Smart is the most advanced brand coalition loyalty scheme in
development, aiming to offer linked loyalty schemes between several
firms. It was announced by Shell with a fanfare last year as the next
generation of the loyalty card. Partners in the scheme included
Sainsbury’s, Next, Cellnet, and Allied Domecq.
However, Ford, which already has a deal with Barclaycard and a number of
retailing opportunities under development, has now withdrawn from the
project, saying it would have conflicted with its own marketing
So will more companies now be forced to review their coalition deals as
different loyalty tie-ups bump into each other?
’There are bound to be clashes when company A links up with company B,
only to find it is already linked with their rival, company C,’ says Air
Miles director of sales and relationship marketing Wanda Goldwag. The
question is: how are those conflicts resolved?
Goldwag argues that coalitions are the way forward in customer loyalty
marketing. The costs, complexity and technical know- how involved in
setting up your own private loyalty scheme are beyond the reach of most
And customers, who now expect and demand rewards for loyalty, want to be
wooed with a broader range of offers than just one firm can offer.
’All the research is pointing toward customers wanting lots of different
methods of collection,’ says Goldwag. ’If you’re in the motor industry,
even the incredibly rich won’t buy a car more than once a year - you
need links with other firms to give customers that constant
Finding the right partners is also crucial. Air Miles knows one of its
biggest attractions to potential partners is its massive database. But
it refuses to issue any data about Air Miles members until all details
of its partnership are fully resolved.
Shell and Sainsbury’s, which are rivals in the petrol field, have
hammered out deals over information on customers gleaned from card data.
Shell is restricting the level of data exchange about petrol forecourts
given to Sainsbury’s. Discussions in this area are amicable, says Shell
UK retail marketing manager Mike Harle, because: ’Sainsbury’s is in the
loyalty programme to build the food side. Our motivation is fuel.’
But even if the marketers can overcome potential conflicts, they must
work at convincing the customer to accept the myriad of loyalty
The indications are that the situation is going to get worse.
Datamonitor estimates there will be around 3.8 billion smart cards in
circulation by the year 2000. ’With such an accumulation of cards,
people just aren’t going to carry them,’ says Robin Clark, editor of the
monthly newspaper Customer Loyalty Today.
But companies clearly need the schemes. Marketing consultancy H Bain &
Co estimates that, on average, annual company profit from a customer who
has stayed loyal for seven years is six times that from a new
The way forward, say observers, is the creation of a limited number of
powerful alliances. Companies are already moving in this direction. In
the first half of 1995, 42% of new MasterCard credit cards issued
globally were co-branded. The Sainsbury’s Reward Card scheme and its
alliance with Air Miles is another example of partnerships between large
players. Shell says it is in talks with up to 24 companies and that more
Smart alliances will be announced next week.
’In the end there will only be a couple of really strong brands,’ says
Air Miles’ Goldwag. ’It will be those schemes that don’t just rely on
one company that will survive.’ And according to Clark, those marketers
not already trying to join one of those schemes are leaving it too
’If you get left out now, you’ve had it,’ he says.