Air Miles sponsoring companies-case histories

[This article appeared in a supplement to Strategy sponsored by Loyalty Management Group.]Some of Canada's leading corporations have embraced the air miles program and, in fact, now incorporate the program as a key element in their marketing plans.Bryan Pearson, LMG Canada...

[This article appeared in a supplement to Strategy sponsored by Loyalty Management Group.]

Some of Canada’s leading corporations have embraced the air miles program and, in fact, now incorporate the program as a key element in their marketing plans.

Bryan Pearson, LMG Canada director, sponsor marketing, says companies are willing to invest in marketing programs in which they have specific results in mind and they can measure those results.

‘Companies are realizing that rewarding current customers is a very good investment,’ Pearson says. ‘One that often pays superior returns to constantly trying to acquire new ones.’

‘For today’s businesses, it’s a combination of understanding the value of customer loyalty and the ability to quantify marketing as an investment – and, they’re looking for a return on that investment,’ he says.

air miles sponsoring companies recognize the value of customer loyalty and the potential of the program and many since joining have experienced growth beyond their expectations.

Terry Plomske

Manager Marketing Communications

Shell Canada, Calgary

Terry Plomske says Shell’s market share is up considerably since joining air miles, and, accordingly, volume is up in excess of industry demand.

Shell launched its air miles program in February 1993, although the company was approached many months before that.

Shell took several months to analyze the opportunity and concluded that it offered great potential for the business, while, surprisingly, not appearing to have much of a downside.

‘We did consumer research, and it validated the material that was presented to us by Loyalty Management Group,’ Plomske says.

‘It said a reward program involving air travel was the most attractive award in the minds of consumers,’ he says.

‘Plus, we had our experience in the u.k. Shell is part of air miles in the u.k., so we had something to back up the research as well.’

‘We’re very happy with the program, and our retailers are happy with the program, and they’re paying for these air miles, too.

‘They share in the cost and are doing it willingly because they’re seeing the benefit of the program.

‘There’s tremendous power in the concept of the program plus there is growing physical evidence of people actually reaping the travel awards.’

In-house, Shell manages its involvement with air miles within the marketing communications department.

Plomske is the primary liaison between Shell and LMG Canada, while promotions adviser Olav Boersma handles cross-category promotions conducted with other sponsors, and Shell’s proprietary retail promotions.

air miles is the core of all of Shell’s retail marketing programs.

‘We’re certainly trying to maintain the brand positioning of Shell within the air miles program,’ Plomske says.

‘We did a coalition tv campaign with lmg at the beginning of our involvement, and we found wonderful co-operation in helping us achieve our brand positioning,’ he says.

‘The look and feel of Shell creative really came out in that air miles commercial.’

In the future, Plomske says, Shell hopes to move into an area offered by the air miles program that it has not tapped into yet – Coalition Database Marketing.

‘The real power of the program is all of the sponsors promoting the same message, and then the cross-pollination of the program as well, that is, getting the collectors to shop at all the sponsor locations.’

air miles is part of Shell’s smaller tactical promotions as well.

For example, when one station is closing, the company tries to transfer customers to the next closest location with air miles bonus miles vouchers that are redeemable only at the next closest Shell station.

‘We’ve also tried to ensure that at least 50% of the signage on our sites has an air miles component to it,’ Plomske says.

‘There are pole signs, pum-toppers, out on the forecourt of the locations, danglers inside, and then various counter-top pieces as well, including air miles sponsor brochures for air miles account sign-on,’ he says.

‘We’re also very strongly encouraging our attendants to ask customers if they want to join air miles.

‘We’ve added a question to our regular mystery shopping program, so the mystery shopper can mark the attendant on whether they mentioned air miles during the purchase.’

Shell, due to the success of the air miles/mega miles promotion last November, is also taking part in the second flight, which launches this month.

mega miles is a national program involving many sponsors.

A booklet of vouchers is given out at various outlets good for particular air miles bonus offers at participating sponsors. About six million booklets will go out.

Jim Dethy

Senior Manager Marketing and Business Development

Bank of Montreal

Two and a half years ago, Bank of Montreal was the first sponsor to be approached to participate in the air miles program by Loyalty Management Group Canada.

Jim Dethy, senior manager marketing and business development for BoM, says:

‘At that time, what was happening in the credit card marketplace was that the focus was very much on the gold, up-scale programs.

‘All rewards were targeted at that top 10% of the population,’ Dethy says. ‘Everybody was competing in that market, and there really wasn’t a lot going on in the rest of the market.

