American Express in March announced Plenti, a “coalition loyalty” program in partnership with several retailers that will launch next month.
The announcement comes at a time when consumers' appreciation of loyalty programs is quite strong. According to Bond Brand Loyalty’s fifth annual study, a third of consumers say they wouldn't be loyal to a brand without a program, and 70% say they modify when and where they shop to maximize points, up 13% over the past two years.
But for many shoppers, these programs can also be a source of frustration. Households in the U.S. on average have signed up for more 21 loyalty programs, but they use less than 50% of their rewards. So, in a customer-centric world, there may be room for more coalitions to form, including one that invites in competing retailers.
With a little help from Jake Kiser, VP of enterprise sales at customer loyalty network Belly, Retail Dive takes a closer look at this new program.
What took so long?
In a first for the U.S., Plenti will allow consumers to shop at one place and redeem their points at another, a concept that has been successful in other places like Canada, the European Union, Brazil, and Australia. Participating brands feature a wide range of both retailers and services: Macy’s, Rite Aid, AT&T, ExxonMobil, Nationwide, Hulu, and Direct Energy, among others. As part of the membership agreement, Plenti will only accept one company from each kind of industry represented.
Coalition loyalty programs are entrenched in other areas of the world, so what took so long for the idea to arrive here?
To be fair, the idea isn’t entirely absent. Programs like Points.com, for example, have allowed frequent fliers to use airline miles (in other words, airlines' loyalty points) at partner retailers. But never before in the U.S. have retailers allowed their points to cross over to buy things from another retailer.
One reason for that is the U.S., unlike many other countries, has a vast, often regionalized retail landscape. Some very big retailers, for example, aren’t necessarily in all 50 states. Another is that most U.S. retailers have established and nurtured their own loyalty programs for decades, responding in some cases to the regional tastes and demands of local customers.
Plus, many U.S. retailers have been reluctant to share.
“In my experience the resistance is typically rooted in wanting to preserve and/or promote one’s brand, rather than taking part in a program that might de-emphasize a single brand in favor of a number of brands," Kiser told Retail Dive.
It’s hard to know why this is happening now, but Kiser says that in a moment when consumers want to save both time and money, the time may be right. The key, he says, is that the program work for everyone — for the retailers and for the consumer.
“The big challenge is always going to be building a platform that can scale quickly, add value for both the big brands and small businesses, all while keeping the customer in mind,” he says. “A customer will need to be able to use this program everywhere they want, all without adding any hassle to their everyday life. The program that accomplishes that will have the best chance of succeeding in the U.S.”
Exclusivity - a problem?
In the AmEx program, there are no competitors in any one retail category that are participating, something that’s not true in other countries. That may make sense, both to American Express as a payments option and for the retailers.
But that could prove logistically difficult in some areas. For example, some retailers, say drugstores, might overlap with others in certain markets but be the sole or major drugstore retailer in others. Rite Aid is Plenti’s exclusive drugstore retailer, but that could be an issue for consumers who aren’t near any Rite Aid stores. This could be why there isn’t yet a grocery-store retailer participating in Plenti.
Even without that logistical hiccup, exclusivity could interfere with Plenti’s usefulness to consumers, Kiser says, without helping retailers or Plenti itself all that much, in the long run.
“I don’t believe that exclusivity is the determining factor for a loyalty program to succeed at this scale,” he says. “With the research pointing to Americans preferring a loyalty program they can use at many stores versus a single store, it’s our belief that limiting the businesses to one per category ignores the consumer need to have a loyalty program they can use at many stores, something that may ultimately get in the way of the success of the program.”
More may be coming
Loyalty programs have long been a way for retailers to capture and keep customers. With loyalty programs so clearly able to shape consumer behavior, as noted in the Bond Brand Loyalty study, those retailers without them have established one, and those with loyalty programs have been revamping them. But there's room for change.
“Loyalty is something that a lot of people in the U.S. are focused on solving right now, so I wouldn’t be surprised to see more of these programs pop up,” Kiser says. “I think consumers are smart, and usually smarter than they are given credit for. They want programs that not only save them money, but also time. They want the programs to be personalized to their needs and to show a willingness to put the customer before the brand.”