Partnerships via Collaborative Commerce allow brands to ultimately drive customer loyalty.
Loyalty Strategy

How Partnerships Can Help Your Brand Drive Customer Loyalty in the Digital Era

Photo by Margarida Afonso on Unsplash

Would you be surprised to learn that since 2000, 52% of companies in the Fortune 500 have either gone bankrupt, been acquired, or ceased to exist? That fact was part of the findings of a 2015 research report from Capgemini Consulting. The report is based on a study of 100 leading companies in North America and Europe and covered industry channels that have been the target of digital disruption.

The brands that disappeared failed on these key points:

  • Inability to cope with the speed, volume, and complexity of change
  • Failure to regularly evaluate their business model
  • Neglect of proactively identifying customer pain points

These three points reflect the challenges faced by many brands today in their customer loyalty efforts. For example:

1) Innovative technology that fosters customer engagement is being introduced at a rate that outpaces marketer’s ability to blend it into their marketing programs. Observe how retailers are scrambling to sort how priorities among mobile apps, digital wallets, online ordering, BOPIS, and BNPL. The means to go to market exist with each service, but how should they be knit together to create a better customer experience and drive additional business?

2) Are the resources and budgets available in the current business model to reach a broader universe of customers? What adjustments to the business model can be made?

3) Customers are experimenting with new brands, buying in new channels and with new payment methods. Have you surveyed the fine points of your customer experience to ensure unnecessary friction is removed?

Customers are demanding that we (brands, retailers, marketers) fulfill the aging promise of personalization. But how can your brand execute on a more personal level with customers, bringing greater relevancy of communications and offers to the vital resource that fuels your business?

The concept of Partnerships has been bubbling up to boardroom levels for years and there are examples of how brands have paired up as a gesture to solving the challenges outlined above. It’s time to explore this opportunity further and we landed an interview with Al Montalvo, who was recently named EVP of Global Business Development, Kognitiv, to explore the topic.

Al is an executive with deep experience in developing partnerships and strategic alliances and who brings that expertise to Kognitiv. At the center of Kognitiv’s approach is a unique concept they call Collaborative Commerce which enables organizations to work seamlessly on a peer-to-peer basis to connect data, commerce and consumer experiences, deliver more compelling programs, and return more control of those critical consumer relationships to brands.

Wise Marketer: Why is the subject of partnerships becoming so topical today?

Al Montalvo: Partnerships are a well-understood tactic to drive scale for organizations, introduce brands to new markets and new customers, and bring organizations with different skills together for maximum collective benefit. It’s a classic business tactic. However, as great a tactic as it is, it can have some drawbacks around time to execute. I strongly believe that one of the most exciting aspects of the Kognitiv solution is that it is a loyalty and commerce accelerant. Business leaders looking to partnerships or strategic alliances as a solution never had a capable platform to create collaborative business relationships at scale before. Technology available today is making this possible.

As we start to see a post-Covid recovery taking shape globally, partnerships are very much back on the table as a viable accelerant to growth. Certainly, across my network, executives are examining their current partnerships or considering new one’s with one question overshadowing that evaluation — “Am I getting all I can out of this partnership and is it working hard enough for me?”

Wise Marketer: Partnerships is a word with broad meaning. What types of partnerships are you talking about specifically?

Montalvo: In the years leading up to the pandemic, you might have thought of partnerships as co-location of physical stores, like Dunkin Donuts and Baskin Robbins or Exxon and Tim Hortons. Those physical relationships expanded to co-creation of content that could be cross-promoted by retailers and others whether online or in brick and mortar.

The limitation of that content was that it effectively translated into discounted offers, in other words, “buy here and receive a discount on a related product.” The alliance of grocers and fuel retailers is an example that most will remember, shopping at the grocer would earn cents per gallon discount at the partner retailer.

The partnerships that we’re focused on facilitating for our clients are the evolution of this content concept.

Wise Marketer: Well that certainly begs for more detail. What’s happening in the marketplace that makes this important?

Montalvo: There are a myriad of factors compelling the changes I’m talking about, and fresh thinking is needed. In many cases the business impact of Covid has brought some of these traditional challenges into sharper focus and, in some cases, created new challenges for organizations to address.

Classic challenges have been magnified. For example, marketing budgets are stretched, and brands need new avenues to reach their customers, deliver new types of value, and as always, impact positive behavior change. Every CMO is tasked with parsing out scarce marketing dollars in the most efficient manner possible. Next, emerging from the pandemic we’re witnessing an evolution of customer values, priorities, and a new set of buying behaviors.

Once you realize the need that exists, as well as the opportunity for brands, the importance of automating the network effect is clear. Recently Dicks Sporting Goods announced that it is including access to Nike’s loyalty program in its own mobile app. Most of these relationships happen because two leaders worked together in the past. That’s a terrific way to strike up a partnership, but a business can’t rely on that serendipity and must find a way to execute partner strategy at scale.

