Can Poly-Rewards Work In The U.S.? The Case For ‘Open’ Loyalty

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Most people play the dating field before committing to the “one.” When it comes to their retail commitments, however, the “one” is usually many companies selling many things, in many ways.

Consumerism, by nature, is polyamorous. A shopper may feel “loyal” to each retailer, but in reality it’s “poly-loyalty.” So why not meet consumers with “poly-reward” programs?

Polygamous reward programs occur when the operators of several different loyalty initiatives agree to an open partnership in which they share member perks and insights, ideally benefitting all involved. Ask the Europeans, or the Canadians. Businesses abroad have been indulging “poly-loyal” members for decades, under the less-sexy term, “coalition programs.”

Coalition programs differ slightly, in that they are managed by one company that extends partnership opportunities to dozens of brands. In poly-reward partnerships, each program is managed by its owner but wedded to the agreement that its members have the choice to earn and redeem points with other brands in the partnership.

Think along the lines of supermarket-fuel program alliances, or the Target-Ulta “power couple” alignment, but with more partners – and possibly more payment options than just a co-branded credit card.

When Your Members Love You And You And You

The case for poly-reward programs is largely rooted in scale, as evidenced among some coalition programs. The German platform Payback, for example, reported that members who shopped with two or more of its partner brands increased their spending by 25%, according to the Wise Marketer.

Bigger per-trip baskets cost less to fill. There are other perks, as well. Following are five key areas where poly-reward programs can realize coalition-like benefits while maintaining brand independence.

  1. Partners see new sides of their customers. When retailers and brands agree to share loyalty initiatives, they can share the insights derived from the anonymized members’ purchase data at the partner companies. These insights can help shape merchandising and marketing approaches for each brand. Gap Good Rewards is an easy-to-follow example. The program members earn and redeem points across all Gap Inc. brands – Gap, Old Navy, Athleta and Banana Republic. Gap Inc. learns how these customers shop within its family of brands, to instruct targeted promotions. Key Rewards, operated by the parent of Williams Sonoma, similarly offers members the benefit of earning and redeeming at all of the company’s seven brands (two Williams Sonoma brands, three Pottery Barn brands, West Elm and Mark & Graham). Members using these program credit cards earn higher rewards (and the retailer learns more about how they spend).
  2. Partnerships can help complete you. Brands and retailers can marry “up” by partnering with organizations with capabilities or resources that can improve their positions. Compatibility and scale are essential, but retailers can think beyond the obvious. Is the potential partner’s customer base different enough to present new growth inroads? Maybe the partner is an expert in a specialized technology or operates in an unfamiliar market. There’s a case study out there: Taco Bell in June announced a retail partnership with Crocs (operator of Crocs Club) on an exclusive pair of slides. Taco Bell Rewards Members, some of whom might not be Croc heads, got early access.
  3. You can go Dutch. In addition to sharing data, merchants that enter into a rewards partnership can agree to share some operational costs, based on the strengths each brings to the table. Marketing expenses, for example, can be reduced when the partners combine promotions across channels – increasing the number of customer touchpoints, as well as the size of the audience for each. The expanding, store-within-store partnership of Kohl’s and Sephora, for example, enables cross-store promotions that encourage more spending: In 2022, 50% of Sephora baskets included an additional category purchase. Members who link their Kohl’s Rewards and Sephora Beauty Insider programs, earn points on both programs when they buy Sephora goods at Kohl’s.
  4. Openness is alluring, and motivating. Variety isn’t the only spice to life; flexibility is as well. Members who are free to redeem the points they earned at one retailer for a reward at a different retailer are likely to be more active. Further, in addition to having earnings and redemption options across a number of retail and brand partners, members of poly-reward programs don’t have to be tied down to one payment method, such as a rewards-based credit card. This is an important distinction when 90% of consumers have one “go-to” card they use most often. With poly-rewards, they can pay with cash, card or digital wallet; the points follow the customer, not the currency.
  5. Better bookkeeping. Because members of poly-rewards programs can amass more points, they reach earnings thresholds faster and will likely redeem their points faster. This encourages higher engagement and good accounting, because higher redemptions mean fewer outstanding points to carry on the balance sheet. Those unredeemed points are considered a liability, because a company has to reserve finances to cover the cost of them when they’re eventually cashed in. This accounting principle is why some companies, such as Starbucks and Dunkin’, expire their points after six months.

Poly-Reward Programs Are Never Alone

Look, plenty of reports confirm that loyalty program members spend more than non-members. Walmart has stated members of its three-year-old Walmart+ program spent $79 per visit to its website, compared with $62 among non-members (CNBC). Amazon Prime members spend $1,400 a year with the retailer, on average, while non-Primers spend $600, the Motley Fool reports.

Yet more than 90% of all companies offer some sort of loyalty program, according to Retailist (citing Accenture). That’s plenty of product dilution, and it can make one company’s customer “loyalty” goals delusional. Unless there’s change.

Individual programs will find it harder to stand out alone. The right partners can change that. They offer more excitement, more opportunities and more to gain – for all involved.

Poly-loyalty requires poly-rewards. That’s not delusional. It’s reality.

 

This article originally appeared in Forbes.

Jenn McMillen
Incendio Founder Jenn McMillen has been building and sharing expertise in the retail industry for 20+ years. Her expertise includes customer relationship management, shopper experience, retail marketing, loyalty programs and data analytics. She's a retail contributor for Forbes.

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