Many large organizations no longer feel that they are getting a fair exchange from coalition loyalty programs, and are seeking to take back ownership of their loyalty data to build better relationships with their customers. While these brands may sacrifice the marketing reach that comes with participating in a coalition program, ultimately the investment made to own their own customer data will pay off in the long run.
By Anthony Stevenson
Gaining a more thorough understanding of a brand’s customers, what motivates them and what influences their purchasing behaviors is only possible if a brand can connect their customer data across all touch-points, including their loyalty program. And to do that, brands need to control their loyalty strategy and implementation as well as the data those initiatives generate.
A coalition program adds an opaque layer between this crucial data and a retailer, preventing a complete view of their customers. When the Plenti program announced in April it would no longer accept new members and that the program would cease operations this summer, many interpreted the program’s struggles as an indictment of the concept of coalition loyalty. Instead, the participating companies may have simply realized the advantages of owning their own loyalty data and tailoring their loyalty approaches to maximize the benefit to their brand.
The original attraction of the Plenti program – and most coalition programs – is based on the immediacy with which a brand could tap into and engage an active, built-in consumer base. But as brands found they could achieve the same customer activation and marketing reach by effectively managing their own social media, digital content and native app channels, the need to rely solely on a third-party solution disappeared. Retailers can more effectively leverage their marketing spend across multiple “owned” platforms to connect with and engage a larger, more targeted audience.
This new approach can be seen in other sectors of the North American economy as well: the same rationale informed Air Canada’s decision to build an in-house loyalty program rather than continue its partnership with Aeroplan. And major retailer Loblaw merged two of its most beloved programs to create one of the largest digital loyalty programs in Canada, PC Optimum. This illustrates a different, more consolidated approach but with the same goal: creating a single customer view based on data collected across all brands and channels.
This trend of merging, consolidating and bringing loyalty programs in-house benefits consumers as well. The earning and redemption process becomes much more streamlined and easy to understand, points work across multiple related banners, and the value proposition is much more obvious. But it is when a retailer unlocks the potential of connected data that customers reap real benefits. More relevant offers and promotions are delivered at the right time, in the channels each customer prefers. And when brands can clearly understand their customers’ needs and preferences, they can create more meaningful engagements that drive deeper brand loyalty and revenue to their business.
Businesses want to drive their own destiny, and to do that they need to own their own customer data. Investing in loyalty solutions that facilitate this outcome will pay dividends well beyond the benefits of participating in a coalition program. Pursuing this approach is possible – with the right technology and the right partners. Brands that take this opportunity and make the investment to own their own data will enjoy a significant advantage over their counterparts that settle for outsourcing their loyalty strategy to someone else.
Anthony Stevenson is International New Business Director at Eagle Eye.