For companies focused on bringing more value to their customers and loyalty program members, brand-to-brand partnerships are a growing area of interest. However, building successful partnerships can be challenging for even the most seasoned brands.
Brand partnerships aren’t formed overnight. They often require a significant amount vetting, planning, and development, ensuring that both companies complement each other’s products, services, values, and audiences.
With the right partnerships in place, both brands can thrive, bringing more value to their customers while reaching new audiences and creating opportunities for growth. With any brand partnership, alignment is key. Brands must consider how a partnership will impact how the customer feels about both brands. But when crafted in an authentic manner, all parties can leverage the partnership to develop stronger connections and drive emotional loyalty.
Loyalty360 spoke with vendor members and loyalty strategy experts about best practices on building brand partnerships within the loyalty industry.
Article contributors:
- Bindu Gupta, Senior Director of Customer Strategy, Insights, and Research for ICF Next
- Lauren Sutherland, Senior Strategist of Customer Strategy, Insights, and Research for ICF Next
- Cassie Preston, Client Services Director CRM & Loyalty of Baesman
- Danny Hotowski, Loyalty Program Manager, Partnership Network Development, Comarch
- Hector Pages, Chief Client Officer of Brandmovers
Foundations of a Successful Brand-to-Brand Partnerships
Over the past several years, brands have homed in on customer data. Through understanding who their audiences are and what they care about, brands can connect emotionally with customers beyond their transactions. In terms of brand partnerships, this allows all companies involved to build authentic relationships with customers over their
shared values and beliefs.
“To build successful brand-to-brand partnerships three things are critical — finding a brand that shares your brand’s values and beliefs, playing to the individual strengths of each brand, and collecting accurate and reliable customer data to measure the success of the partnership,” says ICF Next’s Gupta.
Baesman’s Preston adds, “Brands have taken the opportunity the last few years to really assess their customers’ needs and lifestyles and determine how they can mold their value propositions to fit today’s consumers. Partnerships now are really focused on connecting with the customers on a deeper level, making those emotional brand connections even stickier.”
This connection allows brands to add value to the customer experience while differentiating themselves from their competitors and similar loyalty programs. By leveraging brand relationships — especially between unexpected or seemingly unrelated brands — companies can stand out in a
sea of sameness.
“More and more unusual and unexpected brand partnerships are coming to life that benefit the customer and loyalty program members,” says Gupta. “For instance, e.l.f. and Dunkin partnered to drop exclusive Dunkin flavored beauty products for e.l.f.’s Beauty Squad loyalty program members. More recently, e.l.f. partnered with American Eagle Outfitters to launch a limited edited collection including an eyeshadow palette, a lip balm, and a clay mask designed for 'all cheeks.’ These examples show how brands keep a close pulse on what their audiences want and need and deliver those experiences through unique brand partnerships.”
Brandmovers’ Pages adds, “Brand partnerships have been a mainstay of loyalty programs for years; however, we have recently seen even greater interest in leveraging these to create even greater program value while offering a point of differentiation in a sometimes-cluttered loyalty landscape.”
Brand partnerships succeed most when they focus on delivering value to mutual customers. For example, Gupta explains how
Bilt Rewards partnered with Cathay Pacific to provide Cathay Pacific Asia Miles at a 1:1 ratio for their rent payments, making travel and vacations easier and more affordable for Bilt members. Similarly, Preston adds that
the Ulta @ Target partnership was designed to meet customers where they shop after the brands realized there was a large overlap in their shared customers. As a result, customers can leverage both rewards programs at one location, simplifying the shopping experience without losing engagement.
“Go back to basics — think about your audience and their lifestyle today and try to find partners who may have a mutual customer or product that makes sense,” says Preston. “Don’t let the financials get in the way — they’re important — but focus on what you can both deliver to the customer and then work out the details from there if a partnership makes sense.”
While meeting customer expectations should remain the priority for establishing successful relationships, sometimes financials do play a role. For brands who do need to prove ROI for stakeholders or are navigating economic uncertainty, partnerships help provide the value members expect while keeping costs relatively low.
“Many brands are looking for opportunities to serve their customers in a more simplified way, and at a lower cost. Partnerships can also help brands deliver on their goals of a more loyal customer, while managing to a stricter balance sheet which current macroeconomic times call for,” says Preston.
How Brand Partnerships Benefit Customers
For brand-to-brand partnerships to benefit the brands involved, they must engage loyalty program members. If members don’t benefit from the partnership, neither will brands. Brands can drive customer engagement with the partnership through
exclusive offers available only to loyalty program members.
“This can also be layered on top of a tier strategy whereby members can ‘unlock’ special partner benefits as they level up,” says Pages.
