Coalition programs in the loyalty space continue to pop up, just look at Plenti and its very aggressive launch earlier this year. We also see these programs in the c-store space as well, such as the KickBack Points coalition program. These are not new as far as loyalty goes, as they have been around for decades with limited success. The exception to this is credit card branded point programs like those offered by American Express and many bank VISA programs, such as the US Bank Signature Card. These programs, like airline frequent flyer programs, have elements of a coalition program; but are really proprietary programs with options to earn points at other participating businesses.
So, why have collation programs not been more effective, especially in the US? The following are 7 primary reasons that causes this and will likely continue to limit the adoption and effectiveness of coalition programs, including in the retail and convenience store industries.
- Not enough customer value – This has been a core nagging issue for coalition programs. For most consumers, the potential awards you can earn are just not significant enough to warrant what I call “playing the game”. There are too many shared costs, awards are too general, and awards are often not rewarded back to the participating businesses.
- Limited or no access to customer data – It’s all about the customer data! For most coalition programs, there is limited or no access to key data that would allow you to effectively market and upsell to your participating customers. Or worse, your customer data is used by others.
- Not custom for your needs – By definition, coalition programs are tailored to a group of businesses, not your business. From our experience, a key to an effective loyalty program and a strong return on investment (ROI) from that program is a custom program that you can adapt over time to the needs of you and your customers.
- You can’t differentiate from your competitors – This is absolutely critical to a successful program!! From the initial launch to ongoing improvements and changes to address competitive pressures, your program needs to help you stand out and differentiate you from your competitors. Coalition programs do not give you this important benefit, and often your competitors may, in fact, be in the same program.
- Expenses are too high – Usually costs are driven by dollars and transactions that go through the program. If you are fortunate to have a high level of participation in the program, your costs will skyrocket. This makes achieving an acceptable ROI for your program extremely difficult to achieve.
- Limited ability to enhance program – As stated a few times in the earlier reasons, long-term successful loyalty programs require continuous review and improvement; just like all other elements of your business. Coalition programs cannot easily give you this critical flexibility.
- It doesn’t enhance your brand – Loyalty programs should enhance your brand. This is through program name, supporting materials, and social media; to name a few. This is not possible with a coalition program that is named something like Air Miles, Plenti, or Kickback Points.
Founder & CEO