Is the U.S. Finally Ready for a Coalition Loyalty Program? It Depends.
Plenti, the new loyalty program just announced by American Express, is touting itself as the “first U.S.-based coalition loyalty program.” For those who have been involved in the loyalty marketing world for more than a few years, there’s something oddly familiar about what Plenti is offering.
First, what is a coalition program? Typically, it’s a program that brings together well-known brands under a single currency that members can earn – and burn – on any of the participating companies. The concept was made popular by the long-established and successful Air Miles program in Canada, which launched in 1992. Then, in 2002, the Nectar program launched in the UK and also found great success with the concept.
In the U.S., Plenti is actually not the first attempt to bring a coalition program to market. S&H Green Stamps, launched in 1896, was really the first retail loyalty program that had a coalition feel. It’s actually still around, but has evolved in this era of technology to become S&H greenpoints. Back in 2001, Jaz Rewards was one of the more recent trail-blazers for state-side coalition programs. Then in 2006, Citigroup launched a partnership with Expedia and its Thank You Rewards program to create the first-ever tender-neutral loyalty program in the online travel agency space. The intent was to add additional big-name partners to create – you guessed it – a coalition loyalty program.
So S&H greenpoints are still around, but not ubiquitous. And both Jaz Rewards and the Citigroup program failed to gain momentum. What does this mean for Plenti as it makes its debut this spring? How will it be different?
There are lessons to be learned from the successes (Canada & UK) and failures (U.S.) among coalition programs that Plenti would be wise to heed.
Nationwide consistency & relevancy
One of the challenges with coalition programs in the U.S. is simply geography – which leads to a lack of utility. Unlike Canada and the UK, the U.S. doesn’t have many companies that span the nation as a single brand – which makes it difficult to build a strong membership base across the country. If the participating brands aren’t in your area, it’s unlikely you will join. To complicate matters, relevancy must also be considered. You need participating brands that meet the needs of a mass market audience while seeking out potential loyalty program enthusiasts at the same time – a challenging combination.
Even though more Americans belong to loyalty programs than ever, the percent of active members continues to drop. If consumers can’t see their efforts result in a meaningful reward quickly, they will typically opt-out. That makes “every day spend” categories like gas, grocery, and mass retail critical to the success of these programs. And that’s where the issue of geography often comes in to play.
Today, consumers are increasingly living digital lives. Their “every day spend” is no longer limited to brick & mortar, yet these programs tend to focus on offline partnership. Part of the success of Air Miles and Nectar has been their constant evolution and growth to meet the changing needs of their customer base. Like all good loyalty marketers, ensure you understand your customers and their journey with you.
At this stage, it’s difficult to predict the success or failure of the latest entrant to the world of coalition programs. Our advice? Pay attention to the successes and failures of past programs – and stay close to your customers. Understand what matters to them and infuse that knowledge into your interaction with them at every touchpoint.Tags: American Express, Coalition Loyalty, Loyalty program