Partnerships are also a great way to offer loyalty program members options to accelerate their point earning and tier progression through both programs. For example, partnerships between hotels and airlines — commonly used at the same time — can offer members both discounts on combined transactions and bonus points for engaging with both brands.
Additionally, these kinds of offers allow consumers to save time while still engaging with both brands. By leveraging partnerships, brands provide both financial and experience benefits, facilitating the emotional connection by showing customers their time is as valuable as their transaction.
“There are many things that customers value in brand partnerships including limited time promotions, earn accelerators, unique redemption options, and enhanced experiences,” says Gupta.
“It’s the reciprocal benefits that are important for customers — the idea that they can earn some of the more transactional benefits with each brand in the partnership and remain brand loyal to both,” Preston continues, “Experience is another important factor — if the customer has to do extra work or spend extra time to take advantage of the benefits you offer through a partnership, that partnership won’t connect emotionally as you’d maybe hoped it could.”
Often, partnerships only offer benefits for limited promotions. As a result, members need to engage quickly to take advantage of them. Communication is a key element in driving customer engagement with a brand partnership.
“Like any marketing campaign, get creative with your launch approach — make sure customers clearly understand what they get out of the partnership and how they can get the most out of their benefits across the brands in the collective,” says Preston.
Pages adds, “When it comes to communicating new or altered partner program benefits to customers, the priority should always be producing clear and concise messaging. It is important for brands to provide detailed information on how the changes can affect each consumer individually.”
In these situations,
personalized communication is as important as clear communication. Just like partnerships should be formed through understanding customer data and what is important to them, communication to program members should arrive through their preferred media and speak to their individual interests and behaviors.
“When communications are personalized, and we are seeing this more often, members are more likely to actively engage,” says ICF Next’s Sutherland. “Messaging shown to them can be based on historical activity, including purchases, use of partnerships, co-branded credit card use, in addition to status or tier within the program.”
Challenges and Opportunities of Brand Partnerships
Although partnerships can provide great benefits, customers can still become disengaged with the program. Should a brand face growing disinterest in its partnership, the next step is to inspire customers to reengage. Like all aspects of successful partnerships, reigniting interest in the program starts with data.
“When a partner program begins to experience lagging customer interest and waning activity, the first step is to identify exactly what may be the root of the issue,” says Pages. “Taking a critical look at the program from the customer's perspective and careful analysis of platform engagement metrics such as login history, point accrual data, program email data, and redemption activity can help reveal patterns and where it’s falling short for meeting their needs or failing to deliver expected value.”
Preston adds, “If a partnership isn’t meeting the needs of the audience, looking at the fundamentals of the customer experience are a good next step.”
Understanding the customer experience then allows brands to send the right kind of offer to inspire reengagement. Often, limited time offers to customers who haven’t benefited from the partnership will be enough. But the offered benefits need to connect with the member on the right levels, requiring effective personalization.
Technology also presents a major challenge for brand partnerships. Integration across platforms or between brands requires significant financial and time investment into tech teams and resources.
Comarch’s Hotowski says, “The biggest challenge is the technical integration of the partnership between loyalty programs. With IT resources becoming more and more constrained, a successful integration of partners requires significant financial and time resources for a successful integration. Outlining the benefits for each partner, including any benefits that would bring potential lift in engagement and spend, tends to accelerate the approval process on both sides to help bring in IT support.”
“Other challenges can be technology integration — when a member of one program earns points through a partnership, how are those points recorded, and when do they show up in the member’s account? It’s particularly important that all terms and conditions are clear to members as well as to call center agents who will likely be fielding questions regarding both the partnership and promotional rules. In addition to adding T&C language to co-branded webpages and email communications, a brand should provide agents with instructions on how to answer frequently asked questions,” adds Sutherland.
Additionally, brands can run into issues with legal and compliance while developing partnerships. Building a relationship involves a certain amount of risk, especially if the brands have any level of competition. Brands need to carefully plan out a partnership before execution to help mitigate potential issues like a power imbalance or reputation damage.
Yet, while there are challenges to partnerships, they also bring both brands great benefits. Through careful planning and execution, partners can bring value, awareness, and support for each other to their loyalty program members.
“Creating mutually beneficial partnerships requires careful planning, collaboration, and alignment of goals requiring clear objectives among all parties and a shared vision that leverages complementary strengths,” says Pages.
“Brands who open an exchange of points between loyalty programs will receive incremental revenue when members transfer or redeem points across programs (depending on the direction). And while one brand may 'earn’ more, the other brand benefits from awareness and perceived value of their rewards program,” continues Sutherland.