Research &
Strategic Insight
THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013
LOYALTY
LANDSCAPE
UPDATE
Greetings and welcome to our first white paper of the 2013
season. We at SPC Card, in conjunction with our research
partne...
THE NOW & NEAR FUTURE OF LOYALTY IN CANADA
Research &
Strategic Insight 02
THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013
...
THE NOW: WHO IS USING WHAT CARDS & HOW?
Research &
Strategic Insight 03
The immediate takeaway from our second annual Puls...
Research &
Strategic Insight 04
THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013
THE NOW: WHO IS USING WHAT CARDS & HOW?
Can...
05
Early adoption is also something to consider in our
assessment; 76% of those aged 14-17 in our study were
enrolled in a...
Research &
Strategic Insight 06
THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013
Canadian Student Shoppers and Store Loyalty...
07
Taking a look at the collection versus redemption equation
that drives the loyalty machine, our annual study shows that...
08Research &
Strategic Insight
THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013
Canadian Student Shoppers & Store Loyalty Pr...
09Research &
Strategic Insight
THE NEAR FUTURE: TRENDING EXPECTATIONS & ISSUES
It’s important to note here that nearly one...
THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013
THE NEAR FUTURE: TRENDING EXPECTATIONS & ISSUES
NEW PRIORITIES
I would cons...
STATUS QUO
THE NEAR FUTURE: TRENDING EXPECTATIONS & ISSUES
 64% of our study base would consider contributing
reviews or ...
THE NEAR FUTURE: TRENDING EXPECTATIONS & ISSUES
 Make yourself consistently available where your
membership wants you to ...
Research &
Strategic Insight
About The Study
SPC Card and Conversion are proud partners in the annual “Pulse of the
Canadi...
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THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 LOYALTY LANDSCAPE UPDATE

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SPC Card and Conversion are proud to announce the release of the second annual “Pulse of the Canadian Student Shopper” study.

With 1 million+ cardholders aged 14-24 per year,
SPC Card - Canada’s leading student loyalty program, enjoys robust and privileged access to young Canadian shoppers.

The second annual survey was fielded in September, 2012 and has derived a robust sample size of 1440 young Canadian shoppers aged 14-24.

The study provides unprecedented access to, and of-the-moment perspective on, the volatile, influential and lucrative student consumer market in Canada. To match the evolving focus points of the industry writ large a major focus of this year’s study has been on the shifting expectations young Canadian shoppers have of loyalty programs.

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THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 LOYALTY LANDSCAPE UPDATE

  1. 1. Research & Strategic Insight THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 LOYALTY LANDSCAPE UPDATE
  2. 2. Greetings and welcome to our first white paper of the 2013 season. We at SPC Card, in conjunction with our research partners at Conversion, are pleased to share our findings and thoughts with our coalition partners and the industry as a whole. As North America’s dominant student loyalty program, SPC Card has unprecedented and unique access to the now and the near future of youth shopping behaviour through our 1.1 million student shoppers in Canada and America – and we like to share what we learn. We would like to thank our media partners and The Retail Council of Canada for taking interest in our research and distributing it. We look forward to working with these partners and others now and in the future as we help chart the course of marketing and retailing in North America and beyond. Dean Mazzariol President, SPC Card INTRODUCTION Research & Strategic Insight 01 THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013
  3. 3. THE NOW & NEAR FUTURE OF LOYALTY IN CANADA Research & Strategic Insight 02 THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 The tides are most definitely changing in the consumer landscape. Our 2012 Pulse of the Canadian Student Shopper study attested to this, and it’s largely due to the continuing definition of a new, digitally-driven retail consumer ecosystem. Social media and social CRM continue to emerge as pivotal elements of any and all marketing communication programs. The ongoing economic uncertainty paired with a proliferation of online discount buying platforms means consumers expect discounts everywhere. Meanwhile, the loyalty space continues to become more saturated than ever in Canada with a wide variety of new entrants to the market (Scene and Plum most prominently, but many more private retailer programs continue to pop up) and new “loyalty light” programs being introduced in categories that never touched loyalty before. Virgin Mobile is a prominent Canadian example now, with its Member Benefits strategy. There is also an undeniable change in expectations of Millennials to take into account when it comes to the loyalty space. Soft benefits are an increasingly influential element of any loyalty program, as is recognition for new and trackable forms of advocacy. We have also discovered that the loyalty game of collecting points (tokens, dollars, etc.) is certainly not dead with Millennials, however; instant gratification of varying kinds also plays a key role, particularly as an introductory mechanism and part of an ongoing surprise and delight strategy. So where do things stand right now and, more importantly, where are they going when it comes to the still abundantly fertile loyalty landscape here in Canada? Let’s take a look at some hot-off-the-presses results, freshly culled from this year’s SPC Card / Conversion “Pulse of the Canadian Student Shopper” study, fielded in August / September 2012 to the SPC Card registered members database and generating a regionally diverse sample size of 1440.
