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How are non-traditional partnerships growing the stickiness of a loyalty program? Ritesh Gupta, Airline Information Correspondent assesses the same
The way airlines manage a loyalty program isn’t just about rewarding one with apt loyalty currency or juggling between cash back and travel rewards. Rather one also needs to take into account what can result in affordability of loyalty partnerships.
Airlines have to assess how loyalty linked to aspirational rewards works, and how they need to look at multi-partner loyalty today.
As highlighted during our annual Mega Event 2014 held in New Orleans in late 2014, frequent flyer and financial services programs are beginning to direct their focus to new earn opportunities not common to their program types but table-stakes in coalition programs. It’s being described as a B2B strategy that focuses on the loyalty program aiding merchant partners to use the power of their program and currency to significantly shift shopping behaviour in consumers.
Reality of coalition
The term coalition, as Tim Moulton, VP, business solutions and business development, Points says, often described as a group of customers that share a bucket of customers to cross-pollinate each other’s customer bases “is not always attractive in emerging FFP and FS (financial services) loyalty programs”.
“These types of brands are generally not willing to share access to their customers,” points out Moulton.
“So, the attractive model is one where each party promotes within their base the program offer setting strict guidelines regarding the sharing of member information and reporting,” he says.
According to him, the value proposition presented to merchant retailers from FFP and in some cases FS is the flight reward option, which is usually a stronger value than third party options. FS, value proposition to the merchant is also travel rewards and experienced base rewards fuelled by the ability to double dip accelerating their ability to get to a reward quicker. FS partnerships also provide an easier relationship to the merchant; no additional step, earn construct understood by the collector and usually no IT or MIS requirements by the Merchant.
“When the FFP and FS work together the real power comes out in reporting that shows relevancy to the merchant and partnership return. In this scenario the FSs’ card products become more relevant and effective to the collector, the FFP enables the members to achieve rewards faster and diversify their accrual revenue and merchants have fewer steps to collect and marketing channels with brands that are respected. For FS and FFP programs that do not want merchants collecting membership information this solves for that,” explains Moulton.
Responding to members’ desire
Airlines need to assess what is fuelling merchant adoption.
The benefits to members include new ways to acquire the points and miles they need to reach their aspirational travel goals faster. The industry is witnessing a lot more exclusive member benefits that truly drive engagement with the loyalty program.
So how are FFPs and financial services programs are combining today to new earn opportunities?
“The main opportunity is the FS opening up more to the FFP. In the past co-brands were reluctant to share spending data from the cards to merchants or even the FFP. There are many examples in the market now (TD/ Aeroplan) where this sharing of spend data has begun, and communicated to the member,” says Moulton. “The data can be used to optimize FS and FFP but also used to show value to merchants. The data begins as a BD tool for the cobrand and FFP to understand the best merchants to pursue and extends into proofing value to the merchant when moving through the qualification and discovery phases of the BD process.” For the FFP and FS this data helps promote utility of the program to the members but for the merchant it helps demonstrate members in their trade area that are not shopping, and designing campaigns to encourage stronger baskets and more frequent trips. Essentially capturing more household spend for all stakeholders, adds Moulton.
Citing examples of exclusive member benefits that some airlines are offering today, Moulton shared:
So what can one expect in 2015 as FFPs and financial services programs continue to jointly evolve?
Moulton says one can expect accelerated earn partnerships with merchants. This is currently an under-developed opportunity and program are beginning to develop these teams and partner with third parties to drive the BD process. Also, there would be digital wallet soft launches where FS and FFP’s currencies can be managed and used for some transactions. There is a race in the merging payments sector and the digital wallet provides: the ability to transact with hard currency and the consolidation of content (i.e. loyalty) with the ability to transact with those programs. A consolidator like Points.com allows digital wallets to add that benefit efficiently.