The Aimia Loyalty Lens: 2013 Q4 Report

THE AIMIA
LOYALTY LENS
2013 Q4 Report

A quarterly research report which explores
trends in consumer loyalty, attitudes to
technology and views on sharing personal data

2 / The Aimia Loyalty Lens

INTRODUCTION

The Aimia Loyalty Lens is the first in a series of quarterly research
reports, which are designed to explore trends in consumer loyalty,
attitudes to technology and views on sharing personal data. The
first report includes findings from research conducted in May 2013
and again in August 2013, based on a nationally representative
sample of over 2,000 customers.
The intent is for the Aimia Loyalty Lens to become a regular
survey, which will provide updates and commentary on consumer
loyalty and its impact on both businesses and consumers alike.
Aimia has been helping businesses build better relationships with
their customers for nearly 30 years. Aimia runs its own loyalty
programmes — Nectar in the UK and Italy, Air Miles in the Middle
East and Aeroplan in Canada — and on behalf of some of the
world’s leading brands.
Twenty years ago £1 in every £100 of household spend was
linked to loyalty. Today, £1 in every £7 spent earns rewards.
As technology creates more ways to engage with consumers,
so it leads to a proliferation of customer data. This pushes privacy
issues into the spotlight, so raising a question as to whether or not
customers are aware of how companies are using this information.
And furthermore do they care?
Is technology really creating better connections between the
brand and its customers or actually pushing them further apart?
While it is easy to be seduced by these new capabilities and
short term deals, they do little to engender true loyalty to a
brand — a long-term, mutually beneficial relationship between
a business and its customers.

1

Calculation based on ONS statistics, market share data, retailer revenues and relevant loyalty schemes.

© 2013 Aimia Inc. All Rights Reserved.

The Aimia Loyalty Lens / 3

LOYALTY

ONE THIRD OF CONSUMERS COLLECT MORE LOYALTY
REWARDS NOW THAN THEY DID PRE‑RECESSION

In the wake of the 2008 credit crunch, customer appetite for loyalty has grown dramatically. Two-thirds
of consumers use loyalty currency to help them economise. Eight out of ten loyalty collectors claim points
whenever they can, with one third collecting more rewards now than they did before the recession. Aimia
has seen evidence of this with Nectar. Since 2009 an additional three million members joined the programme
and 44 percent more Nectar points were issued. This research confirms that 87 percent of consumers
participate in loyalty schemes with high penetration across all types of households.
Being savvy and taking advantage of loyalty schemes has entered the psyche of all consumers with the
wealthy, or “thrifty rich”, participating in more programmes than any other group.

4 Cards

£30K

THOSE EARNING BELOW
£30,000 HOLD 4 CARDS
ON AVERAGE

D
CARD
LTY CARD
RD
LOYALTY CAR
LOYALTY CA
LOYALTY
LOYA

£90K

7.2 Cards
THOSE EARNING OVER
£90,000 HOLD 7.2 CARDS
ON AVERAGE

D
CARD
LTY CARD
RD
LOYALTY CARD
LOYALTY CARD
LOYALTY CARD
LOYALTY CARD
LOYALTY CAR
LOYALTY CA
LOYALTY
LOYA
The Aimia Loyalty Lens © 2013.

Whilst there is an obvious correlation with the wealthy and niche programmes like frequent flyers, the “thrifty rich”
are also embracing more everyday schemes like the Ikea Family Card. While affluent consumers were best situated
to weather the recession’s impact with their high household income and stable careers, they spend less and appear
to embrace loyalty more to help make their money stretch further.



LOYALTY

SUPERMARKETS TOP THE LOYALTY LEAGUE TABLE

From a list of 12 categories, respondents were asked to identify the top three sectors they felt most loyal to.
Supermarkets top the table with 29 percent ranking them in the number one position and 57 percent picking
them in their list of top three categories.
Banks and building societies trail in second place. Only 16 percent of consumers state they are most loyal to
this sector while 38 percent list them in their top three.

TOP CATAGORIES CONSUMERS ARE MOST LOYAL TO

38%
£

57%

29%

BANKS AND BUILDING
SOCIETIES

21%
SUPERMARKETS
AND GROCERY

TECHNOLOGY
BRANDS

MOBILE PHONE

27%
FOOD AND DRINK
ESTABLISHMENTS

16%
FASHION
RETAILERS


The infographic below demonstrates that again, supermarkets top the table when it comes to loyalty
programme membership. Just 12 percent are part of a mobile phone, fashion retail or airline loyalty scheme.

