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The total membership of coalition loyalty programs around the world is likely to exceed one billion during 2011

Global Coalition Loyalty Programs

London, 25 February 2011 - Finaccord, a market research consultancy specialising in financial services, has just published the world’s first ever report systematically investigating the rapid global development of coalition loyalty programs, including frequent flyer and frequent stayer schemes operated by airlines and hotel groups, respectively. In total, 115 coalition loyalty programs are analysed in the report including schemes from countries as geographically and culturally diverse as Brazil, China, South Korea, Turkey and the UK.

While BSW, an integrated cashback and discount scheme in Germany was first developed as long ago as 1960, it was then not until 1981 that AAdvantage (American Airlines) and SkyMiles (Delta Airlines), the next two oldest schemes covered in this report, were introduced. Moreover, while airline frequent flyer programs and, to a lesser extent, hospitality schemes, dominated launches in the earlier years, from the late 1990s onwards there have been many more launches of programs originating in the banking, retail and other sectors.

Overall, the total number of members of coalition loyalty programs worldwide is estimated to be growing at an annual average of over 12%. Without making any adjustment for individuals who are members of more than one scheme, Finaccord estimates that coalition loyalty programs around the world possessed total membership of around 974.7 million individuals in 2010, breaking down as follows by sector of origin:

  • airlines - 416.5 million;
  • hospitality - 189.2 million;
  • non-specific - 173.7 million;
  • retail - 104.3 million;
  • banking - 71.6 million;
  • other - 19.4 million.

Given the aforementioned average annual growth rate, the total membership of such programs is likely to exceed one billion in 2011. Moreover, if a working (but reasonable) assumption is made that any individual with membership of at least one coalition loyalty program is, on average, a member of 1.5 programs then this produces a total number of individuals worldwide with membership of at least one such program of 649.8 million. This is equivalent to around 14.4% of the world’s adult population.

Comments Alan Leach, Director of Finaccord: “Coalition loyalty programs are potentially attractive partners for banks, insurance companies and other organisations for several reasons. These include that they tend to have a high number of members relative to other affinity groups in any given country, that they are generally growing more quickly than other affinity groups in any given country, that their membership is often made up of consumers with specific characteristics such as individuals with above average wealth in the case of hotel group loyalty schemes, that they incentivize consumers to buy products or services on a regular basis by awarding them points or miles in return, and that they are normally underpinned by sophisticated technology which facilitates marketing actions.”

In fact, with specific regards to financial services institutions, this research indicates that the vast majority of coalition loyalty programs have established at least one partnership with a company from the banking or insurance fields. Most commonly, these are in the specific area of co-branded credit cards given the obvious and compelling link between multi-partner loyalty schemes and payment cards. Indeed, in descending order of their number of partnerships, American Express, Bank of America (including MBNA), Citibank, Barclays, GE Capital (including GarantiBank and Hyundai Card which GE Capital co-owns), Diners Club, Chase and HSBC are the firms that possess the most relationships as issuers of co-branded cards with coalition loyalty programs around the world.

However, numerous other relationships with financial sector companies are also in evidence by means of which program members can earn points, miles or cashback through acquiring or using financial products. Concludes Alan Leach: “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. Hence, the evidence of this research suggests that coalition loyalty programs constitute not only a global distribution opportunity for financial services and other institutions but that they are also a potential marketing channel for many different types of financial product.”

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Media contact: Roberto Napolitano, +44 (0)20 3008 4406, .

Notes to editors:

Finaccord is a market research, publishing and consulting company specialising in financial services. It provides its clients with insight into and information about major issues in financial services in the UK, Europe and major global markets, with a particular focus on marketing and distribution topics such as affinity marketing, bancassurance and strategic alliances.

Global Coalition Loyalty Programs: Affinity Marketing Opportunities for Financial Services Institutions and Other Organisations is the first ever report about the growth of coalition loyalty programs that has occurred globally in recent years and the affinity and partnership marketing opportunities that they offer to financial services institutions, especially banks and insurance companies, and other organisations.

Coalition loyalty programs can be defined as schemes by means of which members can earn points, miles or cashback directly through expenditure with entities from more than one ultimate holding company. Specifically, earning rather than redemption has been taken as the defining factor because multiple earning partners imply that two or more organisations have joined forces to develop a more compelling loyalty initiative for consumers than would otherwise be possible. Although not ‘classic’ coalition loyalty programs, because they are run by a specific organization rather than co-owned by several firms, airline frequent flyer programs and hotel group loyalty schemes usually fit the definition used as members can earn points or miles directly across multiple partner entities. Straightforward proprietary loyalty schemes by means of which members can earn through expenditure with entities belonging to just one ultimate holding company are omitted. Nevertheless, it should be noted that some coalition schemes actually started out as proprietary programs.

Sample graphic from the report, showing the estimated total number of members of coalition loyalty schemes worldwide (in billions) broken down between programs originating from the airline, banking, hospitality, retail and other sectors, and others with origins that are not sector-specific.

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