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Umbrellas and Coalitions: Is a Joint Loyalty Program Right For Your Salon?
Feb.17,2021By Boulevard Staff
To survive in competitive markets, some retailers turn to joint loyalty programs. Are they a good fit for your salon?
A loyalty program is an excellent investment for any beauty professional, but it can be challenging for first-time salon owners to sustain. While certain business management platforms like Boulevard offer easy-to-use loyalty apps that help you build, customize, and provide reporting on your loyalty program, there are still alternatives to in-house programs that you may have heard about. These alternatives are usually in the form of umbrella or coalition joint partnerships. But no two programs are alike, and salons must choose carefully to gain their clients’ loyalty.
Here are some pros and cons of umbrella and coalition loyalty programs to consider if you’re thinking of taking this route for your salon.
What is a coalition loyalty program?
A coalition is a single loyalty program that collectively supports two or more businesses. Businesses form these alliances to split the costs of implementing a loyalty program, collect and share customer data, and enhance their brand’s value by association. Customers, on the other hand, gain access to a shared rewards system that lets them redeem points from any business in the coalition.
Many types of loyalty programs fit under the coalition banner, from casual partnerships between local businesses to formal programs managed by third-party organizations. One of the most successful coalitions is Air Miles, a third-party service that collects reward points from a broad range of retail business categories. A smaller-scale collaboration might include a local or neighborhood-centered loyalty program.
One unique feature of coalitions is that they allow direct competitors to participate in the same loyalty program. This factor can create challenges for salons targeting the same audience but can be worth the risk if you optimize client data effectively.
What is an umbrella loyalty program?
Business owners sometimes use the terms umbrella and coalition loyalty programs interchangeably, but they have significant differences to keep in mind. While a coalition brings different companies together, an umbrella loyalty program unites brands that operate under a single parent company or shared portfolio. This removes the risk of competition within the program and often contributes to uniform data collection practices.
Which loyalty option is right for your salon?
Umbrella loyalty programs are often the most straightforward systems to implement at scale, but they are only applicable if you’ve already “bought in” to a parent chain company. Independent operators have a more complex decision to make — deciding which coalition is the best fit.
The problem is that coalition loyalty programs often struggle at a large-scale within the United States. The most successful coalitions are those that group complementary products and services together — think supermarkets and gas stations — that can be difficult to coordinate as the program’s service area increases. Small-scale coalitions, such as those serving a local neighborhood or shopping center, tend to be far more effective.
In either case, the best joint loyalty programs adopt the following traits:
Group complementary products: For beauty professionals, this might be a hair salon, nail salon, and spa partnering to offer shared reward points.
Uniform reward structure: Coalitions need comparable “pricing” that sets the value of reward points to your products and services.
Proportional investment: Wherever possible, ensure that financial investments into a loyalty program are proportional to each business’s value within the coalition.
Of course, joint programs are not always necessary in a world where loyalty management is more accessible than ever. However, salons considering ways to create ties with local and professional communities may wish to see whether umbrellas or coalitions are the right fit.