  4. 4. THE NOW: WHO IS USING WHAT CARDS & HOW? Research & Strategic Insight 03 The immediate takeaway from our second annual Pulse of the Canadian Student Shopper study has to be that loyalty programs are alive and well; 79% of our student shopper study base was enrolled in at least one private loyalty program, while a similar number (70%) were registered in a group or “coalition” loyalty program on top of a membership to SPC Card. Loyalty programs are most definitely an established and ingrained part of the modern shopper’s expected landscape of options and something that is not going away any time soon. Aggregate analysis also indicates that there is not as much of a gender distinction as previously marked in the loyalty landscape when it comes to who is actually driving loyalty program membership. Yes, females DO drive private loyalty program behaviour by a significant factor of 17%, but close to three-quarters (71%) of male student shoppers now play an active and formal role in the Canadian private loyalty landscape, versus the 88% of females that play a role. Importantly, these gender percentages come even closer when looking at group coalition membership results. THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 Canadian Student Shoppers & Store Loyalty Programs – Where They Collect Points (n=1440) “I usually collect reward points using:” MALE FEMALE 14-17 18-24 Regular Loyalty Card Credit Card Debit Card Mobile Phone Video Game Console Prepaid Card 0 10 20 30 40 50 60 70 80% 63% 74% 27% 23% 7% 21% 17% 18% 8% 3% 6% 5% 7% 1% 5% 3% 4% 2% 3% 2% 19% 41% 74% 63%
  5. 5. Research & Strategic Insight 04 THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 THE NOW: WHO IS USING WHAT CARDS & HOW? Canadian Student Shoppers and Store Loyalty Programs - Membership (Top 10) (n=1440, SPC Card Members) MALE FEMALE 14-17 18-24 MEMBER OF AT LEAST ONE STORE LOYALTY PROGRAM AMERICAN EAGLE ACCESS CARD INDIGO PLUM REWARDS BEST BUY REWARD ZONE COSTCO MEMBERSHIP CARD MY STARBUCKS REWARDS SEPHORA VIB BEAUTY INSIDER LA SENZA PRESTIGE VIP BLUENOTES SIGNATURE CARD SHOPPERS'S OPTIMUM CARD 71% 88% 28% 18% 18%18% 30% 17% 20%21% 13% 1%1% 28% 23% 8% 11% 43% 39% 45% 0 20 40 60 80 100% PETRO POINTS 10%11%
  6. 6. 05 Early adoption is also something to consider in our assessment; 76% of those aged 14-17 in our study were enrolled in at least one private loyalty program. Further, usage in the past month (earned, collected, redeemed, received a perk) is nearly ubiquitous across our study base, with 90% of student shoppers indicating usage of at least one loyalty program (group or private) in the past 30 days. Loyalty membership is an ingrained and frequently used behaviour that starts early. * No Annual Fee ** Annual Fee + Source: SPC Card Market Share Study 2012 Canadian Student Shoppers & Group Loyalty Programs - Membership (n=1440, SPC Card Members) MALE FEMALE 14-17 18-24 SCENE CARD* AIR MILES* SPC CARD**+ AEROPLAN* HBC REWARDS* 0 10 20 30 40 50% 21% 16% 13% 39% 33% 14% 16% 11% 11% 35% 26% 17% 16% 45% 24% 20% 17% 48% 50% 34% Research & Strategic Insight THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 THE NOW: WHO IS USING WHAT CARDS & HOW?
  7. 7. Research & Strategic Insight 06 THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 Canadian Student Shoppers and Store Loyalty Programs – Last Month Usage (Top 10) (n=membership established in study per program) “Of these loyalty programs, which of them have you used (earned, redeemed, received any benefit or perk from) in the last month?” MALE FEMALE 14-17 18-24 SPC CARDAIR MILES MY STARBUCKS REWARDS COSTCO MEMBERSHIP CARD AEROPLAN PETRO POINTS SHOPPER'S OPTIMUM CARD SCENE CARD SEPHORA VIB BEAUTY INSIDER AMERICAN EAGLE ACCESS CARD 0 10 20 30 40 50 60 70% 61% 63% 54% 53%52% 49%49% 48% 46% 50% 44% 45% 48% 42% 49% 52% 46% 44% 45% 56% THE NOW: WHO IS USING WHAT CARDS & HOW?
