Marketplace Loyalty Programs Should Benefit Both “Buyers” and “Sellers”

The ongoing debate these days is whether Amazon Prime is truly a “loyalty program”. The loyalty practitioner’s view is that loyalty programs should identify, recognize, and reward high valued customers with the intent of retaining them and increasing their value to the brand. Using that definition, what would your answer be about Amazon? Is it a subscription or a Loyalty program?

By: Brian Almeida, CLMP

Looking at some other well-known programs helps with the answer:

• The Tesco Club Card, while being a program that rewards customers, has generated greater value for the organization with its insight for sellers who sold their products at Tesco.
• Payback, a coalition program, is grappling with the revolving door of its program sponsors and is going through many iterations since launch as I-mint. Whether Payback is providing adequate value to the program sponsors and partners is up for question.

We are seeing so many marketplace loyalty programs emerge, defined as “Customer Loyalty Programs with the sellers being the sponsors of the program, these programs allow marketplaces to offer sellers an ability to  identify, target, recognize, incentivize, motivate, and reward buyers through loyalty currency and rewards.” This is almost a new avatar of the erstwhile coalition programs, the difference being the marketplace are firstly marketplaces (as they are called) with a coalition program being inherent to their offering to create effective marketing tools. In India emerging examples taking this form include Reliance & Tatas, with their many different group companies participating, and multi-brand programs like Flipkart’s Supercoins, Payback and Intermiles, food delivery market-places like Swiggy and Zomato, mobility marketplaces like Ola and Uber — this space will see many more to come.

With so many marketplace programs and a history of coalition programs globally, the challenge remains on designing successful programs. Here are some thumb rules for good design:

1. Marketplace customer loyalty programs must offer sufficient reason to engage the members
2. Customer insight and an ability to motivate behaviour drives the success of good loyalty programs
3. Program insights should be available to sellers to improve their targeting, offerings, and incentivize purchase
4. Segmentation and targeting are the cornerstone of success for sellers
5. Financially, currency earn and burn structures are critical and need to be linked to margins of respective categories
6. Treatment of categories in a marketplace are near equivalent to treatment of partners
7. The marketplace must have enough in its armory to control and direct earn/burn mismatches
8. All earn partners need not be burn partners and vice-versa. And tactical promotion partners improve excitement, engagement, and relevance
9. The earn-burn arbitrage and breakage are critical for long-term success
10. Finance modelling must target a high redemption level (70%+)

Here is a short list of the benefits of developing a strong loyalty currency:

• To manage logistics traffic and control or motivate variables for delivery options — urgent last minute shoppers, always needed tomorrow, planned shoppers well in advance
• Incentivize preferred payment methods
• Traffic management on the site “happy hours” i.e. Time of Day, Day of month during office hours, late night shoppers, early in the month (payday)
• Offer sellers a tool to offer incentives & attract customers
• Improve price realization  — lowest vs preferred prices, special deals shoppers

Marketplaces have an opportunity to create loyalty to the platform and understand brand preferences, buying preferences, customer behaviour, and trends across categories that are not available to single brand programs.

As a brand focuses on its values and benefits that drives the customer segment it seeks, the marketplace focuses on a spectrum of brands and the buying behaviour of the customers.

The underlying proposition of the marketplace is “trust”. Gaining customer loyalty via building on trust and meeting expectations every time — all the time consistently — on transactions, delivery, and service.

Most of these you will notice are reflective of the brands that are present on the site and all of these integrate with the overall value of the marketplace and what it stands for.

The single most important factor that the marketplace builds is trust. This is a trust built on capability achieved through delivering consistently and meeting customer expectations transaction after transaction, repeatedly. 

A trust built on goodwill and intent of serving the customer — this is achieved through accepting a wrong and correcting it without making a customer go through hoops and bounds.

Brian Almeida has over 32 years of practice in the customer management business. He is the Founder and a Managing Partner at Strategic Caravan International and a Certified Loyalty Marketing Professional.