For many years companies have given rewards to customers in exchange for increased share of wallet and information that enables marketing activities. But getting real value from loyalty programs has become harder and harder. In part this is because the biggest travel loyalty programs are getting watered down and due to the tremendous proliferation of other incompatible loyalty programs. Most consumers and merchants now realize that actual benefits are far from their expectations.

The old business model might have worked when only a few very large brands had loyalty programs. But not anymore. The typical consumer is now a member of lots of programs. And the majority of consumers can’t spend enough in each place to reap any tangible economic reward. This results in consumer apathy about loyalty programs – which hurts merchants, too. Most merchants are lucky to have 20% of their customers actively participate because the majority of less-active, but valuable customers simply don’t have the need or economic ability to spend more with a merchant running a stand-alone program.

Getting real value from loyalty programs – it’s about making things easier

We need to think differently about both consumers and merchants getting real value from loyalty programs. About how programs can be truly relevant to people’s needs. At Currency Alliance we believe passionately in both the power of a holistic loyalty strategy and of the benefits in terms of convenience that technology has afforded us. We think that by making things much simpler for both the consumer and the merchant, we can eradicate the main flaws that have materialized in existing loyalty programs.

Let’s look at it from the point of view of the consumer. They can’t possibly keep track of 20-30 programs and don’t want to carry all that plastic. A customer may be fairly loyal to a number of brands with whom they shop 6-10 times per year, but even this level of frequency is often too low to accumulate enough value to make the loyalty rewards very meaningful. Still, these customers typically do appreciate receiving offers. Especially when they are personalized and timely.

Unfortunately, a lower frequency merchant is unlikely to have the broader dataset or marketing tools to know when to deliver personalized offers. The lack of most programs’ relevance to most customers is a big problem for the merchant. Without active participation, the merchant neither has an open communications channel to the customer, nor do they know what to say (even if they have the analytics and marketing tools). And connecting with customers across various touchpoints is crucial in order to help the merchant reinforce customer engagement.

Meeting elevated expectations

Getting real value from loyalty programs and ensuring relevance in the future will be about sharing. Consumers have no problem sharing information about themselves as long as there’s trust. Customer-Brand interaction on social media is pretty normal now, and the smartphone has encouraged people to share information in the moment. But, consumers also expect instant gratification. They expect brands to use the knowledge customers have shared to make their shopping experience better. The smartphone and social media have raised their expectations of brands. Those that cannot keep up with expectations will lose even more relevance over the next 2-3 years.

At Currency Alliance we believe a universal loyalty currency is the way to meet these elevated expectations. Our idea behind comcoin is that the logical evolution for all merchants that do not have high frequency with their customers is to join a coalition loyalty program. That way the points they award can be more valuable because the consumer can capture more value across all merchants participating in the program. In fact, the value is high enough that members will look for comcoin-issuing merchants before they choose where to shop because they will have realistic opportunities to redeem.

And the merchant? Well, for those that share a portion of their data, the insight about customers will be magnified by customer interactions with other partners in the comcoin program. So they will be able to use a more robust consumer profile in order to personalize more effectively and to make offers that are relevant to the customer. This is the way to get a big step up in extracting real value from loyalty programs.

If you would like to talk further, have any comments, or would like information about comcoin, please get in touch with us.