Why is loyalty important?

Why are there no coalition loyalty programs in US?

• Coalition loyalty programs are very popular and quite successfull almost everywhere but not in US. Canada and UK have probably tha most mature coalition loyalty market in the world. But every attempt to create coalition loyalty program in US fails. They either go out of business (like Goldpoints) or turn into affiliate programs (like MyPoints). Of course there are airlines - based programs, but they are not that type of coalition programs we have almost in every country except US.

• Answer:

  It is difficult for coalition loyalty programs to demonstrate a concrete return for a specific participating merchant. Typically loyalty programs are designed to foster customer loyalty, either through monetary and psychological incentives, and/or through better knowledge about consumers. With a coalition program, consumers can become loyal to the program, but rarely to the specific vendors who are participating. An academic study of the FlyBuy program in Australia in the 1990's demonstrates this point and shows mixed return for vendors. So for many marketers, that is probably why they are reluctant to participate. If your business is big enough, you probably want to have a proprietary loyalty program to yourself. If you are not big enough, coalition programs become more appealing. But it is hard to coordinate a large number of small businesses at a national scale, especially given how spread-out the US is. There are local and regional ones that operate in limited geographic areas.