2018 Loyalty Marketing Year in Review – Part 2

After reviewing all the news reported during 2018, our staff
identified 4 topics that you needed to know about as we transition into a new
year. In part 1, we covered:

1.The Biggest News in Customer Engagement and Loyalty from 2018

2. Cannabis becomes a smokin’ hot topic (and will be a growth market for loyalty marketers in 2019)

Today, we’ll highlight:

3. Crumbling of the Coalition Empire

4. The Never-Ending Story – Becoming Customer Centric

We hope you enjoy this summary of news from 2018 and wish
you all the best in your endeavors during 2019. We’ll be with you all the way
and hope you will keep The Wise Marketer bookmarked as your top source of news,
insights and education on the global customer engagement and loyalty business.

Happy New Year!

3. Crumbling of the Coalition Empire

The coalition loyalty model has been highly successful in
many markets around the world save for one big one, the United States. Before
2018, there was industry consensus that coalitions were a brilliant play to
lift participating brands to higher profitability with customers than they
might have done through individual efforts.

The leverage enjoyed by partner brands in a coalition
through the shared use of customers, data, and technology were illustrated
through the historical success of AirMiles in Canada, Nectar in the UK, Dotz in
Brazil and Bonus in Peru. There are at least 15 coalitions operating at large
scale with tenure of over 15 years in the market. We don’t name them all here
but offer up these three as best practice examples of coalition operations.

Two things happened in the coalition realm during 2018. First Plenti closed its doors, probably bringing an end to the efforts of major brands to build a “pillar” style coalition in the US. Next, and more surprising, was the struggle of two well-known and highly established coalition loyalty programs outside the US, Aeroplan and Nectar.

The root cause of each issue is distinct. Outside the US, there is a maturation process that causes periodic reevaluation among coalition partners. In Canada, agreements were expiring with Aeroplan, Air Canada, and the banks issuing cobranded payment products with Aeroplan. In the UK, lead partner and retailer Sainsburys reached a milestone in its evaluation of continued participation with Nectar.

For most brand partners in a coalition, participation can
become increasingly expensive over time unless costs are carefully managed.
Interests among and between participating partners must be balanced closely and
at any point in time new leadership can determine that a solo approach to
customer engagement and loyalty might be more compatible with brand interests.

Data ownership is the most valuable asset in play in these negotiations. As the value of customer data grows and customers gain more self-awareness of the value of their data, every brand will be forced to evaluate how best to interact with its customer base.

It is important to remember that “coalition” still works in America, though we probably should give it another name. We learned from interviews with Excentus that a wide-ranging partner model can be successful. We also witnessed many new examples of smart-partnerships between brands facilitated by card linked offers and related technology.

Coalition Loyalty continues to work well outside the US.
Dotz in Brazil, Bonus in Peru and AirMiles in Canada are among the most successful
programs. These programs share a management perspective that treats partners like
customers and proactively works to balance and serve all participating
interests.

The conclusion from a review of all that happened in 2018 is
that “coalition loyalty” is not the panacea that some industry experts once believed
it to be but continues to be a highly successful model when operated with best
practice standards in place. Where market conditions provide an opportunity and
the business is operated effectively, the traditional coalition model will
succeed.

For the US, the partnership model is the way of the future
and we expect to see more growth in complementary partnerships designed to
bring added value to customers throughout the US market in 2019.

4. The Never-Ending Story – Becoming Customer Centric

The journey to customer-centricity has taken on the nature
of a fantasy novel. In the novel, the foreshadowing of an important truth yet to
be revealed creates a threat for the protagonist. To vanquish the threat, the
protagonist must chase down dark forces who seek to prevent the truth from
being revealed. A complicated journey ensues where the rules change, the
environment presents unpredictable challenges, and risks abound at every
corner. Just when things appear the most-dire, a shining light appears, the
protagonist vanquishes the dark force, and truth is revealed.

The declaration from the board level of many public companies that “we are committed to becoming more customer centric” is one that we encountered pervasively across the business landscape during 2018. We documented some brand struggles on this journey and cited ways to go beyond the buzzword and turn words into action to make stronger progress on the journey to customer centricity.

We hope that the journey towards this goal will have an end
and that we’ll have more examples of success to report on during 2019. To be
successful in today’s market, our observations tell us that each company must
determine is own path to customer-centricity, meaning that each brand will
determine the pecking order of key components needed to engage with customers,
build trust, and win their long-term brand affinity (i.e. loyalty).

We reported on the premise that personalization was the most important element of creating a customer-centric organization. Others believe a purpose driven organization will get the best results. We also gave coverage to the novel idea that “time” is the most valuable currency for today’s consumer.

Often overlooked is the need for employee training in order to close the loop on the flawless execution of offer delivery and purchase experience online and in the store. There is also substantial evidence that the make-up of talent on your marketing teams needs to evolve. Adding persons with background in behavioral science and opinion research could unlock new perspectives on marketing strategy.  

One other theme we noted was that as Millennials age, their category can be divided into 2-3 groups, each exhibiting distinct behaviors and tendencies. We wrote about how it is time to move on from marketing to Millennials and expand focus to better understand the preferences of Gen Z.

In the early 1900’s the concept that the “customer is always right” was floated by some legendary retail giants. This great top-line concept was moderated over the years as common sense tells us that customers can be dishonest, manipulative and self-serving. Even though not all customers are right for every brand, the growing call for the corporate enterprise to put the customer first has become louder and louder over the past year. With technology enabling full transparency of brand promises, product specifications, and the opinions of hordes of other customers, brands are wise to seek out the needs, preferences and opinions of their greatest asset, their customer base.

The discipline of talking to our customers and asking them
what they want is still not executed as often as other marketing tactics. We’re
in a technology age where it’s tough to fool anyone, and only the fool would
miss the opportunity to strike up an authentic relationship with a valued
customer in hopes of building trust and establishing an emotional bond that
keeps them close over time.

The white light that brands can follow to ensure the journey
to customer-centricity does not become a never-ending story is the customer. There
is an expectation from our customers that we (brands and marketers) listen
more, ask for their opinion more frequently, and consistently take actions that
show we are listening.

That will be the story for 2019.

Bill Hanifin is CEO of The Wise Marketer and is a Certified Loyalty Marketing Professional (CLMP).

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