What are the implications of the Plenti launch on May 4th? While the U.S. marketplace has distinct differences compared to other countries where coalition models thrive, one can suspect a lot of attention against this landmark initiative. Coalition, by design, has an inherent power of helping partners acquire new customers by harnessing each brand’s customer pool. It can also move market share away from retailers with standalone programs, as customers tend to gravitate toward programs that alleviate the need to carry multiple cards, and collect multiple currencies. Last, but not least, coalition tends to accelerate members’ currency-earning power by getting them to their rewards quicker.
So, how should standalone loyalty programs defend against these threats? In regions with successful coalitions, we also see standalone loyalty programs that have prospered. Take the Canadian marketplace where Air Miles and Aeroplan (two key coalition programs) have extremely high penetration and a wide range of hundreds of partners. Penetration might be high, but our just released 2015 Loyalty Report finds that Canadian coalition programs rank lowest in satisfaction at 19% vs. the category average of 30%. Large-scale standalone loyalty programs, such as Shoppers Optimum (operated by Shoppers Drug Mart), SCENE (operated by Cineplex and Scotia bank), Petro-Points (operated by Petro-Canada), and many others not only co-exist with coalition — they thrive. Operators of standalone programs need to ensure their programs are meeting their memberships’ needs by following some of the loyalty design principles we utilize at Bond:
It’s an exciting time for loyalty, and we are seeing many brands looking for answers about how to improve their underperforming programs and differentiate from the competition. Investing in customer experience, and striving to be a loyalty brand and not just a brand with a loyalty program, are other critical steps marketers should consider to ensure customers continue to shop, advocate, and return again and again.
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