Latvia-based Coalition Rewards, operator and owner of, among others, the PINS coalition loyalty program, enjoyed great success at the Loyalty Awards 2014 ceremony in London, receiving four global awards−more than any other company.
Coalition Rewards CEO Gabi Kool participated in an insightful Q&A with Loyalty360 to discuss his company’s success.
Can you talk about what your recent loyalty awards won in London mean for the company, and what factors do you think contributed to this excellent recognition?
It is a wonderful way to receive the industry’s recognition and acknowledgement of the contribution our team made in its own modest way to the evolution of our industry for the benefit of everyday consumers who are seeking a truly integrated loyalty card offering. Over the past few years, we have been inspired by many of the world’s leading brands while developing our own offering and we hope that PINS and the model it is based on will serve also as a great inspiration for others across the globe. PINS already has more than 700 partners, and it can be scaled to fit both large and small businesses across many different geographical markets.
PINS for the loyalty industry is becoming like Skype for the communications industry. PINS and Skype are great examples of strong brands developed in the Nordic markets, bringing together a new disruptive business model strengthened by innovative technology creating a truly global product.
Can you talk specifically about each of the awards you won below, noting what technologies, customer feedback, and other innovations were critical to their respective successes?
Best Loyalty Program of the Year – Central & Eastern Europe
At Coalition Rewards, we are always looking to provide value to our members and we are very excited to be recognized for our efforts. We see this recognition as an encouragement to move forward. In 2014, Coalition Rewards launched PINS, a new and unique ‘shopper-flyer’ program model which combines the best elements of frequent flyer and retail coalition loyalty programs.
Best Loyalty Industry Innovation
The innovation we entered in the competition was a program campaign where we challenged program members to burn calories and record it via a fitness app. Members who exceeded at least 1,000 calories during the challenge got a chance to win 10,000 loyalty points.
We created a first-of-its kind campaign and technical solution for motivating loyalty members to convert calories into reward miles.
Customers got involved in the actual campaign building by crowdsourcing and gave us input that they would enjoy being rewarded for living healthy lifestyle. This campaign helped us to build a positive company and program image, while also creating a stronger emotional bond between the program and its members.
Those members who participated in the challenge increased their overall activity in program. In addition, many members sent feedback that this campaign finally motivated them to re-start sports activities.
Best Loyalty Program Marketing Campaign
While preparing for the conversion of our former loyalty program BalticMiles to join the new PINS program operated by our company, we faced the challenge to send out new cards to existing BalticMiles members as efficiently as possible. Our business aim was to update the member address database, so the cards would not be send out to invalid or outdated addresses.
During the Christmas time, we sent out newsletters asking members to confirm or update their addresses. It linked them to an interactive web application, which then showed their house in Google Maps Street View, together with animated reindeers who had visited it. We created the application using easily available and cost-efficient digital solutions and tools. Additionally, by updating their addresses, five members won a trip to Barcelona.
Members were very enthusiastic about the campaign–from all the recipients 24% opened the newsletter and 50% of them clicked on the link. From all the people who did that, 82% updated their profile; and 10% of all the loyalty program members updated their addressees, which was a big gain for the company. We managed to save a considerable amount of money, as well as entertained our customers while doing an otherwise boring task–filling out a form.
CEO Gabi Kool Named Industry Personality of the Year across the EMEA region
It is a great honor to be recognized as the Industry Personality of the Year. In the past decade, many industry leaders have been trying to somehow bridge the gap between the traditional FFP model and the Coalition Loyalty model, but so far none had been able to find the right technology or business model to do so. This award shows the appreciation of the industry for our accomplishments and is something that fills our entire organization with great pride.
With today’s empowered customer, how difficult is it to implement loyalty programs that resonate and are relevant to them?
