value and supplement with discounts and other internal value as they wish.
Program Structure – Program enrollment and participation to earn and redeem value should be easy and seamless for members. Program structure should anticipate future growth, with provision for member tiers, soft benefits, and special access for top-tier members.
Independent Management – Having a third party established to operate a coalition is critical to long term success. It ensures equity among all partners and delivers the highest value to participants over the long term.
Shared Data – The member and transaction data gathered over time is a valuable asset and should be leveraged to trigger benefits across multiple partners. See #1 above. If the coalition is controlled by a single partner, data may not be leveraged equitably across partner.
Reducing the best practices for successfully building a coalition loyalty program to 8 steps runs the risk of understating the level of complexity in bringing one of these programs to life.
There are but a handful of people in the world that have enjoyed direct experience in creating, launching and operating a coalition program, and the greatest penetration of these individuals with an independent and unbiased view towards coalition exist within the Partner group of the Customer Strategy Network.
If you are interested in learning more about the Coalition Loyalty model, please contact us.