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Hyatt, MGM announcement highlights future of loyalty marketing

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Hyatt, MGM announcement highlights future of loyalty marketing
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There is a general perception that loyalty marketing programs require tremendous investment to launch, and are expensive to operate over time.

The reality is that loyalty programs do require significant initial investments in most cases, but fear of making the investment and committing to ongoing operational budgets can be defused by focusing on program Return on Investment and the Net Present Value of the future incremental cash flow streams. If you understand the risk / reward curve, you can understand that you’ve got to make a large enough bet to trigger the outcome you are seeking.

My point aside, perception, as we have heard, is in fact reality. That’s why so many organizations have been seeking ways to deliver solid value to customers in their loyalty programs while containing or reducing costs. As the promise of using “other people’s money” to achieve loyalty objectives has faded, “smart partnering” seems to be on the rise.

Two examples of smart partners are worth sharing.

Best Western and Harley Davidson recently announced they would renew their partnership, originated in 2006, for an additional 3 years. Best Western will serve as the Official Lodging Partner of Harley-Davidson’s 110th Anniversary in 2013 and offer a suite of benefits designed to “accommodate the unique needs motorcycle riders have when traveling”. As part of the deal, the hotel chain has established Best Western Ride Rewards Program as a subset of its broader loyalty program and even has a motorcycle blogger chronicling the joys of adventures on two-wheels.

Another good example of a loyalty partnership is the just announced linkage between Hyatt Hotels and MGM Resorts. The partnership will bring benefits to members of the loyalty programs of each organization, Hyatt’s Gold Passport and MGM M Life. You can read more about the details here, and I hope you’ll agree that this is a groundbreaking example of cross brand collaboration.

The next generation of enhanced rewards offers will not be found in “merchant funding V2″ but in the evolution of clever partnerships formed between compatible brands. In the US, this “choosing of sides” among brands may be the predecessor to the formation of multi-brand loyalty programs, effectively creating a coalition loyalty program in the country.

Just imagine the possibilities as brand pairs like Hyatt and MGM expand their circle with others and enable point exchange between brands to serve large groups of consumers in a lifestyle coalition.

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