Canadian Tire ups the stakes in its loyalty program, but do customers have loyalty fatigue?
TORONTO — Canadian Tire is revamping its loyalty program and for the first time bringing it into its other stores, including Sport Chek and Marks, under a brand symbol that has signified the retailer since its inception in 1940: the red triangle.
Triangle Rewards marks the loyalty program’s first major overhaul since the retailer of auto parts and kitchenware launched a digital app and loyalty card in 2014 to complement its longstanding paper Canadian Tire ‘money’ program.
The beloved coupon tender still isn’t going anywhere — Canadian Tire Money will continue to be handed out at stores to debit or cash-paying customers who do not have a loyalty card or app.
But the program’s enhancements come after a period of deep consumer frustration with some of Canada’s biggest loyalty programs over technical glitches, problems with point redemptions and ongoing concerns about privacy and data breaches. Despite that, data suggests Canadians are still heavy users of loyalty programs, which retailers have viewed as an increasingly important tool to hold on to their customer bases amid the rise of Amazon and online deal sites.
“I think loyalty fatigue has to do with the number of programs out there as opposed to (a lack of) willingness to collect rewards,” said Canadian Tire’s executive vice-president Allan MacDonald, who acknowledged it’s still an issue that many of Canadian Tire’s customers don’t realize that the retailer owns Sport Chek.
Canadian Tire bought Marks in 2002 and Sport Chek’s owner Forzani Group in 2011, but initially the company was not sure how much it wanted to integrate the brands, MacDonald said. Now viewed as complementary assets, executives believe they can be better leveraged by using the Triangle as a single common identifier between them and a preferable strategy to partnering with a third-party loyalty provider such as Air Miles.
Triangle Rewards will extend over time to the retailer’s other banners, including auto parts chain PartSource and Pro Hockey Life, and existing Canadian Tire app and card holders will automatically begin collecting Triangle Rewards when the program rolls out later this spring.
When you use a third-party loyalty program “there is some debate as to whether or not your customers are shopping with you because you give out those (third-party) points,” said MacDonald, one of the reasons Sport Chek decided to end its agreement with Cineplex’s Scene loyalty program.
“You don’t have access to be able to market to those customers because they are not your customers, they belong to the loyalty program. It’s very arms length.”
While they are expensive to create and market, retailers love loyalty programs because of they insights they provide into consumers’ shopping habits, and the bulk of consumers belong to more than one program. In a time of heightened sensitivity to the sharing of personal information on Facebook and other digital data-scrapers, one might think consumers would be more concerned about revealing their habits to large corporations.
But branding expert Andris Pone said that’s not typically the case when consumers have opted in to a trusted brand’s program.
“Canadians like their loyalty programs, and they love Canadian Tire,” said Pone. “In last week’s Leger survey, Canadian Tire was ranked third most-admired brand in Canada (behind Google and Shoppers Drug Mart), exactly the same position as last year. So this brand is less vulnerable than most to consumers’ privacy fears. And people have always understood that the entire point of loyalty programs from the retailer’s point of view is to collect information about you and presumably share it with their suppliers and other parties. That is the quid pro quo.”
Despite industry speculation about loyalty program fatigue amid consumer outcries over a proposed (and later cancelled) Air Miles points expiry at the end of 2016 and more recent technical issues related to PC Optimum, Canadians appear to be as loyal to loyalty programs as ever.
More than 90 per cent of household shoppers are in a loyalty program, according to the 2018 BrandSpark Canadian Shopper Study, and 80 per of them cent continue to use Air Miles — the same number as a year ago, when the program was in damage control over the points expiry outcry.
Triangle Rewards offers enhanced and more targeted rewards to consumers, said Susan O’Brien, senior vice-president of marketing, rewarding behaviour such as frequency of visits as opposed to just high dollar value purchases. It is also introducing a no-fee VIP customer credit card for frequent shoppers that will allocate extra rewards at its stores, gas bars and at Canada’s major grocery chains.
Robert Levy, president of Toronto-based BrandSpark, said consumers will likely regard Canadian Tire’s upgraded program as more valuable now because there will be more venues to collect and redeem the rewards, and because of higher targeted points offers.
“You really have seen the bonus points days work well for Shoppers Drug Mart,” he said. “People go to get the points, they see the benefits quickly, and they end up buying more.”
Canadian Tire’s loyalty program has more than 11 million members, which puts it in the same league as Air Miles and Loblaw’s recently merged loyalty program. More than six million customers had signed on to PC Optimum as of February, Loblaw said. The programs had 19-million members in total and an estimated half were enrolled in both prior to the merger.
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