Customer loyalty program value under scrutiny

The value of customer loyalty programs is under increased scrutiny by companies and users in the wake of Air Miles’ recent reversal of an unpopular expiration policy.

The operator of the shopper reward program, LoyaltyOne, angered many members last year with its proposal to void unused Air Miles after five years, only to abandon that plan weeks before it was to take effect.

“It put a little bit of a black eye on the industry as a whole,” said Patrick Sojka, founder of RewardsCanada.ca, which tracks travel reward programs.

Air Miles acknowledged the public frustration, saying card use dropped at the end of last year.

Blair Cameron, head of the program, said it’s premature to say whether that will reverse this year, but Air Miles is ramping up promotions to improve its relationship with collectors.

Still, the company has reduced the value of miles for some rewards, increasing the cost by about 20 per cent. Cameron said that change affects only 1.6 per cent of redemptions for its Dream rewards program, and does not apply to flights.

Last month, Metro said it was considering dropping Air Miles and launching its own loyalty program in its Ontario grocery stores following the consumer backlash. The supermarket chain said the change is one of many it considers when a contract is up for renewal.

The Air Miles misstep doesn’t help foster consumer trust and is a “cautionary tale” for other providers, said Sean Claessen, executive vice-president of strategy for marketing agency Bond Brand Loyalty.

It takes trouble with just one loyalty card to test the public’s patience with rewards programs, added John Boynton, chief marketing officer of Aeroplan operator Aimia.