Canadian Loyalty Programs Surge but Face Challenges of Personalization and Relevance, Study Reveals [Interview]

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The 6th edition of the LoyalT study, by R3 Marketing and Adviso, indicates the number of loyalty programs held since 2017 has increased in Canada, with 52 per cent of people subscribing to more than 13 programs. 

However, there is a saturation in the number of programs people use (7.36 in 2023, compared to seven in 2021). High-income women are the ones who use programs the most. And although Canadians have more loyalty cards, only 51 per cent of them are actually used.

Hans Laroche

“Loyalty programs are being tested by new consumer behaviours and the new economic context. People now evaluate the value of a program not only by the exchange of points or discounts offered but also by the relevance and level of personalization of communication initiatives, in terms of content and/or offers,” said Hans Laroche, Senior Consultant Loyalty Adviso/R3 Marketing.

“Experience and ease of use, especially on mobile, as well as the ability to accumulate and redeem points across all channels are also important criteria for loyalty program holders.

Image: Chipotle Loyalty Rewards

The study of 10,000 Canadian respondents listed the following Top 10 loyalty programs in the country:

  1. Proxi Extra
  2. Chipotle
  3. Mondou
  4. PC Optimum
  5. SAQ
  6. Starbucks
  7. Domino’s Pizza
  8. Walmart
  9. Ultramar
  10. Irving 

Paul Lafortune, Lead Consultant and Relational and Loyalty Marketing with Adviso, who was involved in the study with Laroche, said customers are hurting because of inflation and higher interest rates and they’re looking where they can grab a deal with loyalty programs. 

Paul Lafortune

Consumers today want points for their transactions. They want free items. If they can get any type of rewards for surveys, they like that as well. 

“Personalized offers seem to be a go with customers,” said Lafortune. “They really like it . . . They’re based on your past purchases. 

“They want content. They want exclusive information, content, on products, on the company, shopping experiences.”

Image: Proxi Extra

The report said loyalty programs have evolved significantly over the past 24 months. Notably, the acquisition of Air Miles by BMO, Scene+ aiming to establish itself as the new coalition program in Canada, and programs developing a premium component like Triangle, Uber One, and Lululemon. 

“The LoyalT study’s analyses show a direct correlation between inflation and loyalty. In the last 12 months, 80 per cent of respondents have noticed a decrease in their purchasing power. In the previous study, content personalization was an influencing factor in behaviour,” said the report.

“Today, program users are willing to switch to a competitor in the same sector if the new program is more generous. The generosity of a program revolves around several dimensions, including the accumulation of points on total purchases (basic points) and the ability to earn additional points related to engagement (using the mobile app, participating in a contest, or writing a review) as well as exclusive discounts offered to members in-store, which have become increasingly popular in Canada but have existed for over 30 years in the U.S. and Europe.

“It becomes essential for a brand or retailer to understand its customers and their buying behaviours and use this data to enhance the offers presented, which, when relevant, constitute added value for members.

Mondou Cuddle Club Loyalty Program
McDonalds Rewards (Image: Dustin Fuhs)

Other highlights of the study include:

  • 51 per cent of members primarily use a mobile device to view program communications. This is an increase of four per cent from 2021. Points on each transaction are the most coveted reward type;
  • 26 per cent of respondents say they modify their purchases to accumulate points;
  • 49 per cent of respondents are members of Amazon Prime. Since 2019, the program has doubled its membership in Canada. 47 per cent of program members say they visit retailers more frequently to accumulate benefits. 18-34 year olds are among the strongest program users.

“The study reveals the most effective loyalty programs in the eyes of consumers. This is a very important part of the equation but not 100 per cent correlated with their business performance. Only brands that see loyalty as a business strategy and not just as a marketing operation benefit from the best economic returns, and only the best programs will remain relevant and profitable,” said Elizabeth Henry, CEO, Partner at Adviso.

R3 Marketing is a consulting firm specializing in relationship marketing and loyalty, created by Lafortune and Laroche, who have over 60 years of experience in the field. Adviso is a marketing agency.

Mario Toneguzzi
Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior News Editor with Retail Insider in addition to working as a freelance writer and consultant in communications and media relations/training. Mario was named as a RETHINK Retail Top Retail Expert in 2024.

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