And the Winner in Canadian Loyalty Is … Everyone?

Loyalty memberships have continued to rise in every industry in Canada over the past two years, the 2017 COLLOQUY Loyalty Census found. Canadians are demanding of brands but still see value in loyalty programs and trust them. But the numbers come with a warning. We seek answers in four sectors.

By Melissa Fruend, Partner, LoyaltyOne Global Solutions

If the latest analysis of loyalty programs in Canada proves one point, it is that a wave of trust can raise all ships: memberships, partnerships, ownership, relationships.

According to the 2017 COLLOQUY Loyalty Census, a regular audit of the consumer loyalty industry, the number of consumers enrolled in loyalty programs rose across all business sectors, from retail to coalition and more. In total, the report counted 175 million memberships – a 35% increase from 2015, when the last Loyalty Census was conducted.

This is the second consecutive Loyalty Census in which memberships in every category grew; evidence that even despite the growing numbers (13.3 program memberships for each Canadian household), loyalty marketing is succeeding in achieving emotional engagement.

This is no small feat. Canadians are particularly demanding of brands, so sustained growth indicates they continue to trust and see value in the loyalty equation. This might be because of increased competition, which forces innovation.

But the numbers also come with a warning: With memberships increasing so rapidly, Canadians are bound to choose their favourites and bail out on some due to the overwhelming volume of offers. Only those that maintain an emotional connection via brand equity, and thereby earn consumer trust, will stay afloat.

Rising Above “Marketing Schemes”

The risk of membership loss is evident in the area of the Loyalty Census research that gauges consumer sentiment. Nearly half of Canadian respondents – 46% – believe loyalty programs are nothing more than marketing schemes. Also among the findings:

  • 77% of Canadians said they participate in a loyalty program at least once a month.
  • But those programs have to resonate. Nearly 70% of Canadians said they simply ignore irrelevant marketing communications.
  • Perhaps this is why close to a third of Canadians say they feel overwhelmed by the number of programs available.

And yet membership numbers keep rising. The following is a breakdown of membership growth by industry.

Industry Memberships by the Numbers: the Biggest, Latest and Fastest

Retail: With 44.2% growth, to 89.6 million members (that’s up 27.5 million), retail continues to dominate the loyalty industry with more than half of all memberships. This may be because of the credibility of large operators, such as Canadian Tire (My Canadian Tire ‘Money’), Shoppers Drug Mart (the Optimum Card) and Loblaws (PC Plus, which counts millions of members). Still, continued success means reinforcing the features that ensure loyalty, such as meaningful customer experiences. To do this, retailers must understand which data to collect and how to put it to use to generate accuracy in targeted and well-timed offerings.  

Financial: Bank and credit card program memberships rose by just 0.3% from 2014 to 2016, accounting for 34 million members. Still, it is the second-largest player in the loyalty field, as Canadians are loyal to their bank and credit card affiliations. This is not surprising, since the industry is dominated by just five institutions that operate in a mature loyalty market. Adding dimension are new players, such as the program Drop, which boosts credit and debit card rewards by enabling members to immediately earn points when they buy with partner brands, such as Lululemon.

Coalition: The smallest contender in loyalty two years ago, coalition program memberships rose an impressive 78% since 2014, to 27.2 million members. This growth can be attributed to new additions, including Scene, a program that added more than 10 partners in recent years, and MORE Rewards, which recently qualified as a coalition with the addition of two national partners, including Scotiabank Visa. These initiatives join industry leaders Aeroplan and the              AIR MILES Reward Program, which alone counts more than two-thirds of Canadian households as members.

Travel/other: Even with a 33% boost, the travel/other sector, which includes hospitality and entertainment, is the smallest in loyalty memberships, at 24.2 million. This may be because of the number of travel organizations participating in coalition programs. But the industry is expanding. Relative newcomer WestJet Rewards is apparently responding to Canadians’ demands for relevance by offering a cash-back reward system that is easy to understand. What’s clear is Canadians are using their memberships: 64% said they took at least one flight for business or leisure in the previous year, according to the Census.  

Regardless of how the membership numbers rose – organically or through new program entries – the Census shows Canadian consumers still trust and find value in loyalty. The onus is on marketers to maintain that trust, and never take it for granted.

Because trust, regardless of how it is won, can wane if program operators don't stay the course of relevance. This requires data analytics to customize meaningful rewards in as frictionless a manner as possible, every day, and showing consumers that the organization “gets” them as individuals. Consumer engagement increases when communications and offers stop being about the brand and clearly focus on what is relevant to the customer.

You can read your copy of the entire 2017 COLLOQUY Loyalty Census here.

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Tags: loyaltyone, loyalty, census, industry, marketing, consumer, business