Yahoo Finance Loyalty Wars: company rewards programs gear up to attract customers
The loyalty program wars are ramping up with deeper discounts for cash-strapped Canadians. Just this week, Air Canada announced its launch of a revamped Aeroplan to stoke interest in the travel industry, dropping expensive carrier charges and allowing members to use their points to book seats on any Air Canada flight. Other companies are either expanding rewards plans or rolling out their own programs to entice consumers to start spending again.
PC Optimum, one of the largest rewards programs in Canada, has multiple ways for members to get more value out of their points. You can earn up to 45 points for every dollar spent at a Shoppers Drug Mart, 30 points per dollar at stores selling PC products or with PC Travel, and 30 points per litre at Esso or Mobil locations when using one of their credit cards
Barry Choi, a personal finance and travel expert who reviews rewards programs on his blog MoneyWeHave, says PC Optimum is ahead of the curve. The biggest selling point for Choi is that PC Optimum will give away 100,000 points to people who sign up for their President’s Choice Financial World Elite Mastercard. That’s $100 in free groceries.
“They’re trying to attract the customers to get them used to their brand,” Choi told Yahoo Finance Canada. “They’re thinking long-term.” Choi added that this strategy could be useful in customer retention after the pandemic subsides.
“Once you're introduced to the program and given a chance to understand it... not only will they be loyal, but there's a good chance to also tell the friends and family about the program. So often becomes a word of mouth.”
Some corporations that had reward programs in partnership with other companies have decided it’s time to launch their own platform. Rexall dropped Air Miles as its travel rewards partner and started Be Well in May 2020. The platform was designed to help customers keep track of their prescriptions and personal medical history, though it also has the added feature of a points system where members can earn 10 points for every dollar spent.
Patrick Sojka, the founder of Rewards Canada, a website that covers rewards programs, says Rexall’s program allows it to own the platform at a much lower cost.
“To be a partner with [Air Miles] is very expensive, even if you’re a big retailer like Rexall,” Sojka said. “Nowadays, there are so many different back-end systems that you can buy for not very much and maintain on a monthly basis.”
Companies that once focused on travel rewards are beginning to change their focus towards cash back offers or rewards in grocery and take-out sectors. “We've seen a shift with a lot of programs to kind of promote the gift card or merchandise or cash back options,” Sojka explained. “They know nobody's redeeming for travel, but they want the people using the points.”
Sojka says banks like TD, CIBC and RBC are rewarding customers with multiplier points to spend their money at restaurants and on food delivery services. The TD Rewards Visa gives cardholders two TD points for every dollar spent in grocery, restaurant and fast food purchases, among other features. CIBC’s Aventura Visa Infinite helps to multiply points while buying groceries. Also, their travel points don’t expire, a feature that could be very important for customers who prefer to avoid travel during a pandemic.
Makeup retailer Sephora expanded its rewards system called Beauty Insider in May, a tiered program where members can earn one point per dollar and receive cash back on their purchases.
Businesses like grocery stores that have been heavily relied on during the pandemic are seeing more awarded points and higher cash-back rewards. American Express allows Amex Platinum Card cardholders to earn $250 cash-back after spending $250 in groceries.
Sojka says that these strategies have a good chance in promoting customer engagement and loyalty, which could be crucial for companies emerging out of the COVID-19 downturn.
“People will remember the programs that treated them well during this time, and where they got the most benefits.”
