Loyalty Blogs

We know how essential it is for businesses to gain customer loyalty in the competitive business market era. A well-executed loyalty program can be an excellent investment for any business irrespective of their industry verticals. Still, it can be challenging for many business owners to make their loyalty programs survive and sustain. Understanding different loyalty program types can help businesses choose the right one for their unique business needs.

In this blog, we will learn about coalition and umbrella loyalty programs along with the difference between the two, which will help you choose the right one for your specific business requirements and make your business thrive in the long run.

Understanding the Basics of the Coalition Loyalty Program

In simple words, a coalition loyalty program can be defined as a strategic partnership between two or more businesses that agreed to pool their resources together and offer a single loyalty program to their customers. As these programs support two or more businesses, there will be a split in the cost of implementing their loyalty program, saving extra effort and cost. Another good thing about the coalition loyalty program is that it collects and shares customer data of different businesses and enhances their brand’s values through their association.

On the other hand, customers will gain access to a wide range of shared reward systems that help redeem points on any business that is part of a coalition program. Many types of loyalty programs come under the coalition approach, which can be a casual partnership between small local businesses to formal programs managed by third-party organizations. For instance, Air Miles is one of the most successful collision programs which is a third-party service that collects reward points from abroad range of retail business categories.

One of the best features of the coalition program is that it enables direct competitors to participate in the same loyalty program. This means it can create some challenges for businesses targeting the same audience but if planned properly, coalition programs can be a great benefit for them if they know how to optimize the client data effectively.

Understanding the Basics of the Umbrella Loyalty Program

Now, let’s talk about the umbrella loyalty software solution! Many business owners often get confused between the two terms – umbrella and coalition loyalty program but they have significant differences. That is why, understanding them is essential if you are planning to choose either an umbrella program or a coalition. The main difference is that the coalition program helps to bring different companies together in one frame while the umbrella program helps to unite brands that operate under single-parent or shared ground.

One thing about the umbrella loyalty program is that it contributes to unfirm data collection approaches removing the risk of competition within the program. These programs are used in many industries, especially travel agencies, hotel chains and airlines. Not only do the parties involved in a common umbrella program share the management cost, but also there is no hierarchy between them.

Some of the main benefits of using an umbrella loyalty program are-

– Shared Management

This is cost-effective as the associated costs are split between the companies and brands take responsibility for managing their rewards.

– Mutual Loyalty Approach

These programs unite all programs of parties involved giving customers a chance to use points they earn somewhere and redeem them elsewhere.

– Multi-Currency Support

Customers earn multiple loyalty currencies for different actions and these points can correlate with different reward types.

Choosing the Right Loyalty Approach for Your Business Needs

As we see, both loyalty programs follow a joint approach and offer benefits to different types of businesses. Umbrella loyalty programs are straightforward and can be implemented at scale as it is possible only when the business falls under the same parent company, the same network or comes under shared ground.

However, in the case of a coalition, it can be difficult to decide whether to go for a coalition or not. This is because successful coalition loyalty programs are the ones that group complementary products and services. For instance, supermarkets and hardware shops cannot go together. Small-scale coalition programs involving local neighbourhood stores can benefit more than others.

Always ensure that the joint loyalty programs you choose offer the following features and benefits such as-

1. Group Complementary Services/ Products

Ensure that the businesses you are partnering with for the joint loyalty program can offer complementary products together with shared reward points functionality.

2. Supports Uniform Reward Structure

Go for the right pricing structure which helps to set the value of reward points to your products and services.

3. Proportional to Business’s Value

Make sure that the financial investments businesses are putting for a joint-loyalty program are proportional to each business’s value within the coalition program.

In the end, we can say that a joint loyalty program can be a helping hand to businesses that are planning to target a larger number of shared customer bases. However, always keep in mind that budgeting plays a key role in making such partnership loyalty programs successful.

Final Takeaways

As we can understand the essence of umbrella and collision loyalty programs, we are aware of the wide range of benefits that they offer for businesses that are all struggling to boost customer loyalty and drive revenue growth. These programs enable customers to unlock greater value at lower cost with enhanced convenience and on the other hand, businesses gain enhanced data insights for targeted marketing opportunities.

Make sure that you are well aware of your specific business requirements before choosing between a coalition or umbrella loyalty program. At Novus, we specialise in helping businesses build and maintain effective umbrella and collision loyalty programs for immense business benefits. Book a demo with Novus to see how you can leverage our custom-made customer loyalty programs to grow your business and enhance customer loyalty.