U.S. database specialist buys The Loyalty Group

The Loyalty Group Canada - the company behind the popular Air Miles program - has sold itself lock-stock-and-barrel to u.s. database and data-capture specialist Alliance Data Systems, setting the stage for a possible u.s. launch of the Air Miles program and...

The Loyalty Group Canada – the company behind the popular Air Miles program – has sold itself lock-stock-and-barrel to u.s. database and data-capture specialist Alliance Data Systems, setting the stage for a possible u.s. launch of the Air Miles program and boosting Loyalty’s access to cash for expansion and acquisitions.

The deal, which Loyalty executives say will have zero impact on the Air Miles program, gives Alliance expertise that it can roll out to existing u.s. clients in its private-label credit card business. Alliance hopes to offer tailored loyalty programs to companies like Victoria’s Secret as part of its credit card management service.

‘Frankly, it’s a real enhancement to our product lines,’ says Beth Kuzela, a spokesperson for Alliance in Dallas, Tex. ‘It meshes very well with our client base.’

It also gives Alliance access to the Loyalty Consulting Group, which Loyalty executives say is the jewel in the crown.

‘It’s very advanced-level decision support consulting,’ says John Wright, director of marketing for The Loyalty Group. ‘It can range from site location analysis – figuring out where you should open your next site or where you should close an underperforming site – to customer profiling and modeling.

‘The majority of Loyalty Consulting’s clients have their own customer databases but they use our analysis tools and people to do the data mining exercise, so there’s a big opportunity for us to help Alliance’s clients with that kind of consulting,’ he says.

On another front, Alliance manages a database of over 50 million customers. Loyalty may have one of the largest databases in Canada, but nothing on that scale. Alliance’s expertise managing a database of that magnitude can only help Loyalty as it grows its own. Particularly if it plans to expand the program southward, though Wright says it’s a bit premature to talk about anything that ambitious.

‘We’re not looking to do that right now. It’s not anything we’re pursuing in the short run and we’re certainly not announcing anything.’

Loyalty’s corporate structure remains essentially intact. There will be no staff layoffs at any of Loyalty’s three offices, Wright says, and the management team remains in place with founder and president Craig Underwood retaining the helm of the company while reporting to Alliance chairman and ceo Mike Parks.

The relationship with Air Miles programs in the u.k., the Netherlands and Spain also remains untouched by the deal, says Wright. Those programs are managed by the Air Miles International Group – a separate company. Loyalty in Canada retains the trademark licence for Canada and will continue to observe the knowledge-sharing agreement between the two companies.

Alliance Data Systems began its life as JCPenney Business Services, a provider of electronic transaction processing and credit services.

The company was merged with World Financial Network Holding Corporation, the private label credit card issuer for u.s. reatil chain The Limited, in December, 1996, and renamed Alliance Data Systems.