Loyalty Programs

Let’s face it, not all good marketing ideas have to do with the Internet and new technology. “Loyalty programs” – where companies offer rewards in exchange for a customer’s business - are extremely successful, and aren’t going anywhere anytime soon.

I’m not entirely sure, but I believe loyalty programs started with the airlines. They’ve been offering “frequent flyer” programs for ages, and have developed that system to near perfection. The best customers get free upgrades to first class, access to the airport lounge, early access to the plane, a seperate check in line, and other valuable freebies for harried travellers. It’s gotten to the point where travellers will pay way more for a ticket, or travel a non-direct route, just to use their preferred airline to get the points and/or make use of their rewards. That’s exactly what the airlines want, so it works out just perfectly.

Why would someone fly American Airlines for anything but the points?

Maybe that’s not entirely fair to AA. But every day travellers look at their travel options, and choose to pay $50, $100 extra (or more!) per ticket to fly a big name airline, instead of flying a discount airline. Companies like Jet Blue and WestJet have loyal and passionate customers, but they don’t offer the perks of the big guys.

My favorite programs are those that allow you to collect points from a lot of different merchants. My Aeroplan card now allows me to collect points at Esso, and my Air Miles card allows me to get points at Dominion, Bank of Montreal, Bell Canada, Shell Gas, and on, and on. The only downside to the Air Miles type of program is that it might be less effective as a customer attraction tool. I would go to Dominion anyways because it’s the closest grocery store, and I’ll stop for gas at the closest gas station and not look out for a Shell. But it’s a nice perk to think you’re getting closer to some neat reward with every purchase.

McDonald’s should offer a loyalty program. You swipe a card to collect points every time you buy, and the go online to shop for things to buy with your points. The benefits are:

1) More info about their customers, as people register for the program

2) People buy more food from McDonald’s as opposed to Burger King, Subway or Quiznos which do not have loyalty programs

3) Some of the rewards could be McDonald’s branded items, like caps, shirts, golf balls, and such. More logos out there.

4) You’re identifying your best customers. These are the people it’s worth money sending coupons and things to since they are more likely to respond. Identifying the best customers often increases the ROI for marketing programs – spend less to get a higher % return.