Advance planning models in managing coalition loyalty programs

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Loyalty reward programs (LRPs) are marketing programs aimed at rewarding customers for repeat buying behavior. While there is a cost in offering them, they are ultimately beneficial to the firm. They serve to attract new customers, and to nurture and encourage long-term relationships with existing customers. Hence, LRPs have grown in popularity in recent years across a spectrum of industries. New ones continue to be established worldwide and existing ones continue to be restructured. AEROPLAN®, is Canada’s premier LRP. It reports 4.6 million active members in its program and is a joint venture with more than 75 partners. The cost of redeemed Aeroplan rewards is estimated at $1.382 billion for 2012 and 2013. Aeroplan is an example of a coalition loyalty program (CLP), the most complex loyalty-based systems, in terms of the membership enrollment size, diversification of customer sources for the collection of points, diversification of reward offerings, and operating costs and risks. Managing such a complex system requires advanced solutions technologies.