Coalition Loyalty: Reinvented, Not Retired

Mark Sage

Welcome to Loyalty Unlocked. I’m Mark Sage, and I’m joined today by David Parsons from Ellipsis, one of the sharpest voices in the loyalty space?

Mark Sage

For full transparency, the content and voices in this podcast are all AI driven based on chapters from my forthcoming book on loyalty, and David's own thoughts.

Mark Sage

Today we’re unpacking coalition loyalty — a model that’s been praised, criticised, declared dead, and reinvented more times than we can count. So, lets jump right in!”

David Parsons

Thanks Mark. I’m excited for this one because coalition loyalty has this weird place in the industry right now. On the one hand you’ve got legacy schemes winding down and on the other you’ve got some of the most advanced ecosystems in the world borrowing heavily from the coalition playbook.

Mark Sage

Yes - I agree. It feels like we're at a pivotal point so I'm really looking forward to breaking this topic down with you on what coalition really means today, why some programmes thrive while others fade, and where we see this model heading.

Mark Sage

Let’s start at the top — what even is a coalition loyalty programme in 2024? For me, the simple definition is: shared brand, shared currency, and shared ambition

David Parsons

I agree but I’d add the "how" matters too as traditionally, coalitions had an independent operator running the programme for the benefit of all partners not just the anchor brand.

Mark Sage

And that’s the line that’s really blurred now. yuu Rewards, for example, in Hong Kong is owned by DFI — so is it a coalition? I’d say yes, because it works to drive value across multiple partners, not just serve one.”

David Parsons

That’s where shared ambition comes in. There’s a difference between a shared network where you have access to more eyeballs and shared ambition where you’re trying to grow together

Mark Sage

yes, shared ambition is important and I suspect thats why some partners bail. They come in, get some acquisition volume, and leave. The challenge is creating a model that balances the needs of the group.

David Parsons

Right. I like to think of launching a coalition like putting up a tent in the wind. You start by anchoring the corners with usually a strong grocery or airline partner. But if you don’t get the structure up fast with complementary partners and a shared currency the whole thing collapses.

Mark Sage

Thats a great analogy and brings back fond memories of camping in North Wales! The thing is, if you don’t have alignment on the brand, currency, and purpose early, you’re really going to spend all your energy just holding the poles while the storm rolls in.

David Parsons

And let’s be honest ownership does influence intent as independent coalitions need to make a margin and anchor-owned programmes are often run to drive value within the anchor’s business - that shapes everything from commercials to partner treatment

Mark Sage

True, but I’d argue it’s less about who owns it and more about how they operate it. Are they trying to lift all boats — or just their own?”

David Parsons

Agreed. And with the tech barriers now so low the reason for joining a coalition has shifted as its no longer about infrastructure but about ecosystem and experience

Mark Sage

So what makes coalition loyalty actually work? One of the biggest factors for me is frequency. You can’t build habit with one transaction a month. But if you’re in grocery or fuel — and tie in something like payments, F&B, fashion, or telco — suddenly, everyone wins.

David Parsons

Exactly. Low-frequency brands just don’t have the natural customer cadence to make standalone loyalty work at scale. But in a coalition, they can ‘borrow’ frequency — while still owning part of the customer relationship via their own app and CRM.

Mark Sage

That’s key — they still need to own some of the customer connection. I think thats what gives coalition its real strength. You get overlap between partners, and suddenly your customer becomes someone else’s best prospect.

David Parsons

Thats the acquisition flywheel! And if you can attribute that correctly with the right tech and permissions you’ve got a scalable, repeatable model for growth.

Mark Sage

But there is risk there I think - if you can’t prove that acquisition and shared benefit… partners leave. You’ve really got to show them the value — and I feel that's where measurement and transparency really come in.

David Parsons

Absolutely. And we shouldn’t forget rewards as many low-engagement brands join coalitions to access more aspirational rewards as they don’t really have something motivational to give. But free coffee, cinema, travel - that has emotional value.

Mark Sage

That’s how you make the mundane meaningful. An everyday grocery trip becomes a treat somewhere else. At yuu, we saw people redeeming KFC egg tarts at such volume we could’ve fed Hong Kong!

David Parsons

And it’s no longer about cost savings as coalitions are media ecosystems now, delivering audiences attention and results cheaper and more effectively than paid ads.

Mark Sage

So true, and thats probably one of the biggest changes now in terms of what coalition was and what it has become. It’s not about splitting infrastructure cost. It’s really about building something bigger than any one brand can do alone.

David Parsons

This is where most people underestimate the complexity. You’re not just managing a programme, you’re managing three things simultaneously: brand loyalty to the coalition itself, programme performance for each individual partner, and conversion between partners.

Mark Sage

And that tension is real! One partner wants share of voice. Another wants short-term acquisition. Another wants more data. You need alignment — but also individual support.

David Parsons

It’s also about perception. If customers see the programme as coming from just one brand then you lose that cross-brand power. That was Nectar’s issue I think as Sainsbury’s was dominant and eventually that’s all customers saw.

Mark Sage

And once perception shifts, so does partner trust. You go from coalition to proprietary in people’s minds. At yuu, we spent a lot of time ensuring it felt like a coalition — not a supermarket scheme.

David Parsons

And then there’s the value flow - are you issuing points or receiving redemptions? One’s cost, one’s benefit and good coalitions balance this so both earners and burners win.

Mark Sage

You definitely need to make the maths work for everyone. If you’re a credit card partner pumping points into the system, and someone else is taking all the redemptions — that only works if the value comes back in other ways, such as through higher spending and card usage.