AIRLINES

FASHION RETAIL

MOBILE PHONE

HOME IMPROVEMENT RETAILERS

CREDIT CARD
PROVIDERS

FOOD AND DRINK
ESTABLISHMENTS

PETROL STATIONS

PHARMACY AND
BEAUTY

SUPERMARKETS AND
GROCERY

CONSUMERS ARE MOST LOYAL TO SUPERMARKETS WITH
73% BEING A MEMBER OF THE LOYALTY SCHEME

73% 32% 27% 24% 17% 13% 12% 12% 12%



LOYALTY

3 IN 4 ARE MEMBERS OF A SUPERMARKET
LOYALTY SCHEME

With supermarkets being first off the rank in the 90s with loyalty cards that provided them with real insight
into their customers, it is not surprising that they lead the pack by such a wide margin. However as loyalty
is engendered through other tools at less cost this margin between supermarkets and other sectors should
be reduced.
It appears that supermarkets are also getting it right in the way they communicate with customers. They scored
the highest in terms of sending out relevant communication to their customers. It can be assumed that they
are using the customer data collected via their loyalty programmes to help them deliver more engaging offers.
By contrast, the financial services sector scored the worst. What is most surprising about the finding is
that this sector holds considerable customer data and should be in a better position to offer more relevant
communication to their customers.

SUPERMARKETS SCORE HIGHEST WITH CUSTOMERS
FOR RELEVANCE OF COMMUNICATIONS

3
SUPERMARKETS
AND GROCERY

56%

RELEVANT

66%

IRRELEVANT
CREDIT CARD
PROVIDERS

58%

IRRELEVANT
BANKS AND
BUILDING SOCIETIES


INERTIA AND FINANCIAL SERVICES

Banks and building societies should take note of the reason why their customers remain loyal to them.
Thirty-three percent of respondents said it is because “I have been with them many years” and a further
16 percent said “I can’t be bothered to change”. At the moment inertia is the greatest friend to the financial
services sector. However, as the seven day switch designed to make it easier and less time-consuming for
people to move bank accounts has taken effect in September, it is clear that the sector needs to take the
opportunity to transform and rebuild customer relationships.


TECHNOLOGY

CONSUMERS CLING TO PLASTIC — CONTACTLESS
PAYMENTS AND DIGITAL WALLETS HAVE A LONG
WAY TO GO…
The unceasing pace of technological change offers companies around the world an ever-expanding horizon
of marketing possibilities. Sixty-four percent of UK consumers own a smartphone, and this figure rises to
81 percent amongst 18-24 year olds. And with 67 percent of consumers using their laptops for online shopping,
the potential for consumers to be discovering and eventually making purchases online means we now have a
network of shoppers who are “always-on”. Nevertheless, what the findings reinforce is the old adage that early
implementation and uptake is often gradual and that for technology to be effective it must first and foremost
serve its customers’ needs.
Digital wallets are one of the most recent additions to the consumer arsenal. Their potential has been
celebrated by some influential companies including Google, Apple and Samsung to name but a few. Yet less
than 1 in 10 consumers believe they would be very likely to use a digital wallet on a mobile device at present.
This figure doubles (to 22%) when it comes to those who consider themselves “early adopters” of technology
but even here digital wallets are currently seen as something they are not likely to use on the whole (49%).
The precursor to the digital wallet is often considered to be the contactless card. While awareness of this
technology is high (83%), the vast majority of respondents do not use them (24%). As with digital wallets,
early adopters and the younger cohort show an increased likelihood to use contactless cards. Despite this,
technology and payments companies still need to go further in convincing people of the digital worth of
mass adoption.

USE OF CONTACTLESS CARDS
FOR PAYMENT

24%

OF THE
GENERAL
PUBLIC

36%

18-34 YEAR
OLDS

37%

EARLY
ADOPTERS




TECHNOLOGY

In contrast, perhaps it is the slightly more familiar nature of the coupon that has led to its relative success in an
electronic format. In total, 26 percent of consumers have downloaded an electronic coupon for redemption at
a later stage with most of them (79%) accessing them from home rather than on the go.

CONSUMERS WHO
HAVE DOWNLOADED
AN ELECTRONIC COUPON
VIA MOBILE DEVICE

26%

ALL
CONSUMERS

36%

18-24
YEAR
OLDS

33%

THOSE
WITH
CHILDREN

25%OFF
COUPON
25%OFF

46%

EARLY
ADOPTERS


In short, while the payments industry has been the key driver for technological developments per se, the key
to mass adoption may well be the loyalty industry’s ability to incentivise and reward new behaviour.



PRIVACY

GENERATIONAL PRIVACY DIVIDE

Debate around the collection and use of data has never been more prominent and as the proliferation of data
is set to grow it is only natural that scrutiny from consumers, government and the media should intensify.
An obvious contrast is the difference between how the younger respondents feel about sharing data and
the older cohorts. Having grown up with the internet and Facebook they appear to have a different set of
“rules of engagement” when it comes to personal data.

ARE YOUR CUSTOMERS WHO THEY SAY THEY ARE?

The 18-24 year old cohort are more likely to share a wide range of information online (45%) versus the older
cohorts who are more guarded (just 26% for those aged between 55-64).
When asked to rate how happy respondents would be to share different types of personal information, name,
hobbies and interests and email address top the list. The most guarded information sets are mobile numbers,
web history, addresses and income level details.

