Building Loyalty Program Partnerships Wisely

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In less than two weeks from today, Plenti, a coalition loyalty program, will officially shut down. Created by American Express three years ago, Plenti had an impressive roster of partners, at one point including Macy’s, ExxonMobil, Rite Aid, Hulu, Expedia, among others. Despite its high-profile start, the failure of Plenti shows the many challenges associated with loyalty program partnerships. If you ever consider loyalty program partnerships, it is important that you do so strategically and judiciously.

The Business Case For Loyalty Program Partnerships

On the surface, loyalty program partnership is a great idea. It allows consumers to earn points from different businesses, making reward earning easier and more relevant to more consumers. This expands the potential market for the program. Running a joint program reduces the operational cost for each business. In the case of a dominant business-peripheral business partnership (such as the partnerships airline frequent flyer programs form with smaller businesses), the dominant business can make good money selling its program currency to its partners. Airlines, for example, are estimated to make between 1.5 and 2.5 cents per mile. With all these benefits, what could possibly go wrong? Continue reading “Building Loyalty Program Partnerships Wisely”

Reducing the Loyalty Gap

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Although loyalty programs seem to be everywhere, many question whether such programs are indeed effective marketing tools. Strengthening the case for the skeptics, recent news report a restaurant that shut its doors in just a few months because it offered a ridiculously generous loyalty program. This is of course an extreme case. In reality, loyalty program providers can fairly easily keep program costs under control through smart program design involving the right combination of program currency, point ratio and reward structure.

Some loyalty program problems are not so straightforward however and can be much more subtle and challenging to deal with. One such example is the concern that loyalty programs foster loyalty to the program rather than to the company. That is, “I love Starbucks Rewards” may end up ringing more true than “I love Starbucks”. In the long run, this is bad news for the company because it makes the business overly dependent on the loyalty program. If a competitor decides to offer a more attractive program, customer attrition is likely to happen. What can businesses do to reduce this loyalty gap and make loyalty program members more loyal to the company rather than just to the program? I want to share with you some insights from a research project I conducted with a colleague in Belgium. Continue reading “Reducing the Loyalty Gap”

Leveraging Your Academic Community

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Update note: Sorry I was made aware that the links in the article did not work properly. The problems have been fixed.

If you have been reading my blog for a while, I hope you have come to the conclusion that the type of research marketing academics do is more than just nerdy math or lab experiments. It can be highly relevant to marketing practice. In my career as a marketing professor, I have collaborated successfully with businesses large and small. Such collaborations have been highly gratifying for both the businesses and I. If your business has not been tapping into the marketing academic community around you, you may be missing a great opportunity for knowledge discovery and innovation. In this article, I would like to offer some advice on how to leverage the academic community around you.

Why Collaborate with the Academic Community?

There are many benefits to collaborating with the academic community. I will highlight some of the key benefits here:

  • Access to cutting-edge research methods and tools that you and your staff may not be well versed in. Examples include sophisticated data analytic models, complex experimental design, clever primary data collection methods, etc.;
  • Building reliable and generalizable knowledge based on validated theories rather than just a hunch;
  • Designing and conducting rigorous scientific tests to yield high-quality results that you can trust;
  • Gaining a fresh, non-conventional way of looking at your problem because of different academic vs. practitioner thinking styles;
  • Cost savings compared to hiring external consultants, as many academics’ primary motivation is to publish instead of monetary goals. The mantra in the academic community is Publish or Perish!

Continue reading “Leveraging Your Academic Community”