Equity Rewards set to sweep loyalty realm

After more than 10 years in the offing, a new rewards program that hit the streets Oct. 26 could potentially set the Canadian loyalty marketing industry on its ear....

After more than 10 years in the offing, a new rewards program that hit the streets Oct. 26 could potentially set the Canadian loyalty marketing industry on its ear.

Unlike any other loyalty program ever run in Canada, the Equity Retirement Rewards program provides registered members with a cash contribution to an RRSP account when they shop and earn points at participating sponsors. And, thanks to a recent ruling by the Canada Customs and Revenue Agency, the contributions are income tax deductible.

Although the program is launching with only nine sponsors, including the National Post, Sport Mart and Fernbrook Homes, the anchor sponsor is MBNA MasterCard, which has introduced a co-branded credit card that allows a portion of every purchase a program member makes on their card to be put into a retirement nest egg.

For a one-time registration fee of $25, anyone who joins the Equity Rewards program can immediately begin earning ‘Equity dollars,’ which, depending on the sponsor, can range from 1% to 10% of the value of their purchase.

Held in a trust account managed by TD Trust, once the value of earned Equity dollars reaches $100, the amount can be automatically transferred to a Dynamic Mutual Fund, which is subject to the same benefits and restrictions as any other mutual fund. Members can, however, choose to have the funds transferred to different types of investment products offered by Dynamic Mutual Funds, including RESPs and annuities.

According to Equity’s founder and president, Dennis Paul, the start-up venture hopes to have as many as 1.5 million members signed up within its first year of operation, and it expects to have at least four million Canadians registered in the program within the next five years. If it’s successful in attracting that kind of support from Canadian consumers, the program would rank among the largest in the country, along with the likes of Air Miles and Zellers’ Club Z.

Describing the results of several rounds of market research that have been carried out in Vancouver, Toronto and Montreal, Paul says he’s confident the program will resonate with Canadian consumers.

‘When the research results came in, they were pretty compelling,’ he says. ‘Well over half the people surveyed said they were highly likely to join the program, about 78% of our targeted market said they were very concerned about their retirement savings, and that the $25 membership fee did not create a barrier. In fact, a lot of people told us they would switch from other loyalty programs to join ours.

‘We feel confident that we have a very strong, motivational offer,’ he adds.

To promote the launch of the program, Equity has rolled out a $4.6-million awareness advertising blitz that includes heavily weighted direct response TV, radio, print and direct mail components. All elements of the ad campaign were developed by Toronto-based Echo Advertising & Marketing, while the direct mail portion is being executed by the program’s sponsors.

The program has been launched nationally, with the exception of Quebec, where it will be introduced some time next year.

According to Equity’s vice-president of marketing, former Toronto Blue Jays and Labatt Breweries of Canada marketing executive Terry Zuk, the initial goal is to build significant brand awareness of the Equity Rewards program both among consumers and potential sponsors.

Zuk and Paul say they have spoken to more than 100 potential sponsors, and have received expressions of interest from several, including major national grocery, gasoline and home improvement retailers.

‘The sponsor groups we’ve talked to are all very excited,’ Zuk says. ‘I think they all see the value in having loyalty programs that encompass more than their own retail environments. It doesn’t hurt that all the research we’ve seen says that for consumers, this will make them change the way they spend their money and where they spend it.’

All the same, Zuk admits it won’t be any easy task to get consumers to alter their habits based solely on the arrival of new loyalty program in the marketplace.

‘Clearly, this is going to be a build,’ he says. ‘We’re going to have to be patient and build our brand awareness. But, as that happens, we’ll be adding new partners all the time, and this will be become a very big program. It could be a monster.’