American Express to Launch New U.S.-Based Coalition Loyalty Program. Will It Work?
American Express recently announced that it will launch Plenti, the first U.S.-based loyalty coalition program. The diverse list of brands currently involved include AT&T, ExxonMobil, Macy’s, Nationwide, Rite Aid, Direct Energy and Hulu.
According to reports, the Plenti program will be free to join, and US consumers can earn points and discounts using any form of payment accepted by the participating brands, including cash, prepaid cards and any debit, charge or credit card. American Express plans to debut Plenti in May 2015.
While a nationwide loyalty coalition program is not a new concept, and recent research suggests that 72% of Americans would prefer a rewards program that allows them to shop at many stores versus a single brand, a universal loyalty program has not found traction in the US market. Why? This type of loyalty program is currently available and quite popular in many countries, including:
- Germany: approximately 60% of German households participate in the Payback program, where points can be collected at 175 partner companies.
- Australia: more than 8 million people are FlyBuys loyalty cardholders
- Canada: the 20-year-old AIR MILES Rewards Program stands as the international benchmark for coalition loyalty programs and gives back $500 million in member rewards annually.
So, the question remains: why hasn’t the coalition model taken hold in the United States? Here are two thoughts…
The U.S. market is currently dominated by what’s known in the industry as the single-operator loyalty program. Plenti is addressing this challenge by allowing each participating brand to operate the Plenti program in conjunction with already existing loyalty programs.
For example, Rite Aid will roll its Wellness Plus program into Plenti and issue new loyalty cards to its 25 million current members. Customers will be able to earn Plenti points on certain promoted products and still get Wellness Plus points on every purchase. Wellness Plus points go toward earning elevated member status and Plenti points will be redeemable as cash toward a purchase.
While a good idea in theory, it may be confusing for US consumers.
Secondly, the missing component to success in the US may lie with the coalition operator. This is the company that manages the data, issues the rewards and solidifies collaboration between the participating companies. With American Express at the helm, Plenti has a good chance to succeed.
In 2011, American Express bought Loyalty Partners, which operates multi-brand loyalty programs in several countries, including the Payback program in Germany. This acquisition likely provided American Express with the knowledge, analytics and backend logistics required to formulate a solid coalition model for the US.
Only time will tell if US consumers will accept the idea of using points for the shampoo they purchased at Rite Aid to pay off their AT&T cell phone bill.