Loyalty programs

Major retailers, airlines, hotel chains, gas stations, restaurant chains, credit cards, movie theatre chains etc all have loyalty programs. Each business entity has their own rewards cards either physical or digital or both for their customers. These rewards cards need to be associated with the in-store or online purchase for customers to accumulate points which can be redeemed later for a value that could anything like a gift card or cash back etc. These programs have been used for customer acquisition, customer retention, increasing customer wallet share and of course to reward loyalty. The loyalty programs have existed for almost 50 years and in my view are here to stay for a long long time. Most customers end up having 5-6 loyalty cards from the retailers, airlines, hotel chains, gas stations, restaurant chains, movie theatre chains etc that they most regularly do business with to get additional value. Having multiple loyalty cards is a pain point and a turn off for many customers. A few players like Plenti card from American Express have attempted to create a coalition of loyalty to ease the pain with a network of partners (major retailers, hotel chains, gas stations, restaurant chains etc) but have not found very enthusiastic acceptance from the business entities themselves. There are a few more successful loyalty coalitions or micro loyalty coalitions that have done well like shared loyalty program of Delta, Lyft and Hilton or Matas in Europe or Payback in India. Small businesses, pop and mom stores etc do not have the machinery nor infrastructure to run loyalty programs.

Wouldn’t it be helpful to have universal reward points balance account linked to all reward cards that a customer has? Accumulate points in a single rewards point account for all purchases made with all business entities that the customer does business with and redeem the points anywhere amongst these entities? An illustration would be, if I have a loyalty card each with Delta, Target, Macys, Starbucks, Mobil, Landmark theatres and be able to accumulate all rewards points for transactions with these businesses in one account and be able to redeem the accumlated points for rewards at any one or more of them? And have the flexibility to map more loyalty cards from other business entities to the account?

There will be challenges because there are several types of loyalty programs today – the plain points system, tiered programs, value based loyalty etc. And each of the business entities may have different flavors of loyalty programs and may have a different way of treating their customers. I think these challenges are not insurmountable. Small businesses, pop and mom stores etc can be brought under the ambit of this universal loyalty program once a solution is found.

Perhaps a visa or master card like gateway to link reward points to customer purchases with a single repository of points. Or perhaps something else and it will need a concerted effort from large influencer or a consortium of influencers. I envision someone coming up with a solution in the next few years for sure.

Comments welcome.

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1 Comment

  1. Great thought Shekar ! The article made me to think about Loyalty Programs. By the way, very well written!!


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