Credit Card Loyalty Moves Past The Point

In the loyalty wars, stickiness lies in access to unusual experiences, not redemptions

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In the loyalty wars, stickiness lies in access to unusual experiences, not redemptions


There was a time when loyalty plans were so simple. Swipe your card, earn points. Spend years earning points. Spend a few more years earning points. Redeem points for a short flight somewhere. That time is gone.

Yes, points still work when it comes to inspiring loyalty for many consumers, but as the marketplace has become more cluttered, the major card companies — American Express, MasterCard and Visa—have had to increasingly go further to differentiate. The result has been a growing swath of high-end experiential/VIP-oriented programs that address a mounting consumer demand for more engagement in return for their loyalty. What’s more, in many cases the experiences aren’t given in exchange for points—members still have to pay. The reward isn’t a free experience; the reward is access to the experience.

It’s a trend identified by Maritz Canada, a company that works and tracks trends within the loyalty space, in its third annual Maritz Loyalty Report, which was fielded at the end of 2012. It surveyed more than 4,000 consumers and covered more than 100 programs across Canada. The study revealed that consumers do in fact exhibit a significant appetite for such programs. Among the findings: 40% of consumers in the loyalty landscape value reward programs that offer special services such as concierge benefits and front-of-the-line perks, and 31% value programs that offer VIP access to exclusive events or experiences.

“‘The point is not the only point’ was a key takeaway,” says Scott Robinson, senior director, loyalty, Maritz Loyalty Marketing. “Our study found that alignment with a customer’s core values is, in many cases, one of the strongest indicators of customer satisfaction, even stronger than important factors such as amount accumulated per dollar spent in a program.

“Consumers told us they are particularly loyal to programs that make them feel special, offer non-monetary privileges for members only and communicate often in ways that consumers find personally relevant and interesting. There is only so much that one can offer in terms of rewards and cash—these offerings are not proprietary,” he says.

“That isn’t to say that consumers aren’t keen on points anymore—points and more typical rewards still resonate highly with consumers. But programs stand to rise above with some subsets of consumers if they offer up more of the softer benefits and perks in the experience space.”

Growing consumer demand for relevant engaging experiences certainly explains why the pace at which such programs are developed, deployed and/or evolved has been undeniably picking up steam of late. MasterCard has been actively expanding out its Priceless Cities program with new and more relevant partnerships. Over the last year Amex has been beta-testing a new experiential rewards program, akin to its Front of the Line platform, called American Express Delights. Visa recently extended its Infinite Dining Series by adding culinary weekend getaways (at a cost of up to $1,250 for a couple) and partnering with Wine Country Ontario. It also recently launched the Infinite Music Series.

Each company, when identifying the inspiration behind their new offerings, echoes the same sentiment: it comes down to meeting a need for relevant lifestyle experiences on the part of their customer base.
“A lot of what we do is based out of research,” explains Jen Arthurton, head of consumer credit products, Visa Canada. “We spend a lot of time researching our consumers and getting feedback from them as to what their lifestyle interests are and then we use that as the basis for how we develop the premium experiences.”

When pushed on how successful their programs have been though, the big three all stopped short of providing attendance numbers, offering up instead that most of their events/experiences regularly sell out. Certainly the competition within the space suggests a real demand.

“We do keep a tight eye on the competition and we’ve seen in other parts of the world, where we’ve launched Priceless Cities, that the competition has acted very quickly in trying to respond to certain key high-gross markets where we have a Priceless City and [they] are starting to capture a greater share of spend,” says Lilian Tomovich, head of marketing, MasterCard Canada. “We’ve seen them respond very quickly in launching very similar programs. It’s like any product in the marketplace. It’s highly competitive, everybody’s out to get the consumer.” 

Read on for a more in-depth look at what the big three have been cooking up recently in the loyalty landscape to help satiate their customers’ appetite for unforgettable experiences.

