Retailers missing the point of loyalty reward programs, Air Miles head says

Retailers have lost their way and have become too focused on using loyalty reward programs as a currency to attract customers, says the president of Air Miles. Bryan Pearson says most retailers are neglecting the wealth of shopper data that is collected by the programs that could be used to better market to their customers, which was one of the purposes the program was created in the first place. "Points are really viewed as discounts or an alternative way to get something extra and that's not a bad thing, but I'm not sure it's sustainable in the long run," Pearson said in an interview Thursday. "The de facto result of having a loyalty program really viewed as a way to attract the consumer through short-term tactical initiatives is you end up using what should be a targeted marketing tool as a mass marketing tool." Pearson, who was in Vancouver to speak to the city's board of trade, suggested that the majority of consumers feel there is too much advertising and marketing out there making targeted marketing all the more important. "It's about relevance, its about creating a differential experience for the consumer so you can get about getting that preferred relationship," he said. Since its launch in 1992, the Air Miles reward program has grown from a group of 13 sponsors to more than 100 today and more than 15.4 million actively participating individuals.

But the company is beginning to face greater competition. With a restructured Air Canada's decision to spin off its Aeroplan program, the airline's loyalty program has looked to expand beyond its traditional base of travel-related places to earn miles like flights, hotels and rental cars. Rebranded and operating on its own, Aeroplan (TSX:AER.UN, TSX:ACE.B, TSX:ACE.RV) has started to sign up new partners including Bell, Esso and Futureshop. Aeroplan spokeswoman Gillian Hewitt said the program would like to sign up a marquee partner in each of several retail categories including groceries, drug stores and home improvement. She suggested that while Air Miles may have more members, Aeroplan's members are likely more affluent and more attractive to marketers seeking to learn more about their customers. "There are data mining capabilities that we have that we do offer to our partners as part of our partnership services," Hewitt said. But Pearson says Aeroplan still can't offer the broad snapshot of its customers' shopping habits because while it has plenty of sponsors they don't have the same reach as Air Miles. "It gives us a powerful insight and an ability to create that sort of information pool that helps us work with our sponsors to begin to move to this experience marketing," he said. By Greg Wong