Club Z, Zellers’ popular rewards program, has two important new members.
Zellers has teamed up with Visa and the Canadian Imperial Bank of Commerce to launch a credit card that works in concert with the retail chain’s rewards program.
The arrangement will give Zellers a much more flexible rewards program and allow cibc and Visa to tap the vast Club Z membership.
This alliance follows a series of similar arrangements between cibc, Visa and Air Canada (Aeroplan); Toronto-Dominion Bank, Visa and General Motors; cibc, Visa and Ford, and MasterCard and Canadian Tire, among many others.
‘There’s not much room left [for other programs,]’ says Steve Webster, marketing manager, Visa product development, Card Products Division. ‘The market’s flooded.’
(Webster was highly involved in the research that led to the creation of the Club Z Visa.)
The attraction of the Club Z program for a credit card supplier is that it already has more than nine million members.
‘I can think of no other merchandising program in which the pieces fit together so neatly,’ said Dave Owen, Zellers’ vice-president sales and advertising, at the card launch.
Zellers claims it is the most successful rewards program in North America, with a 75% participation rate, meaning more than six million people have redeemed their Club Z points since the program was initiated in 1986.
The new Club Z Visa card is available to anyone who would normally qualify for a regular Visa.
When a participant makes a purchase in one of Canada’s 300 Zellers stores, they get 100 Club Z points for every dollar spent.
When they use the card elsewhere, they earn 15 points for every dollar spent.
The points ratio still makes for a long haul for the consumer. An item such as a Sony Sports Walkman costs 399,000 points ($3,990 spent at Zellers or $26,600 spent elsewhere). Purchases can also be made with a combination of cash and points.
Points can be redeemed any time, or they can be used to contribute to causes such as the Canadian Cystic Fibrosis Foundation, and unicef.
Other charities and organizations can use the cards to accumulate points collectively.
The point totals will be featured on participants’ monthly Visa bills.
Membership in the club is free, and there is no annual fee for the card. The interest rate is the standard 18.5% as it is for any regular Visa.
Visa Classic cardholders will be invited to transfer to the program with inserts in their November and December bills.
Their cards will be replaced with branded Club Z Visa cards when their regular cards expire.
The CIBC Club Z Visa cards feature the cibc logo across the top of a burgundy-colored card with the Club Z logo featured in the top right hand corner and the Visa logo featured in the lower right.
As with any Visa, the card can be used in automated banking machines.
Greg Mackenzie, vice-president of card issuing at cibc, says he expects about 500,000 customers to sign up for the Club Z Visa over the next three years.
Mackenzie has good reason to be hopeful: a mention of the new partnership in the most recent issue of the Club Z newsletter elicited 25,000 calls over three days, according to Douglas Ajram, director of Club Z.
‘That was just incredible,’ Ajram says. ‘It was a very good sign.’
The card program was designed after market research conducted in February and March of last year.
The initial research took the form of random phone interviews with members, non-members, and members of competitive programs across the country.
The research was used to determine the optimum annual fee, interest rate, and points ratio.
The results indicated that customers were quite particular about what they expected out of such a program. According to Steve Webster, it is important that a card such as this appeals to as many people as possible.
‘If you want to get 100,000 people, you charge a fee,’ Webster says.
‘If you want to get a million, you’re not going to be able to do that,’ he says.
‘Also, as soon as you start jacking up the interest rate, you’re going to lose people.’
More qualitative research in July and August in Vancouver, Montreal and Toronto allowed the companies to fine tune their program.
While a recent similar arrangement between Canadian Tire and MasterCard did not directly involve a bank, Visa byaws make neccessary the participation of a third party bank.
Royal Bank had also made a bid to run the Zellers program, but cibc was awarded the business in August.
For the time being, the plan will be marketed exclusively to current members of Club Z through mailers, as mentioned, p-o-s materials, and through applications at cibc banks.
The existing Club Z will remain in place, as is, for people who do not want the new Visa card.
The cibc has 1,400 branches across Canada.
Zellers, owned by the Hudson Bay Company, has 300 stores.
