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BizReport : Loyalty Marketing : September 24, 2015

Top 3 tips to create a borrowed loyalty program

There is a new trend in loyalty marketing and it's that of brands using the loyalty programs of other brands, thereby 'borrowing' consumers' loyalty. One expert offers his top 3 tips to use a borrowed loyalty program.

by Kristina Knight

Kristina: What is the benefit to this kind of loyalty program for businesses?

Christopher Barnard, President, Points: Besides avoiding the complexity of managing their own loyalty program, leveraged loyalty allows merchants to connect with leading loyalty programs to increase their consumer reach and the distribution of their program, cutting down on the cost of acquiring new customers and developing a loyalty program from scratch.

The other benefit is that merchants now don't have to come up with the entire reward the customer is earning towards. It would take a lot of sweater purchases for a retailer to afford to offer a bonus of a week in a Hawaiian hotel. But, by using a hotel's loyalty program as the incentive, the retailer is now leveraging all of the consumers other earning activity as well as the hotel's brands. Now the 500 points offered with one sweater purchase may just be enough to get someone over the threshold to redeem for the last night of their Hawaiian honeymoon. That's the real power of leverage.

Kristina: For brands considering this kind of approach, what are your top 3 tips?

Christopher: 1. Start off with higher margin items first: By starting with offers funded by higher margin, you can ensure that the offer is compelling in the number of points offered. This should make it more affordable, and thereby mitigate your risk. With more experience, and a better educated customer, the offers can then be migrated to lower margin items with a focus on volume. Alternatively, basket size or frequency can be used depending on your economics.

2. Offer the customer choice: The average consumer if a member of more than 20 loyalty programs, so by offering choice in several different programs, you have the opportunity to better engage their consumers. Another benefit of choice? Once the customer has enough hotel points, they can choose frequent flyer miles for their next purchase.

3. Over-communicate your loyalty offers with your customers: The leveraged loyalty method is extremely valuable to customers who will want to buy from your brand in order to receive rewards in programs they already collect in. But only if they know that you offer it. Over-communicate your offers by informing them at checkout, utilizing email marketing, and including information on receipts.

Image via Shutterstock

Tags: borrowed loyalty, loyalty marketing, loyalty shoppers, Points, rewards marketing

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