Coalition Loyalty

The idea of a "Coalition Loyalty Program" is something that has been prevalent in other countries for many years but is brand new to the US. Coalition Loyalty is when multiple business essentially join together to create their own rewards points. Customers can then earn rewards at any business member and redeem them at any other business member. As part of joining, a business will share there customer information with the other members. There are good and bad aspects of these programs from both a consumer and business standpoint.

Customer Benefits

• Loyalty Flexibility - You can earn one place and reward somewhere else
• Breadth of Earning - The number of places you can earn is greater than a normal, in-house loyalty program
• Industry Diversity - The places you can earn and redeem spans multiple industries

These are all great things, but there are also some downsides to keep in mind.

Customers Concerns

• Data Usage - As part of these programs, the business that are members share your information with the rest of the members so they can market to you.
• Narrow Options within Industries - By nature, these programs want only a single business from a single industry (having more then one would create unwanted competition). This means while your rewards can span industries, you likely only have one choice per industry

These are options you will need to weigh in decided which programs to be a part of. Are you someone that has specific places you like to shop within each industry? Do you mind being constrained to a few businesses with your rewards point? Are you OK with you information being shared? 

From a business perspective, there are other benefits and concerns to these programs

Business Benefits

• Lower Initial Investment Cost - The cost of the program is distributed over all the members, making it more accessible to small and mid-sized businesses
• Customer Data - Being a member offers access to consumer data and a pool of customers larger than the business could gather on its own
• Positive Rewards Transactions - Customers shop at your business to earn rewards (at full price) but redeem them somewhere else (at a discount). You get the benefit without margin hit. This is the ideal situation for a business member
• Limited Competition - By design, there will likely only be one business per industry so it is likely that you will be the only option for customers in that program to buy your type of products.

Business Concerns

• Customer Data - The sharing of consumer data goes both ways. You can see theirs and they can see yours
• Other Business Members - The other business members can have a large impact on the customers the program attracts. For example, joining a coalition program that includes Walmart is likely going to be more beneficial than joining a program with a local bakery.
• Negative Rewards Transactions - Customers earn their rewards (paying full price) at one of the other businesses and redeem them at your business (at a discount). In this case, you get the negative margin impact without the full price transaction to balance out.

Overall, these programs are good step toward the way rewards should work, but they are not quite there. Customer data is still shared which does not respect the privacy of the consumer. While there are more options, the rewards are still not as versatile as they can be. Customers are limited to only the businesses in that program with very limited options within any given industry.

Our goal at Scannibal is to completely break down the walls between where rewards are earned and where they are redeemed. We are literally re-writing the rules for how you earn rewards and we are very excited to take some of the basic ideas of "Coalition Loyalty" and turn them into something revolutionary!

Thanks for reading!
Chris @ Scannibal

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