Home / Module 4: Driving Key Metrics / In-app Benefit Rewards vs. Partner Rewards

In-App Benefit Rewards vs. Partner Rewards

Owned Rewards are rewards you give your players for their loyalty that come from your own inventory. If you a mobile game, this might mean coins, boosters, or ad skipping.

Partner Rewards are rewards that are sourced from a strategic partner's inventory. An allegory in the brick-and-mortar space might be American Airlines letting their loyalty members trade in their points for a free hotel stay with their strategic hotel partner.

In this article, we'll discuss both. We'll talk about how owned and operated rewards might seem like they would cannibalize revenue, but we'll present some surprising data on the contrary. We'll discuss the basics of reinvestment and how to arrive at the right reinvestment rate for your program. We'll go over how loyalty partnerships are becoming more and more common, and can benefit both sides. Finally, we'll discuss how partnerships can often be more difficult to operate successfully, and how playAWARDS can help you navigate the challenges of partner rewards.

Let's get started and be better together!

Partner Rewards

Traditionally, no loyalty programs were "partner" programs. All programs operated in the same basic premise: Spend money with business A and they'll give you some extra business A stuff.

Lately, partnerships in loyalty programs are becoming more and more common.

Branded oneworld®, you can point swap your frequent flyer miles across a number of different airlines around the world, including American Airlines, British Airways, Qatar Airways, and dozens of others.
MGM Resorts partners with regional US casinos like Thunder Valley Casino Resort to extend offers across both customer bases.
Even when you log into your bank account, you're now faced with 10% off at Fatburger or $50 cash back at SimpliSafe.

There are several reasons these partnerships are becoming more and more popular.

They're beneficial to the source loyalty program.

For the source loyalty program, it becomes an additional incremental offering for its loyalty members. Typically, these programs are "point swapping," wherein they allow each other's loyalty program members to use points from the opposing loyalty program. The partners account for it in the backend and compensate each other for the consumption. In these types of partnerships, it's another way to get their loyalty points "off their books" in a way that their loyalty members really appreciate.

In some cases, businesses offer rewards for a partner loyalty program for free. In the case where it's free, the source loyalty program can be far more generous with the points per dollar, making the loyalty member feel like they're capturing some really special deals.

Finally, and especially for mobile games where the experience is 2D, being able to offer some real-life physical experiences helps create a stronger emotional connection to the loyalty program and the brand, because physical experiences inherently provoke stronger emotions than digital ones.

They're beneficial to the destination loyalty program.

For destination loyalty programs, these offerings can be fruitful sources of new customer acquisition. It's effectively acquisition advertising, but in a way that is exciting instead of intrusive. Helpful instead of annoying. Destination loyalty programs are happy to offer up some free or discounted inventory if it means acquiring some new qualified customers in a really productive way.

While these partnerships can be beneficial to both sides, they come with hidden costs...

playAWARDS is a first-of-its-kind partner-first loyalty program. After more than 10 years of working with partners, learning and evolving our program, we've become masters in it. And we're no stranger to all the extra effort that's required to get it right. For one, managing and administering the partnership and the partner rewards. Expect to need to add to your rewards capabilities: geo-based sorting/filtering, metadata around methods of fulfillment and redemption instructions, ingesting partner redemption codes, managing reward consumption restrictions, API-based system-to-system integrations, and more. There's also the relationship management of finding and keeping partners. This will require a team of dedicated professionals and all of the B2B CRM that comes with it.

...and some pitfalls, like non sequiturs...

The most important pitfall – the one that's easiest to fall into, is doing the wrong deals with the wrong partners. If the partner is so far out in left field – like your bank partnering with Fatburger, then there's little synergy in the relationship. For partnerships to work, the introduction of the partner brand should fit in the context of your business. Airlines partnering with hotels or car rentals is a perfect example of this, since they're both in travel, and when customers are booking one, they're often also booking the other.

...and just downright not good deals.

It's also easy to find partners who will give you affiliate-quality deals, like 5-15% off. While these seem like a win-win, you have to keep in mind that your loyalty members do their diligence. If they can find the same or a similar offer out on the open web, then it's not a good reward. Your members are using their points to access deals you've curated. The best rewards will be build from bespoke partnerships and deals.

Partner and O&O Rewards should work together.

Finally, you shouldn't expect partner deals to get you 100% of the way there. Yes, having partner rewards will expand the breadth of your offering, bringing a richer collection of rewards that your members can use their points on. However, it doesn't completely replace the need for your own offerings to be a part of your rewards store. The two should work hand-in-hand. That's because you want to make sure you're relevant to as much of your audience as possible. And what's the ONE thing that EVERY one of your members has in common? What do you KNOW they all want? Of course, it's YOUR products!