HOW HAPPY ARE RESPONDENTS TO SHARE
DIFFERENT TYPES OF PERSONAL INFORMATION?
NAME

HOBBIES

EMAIL

INCOME

ADDRESS

WEB
HISTORY

MOBILE

£
49%

48%

45% 23%

22%

21%

17%


When people were asked whether they have provided false information to companies in the past 38 percent
of them admitted to doing so. This phenomenon actually rises to a half (50%) among 18-24 year olds. Mobile
numbers, date of birth and false names are the most common details falsified. The main reason for doing so is
to avoid companies contacting them in the future (72%).
With such a high percentage of the 18-24 year olds providing false information, we can assume that the rules
of engagement differ from the older cohorts who were brought up in an “offline” era and were often asked to
provide personal details for important documentation. Given that the younger age groups are more likely to
engage with companies online and sign up to offers on the go, this could explain the higher numbers providing
false information. For businesses this poses a real concern to the quality of the information that is being shared
by their customers. They will need to look towards other information to build a more robust understanding of
their customers.



PRIVACY

HAVE YOU READ THE SMALL PRINT?

When signing up to a new product or service 29 percent of consumers claim to always read the privacy policy.
Among the millennial generation this drops to 22 percent. Remarkably, 27 percent of the same age group say
that companies are clear about how they use customer information, 5 percent more than have actually read the
privacy policy!

PERCENTAGE OF CONSUMERS
WHO READ THE PRIVACY POLICY

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29% ALWAYS READ

2% DON’T KNOW

7% NEVER READ

20%
RARELY READ

42%

SOMETIMES READ




PRIVACY

BANKS AND PLACES OF WORK MOST TRUSTED
WITH PERSONAL DATA — ONLINE AND SOCIAL MEDIA
NETWORKS NEED TO BE MORE TRANSPARENT
When consumers were asked to rank how comfortable they are with companies handling their personal data, the
financial services sector came out on top with a mean score of 8.2 followed by place of work with a score of 6.9.

MOBILE PHONE

ONLINE RETALIERS

5.3

5.3

2.6

2.5
ONLINE SEARCH
ENGINES

5.6

SOCIAL
NETWORKS

5.9

LOYALTY
PROGRAMMES

6.1

GOVERNMENT
AGENCIES

6.7

UTILITY
COMPANIES

6.9
PLACE OF WORK

FINANCIAL
SERVICES

8.2

SUPERMARKETS

CONSUMERS ARE MOST COMFORTABLE WITH BANKS
AND PLACES OF WORK HANDLING THEIR DATA


Such high levels of customer assurance are likely to be driven by the highly confidential nature of banking
and places of work and the data security policies involved with both. A surprising finding in this area is that
supermarkets rank third for handling customer data (6.7 ranking) compared to utility companies (6.1) mobile
phone providers (5.9) and online retailers (5.6). Given that supermarkets assess what is in a shopping basket as
opposed to the highly personal nature of information that is shared with banks and employers, it is a high score
for this sector and again could be as a result of the way supermarkets have proven themselves in managing
their customers’ data.
In contrast, the more aggressive privacy policies of some online businesses are only strengthening the public’s
notion that social media networks are not being upfront about collecting and using data. Instead, they have
become a “necessary evil” which, albeit beneficial, are not doing enough to spell out exactly how our data is
being used.



CONCLUSION

Consumers and companies are embracing loyalty — whether it’s
through a traditional plastic card or virtual schemes. Technology
has made it easier for companies to not just understand customer
transactions but also the interactions they have with the company
— from searching online before they buy through to writing a
review post purchase — and these tools are likely to proliferate
over the next few years.
In the Big Data era, our research shows that many consumers
aren’t clear about how their data is used or why. For many, they
are unaware of the exact ramifications of the privacy contracts
they are entering into. There is also a clear divide between the
millenials who are more likely to share a wide range of information
versus the older cohorts who are more guarded. Companies
will need to take this on board and clearly have further to go in
being transparent about how they are using or intend to use their
customers’ data.
The overwhelming positive response to supermarkets and the
way they are using customer data based on the relevancy of
their communications shows that customers are happy to trade
information as long as the rewards are relevant. However, with
the seven day switch taking effect, the financial services industry
in particular needs to understand it can no longer rely on
consumer inertia. Banks and building societies will need to
start providing customers with more relevant communications
in order to retain them.


About Aimia
Aimia Inc. (“Aimia”) is a global leader in loyalty management. Employing more than
4,000 people in over 20 countries worldwide, Aimia offers clients, partners, and
members proven expertise in launching and managing coalition loyalty programs,
delivering proprietary loyalty services, creating value through loyalty analytics, and
driving innovation in the emerging digital, mobile, and social communications spaces.
Aimia owns and operates Aeroplan, Canada’s premier coalition loyalty program,
Nectar, the United Kingdom’s largest coalition loyalty program and Nectar Italia, Italy’s
first independent loyalty coalition program. In addition, Aimia owns stakes in Air Miles
Middle East, Mexico’s leading coalition loyalty program, Club Premier, Brazil’s Prismah
Fidelidade, and i2c, a joint venture with Sainsbury’s offering insight and data analytics
services in the UK to retailers and suppliers. Aimia also holds a minority position in
Cardlytics, a U.S.-based private company operating in transaction-driven marketing for
electronic banking. Aimia is listed on the Toronto Stock Exchange (TSX: AIM).
Visit us at www.aimia.com.

The Aimia Loyalty Lens: 2013 Q4 Report

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