BackThere’s a reason co-branding partnerships are also referred to as brand alliances — they allow two businesses to join forces and amplify their collective impact. For loyalty programs, strategic co-branding opportunities drive customer acquisition, engagement, and retention, all while maximizing loyalty points. Together, these partnerships create more value than either brand could achieve on its own.
Non-travel brands stand to gain significantly by collaborating with travel companies for these very reasons. Co-branding opportunities elevate non-travel loyalty programs with unique, experiential rewards that captivate customers and strengthen member connections. Let’s explore the world of co-branding in loyalty programs, complete with actionable strategies for building impactful partnerships.
What is Co-Branding in Loyalty Programs?
Co-branding is a marketing and sales strategy where two or more businesses form a strategic partnership to create mutual benefits for their shared customers. In the context of loyalty programs, co-branding involves collaborating to deliver enhanced rewards and greater earning opportunities for members. Today, co-branding opportunities are more abundant than ever in the travel industry.
Travel companies, including airlines and hotel rewards programs, partner with non-travel brands like banks and retailers to go beyond traditional travel perks and offer exclusive rewards. One popular example is co-branded credits, which are used by nearly one-third of consumers. These cards allow customers to earn loyalty points and rewards simply by making everyday purchases.
What are some examples of successful co-branded travel loyalty programs? There is Marriott Bonvoy and Uber, which empower Marriott’s 200 million members to earn points on qualifying rides and Uber Eats orders. There’s also Delta SkyMiles and Starbucks, which allows 34 million Starbucks Rewards members to earn double rewards on Delta travel days and unlock exclusive promotions.
The Benefits of Co-Branding with Travel Brands
Tapping into travel-adjacent co-branding opportunities offers non-travel brands several benefits, ranging from increased customer engagement and rewards redemption rates to stronger brand positioning. Consider these tangible outcomes of co-branding:
Expanded Customer Reach
Today’s airline, cruise, and hotel travelers partake in three to four different loyalty programs within a given sector. For non-travel brands, that’s a massive customer base loaded with potential. Co-branded travel rewards allow these companies to tap into their partner’s audience, driving new membership enrollments while introducing more customers to their services and benefits.
Diversified Rewards
McKinsey research shows that experiential factors, like offering an experience worth paying more for and feeling taken care of, now account for three of the top five drivers of loyalty. For non-travel brands, travel loyalty program benefits make these experiences possible. By partnering with travel brands, companies can offer unique, experiential rewards that appeal to a wider audience.
Increased Brand Visibility
Travel-focused co-branding opportunities can significantly enhance a company’s reputation and boost brand visibility. Take airline co-branding partnerships, for instance. Citi was recently named the sole co-branded credit card partner for American Airlines. While smaller than competitors like Chase or Mastercard, Citi now gains access to American’s AAdvantage members, who represent 23% of all U.S. air travelers. This partnership unlocks a valuable audience of co-branded card prospects for Citi to directly market to.
Enhanced Customer Loyalty
Modern customers appreciate more versatile and flexible travel reward options, ultimately magnifying program engagement, maximizing loyalty points, and maintaining long-term loyalty. Combined, these benefits also help capture more of the wallet share. After all, co-branded travel cards drive significantly higher average spending — 32% more per month, to be exact.
Challenges in Managing Co-Branded Loyalty Programs
While co-branding can offer numerous advantages, it’s not without obstacles. So, what are the challenges of managing a co-branded loyalty program? Co-branded loyalty program challenges boil down to integration difficulties, brand misalignment, and mismanaged customer expectations. Here’s a deeper look at these common hurdles, along with how to overcome them.
- Integration Difficulties: Merging systems like loyalty databases between two brands can be complex, leading to potential disruptions or inconsistencies for customers. To remedy this, invest in a shared customer relationship management (CRM) tool for unified tracking.
- Brand Misalignment: If customer expectations or values for partnering brands are not well aligned, it can lead to confusion or dissatisfaction. The best way to avoid this is selecting an appropriate partner; however, alignment can also be achieved with informative marketing.
- Managing Customer Expectations: Ensuring a seamless experience for members across both brands, especially regarding the redemption of rewards, is crucial for maintaining customer satisfaction. A joint customer service department can help solve this issue.
How to Choose the Right Co-Branding Partner
When exploring co-branding opportunities, it’s vital to look for a partner that appeals to a similar customer base — like airline, cruise, and hotel rewards programs. Aligning with a complementary brand ensures co-branded travel rewards resonate with shared customers, making the perks more relevant and increasing the likelihood of ongoing customer engagement and long-term loyalty.
Beyond a shared customer base, co-branding opportunities must also have shared objectives to succeed. Whether it’s streamlining customer acquisition, increasing engagement, or expanding reward offerings, alignment is key. A successful partnership hinges on both brands working towards the same goals, allowing their joint loyalty rewards to meet the needs of their mutual customers.
Lastly, clear and fair terms are essential in any co-branding opportunity. Brands should focus on establishing transparent agreements that outline elements like marketing efforts, revenue sharing, and customer data usage. Successful co-branding examples like Delta and Starbucks show that when both parties are on the same page, both businesses — and their customers — can thrive.
Future Trends in Co-Branding for Travel Loyalty
Co-branding opportunities are slated to continue enhancing customer loyalty in travel and non-travel sectors. As we look forward to the future of co-branded travel loyalty partnerships, anticipate these travel rewards trends:
- Lifestyle Rewards: Experiential rewards are on the rise, with unique lifestyle rewards that encompass dining, fitness, and general wellness reflecting customers’ broader preferences.
- Personalization Through Technology: Artificial intelligence (AI) and predictive analytics are enabling brands to personalize loyalty rewards, making co-branded partnerships even more relevant to individual customer preferences and poised to generate engagement.
- Sustainability Partnerships: As consumers become more eco-conscious, partnerships with sustainable or socially responsible brands offer rewards aligned with environmental values.
Explore Travel Co-Branding Opportunities with arrivia
Co-branding opportunities power strategic partnerships that enhance rewards, boost customer engagement, and differentiate brands in a competitive market. With the right travel loyalty partnerships, your brand can unlock new value for your customers while driving growth and improving long-term loyalty. It’s time to explore these partnerships — and elevate your brand.
At arrivia, our co-branded travel rewards are behind leading names in travel, hospitality, and financial services, like American Express, Morgan Stanley, and USAA.
Learn more about our services to tap into the power of travel rewards today.
