This article is Part 3 of my series titled “Loyalty Redefined by Canadian Retailers”. Please take a moment to read my previous articles in this series about Canadian rewards programs; Part 2 – “The Best Rewards Programs in Canada According to Millennials” and Part 1 “The Top 10 Rewards Programs in Canada“.
Over the past few years there has been a resurgence of corporate interest in building strong loyalty programs, specifically those with hard consumer rewards attached. This is in part because businesses have finally been able to realize the power of customer data to increase profits through targeted offers, but also because consumers continue to look for ways to make their dollar go further with discount sales, special offers, coupons and more.While this option is still considered one of the promising ways to grow one’s fortune or safeguard one’s money, more realistic solution can be obtained by only choosing such futuristic approaches like the cryptocurrency trading practice using the automated crypto robots, about which you can click here to find out more! Ok back to the talk about loyalty programs!
In this article I will highlight some of the big changes that have recently occurred and that will occur in the loyalty space among the top 10 Canadian rewards programs.
Loyalty is finally starting to be understood as a long-term win-win relationship between business and consumer.
An ongoing study conducted by Canadian research firm Abacus Data, found that while about 9 in 10 Canadian adults use loyalty programs to collect points or miles, they use an average of 3 different loyalty programs to collect those points or miles. “These statistics haven’t really shifted much throughout the 3 surveys we conducted in 2013. We consistently see most Canadians using three or more rewards programs on a regular basis to collect points or miles for future redemption”, says Sean Copeland, Director of Consumer Research at Abacus Data.
The one card that you will see coming out of most Canadian consumers’ wallets is the AIR MILES Rewards Program (about 7 in 10 Canadians), followed at a distance by the Shoppers Optimum Program (about 4 in 10 Canadians). While these programs won’t disappear from people’s hands anytime soon, there will be some big changes in the coming months as Canadian retailers begin to redefine the consumer loyalty space.
Take a look at the chart below to see the changes in usage of rewards programs since the beginning of the year. Differences between survey periods that are 4% or more should be considered as significant. It will be very interesting to look at this same chart when we have revised numbers from the holiday season this December.
Top Canadian Rewards Programs 2013
Air Miles LogoAIR MILES Canada is used under license by LoyaltyOne, which is a wholly owned subsidiary of Alliance Data, making it not only the largest program in Canada, but a powerhouse of consumer loyalty insights that is unmatched in North America. For this reason alone, expect this unique coalition program to stay at the top of the rewards program list for many years to come. Watch out for this company’s international growth as LoyaltyOne pushes for thought leadership in areas yet to be owned.
Shoppers Optimum LogoIn 2000, the launch of the Shoppers Optimum Program caused quite the stir for AIR MILES because this new program acquired members at a never-before-seen rate and quickly became the second largest rewards program in Canada. Much of its success is due in part to the rapid growth in popularity of the Shoppers Drug Mart and Pharmaprix retail stores with their improved BeautyBeautiques, which now span across every region of Canada. The Optimum program is well-known for offering large point duplicator incentives through their 10x and 20x the points sales events, higher than average points redemption events, and individualized points offers through email and standard mail. The Optimum program is once again setting up to shakeup the loyalty industry due to Loblaw Companies announcing its intended acquisition of Shoppers Drug Mart for $12.4 billion, the largest takeover of a Canadian retailer. Since this announcement, there have been rumors about the merging the Shoppers Optimum program with Loblaw’s PC Plus or PC Points within the next 3 years after the sale closes. While the Optimum program has large market share and a strong brand that would benefit the PC Plus/Points program, it doesn’t offer a feasible revenue model for current Loblaw stores that lack the gross margin on products found at Shoppers Drug Mart.
Aeroplan logoAeroplan, a company owned by AIMIA, is based primarily around taking flights with AIR Canada to work your way up the new Air Canada Altitude status ladder of privileges. This program, like all programs it seems, is experiencing some major changes, including he cancellation of the publicly hated 7-year mileage redemption policy. The introduction of this policy pushed many avid Aeroplan collectors to leave over the past few years, which is likely why the policy is now being removed. They are also adding a new “distinction” program at the beginnign of 2014, likely to calm issues among members that arose from Air Canada’s incremental changes to reward levels from the Air Canada Top Tier Program to the Air Canada Altitude program. Another big change is that Aeroplan’s contract with CIBC is set to expire at the end of 2013, and Aimia has announced it intends to begin a new partnership with Toronto-Dominion Bank at the beginning of 2014.
