Four Big Differences Between U.S. and European Loyalty Programs
My dollar may be worth just 70 cents in Europe, but my loyalty rewards, and lessons, run in the multiples.
I’ve had the opportunity recently to travel Europe as a guest of the company BrandLoyalty, a Netherlands-based firm in which my company, LoyaltyOne, is acquiring a major stake. BrandLoyalty operates some of the largest grocery loyalty programs in Europe and Asia. Since it was founded in 1995, BrandLoyalty has created hundreds of individual reward plans.
During our eight-country tour of BrandLoyalty’s operations, I’ve noticed a few key differences between American and European programs. Some I was aware of, but some took me by surprise, and I think my domestic neighbors could benefit from knowing and borrowing from them.
So before I jump on the next high-speed train, I am sharing what I think are the four major differences between U.S. and European loyalty programs:
Coalitions: Think of coalitions as loyalty leagues that are not tied to a credit card. The model, which is popular in many countries outside the United States, allows consumers to accumulate thousands of points on purchases from scores of different participating merchants and then redeem them with any of those partners. The best part: Coalitions are currency neutral, meaning the consumer does not have to use a credit card to earn the points. He or she has the option to use cash, personal check or debit card.
The Members: European shoppers tend to visit stores more frequently than their U.S. counterparts, hitting bakeries, cheese shops and butchers almost daily. This translates to more opportunities for data gathering and customer understanding among merchants. One thing has not changed over the Atlantic, however: Europeans are as price conscious as Americans. As a result, European merchants watch prices in places where consumers are in less of a hurry, such as the hypermarchés.
Multi-motivators: Many European merchants offer more than one loyalty oriented program, layering their own proprietary rewards schemes or coalition program with time-limited promotions to earn merchandise – what are often called “collect-and-saves.” BrandLoyalty, for example, will implement one or a series of tailor-made programs for an individual merchant client, while also managing “Instant Loyalty Promotions” that give customers immediate, collectible rewards based on their spending.
Penetration: Outside of the United Kingdom, which is one of the most sophisticated loyalty markets in the world, Europe is still a relative newbie to loyalty program marketing. However, it is a fast learner. Estimates are that roughly 80 percent of European shoppers belong to at least one loyalty program. In the United States, with 2.65 billion loyalty memberships and a population of 314 million, the ratio is much higher. This spells out significant upside potential for loyalty in the continent.
There are many other small differences between loyalty programs in Europe and the United States. In Europe, for example, many of the cards have tiny chips, not magnetic strips. But regardless of how it is executed or pronounced – in Russian it’s верноподданическо – the word loyalty means the same thing everywhere: It is an emotional connection built on trust.
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