Boosting Your Business with Loyalty Program Partnerships

You are always thinking about how to get more customers and how to keep the ones you have happy. This is a constant challenge, which is why many businesses are turning to loyalty program partnerships to solve this problem.

Teaming up with another brand sounds like a great idea. You can pool your resources and grow together with loyalty partners. But there is more to it than just a simple handshake.

A successful loyalty program can be a game-changer for customer loyalty, although partnerships come with their own set of challenges you need to know about.

Table Of Contents:Why Is Everyone Talking About Loyalty Program Partnerships?The Big Wins: Tapping into New Customer PoolsKeeping Younger Customers EngagedThe Problem with Single-Brand ProgramsHow Partnerships Offer More FlexibilityCoalition vs. Bilateral: Choosing Your Partnership ModelA Closer Look at Coalition ProgramsWhy Bilateral Partnerships Often Work BetterIs a Partnership Right for Your Business? The Tough Questions.ConclusionWhy Is Everyone Talking About Loyalty Program Partnerships?

It seems like everywhere you look, brands are joining forces in loyalty partnerships. This is not just a feeling; it is a real trend. Many companies are planning to build rewards ecosystems by working with other businesses to improve their loyalty strategy.

A recent study from EY found that nearly half of corporate leaders plan to expand rewards across partner networks. They see the power in working together for mutual success. This collaboration can build something bigger than what they could do alone, improving customer engagement.

Starting a customer loyalty program from scratch is expensive. You have technology costs, marketing expenses, and administrative work. Sharing these operational costs with a business partner makes the entire model more affordable for everyone involved.

The Big Wins: Tapping into New Customer Pools

The most exciting benefit of partnerships is reaching new people. Your brand gets in front of a completely new target audience, customers you might have never reached on your own through typical marketing strategies.

This allows you to expand into new market segments more easily. Strategic partnerships help with cross-promotion and get your brand name out there. This is really important as more people shop online and hunt for better deals.

Take the Canadian company Pharmasave, for example. It expanded its participation in the Air Miles Reward Program. This is a huge program where over 10 million members accumulate points at hundreds of brands.

The results were immediate. Pharmasave reported new types of customers coming into their pharmacies, driving repeat purchases. The partnership opened doors to a demographic they were not previously reaching, which excited their store owners.

Keeping Younger Customers Engaged

Getting the attention of younger shoppers is tough. They have many options and are not always loyal to one brand. Partnership loyalty programs really shine here, as they can offer more diverse benefits.

The Problem with Single-Brand Programs

Many young consumers, particularly those aged 18 to 24, feel trapped by traditional customer loyalty programs. The same EY study showed that 42% of them feel reward options are often too limited. A stale program can actively harm your brand image.

If they can only earn and spend points at one store, they lose interest fast. They want freedom and flexibility in how they are rewarded. A standalone rewards program can feel more like a restriction than a benefit, failing to meet customer expectations.

How Partnerships Offer More Flexibility

Coalition programs flip this script. They let members earn rewards from a coffee shop, a gas station, and an online retailer all at the same time. This wide range of redemption options is a big deal for younger consumers looking for unique experiences.

Over a third of people surveyed said exclusive access to partner brands was the most valuable part of a loyalty program. This variety is what makes the experience better. It feels less like a corporate scheme and more like a helpful tool companies offer.

These multi-vendor programs also make it easier to personalize customer offers. With robust customer data from multiple partners, you can offer rewards people want based on their purchasing habits. This is especially important for consumers between 25 and 44, who appreciate special offers that align with their lifestyle.

Imagine being able to use points for a subscription to one of your favorite streaming platforms, like getting Spotify Premium. Partnerships offer this kind of modern reward. This level of personalization is difficult to achieve alone but becomes possible when companies join forces.

Coalition vs. Bilateral: Choosing Your Partnership Model

Not all loyalty program partnerships are created equal. You generally have two main paths you can take. You can join a large group or find a single partner to work with.

The first is the coalition model. Think of this as a big party where many different brands participate in one shared rewards program. Air Miles is a classic example of this approach.

The second option is a bilateral partnership. This is a more direct team-up between two companies. They create special discounts or exclusive offers that benefit both of their customer bases.

A Closer Look at Coalition Programs

Coalition programs are big and complicated. They give you immediate access to a huge number of potential customers. But they come with their own headaches that require careful management.

You have to deal with integrating technology across all the partners. There are also data privacy issues to sort out, which can be tricky when dealing with a shared customer database. Aligning every brand’s identity so it feels cohesive is another big hurdle.

Research also suggests these programs do not benefit everyone equally. One study found that coalition programs often benefit the largest partners the most. Smaller brands can get lost in the noise and struggle to get noticed among the other partnering companies.

There is also a risk of partners accidentally stealing each other’s sales. With so many options in one program, customers may just shop for the biggest discount. This can lead to them cannibalizing each other’s sales instead of creating new ones.

Why Bilateral Partnerships Often Work Better

For many companies, a direct bilateral partnership just makes more sense. It is much simpler. You can avoid the messiness of a large coalition and build a more focused relationship.

You and your partner can share customer information without extra complexity. All you need is an overlapping group of customers. These customers should share similar customer preferences and buying habits.

Walmart recently did this with Burger King. Members of Walmart+ get 25% off Burger King orders placed on their site or app. It is a simple, powerful offer that helps both companies and shows how partnerships add value to existing offerings.

FeatureCoalition PartnershipBilateral PartnershipNumber of PartnersMany BrandsTwo BrandsComplexityHighLow to MediumCustomer ReachVery BroadTargetedBest ForCompanies needing scale quicklyBrands with similar audiencesKey ChallengeBrand alignment and tech integrationFinding the perfect partnerIs a Partnership Right for Your Business? The Tough Questions.

So, should you jump on this trend? It really depends on your brand and your resources. There is no single right answer, and it is important to avoid unrealistic expectations.

Competition among loyalty programs is incredibly high, especially in the U.S. A Boston Consulting Group study showed that the average consumer belongs to 14 different loyalty programs. Think about that for a minute.

People are already members of travel programs and several retail ones where customers earn points. They have built up loyalty rewards and status. Getting them to care about a new coalition program is a hard sell and a challenge for increasing customer engagement.

A coalition might be a great fit if you have limited internal resources. It can also work well if you are a consumer packaged goods company without a direct line to your customers. These programs can handle the heavy lifting for you, providing you with robust customer data you could not otherwise collect.

But if you are a luxury brand, you probably want to build your own program. You need to control the customer experience completely so customers feel valued. Partnering with another brand might happen on a case-by-case basis while maintaining a positive reputation.

Before moving forward, it is wise to listen to a loyalty podcast or read industry reports to understand current trends. You must determine if a partnership truly gives your brand a competitive edge. The benefits offered must outweigh the costs and effort involved.

Conclusion

Partnerships are a powerful way to grow your business. They can help you reach new audiences and give more value to your existing customers. However, they are not a quick fix for driving customer loyalty.

You have to consider what is right for your company carefully. Does a big coalition make sense, or would a targeted bilateral partnership be better? Maybe building your own program is still the best path for your brand.

Ultimately, the success of any loyalty program partnership depends on one thing: The collaboration has to give real, flexible value to the people it serves.

Scale growth with AI! Get my bestselling book, Lean AI, today!

The post Boosting Your Business with Loyalty Program Partnerships appeared first on Lomit Patel.