Gauging loyalty marketing’s success not necessarily about membership numbers: LoyaltyOne

It’s no secret Canadians love their loyalty programs. From Canadian Tire money to the Bay’s Scratch and Save cards, we’ve been experts at racking up points and trading them in for deals for years.

But if loyalty marketers in Canada want to get more out of their programs, they’re going to have to invest more in the data gleaned from their loyalty memberships, according to a new report.

On Tuesday, LoyaltyOne released its annual report on the state of loyalty marketing in Canada and the U.S., sharing results and recommendations for marketers during the Canadian Marketing Association Loyalty Conference in Toronto on Tuesday. The company’s research team spent six months compiling information from sources like company financial reports, press releases, data on the number of people signed up to company loyalty programs, and so on.

One of the most striking things about this year’s report is that there just hasn’t been a lot of growth in this space, said Jeff Berry, senior director of knowledge development at LoyaltyOne. He added the company has been doing this report since 2000, but in the past few years, growth has been minimal – even though there’s been a fair amount of innovation.

“About 20 years ago, [Canadians] really started to adopt retail-based loyalty programs and financial service-related loyalty programs … And consequently, they’ve just been in the space longer, and maybe this is a bit of a bad reason, but they’ve used up some of the equity in the basic program – spend X and get Y,” said Berry in an interview, adding even Tim Hortons’ ever-popular Roll Up The Rim To Win promotion might count as a loyalty program.

“Consumers have been exposed to that for so long here so that it’s not new, it’s not unique, it’s not innovative. So I think that has driven this need to evolve programs and things like different kinds of rewards.”

Here in Canada, there were 120 million people subscribed to a loyalty program in 2012. In 2014, that number increased to 130 million – only an eight per cent jump. Canadian households also only subscribe to about nine loyalty programs on average. By contrast, the average U.S. household has signed up for 29 loyalty programs, with growth spiking 23 per cent from 2.6 billion members in 2012 to 3.3 billion in 2014.

So why has growth been so much smaller within the Canadian loyalty landscape, versus what’s happening south of the border? Well, there are a few reasons, Berry said.

First of all, Canadian loyalty programs are often actually made up of coalitions, like Air Miles and Aeroplan, where several retailers will band together to offer points, rewards, and other benefits to their customers. That cuts down on the number of individual loyalty programs out there.

He also noted that while U.S. households are part of so many loyalty programs, they’re actually only active with about 12 of them on average, meaning there isn’t a lot of meaningful engagement going on there.

But there’s still a glaring disconnect between Canadian loyalty marketing and U.S.-based loyalty programs. Even though the U.S. typically offers simple exchange-based rewards programs, Canadian marketers have been hard at work transforming what they have to offer.

Berry pointed to great programs like the PC Plus program, which has focused on providing an excellent digital experience to its members, as an example of where Canadian retailers have been transforming the loyalty marketing model. Canadian Tire has also been busy, having added a new mobile app. It also cemented a partnership between one of its brands, Sport Chek, with Scene, a loyalty operator that rewards consumers with free movie tickets and other entertainment-related rewards.

But in embracing digital and ringing in new partnerships, retailers don’t necessarily entice more people to join their programs – so they have to think of other ways to make the best possible use of their loyalty programs.

The answer lies in data, Berry said. Given Canada has a smaller population that can already access a healthy supply of loyalty programs, retailers need to reap all the advantages they can from whatever programs they’ve built.

“The starting point is exposing the customer information to other areas of the business. [It] generally tends to be the domain of marketing, or the domain of IT, oftentimes because IT is so much part of the infrastructure. Oftentimes the IT department controls the customer information,” he said, adding data could be especially helpful in areas like merchandising and operations, which often don’t get a lot of exposure but are customer-facing.

“Second is then to start putting some analytical horsepower to it, so you can help those organizations leverage it and make those decisions. If you’re not going to do either of those things, you’re probably not going to make that wide use of a loyalty program within an organization very successful.”

Aside from driving revenue, Berry pointed to the wealth of data generated by loyalty programs as a way of proving ROI to the C-suite. Gauging customer retention, net promotion scores, referrals, customer satisfaction and engagement are all ways of proving loyalty marketing is worth doing.

“[These are] all kind of metrics and indicators that people are getting what they need out of you, and are actually engaged with your brand – beyond the financial metrics.”

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Jim Love, Chief Content Officer, IT World Canada

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Candice So
Candice So
Candice is a graduate of Carleton University and has worked in several newsrooms as a freelance reporter and intern, including the Edmonton Journal, the Ottawa Citizen, the Globe and Mail, and the Windsor Star. Candice is a dog lover and a coffee drinker.

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