A coalition loyalty program is a loyalty card system that offers incentives to customers of two or more businesses in return for allowing those businesses to collect user data. Such a program packages customer benefits into a single customer loyalty program.
Coalition loyalty programs are often used by small and medium-sized businesses (SMBs) because it allows a cost-effective way to offer customers a variety of attractive benefits that they would not be able to provide without the support of other businesses.
From a business perspective, coalition programs offer a number of benefits:
- Funding requirements (and risks) are split between multiple companies and don’t all fall on one organization.
- Businesses can share customer data -- about preferences, lifestyle and demographics, for example.
- The increased value of multiple incentives may attract new customers to businesses they wouldn't ordinarily patronize.
- Partners can benefit from cross-promotion and combined deals.
From the customer perspective, a coalition loyalty program offers a wider range of incentives associated with a single card. Furthermore, because the costs are lower than for individual loyalty plans, businesses may be able to pass those savings on to the customer as more attractive incentives.