CEO & Founder, Rewards Canada
President & Co-Founder, Loyalty & Co.
Canadian loyalty programs have had to pivot with the challenges presented by the COVID-19 pandemic, like the temporary closure of brick-and-mortar stores to the suspension of non-essential travel. Mediaplanet asked two industry leaders about how these programs continue to provide value to consumers and how to choose the loyalty programs that will work for you. Read on for insights from Patrick Sojka, CEO and Founder of Rewards Canada, and Steve Allmen, President and Co-Founder of Loyalty & Co.
What makes a loyalty program valuable?
Patrick Sojka (PS): There are many aspects to a loyalty program which can create value, but for the consumer it ultimately comes down to two factors: earn and burn.
A program must make it easy and fun for a consumer to earn a loyalty currency. One way loyalty programs have done this is with personalization — providing offers and incentives that are relative to the individual will keep that consumer engaged in the program.
On the other side of the equation, the consumer has to see value in redeeming the loyalty currency. A valuable program will have a wide range of reward options. Programs want to make sure their reward catalog isn’t out of reach for the majority of their membership base. They want to ensure those with only a few points can feel like they’re being rewarded even with a small reward, and those with huge balances can redeem for something big and know that all the time and effort they invested in this one program wasn’t a waste. Studies shown that a member of a loyalty program who has been able to redeem for a reward will be happier and more engaged with the program down the road.
Steve Allmen (SA): A loyalty program’s value for the consumer is found in its ability to deliver relevant offers and rewards and in a strong brand promise. In other words, if a loyalty program says it will deliver the best customer experiences and fast rewards, it needs to live up to that promise. Delivering this all with a simple message — while not overcomplicating the mechanism of earn — is key. Ultimately, consumers demand benefits from a loyalty program that provides both rational and emotional satisfaction.
For the business, a loyalty program is about knowing, recognizing, and engaging customers with compelling value propositions to deliver greater personalization and motivating a more emotional connection with their brand. It’s valuable to the business when it delivers data to help offer relevant and personalized messages to customers.
The ability to lower the costs of marketing while generating overall business growth can be easily measured by most businesses. It also needs to drive incremental value to the business by attracting new customers, increasing spend, and retaining the best customer segments. Consumer brands that have loyalty and customer data have been able to leverage this information to generate engagement, especially in these challenging times during the COVID-19 pandemic.
How have you seen the loyalty space evolve in 2020?
PS: The word of the year for 2020 for businesses and loyalty programs alike definitely has to be “pivot.” The term has been used to describe how companies have had to adapt to the new reality with the COVID-19 pandemic, and loyalty programs similarly had to adapt.
We’ve seen loyalty programs shift their focus on relevant markets during the pandemic, which primarily revolved around dining and groceries. We saw AIR MILES add reward options with food delivery services DoorDash and Uber Eats, while McDonald’s expanded their program to include French fries and American Express provided big-time grocery shopping credits for some cardholders.
Programs also focused on how they could reward members at home, such as when Cineplex’s SCENE program introduced movie-at-home packages that members could redeem points for.
The biggest pivot had to come from travel loyalty programs, some of which bolstered their non-travel reward catalogs with gift cards, increased value for cashback rewards instead of travel rewards, and found ways to engage those members to prevent them from moving to competing programs. This meant travel programs had to pause points and miles expiry, extend elite status membership, and also pivot to ways to earn more miles and points from home rather than on the road.
SA: 2020 has seen a number of changes in loyalty in Canada and hasn’t been left untouched by the impact of COVID-19. We’ve seen a number of programs launch, including Rexall’s new Be WellTMrewards, and the announcement of the changes for Aeroplan’s planned launch. There’s a continued shift towards experiential loyalty, instant rewards in large retail schemes, and cashback, particularly in the credit card rewards space.
COVID-19, beyond the impact on the Canadian retail sector, has brought to light how a number of large travel-based programs now need to focus on non-travel rewards such as gift cards, in order to allow for member engagement or to simply provide redemption options to deliver daily life rewards such as grocery, fuel, and home improvement rewards.
These changes are being driven by a need to access data, to own the brand and customer experience, and to address consumer demand for instant gratification. As loyalty evolves, it will be led by the impact of technology such as mobile apps, the growing role of e-commerce, and increased interest in personalization and gamification.
We’re also seeing an increase in paid loyalty where a consumer is charged to join a program or pay for increased benefits. If we look at programs like Lululemon membership, Amazon Prime, or PC Optimum Insiders, we see consumers willing to be charged for free shipping, improved discounts, or better-than-market offers. These programs can provide the businesses with a strong revenue stream but must deliver on the value for the fee.
What should consumers look for when selecting loyalty programs?
PS: When it comes to choosing a new loyalty program to participate in, consumers will need to look at a few factors. Questions like these can help you make the decision:
- How easy will it be to earn in the loyalty program?
- Does the program have rewards that are relevant?
- Does the program make it easy to earn their currency? For example, do they have a co-brand credit card that can accelerate earning?
- Will you be engaging enough with the program and its partners to earn enough to redeem for a reward? For example, you wouldn’t need to join the program of an airline that you may only fly with once in your life.
The other factor you should consider is redeeming the currency. Does the program have rewards that are achievable and will interest you? Maybe you’ll fly an airline twice and earn enough points to redeem for a gift card but not enough for a flight — the question will be: do they actually have gift cards that are of value to you? Too often consumers only look at one side of the equation without realizing that the other side fails to meet their expectations. So always look at the “earn” and the “burn” of a loyalty program.
SA: Consumers have many choices when it comes to loyalty programs. I often get asked which loyalty program is best, and my answer is that it depends on what you want to do with the rewards. If a friend tells me they really love to travel and don’t use a travel-based credit card or loyalty scheme, then they’re probably in the wrong program.
When you join a loyalty program you need to really understand what the rewards are, what you have to do to earn rewards or their currency, where you have to shop to do so, and how long will it take to benefit from the program.
You should find a program that’s top-of-mind for you and focus on it. Most consumers have lots of loyalty cards in their wallets, but if you ask them generally, one comes to mind as the best or most important.
For me, I focus all my spending on my credit cards to get hotel and air travel rewards. Although free gas and groceries is important, I’ll look for a card that makes it easy for me to earn enough rewards to go on a trip — when we can travel again, of course — and get the other perks that I want, like free baggage and priority check-in.
You should also track your loyalty program to make sure it’s delivering on its promise. Read the terms and conditions to understand how it works, what the expiry details are, and how your data will be used.