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Why marketplace loyalty programs are the next big thing

Leads Technology & Data

Why marketplace loyalty programs are the next big thing


Jen Kreutzer explores how brands can strategically tap into marketplace loyalty programs to build stronger relationships with customers. 

A recent report by Tzu & Co identified that some of the highest-performing, customer-oriented retail businesses in Australia such as Booktopia, Adore Beauty and BCF are focusing their marketing attention on loyalty programs. Outside of retail, in sectors like banking and finance, loyalty programs in the form of frequent flyer programs and reward points on credit cards have been stalwarts for decades. And there’s good reason for this.

Loyalty programs are one of the best ways to build and maintain long-term client relationships. Loyalty is what drives the success of companies like Costco, because loyal customers who buy repeatedly are more profitable than ones that buy once”. They are also an invaluable source of customer data that inform smarter sales and marketing strategies.

Traditional loyalty programs are one-way transactions. They seek to benefit the customer by offering some form of financial reward. They also establish an emotional connection that drives sales and repeat business. This has worked for well in bricks-and-mortar stores, and more recently, online stores.

However, loyalty programs as we know them are evolving. With online marketplaces, or ‘third party marketplaces’, now ushering in new ways to establish and enhance loyalty programs. 

How marketplace loyalty programs work

Marketplace loyalty programs are different from traditional loyalty programs because they involve sellers or partners in the reward system, in addition to customers. While it appears more complex, with the right technology, it is not, and the potential gains are huge.

How marketplace loyalty programs work

One way to build a marketplace-focused loyalty program is to create a separate reward system for both customers and sellers. Uber, for example, offers Uber Rewards to customers, a four-tier loyalty program, while drivers benefit from Uber Pro, earning points to access bonuses like car maintenance discounts. 

Alternatively, a marketplace can allow sellers to offer their own ‘mini rewards’, as Amazon and Etsy do. This is a good way to engage sellers. It gives sellers greater control in how they engage with customers on the platform.

Finally, a loyalty program can be targeted at sellers or partners only. A brand can offer gifts, incentives, or other benefits like sales training, to strengthen the bonds of those relationships and ensure the marketplace remains a preferred sales channel.

The benefits of marketplace loyalty programs

Marketplace loyalty programs are taking loyalty rewards to a new level because they offer multiple benefits.

Ultimately, marketplace loyalty programs form part of a comprehensive third-party marketplace strategy. They are a fast-growing global trend. The key benefit of feature-rich marketplace core technology is that it creates a community for customers and unifies the commerce experience for them. The marketplace owner becomes more than a single platform selling a single range. They become the umbrella, taking a commission on every product without carrying the risk and cost of producing each one. This allows a brand to grow across categories faster and expand its online presence swiftly by leveraging off the existing profiles of the brands they sell. Barbecues Galore and Surf Stitch are both great recent examples of local retailers branching out with third-party marketplace strategies. 

When loyalty programs are integrated into this offering, the benefits are all-encompassing. The marketplace owner ultimately benefits by becoming the facilitator of a community that cares for its loyal customer, and its sellers, encouraging their return business, as well as providing access to richer customer data. 

Sellers are also able to offer rewards and incentives without the headache of setting up and running their own program. Or they can use it as an add-on to their existing in-house loyalty programs. Thereby, doubling the benefit without doubling the investment. 

In an era when many institutions, from retailers to banks, are pressured to find new means to re-establish customer trust and relationships, marketplace loyalty programs are a game-changer. Indeed, as more banks and neo-banks establish marketplaces that allow them to ‘plug in’ products and services from other financial institutions, there is enormous scope to develop targeted loyalty programs that benefit all participants of the transaction.

Over the coming 12 months, expect to see marketplace-powered businesses across Asia-Pacific lead the way in loyalty program innovation. 


Jen Kreutzer is the VP of marketing at Marketplacer.

Photo by Andrea Piacquadio from Pexels.


Found this article interesting? Read about how to measure loyalty programs using two important metrics: Average Basket Value (AOV) and Customer Acquisition Cost (CAC).


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