Air Miles CanadaRebranding the Air Miles Reward Program

INTRODUCTION

Objective-

• Intended to re-energize the brand and the Program’s more than 9 million active household accounts, representing more than 14 million Canadians.

• The campaign was also meant to refocus the brand’s premier position in the loyalty industry.

INTRODUCTION

Rebranding Campaign featured two approaches thatwere new-

• Background consumer research had not followed the conventional route of focus group.

• The campaign had strong emotive elements in its design and execution.

THE COMPANY

The program was owned and operated by Loyalty and Marketing Services - subsidiary of Alliance Data Systems Corp. (ADS) - based in Dallas, Texas.

ADS was a leading provider of transaction services, credit services and marketing services.

Managed more than 105 million consumer relationships for some of North America’s leading companies.

THE CUSTOMERS

Program had 3 sets of customers: Sponsors , Collectors, Suppliers.

Sponsors:

• More than 100 brand-name business partners, utilized the coalition loyalty platform offered by the program - issuing reward miles to shoppers for every purchase.

• Sponsors included supermarkets, financial service providers, national petroleum retailer, consumer and B2B services - forming the largest coalition offering a common loyalty platform.

• Canada Safeway, Bank of Montreal, Shell Canada, Amex Bank - Largest Sponsors, 44.6%.

THE CUSTOMERS

• Each Air Mile reward was both a reward to the consumer for shopping at Sponsor’s location and an incentive to shop again with same retailer.

• Program offered category exclusivity to Sponsors on a regional or segment basis.

Benefits to Sponsors-

• Program contributed to sponsor’s effort to change consumer behavior .

• Enabled the business to operate a loyalty program at a lower cost.

• A dedicated team was assigned for each sponsor who guided them and serviced each account.

THE CUSTOMERS

Collectors:Individual consumers and households acted as collectors – accumulated reward miles on purchase at sponsor’s location or by using one of credit-card partners.

Reward structure facilitated a quick and easy manner for collectors to earn a broad selection of awards.

The program has issued 17 billion reward miles since 1992.

THE CUSTOMERS

Suppliers:Included airlines, leisure and entertainment providers and manufacturers of consumer electronics.

Provided products and services that collectors could receive in exchange for accumulated Air Miles.

Program featured 300+ suppliers, offering 800+ reward opportunities in multiple categories

The Revenue System

The program collected fees from sponsors based on the number of air miles issued.

Fees for marketing and administrative are provided to sponsors- “Deferred revenue”

Some reward miles went unredeemed by collectors – “Breakage”.

Air miles rewards were never expired. Till Dec 2005, $610.5 M as deferred revenue

and 3.25 billion reward miles are issued.

The Business Model

The program competed against loyalty programs by other companies.

Remain partnered with sponsors that were desirable was crucial to remain competitive.

To attract new sponsors and consumers – sustain active collectors.

Maintaining differentiation was crucial to remain competitive.

The Competition

The Canadian loyalty market was becoming saturated.

Also popularity of loyalty credit card was growing.

Company needs to preserve the distinctiveness of Air Miles brand.

The Program segmented the collectors into 4 groups based on intensity of their engagement: Best, Next Best, Maintain and Low.

The Rebranding program was targeted to Next best collectors.

Rebranding

Other reasons for rebranding:The program was no longer earning a bulk

of its revenue from air travelers.Collectors had limited awareness that the

program went beyond the flight reward.Aeroplan, the Frequent flyer program was

indicating its goal to replicate Air Miles model.

The Rebranding Methodology

Stage I

Examining two traditional approaches

•Ascertain gaps•Seek differentiation by filling them

•Look Inwards•Change Positioning to reflect deeper insight

More Meaningful

Stage II

Expectation from rebranding.

Attitude of collector segment

Supplier or

sponsor

Cust. Acquisiti

on

Consumer Awareness

Inc. in Issuance of Reward

Miles

Stage III

Consumer Insight

Focus Group Format

Storytelling

Theme: “Feeling Rewarded”

Group Split: Each group was split into teams.

Team Activity: Develop a story about “feeling rewarded”.

Wrap Up Activity: Each participant was invited to write a personal story of feeling rewarded.

Storytelling

Each Story was personal and different.Every Story was built around common

elements.Each story began with a sense of hope for

the future.Then in each story there was a crisis.After a period of trial and tribulation, each

story ended with a resolution. The goal was achieved.

Learning from Activity.

Emotions associated with “Feeling Rewarded” were more important than the reward itself.

It was this realization that marked the beginning of a new journey for the brand, from functional experience to one that is emotionally engaging.

Conclusion.

Thank You