Everyday consumers are seeking a truly integrated loyalty card offering. Therefore, during a five year period our company developed a hybrid model between the traditional FFP model on one hand (as run by legacy carriers like Air France/KLM and Lufthansa which arguably offers the best value proposition globally for frequent/corporate travelers) and the Coalition Loyalty model on the other hand (most successful offering for everyday consumers/infrequent travelers such as Nectar (UK, Italy, Chile), Payback (Germany, Poland, India, Mexico), Dotz (Brazil) and AirMiles (Canada).
Over the past few years the Coalition Rewards organization looked in detail at the various models and programs in both these categories around the world and met with several of their management teams to better understand what makes them successful, but also what hinders them in offering a strong combined value proposition.
Based on the reviews and the company’s own business development discussions with prospect retailers and existing partners like airBaltic and 250+ other partners, it created a third loyalty model which was coined as the Shopper Flyer Program model, or SFP in short.
This model is believed to represent a very strong business opportunity for especially mid-size airlines and LCCs to serve infrequent customers based on best practices from the coalition loyalty models, while also maintaining certain core elements of the FFP offering. Key differentiators versus the existing FFP model (which is limiting airline programs in getting much larger revenues and loyalty penetration in key categories such as grocery) are:
shared database access, based on agreed database principles
a strong and partner independent loyalty brand (most FFPs brands are uniquely linked to the airline’s brand in the consumer’s mind and thereby limiting the retailer’s willingness to display the brand on product level (POP branding) in their stores which is a requirement to get >60% revenue penetration of store sales via the loyalty card
storing data on product level (SKU level) in the database as retailers want to run time-bound loyalty promotions on product level and don’t want to have to offer double points for example on all their products during a certain period
How would you characterize the current state of customer loyalty and loyalty programs in Europe?
Many consumers have up to 20 different loyalty cards in their wallets, varying from their favorite frequent flyer program to their grocery chain’s loyalty card. As a result, the consumer ends up collecting points in all these programs in a fragmented way, which very often cannot be combined and therefore the rewards are also much smaller for members than if they could be combined.
We can clearly see the consumer responding to this new and integrated offering. Our initial roll out has been in Finland and the Baltic countries of Latvia, Estonia, and Lithuania. The success and adoption rate has been great. In Finland for example we already have more than 20% of the population participating in the program, only two months after the actual launch of PINS.
We also see that there is an increasing hunger among our business partners for smarter and more targeted loyalty. Proprietary frequent flyer loyalty is limited to regular, primarily corporate travelers, while coalition loyalty is by far the most successful for households and gives the retailers deeper insight into shopper behavior and the efficiency of their stores. Loyalty has moved much further than just gifts. Coalitions today take the information and analytics so much further, because the information is gathered from a range of partners.
We expect loyalty to continue to move at an accelerated pace. There are a lot of discussions about how to target the individual customer. We work with a group of highly focused retailers who understand the power of data. The use of mobile wallets, enhanced mobile apps and also beacons are topics we are discussing in much more depth than a year ago.
What role does technology play in all of this?
A program like PINS requires a strong technical platform which integrates with the airline reservation systems, while on the other hand you also need to build the necessary interfaces to the retailers cashier and POS systems to allow members to spend their points real-time while shopping.
There are mostly similarities across Europe when it comes to technology in the loyalty industry, but if we would have to single out one thing it is probably the use of mobile solutions which differs somewhat across our markets linked to the adoption rates of smart phones by the population.
Finland is arguably the most mobile savvy consumer market on earth and therefore our loyalty solutions have to include strong geo-location based offers. Our mobile strategy is most advanced in this market based on mobile optimized websites, a highly advanced new mobile app which is about to be released, as well as integrations with the most popular local mobile wallets and banking applications like PIVO in Finland. For us to play a leading role in this field in this market is also helping us to bring this technology and approach to our other markets.
But in the end you need more than just technology. Our job is around data, but it is also about exciting campaigns and about emotional bonds with customers. It is about smart people working with good systems. You need a smart system, but in the end it is not what differentiates.