Exploring Business Strategies for Customer Loyalty

Canadian Tire Loyalty Program

Canadian Tire Money, the best loyalty program?

Among all loyalty programs, it is my belief that Canadian Tire has one of the most straight forward, simple and easy to use programs. The concept of it being that for every purchase you make in store, you get a percentage back in Canadian Tire money. You can use this money towards your next purchase or collect it and use it in a one big chunk to pay for an entire bill. It started out as handing out bills that looked like what the Canadian money looked like when it was made of paper, and it basically was vouchers for discounts that could stacked on top of each other for bigger discounts. Nowadays, Canadian Tire money has moved to the electronic world, and they give you a card, with a keychain fob so it can always be carried on the person. For people who do not have the card they still hand out bills, but it is more convenient for frequent shoppers at Canadian Tire to keep the electronic card.

I think this loyalty program is one of the best, most tangible in terms of rewards. The quantity you get in Canadian Tire money does equate to the same value as regular money. The bigger the purchase, the higher the Canadian Tire money earned. What also sets this loyalty program apart, is that you make entire purchases with Canadian Tire money, and you still receive a reward on that purchase.

For example, as a comparison Shoppers Drug Mart, when you use the Optimum Points on a purchase, you do not receive any points on that purchase, not even on the percentage of real money spent. So Canadian Tire money is superior in their reward system in my opinion.

They have also rolled out credit cards, so you can earn Canadian Tire money on regular purchases outside of Canadian Tire and their affiliates. It can be good, if you are a responsible credit card user, I personally would not subscribe to it again, because I found I tended to use my card more often for the points, but I did not always keep up with my balance. This was my mistake, a problem of my own making, but someone who can maintain the credit card properly might benefit from this product. However, my earnings from regular purchases at Canadian Tire are enough for me to be satisfied with this loyalty program, and they have a wide variety of items that it makes sense to go to Canadian Tire for many of my needs.

About Airmiles.

Next up, in our breakdown of loyalty programs is Airmiles. This is one of the most confusing loyalty programs I’ve ever experienced. I remember the first time I got an Airmiles card, I was very excited because I was under the impression that the points you collected equated to actual miles on the air. I collected for months, until one day I went online to check how many miles I had gathered up to that point, when it prompted me to choose how I wanted to use the Airmiles. It asked how I wanted my airmiles to be divided, between Cash and Dream Miles. As I understood it, the Dream Miles was for air travel, and that was what I wanted. I understood I would need many miles to get a free trip eventually and I was okay that, until I found out that Airmiles were not one to one equivalent. The number of miles needed to achieve a trip, or even a discount on a flight was massive, and the rate of obtaining miles was very low.

At that point, I realized that using the miles for money off of purchased goods would probably pay out better, than to hope to use them for flights.

It turns out that to get $10 off at one of the stores that subscribe to Airmiles, you need 95 Cash Miles and you can use up to $750 which would be 7,125 Cash Miles daily. If you consider the low rate that miles are earned, that is very unlikely to be achieved if you are a casual Airmiles user.

The business is setup for you to obtain other means to earn the Airmiles, such as credit cards that have sign on airmiles bonuses, or a faster rate of obtaining miles by regular use of said credit cards. Also, if you are diligent on which store have promotions on Airmiles it might be faster. There is a variety of stores that use Airmiles, and although they are very popular among big retailers to obtain the higher amount of rewards it either takes a long time earning or subscribing mainly to the products that help you collect.

Another downside to the Cash and Dream Miles split is that it is not transferable. Once you’ve accumulated Miles they are staying in that side of the rewards. You are allowed to change how much percentage you wish to put into either one, as many times as you want, but the earned miles stay as what they have been earned. If you are like me, and work towards the Dream Miles, only to find out that the amount of miles needed is not a one to one ratio, and in fact there is no set amount as it varies from what places you are travelling to, to the type of seat preference. You realize that you’ve been collecting something that you probably will not get to redeem unless you join their other product lines and promotions. Then, realize that you cannot use the earned Miles for the other type of reward, and ultimately, they are useless to you. It is for this reason that I find Airmiles to be confusing, and intentionally ambiguous to mislead their users.

Shoppers Drug Mart’s Optimum Points

The first company we shall be taking a look into is Shoppers Drug Mart, and their loyalty programs is commonly known as Optimum Points. It is a system that gives you 15 points for every dollar spent, and after you hit a certain amount of points, you can redeem those points for cash discounts on your purchases. The higher amount of point you have, the bigger the rewards. They also have events were if you spend a certain amount of money in the store in non-pharmaceutical products the points you receive increase. One of these events is the x20 for purchases over $75, so instead of earning the regular 1,125 points you would receive for that purchase, those get multiplied by 20, equalling to 22,500 points instead. Now, that would seem like large amount of point, however, to hit the first threshold of redeemable points you need 10,000 point for a $10 reward. The rewards go up by collecting more points, but the amount of money you have to spend even during these events is quite high. For the regular customer who only shows up occasionally they may very well not hit the higher amount of reward for a very long time, and those who do commit to the point system shall be spending large amounts of money continuously to collect the higher rewards. Recently they have added other partners where you can also earn optimum point, such as some gas stations, but the points gained per dollar are even lower than those earned at Shoppers Drug Mart.

It is on every customer to decide if spending money at these places is worth the rewards, perhaps they are if they are diligent on the earn more events, and only shop when they happen. Are there benefits to doing so? Or is it better to shop somewhere where the sales are better?

An introduction…

Hello!

My name is Paula Guajardo, and in this blog we are here to talk about different stores loyalty programs, and how those affect customers, and benefit the companies that set them in place.

So, if you are interested please stick around and read what I’ve found out!

Stay tuned for the next post were we shall explore the specifics of how loyalty programs work!