  8. 8. 07 Taking a look at the collection versus redemption equation that drives the loyalty machine, our annual study shows that the game is still on with half of our student shoppers perceiving themselves as at least “frequent collectors of points.” Another 30% indicate they collect points “all the time” (13%) or, at the top level, collect points“all the time and look for ways to double up points, etc.” (17%). And despite all the hoopla about new modes for payment and collection, just under 7 in 10 (69%) student shoppers still collect using their various standard loyalty cards with credit cards (25%) and debit cards (19%), pulling up the rear as the second and third most used collection vehicles respectively. Mobile phone collection (5%), video game consoles (4%) and prepaid cards (3%) round out the collection vehicles. Canadian Student Shoppers & Store Loyalty Programs – Collecting Points (n=1440) “Thinking about programs that allow you to collect points, which best describes you?” MALE FEMALE 14-17 18-24 I never collect points 0 10 20 30 40 50 60% I collect points once in a while 26% 29% 28% 27% I collect points when I am reminded 19% 16% 20% 15% 7% 9% 3% 5% I collect points all the time & look for ways to double up points etc. I collect points all the time 12% 13% 10% 15% I am a frequent collector of points 19% 20% 16% 23% 16% 16% 17% 17% Collect Frequently [Top 3 Box] 49% 50% 44% 55% Research & Strategic Insight THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 THE NOW: WHO IS USING WHAT CARDS & HOW?
  9. 9. 08Research & Strategic Insight THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 Canadian Student Shoppers & Store Loyalty Programs – Redeeming Points (n=1440) “Think about how you redeem those points, which best describes you?” MALE FEMALE 14-17 18-24 33% 34% 35% 37% 36% 35% 37% 21% 20% 8% 8% 10% 10% 21% 22% 33% I hardly ever redeem I save them up for at least a year I save them up for at least six months I save them up for a month or so 0 5 10 15 20 25 30 35 40% On the redemption side of the equation, we see results that one can look at from a variety of perspectives. From the normalcy and needs viewpoint, the fact that just over a third (34%) of student shoppers describe themselves as “hardly ever” redeeming and another third (36%) say they “save them up for at least a year” should be of some good news to points and credit-based loyalty programs where the house must always win; higher collection rates and lower rates of redemption drive the loyalty machine. Of course, there’s a flipside here that speaks to the potential of an increasingly detached base of loyalty program members –particularly within the context of a landscape that is getting more congested. Creating a legion of zombies without a mission or a preference is not the ideal approach. We also don’t want a legion of members who are increasingly cynical of the loyalty game; 60% of our student shopper base agrees that, “The problem with most loyalty programs is that they aren't very good at providing me with benefits or rewards quickly enough.” Luckily, the changing media landscape is presenting opportunities where engagement and advocacy can be driven, in part, without only having to offer more costly redemption and discount benefits. As per last year’s study, we have the developing digital marketing and retailing ecosystem to thank for this. THE NOW: WHO IS USING WHAT CARDS & HOW?
  10. 10. 09Research & Strategic Insight THE NEAR FUTURE: TRENDING EXPECTATIONS & ISSUES It’s important to note here that nearly one-third (31%) of our student shopper base states, “I don't find the communications I get from loyalty programs to be very relevant.” Not bad, but we can do better. Important options to consider in order to become more relevant, as highlighted in this study, include:  Offering more frequent rewards at a lower value for behaviour your modern shopper is increasingly comfortable with.  Nano-points, simple recognition and/or stored activity accumulation for use later in a surprise-and-delight context should be considered for desirable consumer behaviour. This could include downloading apps to their smartphones, checking in, advocacy, reviews and provision of more specific personal information in exchange for more relevant information and offers. The loyalty game involves a fine balance between engagement to drive allegiance, an increase in purchase volume, size and frequency, and keeping redemption rates predictable and manageable. Our study has identified a number of potential vectors that the wise loyalty program should start to recognize, consider and implement to suit the changing expectations of the modern consumer. Any loyalty program membership base should be recognized as the marketing function’s most valuable asset. It’s your addressable community of people who are “in.” It reduces your reliance on paid media within a measurable, responsive and highly scalable framework. It’s also a key recommendation and advocacy engine and, in the hands of a modern brand publisher, a brand enhancer of potentially epic proportions. Our goal, and ideally your goal, should be to make loyalty membership databases an asset on any organization’s books. With this assertion, let’s take a look at some ways the modern brand publishers can up their game within the loyalty space. THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013
