The retail landscape is crowded with loyalty programs giving consumers a plethora of points, discounts, and rewards-based memberships to choose from. In fact, the average American household holds memberships in 29 loyalty programs across the retail, financial services, and travel industries, but actively uses only about 12 of them, according to loyalty marketing research company Colloquy.And as more companies roll out loyalty programs, the competition for members becomes increasingly difficult. But what if companies agreed on a joint loyalty program? Yesterday, American Express announced that it was teaming up with Macy's, Rite Aid, Exxon Mobil, Hulu, and other brands in a coalition loyalty program.
The program, which will be launched in May, is called Plenti and it allows users to earn and redeem rewards points at any participating company. Users, for example, can earn points when buying a tank of fuel at a participating Exxon or Mobil station and use the points on a pair of shoes at Macy's.
Members earn points regardless of the payment type they use, including an American Express, MasterCard or Visa credit or debit card, and cash.
American Express is calling Plenti the first U.S.-based coalition loyalty program, but such programs are already common in Canada, Mexico, and other countries. "Coalition loyalty programs are popular because they're convenient for the customer," says Manuel Alejandro SÃ¡nchez Vega, CRM manager at Club Premier.
Based in Mexico, Club Premier is jointly owned by airline company Grupo AeromÃ©xico and Canadian loyalty firm Aimia. Its 3.5 million members earn and spend points with more than 100 financial institutions, retailers, hotel and travel providers, and other partners. Additionally, Club Premier sends members targeted content like personalized emails based on their shopping behavior and other data with the help of SAS Analytics.
Personalized offers and the convenience of only needing one loyalty card for a wide variety of companies makes Club Premier "a powerful loyalty program that we're continuing to expand," SÃ¡nchez maintains. The majority of the program's members are located in Mexico, and about 3,000 members live in the U.S. The company is planning to expand in the U.S., SÃ¡nchez adds, but the process has been slow, especially when many retailers are already wed to their own loyalty programs.
Another issue is the fragmented retail space. Unlike in smaller countries, the U.S. doesn't have one national grocer or drugstore--it has several brands that compete with each other. American Express has said it plans to add more brands and other categories to Plenti, but we're unlikely to see numerous brands in one category.
For example, Rite Aid would most likely balk at customers using points from its stores to shop at a CVS or Walgreens. And large corporations like Walmart and Target will probably not participate since its products overlap with numerous companies. These issues could limit the value of a coalition loyalty program for U.S. consumers.
Still, brands are facing a lot of pressure to engage customers and the benefits of an integrated loyalty program could trump the challenges.