Finding the right partner

For brands with loyalty programmes, finding new ways to maintain their advantage in today's constantly changing and competitive environment is increasingly challenging.  Building strong relationships with trusted brand partners is a proven way to extend the loyalty offering.  Through sales promotion, incentives and benefits platforms, affinity programmes and sponsorship, effective partnership marketing can engage new customers and optimise the value of the existing membership or customer base.

Using partners to differentiate a proposition and drive added value is not a new concept. Many global brands have successfully utilised the power of partners to ensure a relevant consumer proposition at both a global and local level. For example, Wyndham Hotels has adapted its global loyalty programme to tailor the member benefits and partners available in local countries, and in particular they have focused on China having its own unique proposition.

Finding the right partners can provide your loyalty programme with diversity and opportunity. They enhance the value proposition of the programme as well as reinforcing brand values through association. Moreover, well considered strategic alliances may even provide a source of acquisition, introducing new, like-minded customers to your brand.

On the other hand, tactical initiatives can be established relatively quickly and generate valuable short term revenue.  However, getting the balance right between risk and reward, and short and long term goals of the partnership is key to the success of the programme. It is easy to look at the initial influx of short term revenue to the organisation rather than the long term effects on value creation, or even worse brand dilution.

We look at some case examples which highlight where brands have really enhanced the customer experience and added value through effective partnership strategies:

McDonalds and Visa team up to tap into the target audience through a new social medium

In the US an interesting partnership has been formed between McDonald's, Visa and location-based social network Brightkite to reward the fast food giant's most faithful patrons with a $5 Visa Gift Card. To highlight the campaign, Brightkite has run a location- and activity-targeted ad campaign that launches a mobile on-screen spinner that highlights the McDonald's dollar menu.  Whenever consumers check-in at McDonalds on their mobile with Brightkite they receive the 'Easy' badge courtesy of Visa and McDonald's. This means that as soon as they enter the restaurant they are reminded that Visa is an easy way to pay - so the two brands and the core message are tied together at the point of purchase. The first 500 people to earn the badge also receive a $5 Visa gift card.  As the user keeps visiting McDonald's they upgrade their badge, so the rewards keep coming and the brand messaging is reinforced. The badge is displayed on users' profile page, so friends see that they are engaged with the McDonald's and Visa brands - giving the programme a viral edge.

Microsoft show the way with an innovative marketing partnership

Microsoft and Gorillaz, the world famous animated music band, have recently announced an innovative, on-brand global marketing partnership to showcase the Beta launch of Microsoft's new Internet Explorer 9 browser. Microsoft approached Gorillaz to ask them to develop an online experience that showcases the potential of the web when viewed through the new web browser.

The Gorillaz' design team have taken advantage of HTML5 and the new features Internet Explorer 9 Beta provides to create a stunning new web experience for Gorillaz fans as seen on gorillaz.com/club-room and across Gorillaz.com. Microsoft is also featuring this web content on its specially designed microsite www.beautyoftheweb.co.uk. This partnership will therefore create increasing brand utility for Microsoft and distribution for Gorillaz.

How to decrease churn rate through marketing partnerships

Many brands have realised that chasing customers at any expense isn't a way to build a business long term. Whilst it improves the numbers in the short term, the churn rate is phenomenal amongst people who have been seduced by an attractive price offer, as they are promotionally promiscuous. They will leave as soon as one of the competitor brands offers something else.

This is especially true in fitness gyms and telecoms. So how do you stop the churn rate getting out of control? Create a loyalty programme that differentiates itself from the rest by offering truly compelling and exclusive benefits, as well as tailored and relevant offers. If customers know that they will save more and obtain greater value through the additional offers and benefits, then they will be reluctant to switch.

Fitness First in the UK, for example, has spent years and millions of pounds on driving customer acquisition, through offering cut price membership deals. The customer motivation to join was to leverage cut price offers rather than a genuine commitment to membership which resulted in massive churn rates of 40%. They then introduced a retention strategy with a myriad of compelling and money saving branded offers, given to them for free by eager partners happy for the positive brand association, free media in the gyms and extra custom.  They underscored the marketing of this with the strapline of "save your annual membership fee with these great offers". It made people think twice before cancelling or switching brands as none of their competitors offered such a variety of lifestyle-orientated brands offering real money saving offers. The churn rate plummeted and their positive brand perception dramatically increased.

Content as the new currency

In a world where the average consumer is bombarded by hundreds of offers a day what is truly compelling and exclusive?  As more and more magazines and newspapers across the globe are putting up pay walls in front of their content, publishers are fast becoming an attractive target partner. Teaming up with publishers gives brands the opportunity to offer exclusive, tailored content to their loyalty programme members.  The combination of content and benefits is an enticing proposition.

Looking at the benefits of these developments for the media owner, paid-for content has helped identify and understand those customers who clearly value access to content not available to everyone, are prepared to pay for it and therefore want to have a greater level of engagement with that brand. 

This not only creates an additional revenue stream but also allows the media owner to further develop their own partnership strategy to support the needs of their members.  For example, The Times national newspaper in the UK has set the benchmark when it comes to offering membership beyond a subscription.  TheirTimes+club allows members get access to invitations to exclusive events such as film screenings, talks, discussions with authors, money-saving offers among others, all which are connected to themes their readers are passionate about; travel, food, style and culture.

The future will see more media owners applying best practice from their industry, and that of others, to offer their own bundle of partnership benefits which could driver greater incremental revenue opportunities whilst supporting both customer acquisition and loyalty objectives.

Final word

Partnerships will continue to become increasingly important to organisations across different industry sectors and geographies, but they need to be driven by clear business objectives.   Whether they are money can't buy events or money-can-buy content and are incorporated into a loyalty programme or offered promotionally to a wider customer audience, used in the right way, they can deliver enormous commercial value to brands and benefits to their customers.