3 seasoned loyalty practitioners peek under the hood of this once-massive loyalty machine.
Yesterday’s announcement that Plenti is officially signing off is not entirely surprising. Scuttlebutt and rumour mill have been working overtime during the past few months speculating not so much as to “if”, but more as to “when” this event might occur. We spoke with 3 loyalty industry veterans to get their opinions and prognostications on the news.
Bill Hanifin has spent the past 15 years designing and evaluating loyalty programs of all types and is the CEO of The Wise Marketer. Aaron Dauphinee, Chief Operating Officer at The Wise Marketer has an equally impressive resume, having been involved in managing several of the larger coalition programs in existence over the past few years. Jeff Hassman is CMO of Excentus (recently acquired by PDI) and has been running one of the most successful coalition programs in America (Fuel Rewards). Here are their thoughts (edited for brevity).
According to American Express, "“While Plenti has grown in scale since its launch, a number of factors, including shifting priorities among some partners and changing competitive conditions in their industries, led American Express to determine that its investments in coalition loyalty initiatives will be better suited to international markets where it manages several large and growing programs.”
Much as we pulled for Plenti to right the ship, the program is closing per the announcement made this morning. Over the years, I’ve been an advocate of the benefits of “true” coalition for brands in key verticals. I have been part of 2 successful launches outside North America and have advised operators of several others, and so have witnessed successful execution first-hand.
It just may be that the model will not take hold in the US as it has in other parts of the world. The reasons for that are well documented and have to do with:
- Concentration of most attractive consumer groups in geographic areas - in the US, people are more widely distributed and brand coverage by coalition partners is a bigger challenge.
- Smaller group of category leaders in key verticals including banking, retail, wireless, fuel, grocery - in the US it is more difficult to find brands that have a national footprint.
- Less well developed sole-brand loyalty markets - That point may be less true today, but was the case when the first wave of coalition programs were launched in EU and LAC.
One evolving factor that may have made life difficult for Plenti is that brands are now much more aware of the value of their data and are highly interested in owning and controlling this data. They are less willing to defer control to a third party. This trend may be accentuated by increasing regulation over consumer data via GDPR.
Another key factor is that Plenti did not have a compelling value proposition for many consumers. ATT customers were rewarded without having to change behavior. This had to be margin eroding for ATT. Other brands just didn't have national coverage - in fact did any of them have a national footprint? Macy's?
For the record, I’m less interested in loyalty nomenclature and more interested in program success for the brands that back loyalty programs, coalition or otherwise. For example, I view the Shell's Fuel Rewards Network program not as a coalition in the sense of Plenti, Nectar or AirMiles, but as a brand-centric program generating added value through third-party partners (similar to American Advantage and similar programs). In this case of course, Shell is the sponsoring brand and value is added through the online mall, grocers and other partners.
Amex participates in coalition programs around the world (their list as an owner or sponsorship is very diverse) so it’s interesting to note that, with them leading in the US, they couldn’t make it work. Perhaps their pricing strategy was too low and partner commitment was only there because of this?
Have they killed it for the rest? Perhaps. Or will new models now emerge that leverage technology (i.e. data coalitions, rewards brokerage)? Or possibly loyalty blockchains get built prior to all partners committing vs. waiting to get the right partners together before being built?
Mar tech will play a key role. In particular, look at Sainsbury, now with owning Nectar, going mobile-first and introducing innovation that way. The big question is – can that be echoed in US. Or will it require backing into a coalition subtly, like what is anticipated with the Loblaws and Shoppers model in Canada?
I don’t think it’s dead but the traditional concept is definitely more than past it’s prime – time to evolve.
The latest announcement about Plenti’s closing isn’t unexpected as we’ve heard from both consumers and participating merchants about their decision to leave the program over the past several months. Many of the brands we’ve spoken with have been re-evaluating their proposition in the wake of Plenti’s collapse and will be seeking a new loyalty partner that can provide everyday value to their consumers without disrupting their existing program.
Contrary to statements issued by Amex, multi-merchant loyalty can work in the US, which we have proven with the success of the Fuel Rewards program. It was the first ever multi-merchant program launched in the US, has a built a successful coalition in a little more than half a decade, with millions of members and dozens of partners… and continues to expand its reach each year. It does so by providing a rewards currency that is relevant, useful, easy-to-use and valuable to consumers. This flexibility makes for a successful coalition, allowing merchants to achieve their own results without bearing responsibility for the program’s success. The value proposition is the rewards currency itself, not any single brand.
It’s unfortunate that the narrative continues to center around how coalition loyalty programs are inherently unworkable in the United States. A successful loyalty program is not about brand size or partner name recognition, but about understanding customers – whether a brand is a national retailer, a regional grocer or a local convenience store. Plenti never delivered on this front, and its failure to do so is not a failure of coalition loyalty as a concept, but a failure of execution.
What’s your opinion? We invite you to comment below.