Loyalty programs have quickly become a popular business strategy for industries looking to capture a more robust and profitable customer base. However, many brands are quickly beginning to realise that simply providing access to valuable rewards is no longer enough.
Loyalty ecosystems, on the other hand, offer more than what is provided by the brand itself. Loyalty ecosystems are generally developed in two ways, the most common being for brands to extend their rewards offerings across multiple corresponding partners or businesses. Alternatively, brands may choose to build their loyalty ecosystem by expanding into several proprietaries or subsidiary products and services.
The shift from loyalty programs to loyalty ecosystems
The shift from loyalty programs to loyalty ecosystems is already progressively underway across many industries (e.g., Woolworths expanding into insurance services or Amazon acquiring Whole Foods). The benefits of implementing a loyalty ecosystem are significant, for example:
- Members can access flexible earn and redemption avenues across a diverse range of products and services
- Businesses can gain a large and comprehensive pool of consumer data
- Businesses can gain a better understanding of customer behaviour and critical touchpoints
- Businesses can use this data to increase omnichannel personalisation across a variety of customer segments
- Businesses can deliver frictionless customer experience across multiple touchpoints
With increased brands shifting towards this new strategy, brands considering a basic rewards program should be aware that such programs may not deliver to the new expectations of convenience that consumers are increasingly becoming more accustomed to.
Rakuten: An omnipresent loyalty ecosystem
Rakuten is a formidable example of a fully developed loyalty ecosystem. The brand emerged as a Japanese e-commerce site in 1997, and have since expanded to over thirty countries across the US, Europe, Africa, and the Asian Pacific. It is currently the fourth largest e-commerce market in the world and has proven to be one of Japan’s most successful coalition points programs. To better illustrate this, over 500 billion Rakuten points have been earned since September of 2020.
The program originally offered a single avenue of points earn which could be accessed by making transactions via the e-commerce platform, Rakuten Ichiba. The brand has since expanded its operations by strategically partnering with hundreds of popular Japanese brands across a variety of categories to deliver value at every turn.
In addition to this, Rakuten also provides over seventy subsidiary services across travel, entertainment, energy, banking, telecommunications, insurance etc. The company dominate a large portion of everyday life in Japan with over 111.4 million members, seventy per cent of whom hold more than two Rakuten services.
To put this into perspective, the total Japanese population is approximately 126 million.
Rakuten has not only dominated the Japanese loyalty space but has successfully achieved omnipresence across the country, allowing citizens to earn points for every task conceivable to the mind.
Providing convenience through versatile points earn and redemption
The appeal of Rakuten is largely drawn from the diversity of products and services offered. Members of the program can earn points in an extreme variety of ways including:
- Spending with any of the 49,000 stores on the Rakuten Ichiba platform
- Upload your cooking recipe on Rakuten Recipe
- Spending with any of the hundreds of partner brands across dining, shopping, beauty, living and essential services (e.g., fuel stations, convenience stores, airlines, pharmacy’s, postal office, McDonald’s etc.)
- Engaging with any of Rakuten’s 70+ subsidiary services, for example:
- Make a reservation with Rakuten Travel
- Purchase a plan with Rakuten Energy
- Buy movies with Rakuten TV
Members are able to redeem these points in a vast number of ways including:
- Using points to offset the cost of certain Rakuten subsidiary services, e.g., paying electricity bills, paying mobile plan bills and purchasing entertainment plans
- Using points to offset the cost of partner brands e.g., use points to offset the cost of a McDonald’s meal
- Exchange points with All Nippon Airways (ANA) airlines
Rakuten provides a combination of multiple essential services as well as highly desirable partner rewards, which are all interconnected via one program. This not only provides high levels of convenience but enables points earn behaviours to become a natural extension of everyday living.
The Rakuten loyalty ecosystem continues to expand and evolve in accordance with modern trends. For example:
- Crypto currency: Members who hold the Rakuten Wallet may buy and sell crypto currency using their Rakuten points.
- Stock investment: Members can use their Rakuten points to invest in the stock market via app.
- Rakuten Pay: Use points at any stores that accept Rakuten Pay to offset the cost of grocery or any partner purchases.
- Post Office Pick-up: The program now awards members with points for using Japan Post or Hako Post pickup services to collect their packages purchased via Rakuten Ichiba.
- Rakuten Check app: Earn points for going into a Rakuten partner store and checking-in via the app.
The scope of Rakuten points earn possibilities are limitless. When considering that there are numerous additional bonus earn opportunities that run throughout the year, members are constantly invited to engage with the program.
Are loyalty ecosystems the future of loyalty?
Though it would be highly impossible for many organisations to implement a loyalty ecosystem of this size, the consumer desire for convenience is a key driver for brands looking to expand their suite of products and services.
Many successful loyalty programs today are beginning to branch into new areas to deliver more relevant and meaningful value. As a result, every brand should investigate whether there are untapped opportunities for creating a loyalty ecosystem within their network to deepen engagement among valuable customers.