Why loyalty program partnerships are on the rise

Countless brands are turning to loyalty programs to keep consumers happy. But brands must constantly update and enhance their perks as the competition heats up—including for paid membership programs. This has led to a rise in loyalty program pairings such as a new Walmart+ and Burger King collaboration. U.S. consumers belonged to an average of 17.9 loyalty programs in 2023, up from 14.8 in 2019, but only about half of these memberships are active, according to Emarketer, citing data from Bond which consults companies on loyalty offerings. In a 2024 survey, Deloitte found that nearly three-quarters of consumers expect brands to offer benefits beyond their own products, “however, brands should remember that it is not merely the number of partnerships, but rather their quality and strategic alignment, which ultimately attracts consumers.” The Walmart+ and Burger King offer, announced in August, gives Walmart+ members 25% off Burger King digital orders and a free Whopper every three months if they link their rewards accounts. Walmart+ memberships cost $98 a year. “Consumers are value-driven, up and down the socio-economic chain,” Robin Korman, principal of Korman Consulting and the former head of marketing, loyalty and partnerships for Global Hotel Alliance, told Ad Age. “If they don’t think they got their $100 worth of value, they’ll change.” Check out the latest Ad Age events and award programs Of course, loyalty program partnerships are not entirely new. In 2020, Target announced that it would open Ulta Beauty stores inside Target stores. Shoppers have to link their Target Circle rewards program to Ulta’s program to get Ulta points when shopping the in-Target Ulta stores. In 2022, Delta and Starbucks linked their programs so that members earn one mile per $1 spent at Starbucks, and on days when Starbucks members have a Delta flight, they earn double the Starbucks points. T-Mobile launched “T-Mobile Tuesdays” in 2016 to give customers discounts on other brands. The carrier recently touted that members could get $4 off their next Jamba Juice order, or free Italian cheese bread with the purchase of a pizza from Little Caesars. Last year, Delta partnered with New York Times Games so that Games members could have unlimited play on flights (NYT Games costs $50 a year). Just last month, Peloton partnered with Kindle so that users can read on their bikes and treadmills (Peloton and Kindle membership pricing varies). Filling gaps Brands looking to boost loyalty partnerships should begin by surveying loyalty members or the consumers who spend the most with a brand, Korman recommends. “Where else are they shopping? What other brands do they like? Look-alike modeling is really helpful here,” she said. AARP has long used outside partners to attract members. (An AARP membership costs $16 per year, or $12 if automatically renewed.) The nonprofit says its most-used partner categories are in travel, dining and entertainment, but that members and trends help them find new partners. “We look at what behaviors our members are engaging in,” said Barbara Shipley, senior VP of brand at AARP. “Are they going to more fitness classes? Downloading more books to their devices? We then see who we can partner with in those categories.” AARP sponsored the Rolling Stones tour this year, with AARP members getting the earliest access to presale tickets. Shipley added that younger members often join for the travel discounts, but start exploring other categories. View this post on Instagram A post shared by The Rolling Stones (@therollingstones) Brands should also look to external partners to fill gaps in what a brand can offer, according to David Slavick, co-founder and partner at Ascendant Loyalty Marketing, which helps brands create and improve their loyalty offerings. For example, retailers (like Walmart) can offer discounts, free shipping or faster checkout—but not hot french fries (like Burger King can). “There is only so much a brand can offer,” Slavick said. “But bringing in new partners first makes news, but then lets new and existing customers consider the extended benefits. If the brand did their homework, that news would be attractive.” Brands should be careful that they don’t cannibalize their own products. Slavick said that Walmart probably wouldn’t partner with Blue Apron, while Korman noted that Costco would never partner with Burger King, because part of Costco’s draw is its food court. “You can feed a family on Costco pizza and hot dogs after shopping,” she said. “They don’t want them going through a fast food drive-thru.” Simplicity Another key aspect for brands is to follow the old acronym KISS—“Keep it simple, stupid”—when it comes to partnering on loyalty programs. It should be easy for consumers to understand how they can earn and “burn” points. “Brands need to think about their loyalty currency as an extension of consumers’ real dollars,” said Kelli Hobbs, VP and head of U.S. business development for Valuedynamx, a Collinson Group company. “They want seamless redemption, and they want to easily earn and redeem between multiple brands.” Changes to loyalty programs should also be done carefully, and preferably make it easier for consumers. Last year, Starbucks angered customers when it changed the rewards tiers, meaning that members had to double their spending to get a free hot coffee, tea, or bakery item. Delta also changed its SkyMiles program, raising the thresholds needed to reach different statuses and limits on visits to its airport lounges. The airline was forced to retreat after complaints. Hobbs notes that gamifying a rewards program can be another way to attract younger consumers. It doesn’t have to be as complicated as making a branded game. “Maybe that means that they get a small reward just for downloading the app,” she said. “Or letting them skip to the next level of the loyalty program by doing a certain behavior.” More: Why restaurant apps and loyalty programs are important Consumers are well aware that signing up for a loyalty program means sharing their data with brands, and they expect brands to show them applicable deals. “Loyalty programs are voluntary data-tracking programs,” said Korman. “Consumers know that they are allowing companies to understand what and when they buy something, but they expect better, personalized offers in return.” Check out the latest Ad Age events and award programs

Why loyalty program partnerships are on the rise

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