Canadian Tire Money Advantage LogoA program that has been a staple of Canadian loyalty for over 50 years is now in need of clear direction and consistent messaging. In an attempt to rejuvenate it’s Canadian Tire Money program in 2012, Canadian Tire introduced the Canadian Tire Money Advantage program, which aims to replace the standard printed bills. This was a great concept program in Nova Scotia, but it is taking the retailer far too long to implement the program nation-wide. This delay is causing the retailer to quickly fall behind the competition in the loyalty space. The Canadian Tire program could also see some big benefits by removing the Canadian Tire branding to accommodate it’s other brands, including Mark’s Work Warehouse. Personally, I would suggest something simple like “Canadian Money Advantage”, which could then be sold as a larger coalition program across many verticals.
Petro-Points LogoI haven’t noticed any significant changes to Petro-Canada’s PETRO-POINTS program over the past year and I don’t expect much to change anytime soon. They did announce the closure of their online Points Shop, which seems to be more of a step back than a step forward. I’m honestly curious to hear what other people have to say about the future of this program as I can’t see how it will continue to compete on a level playing field with all of the others.
Scene LogoSince Cineplex owns about 85% of Canadian movie theatres it’s fair to say that the Scene program is here to stay. They have the unique ability to target youth at a rate unreachable by any other reward program and have seen substantial growth because of this. The partnership between Scotia Bank and Cineplex was a smart move for both companies, who likely both saw higher retention due to the Scene program. This program integrates standard earning opportunities through purchases as well as gamified in-theatre experiences on your smartphone. I would like to see this program start to reach out to other youth-focused retailers to expand its reach and further situate itself with this group.
Hudsons Bay Rewards LogoHudson’s Bay Rewards has seen a steep decline this year in the number of Canadians regularly using their program. However, I wouldn’t consider this a failure as much as a necessary and temporary decline due to changes with their program, changes in store, and the re-branding as a result of the closure of Zellers across Canada and the purchase of U.S. retailer Saks. Earlier this year, the HBC program was replaced by the new Hudson’s Bay Reward program, which is a far simplified program compared to what it was and should be a welcome change to consumers. The problem isn’t the program itself, but rather change itself as HBC evolves into something new. Many long-time members of the HBC Rewards program were likely of an older demographic of Zellers and old-school The Bay shoppers, meaning these changes seem inconvenient, difficult to understand and not applicable to their specific needs. Luckily there’s Walmart or Target for those shoppers.
PC Plus LogoA few months back, Loblaw launched its new PC Plus rewards program, which features a gamified smartphone app for use on almost every major mobile platform. David Coletto, CEO of Abacus Data, is well-documented advocate and avid user of the PC Plus app, which gives you access to personalized offers to earn rewards on food purchases. This is a program that will likely see unprecedented gains in usage if it is rolled out across all of the Loblaw brands. On the other side of Loblaw’s rewards, the original PC Points program hasn’t seen much growth since its early days in the late 1990′s, likely to due the requirement of members needing a bank account or credit card with PC Financial.
Sobeys LogoClub Sobeys, an aggressive entrant to the loyalty space, has been making leaps and bounds with the technology it uses to offer a more customer-friendly approach. Ways to earn now include a Membership card, Debit card, Credit card and Smartphone app. Now with Sobey’s recent acquisition of Safeway Canada’s 200+ predominant stores in Western Canada it has an opportunity to chew away at some of AIR MILES market share in the loyalty space if it ends its relationship with AIR MILES in favor of its own Club Sobeys program. Safeway is known for offering some of the best AIR MILES offers in Canada, and due to frequent shoppers it is likely the primary reason that we typically see higher AIR MILES participation in the Western region. This program is definitely one to watch over the next 12 months to see if the right leadership decisions come about to make it an industry leader or an industry flop.
With all of the changes happening across all of the top rewards programs in Canada I’m very curious to see which ones will be the loyalty industry leaders come this time next year. What are your predictions?