In August 2021, I wrote an article on adding partners to a loyalty program proposition.
At the time I thought it was a contemporary value add strategy for programs, not necessarily a new strategy.
However, I am seeing in the market fresh examples of partnerships being formed by loyalty programs where existing programs are adding more partners (some examples below) and hearing from my clients the desire to add partners to their programs.
- The recent partnership (Oct 2022) of Starbucks and Delta – “Delta and Starbucks link their loyalty programs”.
- Nike launches JD Sports partnership (Sept 2022). “Sports apparel brand Nike Inc has partnered with sports retailer JD Sports on a members-only rewards programme”
- Velocity Frequent Flyer and MYER (Sept 2022) – “Sky’s the Limit for New Retail Partnership Between Velocity Frequent Flyer and Myer”
- Not such new news (Dec 2021), however the addition of Officeworks and Bunnings into the Flybuys partner ecosystem extends the power of the Flybuys point even wider (with 22 partners in total)
- Everyday Rewards now has 14 partners (including Woolworths).
- Qantas has over 400 partners
- Velocity Frequent Flyer has 62 partners
- Priceline’s Sisterclub has Seven Partner Perks
Considering the examples above (this is by no means an exhaustive list), I believe it is timely to provide renewed inspiration (and a six-step partner plan) for loyalty program managers to consider partners as a way to revitalise the value provided to their loyalty program members (customers), their business and in turn back to partner brands.
There are two types of partner propositions:
- Partners-as-core to a proposition
- Partners-as-value-add to a proposition
1. Partners-as-core to a proposition:
The core loyalty program is established as a collection and collaboration of partners (some call it a coalition) for members to earn and redeem the core program’s currency within and among the coalition of partners. The core program is primarily funded by the selling of the currency to the coalition of partners.
Examples include Australia’s largest and most well-known loyalty programs such as Qantas Frequent Flyer, Velocity Frequent Flyer, Flybuys and Everyday Rewards.
This strategy has been in market for as long as these programs have existed as it is the essence of the proposition.
2. Partners-as-value-add to a proposition:
The core loyalty program proposition and member behaviour engagement is structured around the host brand’s internal ecosystem of products and services. Rewards and benefits are primarily funded by the host business.
The core program then evolves to add partner brands (products and services) and tailored partner offers to add value to the host program’s members to create more connection and interaction with the program.
Other examples are the ‘member benefits’ programs offered by member-based motoring associations such RACV, NRMA, RACQ, RACT, RAC and RAA providing value add partner offers to their member base.
This strategy is gaining more momentum as programs continue to look for an edge to be different and add more value to their members.
Adding partners adds direct and indirect revenue to the program (the business benefits)
Direct revenue is generated by partners paying to gain access to the host loyalty program’s member base and in the case of coalition programs the purchase of the core currency.
Indirect revenue is when the partner offers which are provided to members stimulate their purchase behaviour at the host brand, spending more and purchasing more often ie more revenue is generated.
Members want more rewards and benefits outside of the brand’s core program proposition (members' benefit)
In the For Love or Money™ 2021 customer loyalty and loyalty program research, members of loyalty programs in both Australia and New Zealand identified their preference to earn and redeem rewards outside the brand’s program with relevant partners (vs only earning and redeeming rewards within the brand’s ecosystem).
48% of Australian members (Gen Z = 58%) preferred to earn and redeem rewards outside the brand’s program, with relevant partners
58% of New Zealand members (Baby Boomers = 60%) preferred to earn and redeem rewards outside the brand’s program, with relevant partners.
Adding partners to your loyalty program proposition is not new. The benefits are clear: It’s good for members and it’s good for business.
Now, it’s a simple case of actioning a partner plan.
Adding partners as a value add to your loyalty program proposition. A Six-Step Partner Plan.
Before you pursue partnerships for your loyalty program, here is a summary of the six steps to consider as you plan to add partners and their offers to your loyalty program focusing on ‘Partners-as-a-value-add to a proposition’.
1. Purpose of the partnership (why add partners?):
Gain clarity on purpose of the partnership such as (not limited to):
- Proposition extension and ‘breathing new life into the program’
- Competitive differentiator
- Adding value to your loyalty program’s members’ lives
- Gaining new members (if access to a partner member base is included in the partnership agreement)
- Leveraging the value of your existing member base
Define measures of success:
- Increase member activity and engagement
- New member growth (new segment reach)
- Enhance data/insights
- Increase revenue to program (and the host brand) …do the numbers!
2. Proposition to partners (what’s your proposition to partners?)
What does your program and member base offer potential partners?
- An engaged member base (with metrics of success such as activity and communication engagement)
- A new communication channel with a pre-defined reach (media opportunity)
- Profiled audience (can be segmented for targeted offers)
3. Potential partners (who do you want as partners?)
Evaluate potential partners
- partners you want by category and brand
- partners your members want by category and brand (research partners/brands with your members)
4. Partner alignment (who do you want to be associated with?)
Score and rank partners on an evaluation scorecard
- Set criteria of evaluation such as (not limited to)
- brand alignment (do you want the partner brand to be associated with your brand),
- the partner offer relevance to your member base (will they be excited about the partner offer),
- member profile alignment (seeking same members or seeking different segments) and
- Access to new members (growth opportunity)
- partnership integration complexity (technology integration and other connection points between your brand and the partner brand)
(We have developed an evaluation model to weight and score criteria for adding partners).
5. People and Operational plan
Set up a risk mitigation action plan for operational success.
- Define all implementation criteria including (not limited to)
- leadership buy-in
- people to manage the partner relationship
- budget rigour
- technology requirements and reporting
- data sharing compliance, privacy and security
6. Partnership go-to-market
- Cover all the fundamentals of implementation including partnership agreements (legals etc), reporting of results and overall partnership relationship management.
In summary, there are two powerful reasons to add partners (their offers/products/services) to your program proposition:
- Members want them
- The business bottom-line benefits
...and you now have the basis if a Six-Step Partner Plan (there is more detail to add to the plan, however the above will get you going).
If you want to formulate a proven and robust partner plan based on the six steps outlined above, please let me know firstname.lastname@example.org
Have a happy loyalty day!