American Express


American Express has long worked with Air Miles and Aeroplan to offer all its members the Front of the Line ticketing program. However, in 2012 American Express Canada tried bridging the gap between this mass program and the premium offerings it’s been extending to Platinum and Centurion card members­—VIP “white glove” concierge-type opportunities and curated experiences like trips to the Oscars or Grammys.
With its hybrid beta program, dubbed American Express Delights (with plans to rebrand it as American Express Invites to align it with global initiatives), the offering incorporates dining, retail and event experiences such as VIP access to Winterlude 2013 in Ottawa or film previews for all members.

It still skews more towards Amex’s premium customers based on their propensity for leisure and higher discretionary spending, but the brand wants Delights to give all members access to enhanced experiences, taking offerings for non-premium card members “beyond the ticket,” says David Barnes VP, advertising and sponsorship, corporate communications, American Express Canada.

Amex also recently launched a new enhanced travel product with Air Miles. The new Reserve Credit Card, unveiled in February, offers a more luxurious travel experience with perks including exclusive cardmember concierge service for travel planning, an annual companion flight, four annual passes to more than 600 airport lounges around the globe, access to priority security lanes at Toronto Pearson and priority limo and taxi service.

“Travel is one of the cornerstones of the American Express brand,” says Tracy Hendricks, VP, new product development/rewards, American Express Canada. “With this offer we’ve gone beyond the earn-and-burn transactions of traditional travel reward programs to focus on premium travel experiences and exclusive Cardmember customer service.”

MasterCard


Currently, MasterCard’s focus is on accelerating the Priceless Cities program, which it launched two years ago and is available to all its cardholders.

“What we’re trying to achieve is figuring out how we can add some pricelessness into people’s lives,” says Lilian Tomovich, head of marketing at MasterCard Canada. “So, you’ll continue to see our programming and the work that we do evolve around that concept.”

To date, the program exists in 21 cities globally, with Priceless Toronto the only Canadian entry. Each market featured has the opportunity to customize and create a value proposition of experiences relevant to the city and the cardholders living therein. The more premium the card, the fancier the reward.

Available experiences cross categories including sports, culinary, shopping, arts and culture, travel, music and entertainment, ranging from the high-end (VIP access to World MasterCard Fashion Week; private tours of the ROM’s vault), to the all-access-type (access to the Beyoncé World Tour 2013, for which MasterCard recently announced its sponsorship).

The brand is actively exploring new partnership deals as well as expanding cross-border opportunities to capture not just the domestic spending, but also the international spend from MasterCard’s affluent and travel-hungry cardholders, says Milos Vranesevic, VP, sponsorship and merchant marketing, MasterCard Worldwide, Canada.

“Creating experiences not just within Toronto but across Canada, we think that has strong appeal to international cardholders,” says Vranesevic. “There’s significant potential when you think about where tourists travel through Canada and areas of interest. That’s something that I think is going to continue to be a priority for us.”

Visa


Since the 2008 launch of its Infinite Dining Series for Infinite cardholders, Visa has been focused on providing affluent customers with experiences that address their wide range of lifestyle interests. In that vein, it recently extended Infinite Dining to include experiences in Niagara region’s Wine Country and culinary weekend getaways, as well as launched a brand new Infinite Music Series.

Knowing that its affluent customers often have wine on the mind, Visa tested its first Wine Country event last summer, allowing Infinite cardholders special benefits at wineries in the region, (complimentary tastings, exclusive winery events and discounts). The brand has plans, says Jen Arthurton, head of consumer credit products, Visa Canada, to blow out the Wine Country component more significantly as well as its Culinary Weekend concept, which featured celebrity chefs, wine experts, dinner and brunch.

The Infinite Music Series also launched last summer with a concert featuring the The Tragically Hip. Like the Diner Series, the Music Series provides Infinite cardholders with special VIP perks at big musical events, including meet-and-greets, pre-sale ticket access and tickets to “sold out” concerts, valet parking and VIP lounge access.

“[Developing and executing these kinds of programs] is about going above and beyond the traditional utility of a card, at a point of sale, or even around rewards, and creating some differentiation,” says Arthurton. “Moving into the experiential piece is really creating memories for cardholders that are associated with their card. That in itself, above the reward redemption value, creates a longer term stickiness.” 

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