Global Coalition Loyalty Program Membership to Top 1 Billion in 2011

Fourteen percent of the world's population belongs to at least one coalition loyalty program. By Leonard Klie Posted Feb 25, 2011 Finaccord, a British market research consultancy specializing in financial services, estimates the current total number of memberships in coalition loyalty programs at 974.7 million globally, and expects the number to surpass 1 billion by year’s end. Coalition loyalty programs are defined as those programs that involve more than one organization. “The programs are not run by just one organization, but rather, they’re jointly owned and managed. Members can get benefits and rewards through a number of different organizations,” explains Alan Leach, director of Finaccord. As an example, he cites airline rewards programs that let members accumulate miles through purchases at affiliated retailers or hotels. By vertical, the numbers break down as follows: airlines - 416.5 million;  hospitality - 189.2 million;  non-specific - 173.7 million;  retail - 104.3 million;  banking - 71.6 million; and  other – 19.4 million. Finaccord estimates the number of people with memberships in at least one coalition loyalty program is 649.8 million, which is equivalent to around 14.4 percent of the world’s adult population. The firm cites a growth rate of about 12 percent per year.\ “It’s a very large market that is still growing,” Leach says. “It has grown steadily over the past 30 years, but it’s really broadened substantially in the last 10 to 15 years.” According to Finaccord’s data, German firm BSW launched the world’s first coalition loyalty program in 1960. It was followed in 1981 by American Airlines’ AAdvantage program and Delta’s SkyMiles program. Since the late 1990s, many of the new program launches have been in banking, retail, and other sectors. In addition, many of the existing coalition loyalty programs have established at least one partnership with a company from the banking or insurance fields. Most commonly, these are in the area of co-branded credit cards. American Express, Bank of America (including MBNA), Citibank, Barclays, GE Capital, Diners Club, Chase, and HSBC are the firms with the most relationships as issuers of co-branded cards with loyalty programs around the world. “Loyalty programs are potentially attractive partners for banks and insurance companies,” Leach says. “As well as mainstream banking, insurance, and assistance products—most notably motor, household, and travel insurance—there are also plenty of examples of niche services being marketed through multi-partner loyalty schemes. These include identity theft assistance, travel money, home assistance, boat/yacht insurance, and pet insurance.” The benefit to organizations partnering in these programs is clear. “They want to encourage loyalty to their own brand, and they make it more attractive by allowing members to earn points with other vendors and retailers,” Leach says. “It’s all about encouraging the use of their own products and services.” For the consumer, the benefit is also great. “As a consumer, it’s really about more options. You’re not just limited to one organization, so you can collect points faster and redeem them at more places,” Leach says. Though Leach says the dollar value of these programs is incalculable just because of the sheer volumes, he could safely say that it is “huge.” To contact the editors, please email editor@destinationCRM.com Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visithttp://www.destinationCRM.com/subscribe/.