‘We looked at the air miles concept as an opportunity to go after the other 90%,’ he says. ‘We were quite content to do something in that marketplace and focus a little less on the top 10%.’

Dethy says the bank thought the air miles program would fulfill its needs and after consumer research and exploration of the program in the u.k. found all feedback was positive.

‘We were in the process of evaluating different opportunities that were out there,’ he says.

‘We were firmly of the opinion that the marketplace was going to change.

‘With the change of focus in the ’90s to more value-based ideals by consumers, what we needed was something to protect that consumer base and give them something back, a thank-you to them for maintaining their business with us.

‘We were looking around at different ideas and concepts, but this was the first one that had come along that had mass appeal and that really could be applied across the board.

‘Not just on the credit card side, but any banking service you could actually leverage and use air miles as a loyalty type reward.’

The Bank of Montreal is more than pleased with the program.

‘We’re much further ahead in terms of results than what we’d anticipated when we did our original business case,’ Dethy says.

‘The utilization of the products, particularly the credit card, has certainly far exceeded our expectations,’ he says.

‘The people that take these cards utilize them very heavily.’

Bank of Montreal has been using air miles beyond its credit card business with special products such as air miles savings accounts and chequing accounts and air miles offers on personal loans and mortgages.

Those services are called continuity programs, regular services that any customer can take advantage of at any time.

‘In addition, we’ve used air miles in a number of what we call `sprint initiatives,’ ‘ Dethy says.

‘Things like short-term incentives on travellers’ cheque purchases, purchases of packaged plans, gics and other bank products and services.

‘We have also used air miles for staff incentives and rewards for good customer service.

‘air miles is a very versatile tool.’

Becoming an air miles sponsor has also resulted in the creation of three new Bank of Montreal MasterCard products: a standard air miles MasterCard; a gold air miles MasterCard, and a co-branded air miles MasterCard with Shell Canada.

The basic reward collectors get for sign-up on the standard card or the Shell co-branded card is a 100-mile sign-up bonus and the $35 fee is waived for six months.

Collectors earn one air mile for every $20 spent with the card.

Those signing on with the gold MasterCard get a 200-mile sign-up bonus. The annual fee is $95.

Dethy says the double-branded card has been successful.

‘It’s a win-win situation between ourselves and Shell in that Shell, through the MasterCard, provides a way for their customers to build their air miles rewards even more quickly,’ he says.

‘From the bank’s perspective, it provides us with over 3,000 outlets to distribute our applications through with the additional promotion associated with it.’

BoM has been promoting its air miles products in all areas of marketing, including telemarketing and statement inserts to its own customers, as well as to the air miles base of collectors.

The bank has promoted air miles not only through its relationship with Shell, but in alliance with other sponsors such as Safeway and Multitech, which have advertised the air miles MasterCard at their outlets.

MasterCard applications have also gone out in Provigo and Safeway flyers.

‘We also have, depending on the time of the year, done a lot in the way of point-of-sale at branches – poster, banners, application forms – we’ve used virtually every marketing tool you can think of,’ Dethy says.

‘We’ve used television to a certain extent to promote the bank as being the air miles bank,’ he says.

Although the banking industry prides itself as being in the forefront of database marketing, one of the things about the air miles program that was attractive to the Bank of Montreal was its coalition database.

‘If you look at the credit card business in the past, one of the key reasons why people maintain a credit card relationship, or even a banking relationship is because of convenience to a particular location,’ Dethy says.

‘In terms of a credit card, if they deal with a certain financial institution, chances are, they carry that financial institution’s credit card,’ he says.

‘What the air miles database does is provide us the opportunity to approach customers of other financial institutions.

‘Not on a straight-up financial institution basis, but utilizing it as a tool to people who are predisposed to the product offering because they’re interested in the dream of travel.

‘It is a very effective way of approaching new people.

‘The ability to segment the database to different types of product and offers is phenomenal. And the cost of reaching people is a marketer’s dream.’

For all of the air miles sponsors, all of the aspects of coalition marketing have helped make their marketing spend more effective.

Each of the sponsors are non-competitive. And because they each have their own category, they easily and willingly work together to target each other’s customers.

‘It’s as important for Safeway, for example, to attract the Bank of Montreal customer as it is for the bank to attract Safeway customers,’ Dethy says.

He says the bonus is that ‘you’re sharing the cost of promoting the program with a number of other players.

‘You don’t have to carry the whole cost of the program yourself, nor do you have to worry about the administration of the program because a third party is doing that.’