Adding partners to your loyalty program proposition. The benefits are clear. (Here’s a six-step plan)

One of the more popular strategies to build up the value of a loyalty program proposition and boost member interaction is to add external partner products/ services as rewards and benefits to a program member base.

There are two approaches to this.

Partners-as-core to a proposition
Partners-as-value-add to a proposition

1. Partners-as-core to a proposition:

The core 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.

Examples include Australia’s largest and most well-known loyalty programs such as

QFF = more than 400 partners[1]
Velocity = 57 partners[2]
flybuys = 24 partners[3]
everyday rewards = 10 partners[4]

Other examples are bank credit card reward programs and the ‘member benefits’ programs offered by member-based motoring associations such RACV, NRMA, RACQ, RACT, RAC, RAA and others.

2. Partners-as-value-add to a proposition:

The core program is structured around the brand’s internal ecosystem of products and services. Rewards and benefits are funded by the business.

It then evolves to add partner offers, adding value to its members to create more connection with the program.

An example of this Priceline’s Sisterclub who have in recent times added ‘partner perks’ with 6 partners[5] added to the core program proposition.

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 stimulate members’ purchase behaviour, spending more and purchasing more often = more revenue 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. 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 to your loyalty program. A six-step plan

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’)

Purpose of the partnership:
- Gain clarity on purpose of the partnership such as (not limited to):
  - Proposition extension
  - Adding value to members’ lives
  - Gaining new members (if access to a partner member base is included in the partnership)
  - 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
Proposition to partners
- What does your program and member base offer potential partners?
  - An engaged member base (with metrics of success)
  - A communication channel
  - Profiled audience (can be segmented for targeted offers)
Potential partners
- Evaluate potential partners
  - partners you want by category and brand
  - partners your members want (research with your members)
Partner alignment
- Score and rank partners on an evaluation scorecard
  - Set criteria of evaluation such as (not limited to) brand alignment, offer relevance to member base, member profile alignment and partnership integration complexity
    (We have developed an evaluation model to weight and score criteria for adding partners)
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 relationship, budget rigour, technology requirements and data sharing compliance
Partnership go-to-market
- Cover all the fundamentals of implementation including partnership agreements, reporting of results and overall partnership management