500FRIENDS BLOG
Loyalty trends & best practices

The Plenti Program: What does it mean for the competition?

by Arif Damji
December 12, 2015
The Plenti Program: What does it mean for the competition?

It’s official—the U.S. finally has its newest attempt at a coalition loyalty program. Though it’s not the first to try and break into the tough U.S. market, Plenti has clearly become the latest coalition program in North America to gain traction. That being said, many observers and competitors are baffled about what a coalition program is and why it is compelling, whether Plenti has and will be successful, as well as what it means for the competition.

What is a coalition program and why is it compelling?

A coalition program is built off the premise of loyalty being a network effect whose appeal grows with further ways to engage and be rewarded by the program. Imagine the situation where you frequent a particular restaurant twice-a-year and they create a loyalty program. The program will probably not be very appealing to you as (a) you don’t visit the restaurant enough to really engage and earn with their program, and (b) you are limited to claiming rewards at only that restaurant. Now imagine a program that covered all restaurants within a 10 mile radius of your house. All of a sudden, the program seems more compelling as you are likely to visit many of the restaurants and easily find ways to claim rewards and benefits. Coalition programs often combine the programs of multiple companies and allow a member to earn rewards, offers, and benefits across all these companies. Furthermore, these programs combine non-competing industries that are either high spend or high frequency so the collection of companies can form a high percentage of your discretionary income.

Is Plenti a success and will it continue on in the future?

Plenti has certainly received a lot of marketing dollars and hype behinds its launch, but we should remember that the U.S. is an extremely challenging market for coalition loyalty. The U.S. is both a large and heterogeneous market with a significant number of companies with a regional rather than a national focus. In order to judge success, let’s try and see how the Plenti program stacks up next to other coalition programs in penetration. Eight of the top coalition loyalty programs, throughout Europe, South America, and Canada, launched around 20 years ago and average a household penetration of 57% each. Overall in its first 6 months since launch, Plenti has an impressive enrollment count with over 30 million members, although this is still a small percentage (16%) of U.S. households. As mentioned by American Express EVP/CEO Jeffrey Campbell during a Q3 2015 earning conference call, “It’s very, very early days in the U.S. and so we’re very encouraged by the growth that we’ve seen and the number of members that Plenti has been able to attract.”

In many ways, Plenti’s future success will be determined by its ability to solve for two current downsides. Firstly, it still lacks a grocery partner, which is often considered the foundation of a coalition program due to the high frequency of visits and annual spend. Secondly, the coalition is still small with only 8 partners and whilst they have a few large and top-tier names, there are a number of industries and popular brands that need to be added to the docket.

What can the competition do to counter this risk?

Let’s be clear—the entrance of the Plenti loyalty program does not have to mean the downfall of competing brands and their respective programs. Instead, it raises the bar a bit higher around what your program needs to do to not just minimize the impact of Plenti, but also come back stronger. Here are some suggestions:

  1. Identify, identify, and identify: Plenti is a program that is built around helping companies boost overall identification rates, as well as presenting a more holistic picture of a loyalty member. They are able to build a view of a member across their spend behavior in 4 industries across 8 partners. Your program needs to have a sufficient enrollment rate to have a higher identification rate, as well as collect enough relevant information from loyalty profiles and non-purchase based engagement opportunities to better understand members. Remember that identification is only the first step and you need to ensure you personalize communications to stay relevant.

  2. Think of building a unified program: For companies with multiple sub-brands, the value of a unified program is clear. Don’t let your data become further siloed and remember that you must leverage the network effects of loyalty by expanding its scope within your organization. For more information on unified programs, please click here.

  3. Consider adding partners to your program: Often, loyalty programs in different industries or sub-industries can have much to gain from linking together components of their loyalty program. From offering shared program rewards and promotions to the opportunity for reciprocal VIP status in a partner program, you can ensure that you keep your program top-of-mind to members and perhaps even help build a larger universe of high spending members.

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