In May, American Express launched Plenti, a U.S.-based coalition loyalty program with eight partners, including Macy's, AT&T, Exxon Mobil and Rite Aid. These types of programs, which let consumers earn and redeem a single currency across multiple partners, are popular in other areas of the world, but coalitions have historically failed to gain traction in the United States.

Plenti's initial progress indicates that it might buck the trend: It signed up more than 20 million members in its first two months reaching around 16% US household penetration. For reference, established coalitions such as AIR MILES, Nectar and FlyBuys have household penetration rates of more than 50%.

But any decent loyalty marketer knows enrollment doesn’t tell the whole story. Three things, in particular, give coalition in the U.S. a fighting chance:

  • The loyalty program landscape is crowded. Plenti entered the market at a time when companies across industries – from retail to travel/hospitality to automotive – invest in loyalty programs to drive retention, engagement and loyalty. According to Forrester’s Consumer Technographics data, consumers belong to an average of nine loyalty programs. The proliferation of branded programs makes it hard to stand out, and it shows: 58% of loyalty marketers that Forrester surveyed in 2015 indicated they were dissatisfied with their loyalty strategy. Coalition programs offer a differentiated value proposition: members shopping across partners experience an increased earning velocity and wider choices for redemption, which boost the utility and perceived value of the program.
  • Consolidation creates a wider field of national partners. Coalition success hinges on the mix of anchor partners; coalitions must enter the market with a partner mix that creates a high perceived value and motivates both consumer enrollment and participation. Traditionally, this has meant balancing anchor partners that ensured frequency and velocity of point-earning – through grocery – with those that offer variety of redemption – through travel and retail sectors. Previous attempts at a U.S. coalition stumbled on this point because of the fragmented airline and grocery market. However, Plenti’s lineup of launch partners – particularly AT&T and Hulu – reflects how far the landscape has shifted. Expansion in key industries, such as telecommunications, and rapid consumer adoption of mobile and Internet-connected technology mean that coalitions can balance scale and frequency without a singular expansive grocery partner.
  • American Express has the data science chops to succeed in the Age of the Customer. The customer obsession required these days starts with customer data and insight – what companies actually know about their customers rather than what they think they know. Coalition loyalty programs often incorporate a shared data model that centralizes interactions across partners and delivers insight for use in promotions, acquisition campaigns, product development and more. Since the owner/operator of the coalition plays a central role in collecting, analyzing, managing, distributing and protecting that data, it must have a strong track record. American Express brings both coalition and proprietary loyalty experience to the table, through its own Membership Rewards program and the Payback coalition program (in Germany, Poland, Mexico and India).

So, what does this all mean for loyalty marketers – coalition partners and branded programs alike? For now, two main things:

  1. Your customers’ loyalty may be up for grabs. In the past, the maturity of the U.S. loyalty market and focus on proprietary programs posed the biggest competitive threats to coalition. But the launch and promise of Plenti means a new loyalty model is taking root. At scale, coalition programs have a lot of pull with consumers. Combined with the ever-increasing control empowered customers have over brands, the writing is on the wall for undifferentiated loyalty programs: It’s time for loyalty operators to double down on program value propositions and move past a purely transactional approach. American Express plans to add more partners in 2016, so hopefuls should take stock of existing loyalty initiatives as a baseline and identify how coalition would specifically boost those efforts. The shared benefits of a coalition go beyond retention, with opportunities emerging to share best practices, collaborate, run cross-promotions, and even acquire new customers. Effective partners will set aside a laser focus on individual performance and commit to operationalizing, promoting and actively participating in the coalition in order to drive group success.
  2. Adaptive intelligence is critical. The shared data model behind most coalition programs drives home the notion that the data from existing customers isn’t necessarily enough to get by in today’s world. Even for companies that don’t plan to join a coalition, there are plenty of opportunities to tap into the expanding data economy. For example, they can identify complementary program partners that align with the brand promise and establish a data exchange. Some retailers, such as Lowes and North Face, do this with their suppliers or reselling partners.

It’s still early days for Plenti. And they have a lot of work to do to achieve and maintain the scale and popularity that established coalitions have in other parts of the world. But one thing is for certain: there are plenty of opportunities to learn and grow for coalition and branded loyalty programs alike.