Daily Insights

Loyalty Rewards Ecosystems on the Rise

By: Amie Song | Aug 20, 2020

In an increasingly personalized and connected digital world, loyalty programs have become a key tool for brands to engage with consumers. Traditionally more focused on providing monetary rewards, loyalty programs have evolved to offer diverse experiential rewards as a way to elevate the customer experience. In China, smart brands and retailers are taking the next step to build ecosystems and partnerships for loyalty rewards. China’s largest B2C e-tailer, Tmall, offers a glimpse into the evolving partnership ecosystems that are becoming the hallmark of loyalty in China. 

On August 8th, Tmall celebrated the second anniversary of its subscription-based loyalty program 88VIP with a member-only shopping festival. A two-hour gala was livestreamed the night before on social platform Weibo and gained 33 million views. Featured in Gartner’s Building Best In Class Loyalty Programs in China insight report, 88VIP offers best-in-class experiential benefits through an ecosystem of rewards partnerships. Like Amazon Prime, which includes access to other Amazon-owned channels such as Prime Video, Prime Music, and Prime Reading, 88VIPs enjoy memberships to Alibaba-owned video platform Youku, travel platform Fliggy, movie ticketing platform Taopiaopiao, and food delivery platform ele.me. Outside of the Alibaba ecosystem, 88VIP also partners with Marriott, on-demand beauty service platform Helijia, and the popular music streaming platform Netease Cloud Music. 88VIPs can even receive a complimentary physical examination via VIP access at iKang Healthcare Group—one of China’s largest private healthcare services networks. Similarly, JD, the second largest e-tailer in China, announced a JD Plus Super Membership in January on its Member Day, which included memberships of eighteen partnering platforms.   

Leveraging partnerships to build an ecosystem of membership rewards is not exclusive to e-tailers. Brands have also started to follow suit to differentiate their loyalty experience. Fast food restaurant KFC offers a paid subscription membership that includes breakfast food and coffee as well as free delivery. Additionally, members can choose from memberships with video streaming platform iQiyi, audio platform Ximalaya, or grocery delivery JD Daojia as part of their rewards program. Lancôme, the Genius brand in Gartner’s Digital IQ Index: Beauty China, upgraded its loyalty program recently and is now offering VIP-tiered customers annual memberships to Shanghai K11 Art Museum and Shanghai Fosun Foundation as well as memberships to video streaming platforms of customers’ choice. Another example is local jewelry brand Chow Tai Fook, which partnered with UMP Healthcare Group during the Coronavirus pandemic to provide free video doctor consultation sessions to its VIP members of gold level and above.

“A strong loyalty experience is a key component of market success and a differentiated loyalty program creates competitive advantage and boosts brand equity, ” says Danielle Bailey, MVP, APAC at Gartner for Marketers. “Both brands operating in the market and Western brands alike can be inspired by the evolution of loyalty in China.” 

The loyalty rewards ecosystem helps brands better understand consumer interests and creates more touchpoints for engagement. It’s important to choose the right partner for loyalty collaborations based on member profiles and target audience. Brands need to make redeeming memberships across platforms a seamless experience. Instead of one-time-only redemption, brands should frequently activate with partners to drive traffic and increase the equity and awareness of brands’ loyalty offerings.