A new breed of rewards- tracking web sites aimed at easing consumer frustration with loyalty programs are a step in the right direction, but not a long-term fix, according to a new study by SWIFT EXCHANGE and COLLOQUY. The study, which looks at the latest wave of websites promising simpler ways to manage multiple loyalty memberships, sees these companies as forerunners to fully collaborative loyalty solutions that will allow consumers to consolidate retail, travel and credit card rewards to maximize redemption and streamline utilization.
The Mix Fix: Rewards Aggregators and the Trend Toward Collaboration, from SWIFT EXCHANGE and COLLOQUY, says rewards aggregators are a stepping stone to alleviating deeper, systemic shortcomings that continue to plague the loyalty industry. These shortcomings most notably include the need to manage too many programs, complex redemption requirements and low returns on rewards. The study’s co-authors, Nancy Gordon, chief operating officer of SWIFT EXCHANGE, and Kelly Hlavinka, managing partner of COLLOQUY, describe two key elements that will characterize the long-term “mix fix” for the industry.
“Cluster programs,” a concept conceived and coined by SWIFT EXCHANGE, re-imagines the traditional partnership approach followed by most programs in ways that allow issuers and merchants to maximize program value for each other and transform the customer experience.
According to SWIFT EXCHANGE Founder & CEO Richard Postrel, “Cluster programs spring out of the need for collaborative engagement between companies to address consumer needs while preserving a level of independence and control to address issuer needs. We believe the next horizon of loyalty marketing will employ cluster models that allow rewards program operators to work together but still maintain control over key components of their value proposition, branding and messaging.”
“The problem for everyone with partner programs today is that points transfer and conversion offerings often have long processing times, cumbersome customer experiences, and fees that dilute the value proposition,” Gordon said.
Hlavinka noted that, particularly outside the United States, alternatives to the status quo hinge on coalition building. In coalition rewards programs, operators balance the interests of multiple sponsors and customers.
“Coalition programs attract marketers who want to offer customers a wider variety of earn and burn options, and who are looking for richer data,” Hlavinka said. “Perhaps the growth of program aggregators signals a greater openness for how this model could finally be imported to the U.S.”
The co-authors share the view that companies hoping to make a lasting contribution in loyalty marketing must simplify the consumer experience and enable more immediate gratification. They see U.S. loyalty programs following a natural progression toward a mix of cluster and coalition-driven programs.
The report is grounded in SWIFT EXCHANGE and COLLOQUY research showing that American consumers, who hold over two billion memberships in rewards programs, leave a whopping $16 billion unspent out of the $48 billion they earn each year in points and miles.
The full Mix Fix report can be accessed free of charge at http://www.swiftexchange.com or http://www.colloquy.com.
About SWIFT EXCHANGE
As a pioneer in global commerce, SWIFT EXCHANGE has developed a first-of-its kind electronic commerce ecosystem utilizing its patent-protected technology that blends points and miles from different reward programs to make them as easy to spend as cash. SWIFT EXCHANGE’S first deployment includes a multi-tender payment mechanism that easily embeds into e-commerce sites and at point-of-sale. Reward program issuers have a way to expand the utility of their rewards currency for customers and merchants have a way to accept rewards currencies for payment. Founded by CEO Richard Postrel, SWIFT EXCHANGE is owned and operated by Signature Systems LLC. For more information, visit www.swiftexchange.com or call (305) 865-7000.
About COLLOQUY
COLLOQUY comprises a collection of publishing, education and research resources devoted to the global loyalty-marketing industry. Owned by LoyaltyOne, COLLOQUY has served the loyalty-marketing industry since 1990, with over 40,000 global subscribers to its magazine and www.colloquy.com, the most comprehensive loyalty web site in the world. COLLOQUY’s research division develops research studies and white papers, including industry-specific reports, sizing studies and insights into the drivers of consumer behavior. COLLOQUY also provides educational services through workshops, webinars and speeches at events throughout the world and is a loyalty-marketing partner of both the Direct Marketing Association and the Canadian Marketing Association and a content provider to the American Marketing Association. COLLOQUY also operates the COLLOQUY Network, a global consortium of practitioners certified in COLLOQUY’s proprietary methodology. COLLOQUY magazine subscriptions are available at no cost to qualified persons at www.colloquy.com or by calling (513) 248-9184.