Wise Marketer: What objectives can a business tackle through a collaborative approach to partnerships?

Montalvo: Acquisition and product trial come close to the top of the list. Brands are desperate to get customers into new categories, or find net new customers to introduce their brands to, and that mechanism didn’t really exist before but now it does.

One brand we worked with identified that 35% of all loyalty rewards points earned were being used to purchase or try a new product. What a great “trigger” to introduce trial of new products to your most loyal customers. Now we have a platform where we can share data with a non-competitive partner to help test new products. We might send samples in ecommerce orders to trigger an above average response in engaging in a new product. There are many other tactics.

Another looming challenge is to protect against the dilution or distortion of your brand. There are some significant, popular networks which have taken up that place between your business and the customers you most want a direct relationship with. That erosion of a direct consumer relationship is hugely detrimental over time. The failure to proactively analyze the business model and to anticipate changes needed to continue to satisfy customers was a big call out in that Cap Gemini report. We should always want to be able to answer the question “what does my customer want that I can’t give them?”

For example, you may have social accounts with 20 million followers but the most valuable insights you want to know about those customers are effectively rented from the intermediary, e.g. Facebook, Instagram, etc. Facebook is becoming more expensive and as we read, increasingly invasive. Brands that are seeking Kognitiv out are desperate for ways to encourage consumers to intentionally and proactively share information that will foster a deeper and more trusting relationship. Enabling strategic, well-aligned partnerships adds a halo effect that fosters higher levels of consumer trust. Crafted and executed well, partnerships can add an entirely new reason to engage — or re-engage — with an organization. Extending the life time value of a consumer is a core need that many organizations come to us to solve.

Wise Marketer: How will the future of customer loyalty be impacted by the Collaborative Commerce model?

Montalvo: The most successful companies in the future won’t be going at it alone. The opportunity to work with “like minded” peers who bring unique value, a different set of consumers, brand equity, and awareness that you may not have is just too compelling. The value of partnerships transforms traditional loyalty models from a reliance on currency accumulation to unlocking engaging experiences.

The next generation loyalty programs use new forms of value, not tired and generic currency that have become commoditized, to unlock an experience that will delight the customer. Content that drives loyalty will become more about access, experiences and privileges. We enable brands to deliver this type of value to customers through multiple, active partnerships that a single enterprise cannot.

Wise Marketer: What are the biggest obstacles to be addressed in creating sustainable partnerships?

Montalvo: Balancing the interests of collaborating partners is always key to long term success. Our platform and processes enable efficiencies that allow for more meaningful programs, resulting in partnerships where all participants win in meaningful ways. From the consumers being able to get new, meaningful value from brands they already trust to the collaborating peers and partners able to create new value for and heightened participation from their most important consumers, this is the foundation for a sustainable advantage.

At Kognitiv, we have a adopted a proactive approach to managing relationships that combines technology and human power. Our technology platform allows us to remain flexible, agile, and nimble in adapting to client needs driven by the customer. We also employ something we call an “Embedded Services Team” that ensures we always have the human touch on strategy. Together, this creates lots of “High Five Moments” that result in ongoing excellence in our execution.

Wise Marketer: Do partnerships solve everything? What are the table stakes to making Collaborative Commerce work?

Montalvo: Partnerships won’t solve everything. You must fundamentally operate good business. Your consumers must feel valued, ideally at a personalized level. This ensures you are a business worth partnering with.  

Acceptance that we’re not going back to normal helps as well. There won’t be a new normal. The pandemic reminded us that we were always changing, it has just accelerated recognition for many businesses that weren’t prepared to manage the pace of global change.

It helps to know what business you are in, and most have gotten better and better at understanding this as a core need. The business pendulum has swung from generalization to specialization and while some organizations have the deep pockets to be “vertically integrated” — it’s not feasible for most. Customers don’t care if their new sneakers were shipped from a Nike warehouse or one operated by DHL. That liberates Nike from operating a large real estate operation. Partnerships bring access to technology and services that you have no strategic reason to get into.

The financial benefits of working in partnership versus alone is important to calculate. Does your business want to spend $15 – 20 million architecting its own loyalty program or would it rather engage in mutually-beneficial partnerships with peers that are driven by the same business objectives as you? There are incredible efficiencies to leverage through partnership rather than starting every program from scratch. And, as we discussed at the start of this chat, the ability to scale quickly by working within a collaborative platform like ours, means that the concern about speed-to-market is elegantly taken care of and managed sustainably.

How Partnerships Can Help Your Brand Drive Customer Loyalty in the Digital Era
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