David Parsons

Which is why we say coalition operators need to act like marketing agencies. Each partner needs account management not just commercial terms, but support in activation, strategy, and results

Mark Sage

You're right! It does end up looking a little like a marketing agency, with account management, planning, data - we had that structure at both Nectar and at yuu Rewards. Dedicated teams for each major partner. Not just sales, but strategy and analytics. And importantly, one for the coalition brand itself — to make sure that story was also getting told.

David Parsons

And that’s when the flywheel effect kicks in. More partner promotion means more engagement. More engagement means better data. Better data means more value and more interest from new partners.

Mark Sage

Alright, let’s switch gears for a moment with a quickfire round I’m calling it "Coalition or Not?" I’ll throw a programme at you — and we’ll debate whether it really counts as a coalition. Ready?”

David Parsons

Let’s do it. But fair warning — I may contradict myself…

Mark Sage

Ok... Qantas Frequent Flyer. You’ve got airlines, BP for fuel, Woolworths for groceries, even points from streaming services. Coalition or not?

David Parsons

Yes — from a modern perspective. It’s partner-rich, spans multiple categories, and has a shared currency. Sure, it’s anchor-owned — but the member sees a network, not just an airline

Mark Sage

I’m not convinced. It does look like a coalition, but the value really feels one-way — toward Qantas. Partners don’t seem to get equal brand presence or data leverage. It’s more of a proprietary programme with great partners

David Parsons

But doesn’t that describe most coalitions today? Anchor-led, but still built around multi-partner value? It’s a coalition in structure — just not in governance.

Mark Sage

Maybe - I can see your point.

Mark Sage

Lets try Aeroplan. Started by Air Canada, spun off to Aimia, then brought back under Air Canada. Coalition or not?

David Parsons

Absolutely. It was a clear coalition under Aimia. And even now, despite being re-acquired, the model still holds. Multi-partner, multi-category, shared earn and burn. It’s just back in-house

Mark Sage

I agree on the Aimia era — total textbook coalition. But post-reacquisition, it feels like it’s slowly re-centralising. It's mainly a mix of payment card earn, online affiliate and some limited offline. Still partner-powered, yes — but is it operated for all partners equally and is it truly everyday earn?

David Parsons

Depends how it’s run internally. But I’d say: if it walks like a coalition, talks like a coalition — even if it sleeps at Air Canada HQ — it’s still a coalition.

Mark Sage

Fair. It’s one of those blurred lines.

Mark Sage

Alright, final one — yuu Rewards. Owned and anchored by DFI in Hong Kong, but includes banking, fuel, F&B. Coalition or not?

David Parsons

No hesitation, yes. It’s a coalition. It’s got the scale, the partner diversity, a shared brand and currency, and a strong operating model

Mark Sage

Agreed — and I’d say it goes a step further. yuu operates with a clear ambition to lift all partners. That’s what defines a true coalition for me: shared ambition, not just shared branding.

David Parsons

Exactly. Whether it’s proprietary, co-owned, or independent — what matters is whether the model drives value for everyone in the ecosystem.

David Parsons

One slightly contra review on coalition‘s if you take things to the extreme – they’re either owner-operated or dead. And most owner operators only really care about the owner.. so that’s a real risk. Those that can balance those competing priorities will shine - but it's tough.

Mark Sage

Thats a good point and I think what we’ve proven in this discussion is that this isn’t a binary game anymore

David Parsons

Nope. It’s a spectrum. But the closer you get to shared ambition and shared value, the closer you are to true coalition

Mark Sage

So let’s look ahead. Are coalition programmes dying? Or are we just seeing the next chapter?

David Parsons

I think the classic model is fading. But the coalition principles of shared data, shared audiences, shared value are more relevant than ever. They’re just showing up under different names

Mark Sage

Absolutely. I see programs like yuu Rewards as examples of this next wave. Digital-first, flexible, and truly rooted in shared economics

David Parsons

And in the superapp model, coalition is the connective tissue. Loyalty moves you across verticals — from groceries to insurance to travel — because it creates a narrative and a reward across the journey.

Mark Sage

I also feel that ownership doesn’t matter as much now. Whether it’s anchor-owned, co-owned, or independent — what matters is the mindset. Are you operating for the benefit of all partner?

David Parsons

Completely agree. It’s always required a collective investment mindset. Every partner has to believe that growing the whole programme benefits them individually. But that’s not always an easy sell — especially when some partners feel like they’re doing the heavy lifting.”

Mark Sage

And now we’re seeing even more pressure. Brands want their own app, their own CRM, their own loyalty programme. Which makes sense — they want to control the experience, the data, the messaging.

David Parsons

Right — but with today’s tech, that’s actually achievable. You can let partners run their own front end, as long as the coalition still anchors reward and recognition. That central value layer is critical

Mark Sage

Exactly. If you let every partner fragment off — with separate points, separate currencies, different rules — you lose the magic. The coalition stops being a flywheel and starts being noise.

David Parsons

And then you’re just another network of disconnected offers. The strength of a coalition is in the shared centre — one brand, one currency, one reason for the member to care.

Mark Sage

So, to sum it up: coalitions aren’t ending—they’re just evolving into something bigger... smarter... more connected?

David Parsons

Yes! Coalition loyalty isn’t dead. It’s just not wearing its old clothes anymore. And that’s probably a good thing.

Mark Sage

Well said - And a great note to end on. Thanks for joining David, always a pleasure to spar ideas and unpack the shifting shape of loyalty.

David Parsons

This is a topic I really love so thanks for having me! Coalition loyalty might be harder to run, but when it works, it works better than anything else out there and its still full of untapped potential.

Mark Sage

And thanks to all of you for tuning in to Loyalty Unlocked. We hope this episode gave you a fresh perspective on coalition loyalty.

Mark Sage

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