Coalitions Could Lead to a Point-opian Future for Loyalty
Consumers enrolled in multiple, unrelated loyalty programs often experience confusion and friction when it comes to redeeming rewards. According to a survey by Colloquy Customer Loyalty, one-third of the total value of rewards doled out by U.S. businesses each year goes unredeemed, and 58 percent of members don’t actively participate. This leaves customers feeling un-rewarded even when rewards are earned, while companies miss out on valuable engagement. Some see coalition loyalty—platforms that enable customers to earn and redeem points across multiple brands and retailers—as the way to win.
Although loyalty coalitions have existed in Europe for some time, they’re just now starting to gain serious ground in the U.S. Last year, American Express launched Plenti, a loyalty platform featuring Macy’s, ExxonMobile, Hulu and Rite-Aid, among other brands. In 2015, FIS unveiled Pointopia, an initiative that enables consumers to combine rewards points and coupons from retailers, service providers and financial institutions, and turn them into currency that can be used at all participating brands. Pointopia users can combine any number of reward points, miles, offers and coupons with payment cards to pay for purchases made in-store or online.
For FIS, opening up the loyalty ecosystem helps meet consumer demand for easier rewards redemption. It also enables payments providers and brands to increase engagement, which drives card usage and shopping traffic. But for coalition loyalty to reach its full potential, there has to be flexibility, according to FIS senior vice president, global retail payments James Hutchison.
Rather than a static, permanent group of brands and companies, Hutchison extolls an ecosystem that enables brands to band together to launch specific campaigns, then subsequently partner with different brands for other campaigns.
“There could be a coalition for Saturday evenings involving a theater company and a restaurant. It could even include a ride service,” Hutchison said. “You could run that [campaign] for a week leading up to Saturday night, then have the redemption opportunity take place on Saturday night.”
Tailored campaigns built around specific themes are “more compelling to the consumer in terms of driving behavior,” Hutchison said. They also give brands greater ability to adapt to changing market conditions and pinpoint interactions with customers based on particular points in the retail cycle, or special events, such as birthdays. “It’s endless the way you can set these things up. When the concept is taken to its logical conclusion, I would anticipate that you could create a coalition around a single consumer.”
FIS’ focus on frictionless loyalty redemption is on display in the company’s ScoreCard Rewards Program, which took home Best-in-Category for Outstanding Rewards Program at the 2016 Pay Awards in March. ScoreCard drives engagement for cardholders by eliminating friction at the redemption level. For instance, the program’s recently launched fuel rewards component doesn’t require customers to swipe a separate loyalty card; instead, discounts are automatically applied when their ScoreCard debit or credit card is swiped at the pump.
“What makes the program special is that it provides the most frictionless redemption opportunity of any loyalty program we know of,” Hutchison said, noting the ease of reward redemption, which had led to success with more than 3,100 financial institution partners. “Consumers want to use their points and they want to be engaged by the merchants, retailers and service providers they use.”
Along with offering ScoreCard to financial institutions for use with card programs, FIS’ product line also includes payment-agnostic loyalty services for retailers. The company cites that multi-pronged approach as key to developing the loyalty ecosystem as a whole, with card-linked and merchant-targeted programs working together to drive engagement and redemption, thus increasing sales and revenues for all parties.
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