Pair partner rewards with owned & operated rewards for the most productive loyalty program. Bringing in partner rewards can be a wonderful win-win-win benefit for you, your members, and the partner. That said, know that it comes with a LOT of new work to get it right, and there are some pitfalls that you should watch out for.

What's important:

Owned Rewards

Won't it cannibalize my revenue?

You might be thinking, "I don't want to award my monetizing currency because it will cannibalize revenue. I'll stick to secondary currencies." We hear you and understand where you're coming from. Certainly, secondary currencies can have a positive impact, while also protecting your app from cannibalization. However, we've worked diligently with apps over the years (click here to read one such study) and have continued to prove out the same thing over and over again: If you award the right amount of your monetizing currency as a reward for loyalty, it can actually INCREASE lifetime value of participating members, not DECREASE it.

How could this be? Simple. When players buy your currencies with loyalty, they treat it differently. They spend it less like their paycheck and more like their Christmas Bonus. In short, they increase engagement. They also go on to stick around longer because they value the loyalty points they're earning.

Why award my currencies "in the name of the loyalty program" and not just through a more traditional faucet?

You might be wondering why you should trouble yourself to attach some of your free faucets to a loyalty currency vs. simply offering them through a more traditional method. Good question! For one, the reasons we just stated above. When the currency is granted as a "reward for loyalty," it taps into a different part of your player's brain, letting them think about and spend that currency differently.

Second, think of it this way. You're going to award some amount of free currency either way. You can either feather some of it into your loyalty program or not. But the more you do, the more your players will value their loyalty currency. And the more they value their loyalty currency, the more they'll see it as an "investment" in your app that is keeping them from switching to one of your competitors. Players, like all consumers, understand the language of loyalty programs. When you tell them that's what it is, they get that, and they respond to it.

So what's the right rate of reinvestment?

Okay, so awarding the right amount of your monetizing currency can be accretive. But what's the right amount?

There isn't a simple answer. For one, it varies wildly by industry.

Of course, the reinvestment rate from playAWARDS is driven by our partner rewards, illustrating the power of having this type of rewards in your catalog. And if you isolated owned & operated rewards, you would have to break it down by player value. Since non-monetizing players can earn benefits, the reinvestment rate for them is infinity. For monetizing players, as a rule of thumb, we target around 10% (more monetizing currency) above and beyond any purchased currency. Once again, this is a wonderful thing to A/B test. playAWARDS is happy to work with you in formulating such a test for your app.

The concept of reinvestment rates is discussed in more detail in the article Introduction to Loyalty Economies.

Offer a spectrum of value

We also recommend offering both achievable rewards (low loyalty point price, low chip amount) and aspirational rewards (high loyalty point price, high chip amount). Achievable rewards should be redeemed often, while aspirational rewards much less often, perhaps only once a year.

Why offer aspirational rewards? Aspirational rewards are what loyalty programs are all about. Nothing speaks more to the word "reward" than an aspirational reward. When players redeem it, it triggers the very feeling you want in them that strengthens your relationship as well as their appreciation for their loyalty points, making switching costs that much higher. In short, aspirational rewards will lift LTV.

Catalog Approach

It may be tempting to leave out your monetizing currency and simply focus on secondary currencies or vanity items that could never be sold.

This is certainly an approach you could test. But our underlying thinking is this:

The more valuable the rewards you offer your players,

the more they will value their loyalty points.

The more your players value their loyalty points,

the more invested they'll feel, the stickier they are,

and the more they'll engage with your app.

If you have a monetizing currency, it's because your players value that currency, right? So if you want them to value loyalty points, you KNOW you can achieve that using your monetizing currency. Reinvesting in your players accordingly will achieve the above goal of convincing every player their rewards are valuable.

Finally, we also recommend a balanced approach. Don't follow just ONE strategy. Don't offer ONLY your monetizing curreny(ies) or ONLY your secondary currency(ies). Instead, try to create a catalog of offerings, including both monetizing and secondary currencies.

It dilutes any exposure you have to reinvesting through monetizing currencies.
It creates a far more compelling proposition to the player.
It can reaffirm that it's not just about entitlement, but fun, intrinsic benefits as well.

But don't worry, playAWARDS will help.

Feeling daunted by all of this? Don't know where to start? Don't worry! That's where playAWARDS comes in. With our decades of collective experience in partner-first loyalty programs, we've got you covered! Partner with playAWARDS and we'll help you build out your program every step of the way.

While it may seem counterintuitive, offering up your most valued currencies in exchange for loyalty can actually yield higher LTVs. In fact, it has lifted LTVs again and again across countless industries. Find the right re-investment through A/B testing, combine your monetizing currencies with secondary ones for a catalog approach, and watch as your players reward you with their loyalty!

What's important:

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