  11. 11. THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 THE NEAR FUTURE: TRENDING EXPECTATIONS & ISSUES NEW PRIORITIES I would consider volunteering time to a cause or charity in exchange for points, rewards or discounts I am interested in using my phone rather than a card to collect points and receive discounts I wish loyalty programs offered more of an experience rather than just discounts I would consider converting points or rewards into ballots for daily contests to win trips, tickets and merchandise I would consider providing personal preferences to a loyalty or rewards program in exchange for more targeted and relevant advertising and offers I would consider driving my friends to shop in a given time period at a given store in exchange for points, rewards or discount I would consider converting points or rewards into credits to pay down obligations like a monthly cell phone plan or a student loan I like the idea of pooling points or rewards with friends and family as a route to bigger rewards, steeper discounts, etc Loyalty programs for people my age need to involve social media connections and community I would be likely to download a loyalty app to my smartphone I would consider contributing reviews or comments online in exchange for points, rewards or discounts I would consider checking in at various participating retailers in exchange for points, rewards or discounts 64% 62 % 55% 36% 44% 33% 41%59% 41% 34% 33% 45% Research & Strategic Insight 10
  12. 12. STATUS QUO THE NEAR FUTURE: TRENDING EXPECTATIONS & ISSUES  64% of our study base would consider contributing reviews or comments online in exchange for points, rewards or discounts.  A majority (55%) would also consider checking in at various participating retailers in exchange for points, rewards or discounts.  Utilizing the access and efficiency of modern, skillfully managed membership databases to give your members more dexterity with their points.  62% of our study base expressed interest in converting points or rewards into credits to pay down obligations like a monthly cell phone plan or student loan.  59% like the idea of pooling points or rewards with friends and family as a route to bigger rewards, steeper discounts etc.  41% consider volunteering time to a cause or charity in exchange for points, rewards or discounts. 69% I prefer getting instant discounts versus collecting points 63% I am pretty much always interested in new loyalty programs so I can save money 59% Emails are the best way for a loyalty program to communicate with me 39% When a retailer offers a loyalty program I know they want to offer me the best deals 11 THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 Research & Strategic Insight
  13. 13. THE NEAR FUTURE: TRENDING EXPECTATIONS & ISSUES  Make yourself consistently available where your membership wants you to be.  Just under half (45%) believe that, “Programs for people my age need to involve social media connections and community.”  44% would be likely to download a loyalty app to their smartphone (a figure destined to increase as rewards and recognition get offered to members for doing so).  Over a third (36%) are interested in using their phone rather than a card to collect points and receive discounts. Universal smartphone adoption could be the tipping point in the future.  59% of our study base indicates that email is still the best way for loyalty programs to send communications.  Think about experiential events and benefits that both enhance your overall brand relevance while also utilizing the omnipresent efficiencies of the digital world.  Indeed, one-third of our study base wishes loyalty programs offered more of an experience rather than just discounts. 60% The problem with most loyalty programs is that they aren't very good at providing me with benefits or rewards quick enough I don't find the communications I get from loyalty programs to be very relevant I am unclear about the value of reward points and often find them confusing 31% NEEDS IMPROVEMENT 31% THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 12Research & Strategic Insight
  14. 14. Research & Strategic Insight About The Study SPC Card and Conversion are proud partners in the annual “Pulse of the Canadian Student Shopper” study. With 1 million+ cardholders aged 12-24, SPC Card, Canada’s leading student loyalty program, enjoys robust and privileged access to young Canadian shoppers. Conversion Research, the full service insight practice helmed by award-winning market research expert Mike Farrell, provides undeniable longitudinal experience and objective discipline. This study was fielded online in September 2012 to a fielding universe of SPC Card members and derived a national total aggregate sample size of 1,440 Canadian students aged 14-24 – weighted to most recent StatsCan regional and demographic information where applicable. Full sets of detailed tables are available upon request. Customized detailed tables (i.e. cut by stores shopped or custom demographics) are available for a very reasonable fee. Project Lead and Author Mike Farrell SVP, Research and Strategic Insight Conversion Marketing & Communication Data Lead Caroline Wilson Vireo Research Design Diana Shim Interested in knowing more about SPC Card? Please contact: Nicholas Bianchi Vice President, Sales & Loyalty Marketing nicholas@spccard.ca toll free – 877.798.4637 ext. 241 Interested in knowing more about Conversion, this project and custom research opportunities? Please contact: Mike Farrell SVP, Research and Strategic Insight Conversion Marketing & Communication mike.farrell@driveconversion.com 416.938.0673 Please direct all media inquiries to Mike Farrell. THE PULSE OF THE CANADIAN STUDENT SHOPPER 2013 13
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