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How Air Canada’s acquisition of the Aeroplan coalition loyalty program hurts Canadian brands

Seize Digital
Author: Anthony Stevenson

Nearly two months after Air Canada announced it will acquire Aeroplan, consumers and the Canadian business community are still reckoning with the shift in the Canadian loyalty landscape. For Air Canada, bringing the popular coalition loyalty program they originated back “home” is a good strategic move. Not only have they realized the financial benefits of owning and operating a loyalty program, but they now have direct access to a wealth of Canadian customer data they can leverage to create a better consumer-airline relationship. But what’s been missing from the conversation is how this development impacts the other Canadian brands that remain in the Aeroplan coalition program. Are they gaining the same value?
 
The short answer is no. The attraction of most coalition programs like Aeroplan is based on the immediacy with which a brand could tap into and engage an active, built-in consumer base. But in reality, participating brands are surrendering access to these customers, and all of the loyalty data consumers are willing to share. Air Canada now owns the customer relationship, putting brands at a competitive disadvantage as they’re unable to develop and deploy personalised offers and communications or gain insights into the effectiveness of their marketing strategies.
 
The benefits Aeroplan claims to offer brands are quickly outweighed by the opportunity cost of not fully understanding or engaging with their customers. And as Canadian consumers demand a more personalised experience, the list of Canadian brands who recognize the value of data and owning their own loyalty program only continues to grow.
 
Canadian Tire recently expanded its loyalty program across its various brands to provide a better loyalty experience for its customers. And major retailer Loblaw merged two of its most beloved programs to create one of the largest digital loyalty initiatives in Canada, PC Optimum. This wave of consolidation and expansion (and now acquisition) allows brands to enjoy far greater visibility into customer behaviours within the loyalty program, providing benefits to the consumer like tailored, real-time offers and redemption options, and more relevant interactions.
 
As these companies have demonstrated, brands who bring their loyalty solutions in-house learn more about their customers’ needs and preferences, resulting in more meaningful engagements that drive deeper brand loyalty and revenue to their business. And they can achieve greater customer activation and marketing reach than if they participate in a coalition program like Aeroplan—without making massive time and resource investments that will hurt, not help, their business over time.
 
When brands recognize the advantage loyalty data plays in creating a direct customer connection within a loyalty program, moves like Air Canada’s bid for Aeroplan seem less surprising. The retail landscape is changing, and successful Canadian brands are taking ownership of their loyalty strategies, and by doing so, taking ownership of their customer data as well.