Loyalty Programs: Which One Is Right For You?
Travel An insider in the loyalty and rewards game shares his insight into the growing industry.
Mediaplanet: Where does Canada rank in terms of loyalty programs in the world and why are Canadians so fond of them?
Steve Allmen: Canada is one of the most engaged countries in the world when it comes to loyalty programs. The global rankings probably vary depending on the source but most research shows that the typical Canadian belongs to more than 12 programs on average. That means a staggering number of memberships are out there in wallets and now on phones with a large number of miles or points available for use.
Canadians have become conditioned to getting rewarded for their shopping and playing the “game” of earning for all spend, getting bonus points for doing something extra, and ultimately getting something for “free.”
MP: How has the loyalty industry grown since you first started?
SA: I started in the loyalty industry in 1998 with Air Miles. At that time, it was expensive to start a program, the technology was complicated, and consumer engagement was low.
Loyalty programs are changing with smart phone, mobile apps, and instant rewards being key drivers. As we move away from rewarding at the time of purchase to tracking and rewarding loyalty along the whole customer journey, we truly see that using data and relevant communications is the vital reason loyalty programs succeed.
The ability to build a program is no longer limited to large providers but can be seen in local marketing programs, strong mobile platforms, and unique coalition programs.
MP: What are some common misconceptions around the rewards redemption?
SA: Travel rewards are a big part of Canada’s loyalty landscape and the biggest misconceptions include:
It takes too long to go anywhere. If you consolidate your spend on a credit card or with a program that offers travel you can generally get somewhere within 12 months of starting. If you want to go first class to Tokyo it’s going to take a while but a flight to New York City can be easy to get.
Programs have blackouts. Most programs no longer black out but there may not be seats available on the airline or at the time you want to travel. It’s best to try and be flexible in your travel plans and book well ahead of your trip.
It’s supposed to be free. Some programs have fees associated with the reward so make sure you understand the program you have signed up for.
MP: How has the emergence of gift cards had an effect on the loyalty industry?
SA: The emergence of gift cards has had major impacts on the loyalty industry starting with redemption. Most loyalty programs use gift cards to get members to redeem and to provide a benefit to their partners. Today, many consumers will opt for a digital gift card — rather than plastic — that is emailed to them within seconds of redeeming their points. This allows customers to get engaged in the loyalty, see that their points have value, and provide important data for the loyalty program.
MP: Is there an opportunity for positive change in the loyalty industry?
SA: Loyalty has to be earned and programs need to make sure they keep addressing the needs of the consumer. If a program is too complicated or redeeming is too hard, then consumers stop being loyal. As we saw with Starbucks, when they changed their rewards program or Air Miles with their expiry challenges, consumers are happy to use social media to express their point of view and ultimately speak with their wallets.
MP: What should Canadians look for in a loyalty program?
SA: My main recommendation to anyone looking at a loyalty program is to choose one that gives them the reward they want and focus on that program. If you want free groceries, find the best program that delivers that reward. Travel is a great reward too and is usually best delivered by a credit card. But as any good advisor will tell you, getting the right credit card is great, however, earning points while not paying off the balance is not good business.
Focus your earn on the best program for you, make sure to use your points, and, when redeeming, enjoy the experience as it’s usually a free benefit.