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Wanted: A Mix Fix

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Loyalty and rewards programs are a chronic pain point for consumers who gripe about complex rules and meager payback, but there’s no easy fix to the problem. Even the new breed of reward-tracking websites that promise to ease frustration appear to fall short of a much-need long-term fix.

Those are the findings of a recent study by Swift Exchange and COLLOQUY. The study views the latest wave of websites claiming to provide simpler ways to manage multiple loyalty memberships as a stepping stone to fully collaborative solutions, but concludes there is still work to be done. It identifies several shortcomings with the aggregators, including the need to manage too many programs, complex redemption requirements and low returns on rewards.

Calling for a “Mix Fix,” study co-authors Nancy Gordon, COO of Swift Exchange, and Kelly Hlavinka, managing partner of COLLOQUY, contend that the next horizon of loyalty marketing will employ cluster models that allow rewards program operators to work together but still maintain control over key components of their value proposition, branding and messaging. They believe companies must simplify the consumer experience and enable more immediate gratification, and trust that U.S. loyalty programs will follow a natural progression toward a “mix fix” comprising cluster and coalition-driven programs.

“The problem with partner programs today is that points transfer and conversion offerings often have long processing times, cumbersome customer experiences and fees that dilute the value proposition,” Gordon says. “Cluster programs spring out of the need for collaborative engagement between companies to address consumer needs while preserving a level of independence and control to address issuer needs.”

Hlavinka notes that in coalition rewards programs, operators balance the interests of multiple sponsors and customers. “Coalition programs attract marketers who want to mix currencies across platforms without diluting value, who want to offer customers a wider variety of ‘earn and burn’ options, and who are looking for richer data.”