Loyalty Blogs

Partnering with another brand to roll out enhanced loyalty benefits is a great idea to engage and retain customers. An airline might team up with a hotel chain to reward their loyal customers with the best stay experiences. Or a travel booking app can partner with a car rental company to facilitate two-way benefits.

The loyalty partners can be complimentary or otherwise. The rationale behind such alliances is to engage customers and retain them for the long haul. Repeat business is the need of the hour to lower customer acquisition costs. Loyalty partnerships entice customers effectively while benefiting both brands. It enhances mid-to-long-term engagement and reduces customer attrition effectively.

This post will discuss promising collaborations and how they can add to the customer’s value and experience.

How Loyalty Partnerships Create Customer Value?

Offering the best of both worlds is a win-win strategy for partner businesses. Capturing the interest of each other’s customer base is a great business move to expand your customer base and satisfy your existing customers.

By collaborating with synergic brands, you can create value for your customers that you couldn’t do alone. For instance, a restaurant might offer its loyal customers a free side order every six months, which isn’t sufficient to engage them. It doesn’t create a sense of getting something extra among the customers. If the restaurant partners with a complementary brand, such as a local brewery or a nearby movie theater, they can enhance the value proposition for their customers. A voucher for a discounted drink at the brewery or a BOGO movie ticket does the job perfectly to develop a sense of satisfaction among customers.

When multiple brands are involved in your loyalty ecosystem, it keeps your customers busy and excited. They keep interacting with your or your partner brands at one point or another, facilitating retention and engagement all the time.

As a business fostering loyalty partnerships, you can greatly benefit from diversifying your category portfolio. There are earn-and-burn partnerships that can balance things out for you. Partnering with gas stations and grocery stores, which drive frequent engagement, will settle the volatility that partners like hotels and restaurants bring.

Partnering with brands with proprietary loyalty programs allows customers to transfer loyalty points between programs. This flexibility encourages customers to accumulate points and engage with participating brands.

These strategies create symbiotic relationships where brands and customers mutually benefit. It leads to increased customer engagement, enhanced value propositions, and expanded market research

Major Challenges with Traditional Loyalty Partnerships

Traditional loyalty programs fail to deliver personalization. Customers come from different backgrounds, and the classic loyalty partnership fails to provide custom incentives. Different buyers have different preferences that extend beyond the usual loyalty benefits, like luxury stays or flight upgrades.

Not all customers are looking for luxury, but most of them want practical redemption options.

Not getting an option to redeem points for frequent hotel bookings or spending too many points on booking a single hotel puts customers off. A frequent traveler would love generous discounts on economy class flights rather than expensive upgrades to business class.

The True Meaning of Co-Creation in Loyalty Partnership

Traditional co-creation focuses more on collaboration with customers. Modern co-creation emphasizes partner brands to enhance value for shared customers. Such collaborations utilize customer insights and data on a shared basis to develop highly personalized loyalty programs. Coalition loyalty programs build a flywheel effect where each partner contributes additional customer insights. This exchange of profiles allows both businesses to anticipate and respond to evolving customer needs.

However, the conventional approach to forging loyalty partnerships, centered around incremental revenue, may not sustainably align with the objectives of both parties. While incremental revenue remains crucial, sustainable models prioritize creating customer value, thereby accelerating the flywheel effect. As a result, revenues naturally follow suit.

How to Co-Create Through Loyalty Partnerships?

Co-creation via loyalty partnerships considers customers’ spending patterns to fetch valuable insights and drive partnerships between brands. Intuition plays a role, but the success of such partnerships is mostly strategic.

Here’s an example: a partnership between a fuel company and an airline can identify high-spending customers and offer targeted incentives like bonus points for fuel purchases leading to flight upgrades. This approach is tested for success, but the growth potential is limited as interested customers are already part of similar loyalty programs.

The loyalty partnership between a music streaming platform and a sports shoe retailer can turn into a bigger success. People can get unlimited free music for their fitness regime, and the fitness app will record their important vitals. This is an excellent way to collect data that will benefit both brands. The usage will reveal useful insights on music preferences and running frequency to pitch relevant loyalty benefits and drive product innovation. That’s an ideal example of co-creation.

Multi-brand loyalty programs create opportunities across different sectors. A retailer can collaborate with a baby formula brand, knowing how young parents seek such benefits from their reward points. A restaurant chain can partner with Quick Commerce, taking access to customers’ purchasing habits.

Data is again a hero here, as accumulated data from such partnerships takes note of customers’ diverse spending patterns, creating opportunities to earn and redeem points across their monthly expenses. This creates a powerful flywheel for value creation among partners and enhances the overall customer experience.

Ace Coalition Loyalty Programs with Novus

Novus Loyalty has vast experience in planning and executing multi-brand loyalty programs. With its cutting-edge technology and innovative approach, Novus has helped brands become strategic loyalty partners. If you are looking for effective coalition loyalty programs for your business, get in touch today.