5 points to make your loyalty rewards pay

Here’s our strategy to make them work for you

CALGARY, AB, Apr 24, 2014/ Troy Media/ – I’ve never been much of a couponer, but I love customer loyalty programs. In fact, last week I paid for my groceries with reward points, and it’s not the first time I’ve done this.

I am not alone. The average Canadian consumer uses 8.2 loyalty programs, according to Lonely at the Top: The 2013 COLLOQUY Loyalty Census compiled by the organization’s research director, Jeff Berry.

We’re as likely to use point programs to stretch our basic household budgets on everyday items as to splurge our points on a sunny overseas vacations. Some of us even have wills that determine which of our heirs will inherit our reward points:

According to the Canadian Marketing Association, the five most popular loyalty programs in Canada are Air Miles, Shoppers Optimum, Canadian Tire Rewards/Money, Aeroplan, and HBC Rewards/ Hudson’s Bay Rewards. But even that little coffee shop in the Mall may be going head to head with McDonalds in the race to provide you with a free coffee once a week for your loyalty.

Strangely enough, not everyone in the financial advice business understands how much households and businesses benefit from loyalty programs.

A couple of months ago, I was ‘sort of’ listening to a CBC business journalist chatting about one of the country’s growing drug store chains. I jolted to full attention as I heard her quip that she didn’t see the point of Shoppers’ Optimum points. I was stunned: a business journalist who doesn’t get the point of points? Perhaps, she should investigate how people in her audience use them; or read the dozens of blogs and marketing sites, like the Canadian Marketing Association or Loyalty.comdevoted to teaching consumers and businesses how to make the best use of them.

For millions of Canadians, reward points are as good as money in the bank. We use them to purchase anything from vacations to computers to groceries, and we are becoming increasingly choosy about which programs we enroll in.

Although Americans appear to be catching up to us, Canadians still lead our American cousins in devotion to loyalty programs. More than 90 per cent of Canadians belong to at least one loyalty program compared to 74 per cent in the United States and 42 per cent in India. The average number of loyalty programs a Canadian belongs to is an astounding 8.2

Participation, however, peaked at 94 per cent in 2009 as Canadians began to focus their attention on programs that provide them the most benefit.

The fact that so many retailers have reward programs speaks to their success as a marketing tool. But as a consumer you need a strategy to make them pay.

  • Depending on your financial circumstance, you can use them to splurge on that luxury – a yoghurt maker, perhaps? – that you could never justify purchasing with your regular cash, or to purchase something already on your ‘must by’ list – a new vacuum cleaner, linens, or even the groceries. What you use them for depends on your level of financial fitness.
  • If you are using a credit card to rack up your points, you may be putting yourself at risk of losing the point game. Fees, credit charges and overspending will quickly defeat the purpose of using a credit card to build your point limits.
  • Don’t use your point card as an excuse to buy items that are not on your purchase list. And when you do use the points, check the real value of the listed price.
  • Don`t pay more than you should for the items you buy in the first place. Points are not an excuse not to shop around for the best price.
  • Use them in conjunction with sales and other promotional offers. For example, if you do happen to have a coupon handy, use it to increase your savings when you redeem points.

Come to think of it, I think I will give coupons another try. But that’s another column.

Jane Harris-Zsovan offers her readers practical money advice for the real world.

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