The Final Round: Coalition Loyalty vs Proprietary Loyalty

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By: Wise Marketer Staff |

Posted on March 31, 2021

We stirred up the loyalty nest with our recent articles pitting the two kingdoms of loyalty against each other: coalition loyalty versus proprietary loyalty. Each kingdom’s clans quickly rose to defend their beliefs, and opinions ranged from the assertion that the traditional coalition loyalty model is dead to proprietary loyalty being too risky, while lacking in benefits.

No matter what side you’re on, we found the most practical assessment to be the one expressed by John Bartold, Co-Founder PIVOTL cx, “Different businesses have different needs, requirements and goals. Matching the right approach to the needs is where success lies.” As the old saying goes, your mileage [customer loyalty] may vary.

The array of comments we catalogued was large, and we have curated the most interesting here.

Let the debate rage on!

Australian loyalty market perspective

Phil Hawkins, Chief Operations Officer, FlyBuys Australia:

"Reflecting on some of the commentary on Australian-based programs — the alleged dominance by frequent flyer programs operated by individual airlines isn’t backed up when Australians are asked which programs are their favorites. In the last annual survey by The Point of Loyalty, Australian frequent flyer programs ranked 3rd and 5th on the list, well behind FlyBuys and Everyday Rewards.

FlyBuys is owned by two large retail groups, Wesfarmers and Coles Group, and retains its core coalition structure with 23 partners. The program has consistently ranked as Australia’s most popular loyalty program in the annual surveys conducted by The Point of Loyalty."

A new coalition program in Colombia is learning

Alejandro Gonzalez, CEO, Puntos Colombia:

“There is a mention on the new players which are offering different value propositions and emerging partner models. I run Puntos Colombia, a coalition loyalty program based in Colombia. The program is 2.5 years old and is a true coalition model founded by the largest retailer and the largest bank in the country.

The main concept is to provide value in everyday life for members. We are leaning and evolving — and take these excellent points of view into consideration. If you are interested, you can visit our website to learn more."

How you value customer data influences the decision of model choice

Christian Hausammann, Managing Director Europe, SNIPP!:

“People get more sensitive about their data and loyalty is an exchange of data against benefits.
So coalition by itself gets a bit scary for a lot of consumers. For the consumer, proprietary may at first glance offer less value, but offers more control, more engagement, more real loyalty, and often even more and better benefits from the one loved retailer.

For a retailer, proprietary is more demanding, but it gives a lot more control and the chance to make the loyalty program the backbone of the multi-channel strategy. Lastly regarding coalition payment networks, payment is already a pure commodity and banks are losing more and more trust and customer relationships, so I don’t see coalition developing in this area.”

Measure your tolerance for financial liability

John Bartold, Co-Founder, PIVOTL cx:

“Selecting coalition versus proprietary is more a business model or operating model question, and today you add the conversation about loyalty platforms or ecosystems. All the models can deliver a loyalty value proposition to consumers, through primary model elements of technology, data ownership/access, brand relationship and liability.

After looking at the other articles and comments, a piece I feel missing is the other 'L' in loyalty, 'Liability'. Liability has always been a challenging discussion with brands. Coalitions offer a liability solution for brands as coalition operators typically hold the liability rather than the brand. For brands in low margin categories or emerging markets, the benefit of the coalition carrying the liability is attractive.  

Today, various industry sectors have found ways to manage liability or provide a loyalty value proposition without accruing liability even though the approach used diminishes the customer value proposition. Brands are once again realizing the value of the data, especially in an environment where data is not as readily accessible as privacy concerns grow. So, even where liability remains for a brand, the balancing factor is the data.

In the end, coalition models shouldn't be ignored. Different businesses have different needs, requirements and goals. Matching the right approach to the needs is where success lies."