Sonder | A loyal problem
With so many sophisticated loyalty programs now operating, securing the right number of optimal partners is becoming significantly harder. To thrive, loyalty program managers must demonstrate the entire value exchange for the potential partner.
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A loyal problem

A loyal problem

Nine out of ten Australians are a member of at least one loyalty program. On average, people are members of four loyalty programs, but active in only half of them. Nowadays, there is a plethora of loyalty programs to join. Which isn’t surprising when it costs anywhere between 5 and 25 times more to convert a new customer than an existing one. According to the For Love or Money report on loyalty programs in Australia, there are 58 million loyalty cards in existence and more coming with the likes of Uber and Amazon Prime recently launching. With so much choice, there’s a potential new challenge emerging for loyalty program managers.

The once humble loyalty program has become a sophisticated, data-centric ecosystem. Today’s loyalty programs seek to exceed customer expectations by utilising behavioural analytics to adapt to (and in some cases predict) customer needs and serve the optimal reward/offer to them. These programs can engage people through email, social, website, mobile geo-targeting and online retargeting. But, in order for all of this sophisticated personalisation to actually work, there needs to be a lot of different rewards partners to ensure the experiences are genuinely tailored. And herein lies the problem… Attracting and securing enough of the right brands to partner in your loyalty program will become a challenge. 

Potential partner brands now have many loyalty program options available to them. Creating a value exchange that stacks up for the partner brand is becoming increasingly important. Demonstrating the downstream financial opportunity is something loyalty programs do very well. Framing their media ecosystem as a powerful way to connect with audiences is not. Which is where the most advanced loyalty programs are now seeking to demonstrate value. Globally, American Express recently valued their owned media assets for its Offers program. The media value will be presented as true value that the partner receives (at no cost) in addition to the downstream financial performance. Ultimately, it makes for a very compelling opportunity for a partner.

With the loyalty space burgeoning, the need to reframe the value exchange to partner brands is becoming crucial. It’s no longer just about creating the customer membership in order to succeed. The personalisation has to genuinely deliver too! For that to happen, programs need plenty of partner brands that will appeal to specific customer segments, that link to your category, but not compete. To thrive, loyalty programs must do everything to attract the best partners and lots of them, which means demonstration the full value exchange.

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