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Loyalty in Financial Services - Canada - April 2015

The preference of high income earners for unique/non-purchasable rewards is an opportunity for marketers to think out-of-the-box and come up with creative rewards which may not be materially extravagant, but appeal to the status conscious.”

– Sanjay Sharma, Senior Financial Services Analyst

This report looks at the following areas:


Designing winning features that resonate with target segments
Bridging the trust deficit towards the financial services industry among certain segments
Improving loyalty program tracking and communication
Enhancing the appeal of loyalty programs among younger Canadians


INTRODUCTION
Methodology
Abbreviations
EXECUTIVE SUMMARY
Market factors
Overall negative impact of lower oil prices on the Canadian economy
Impact of interest rates, inflation and exchange rates
Outlook on the real estate and housing market
British Columbians have the highest net worth
Household debt in Canada
Population count and growth in Canada
Companies, brands and innovation
The consumer
Most Canadians are loyal to their main financial institution
Figure 1: Switching of main FI in the past five years, February 2015
About a third switch due to better deals
Figure 2: Reasons for switching main FI (top three reasons), February 2015
Travel rewards top the list of Canada’s most popular loyalty programs
Figure 3: Types of loyalty programs participated in the past year, February 2015
Convenience, cashback and immediate discounts rated as the most important features of a loyalty program
Figure 4: Most important features of a loyalty/rewards program (top five), February 2015
Females aged 35-54 are most likely to be strategic shoppers influenced by loyalty programs
Figure 5: Summary of attitudes towards loyalty, February 2015
What we think
ISSUES IN THE MARKET
Designing winning features that resonate with target segments
The facts
The implications
Bridging the trust deficit towards the financial services industry among certain segments
The facts
The implications
Improving loyalty program tracking and communication
The facts
The implications
Enhancing the appeal of loyalty programs among younger Canadians
The facts
The implications
TREND APPLICATION
Trend: Secret Secret
Trend: Let’s Make a Deal
Trend: Prove it
MARKET FACTORS
Key points
Economic overview
Overall negative impact of lower oil prices on the Canadian economy
Figure 6: Canada’s GDP, by quarter, Q4 2008-Q4 2014
Figure 7: Household disposable incomes and savings in Canada, by quarter, Q4 2008-Q4 2014
Figure 8: Canada’s unemployment rate, by gender, 2008-15
Impact of Interest rates, inflation and exchange rates
Figure 9: Inflation rates in Canada (%), 2004-14
Bank of Canada cuts interest rate to 1% in January 2015
Figure 10: Canada bank rate by month, 2005-15
Outlook on the real estate and housing market
British Columbians have the highest net worth
Figure 11: Canada median net worth, by province, 2012
Household debt in Canada
Consumer Confidence
Figure 12: Consumer Confidence Index, monthly, January 2008-February 2015
Demographic overview
Population count and growth in Canada
Figure 13: Share of population of Canada, by territory/province, 2015 (projected)
Minority groups account for less than 20% of Canada’s population
Figure 14: Estimated population of Canada, by ethnicity, 2011
Canada’s population is expected to age in the coming years
Figure 15: Population aged 65 years and over in Canada, historical and projected (% of total), 1971- 2061
Figure 16: Projected trends in the age structure of the Canada population, 2014-19
WHO’S INNOVATING?
Key points
AIR MILES, YMCA and Public Health Agency Initiative to Drive Fitness Participation
About the participants
Montreal Canadiens Club 1909 and San Francisco 49ers Faithful 49 loyalty schemes
MasterCard and One Inc.’s loyalty program solution
SCENEtourage from SCENE
LOYALTY PROGRAMS
Air Miles
Overview
Recent news
SCENE
Overview
Recent news
Aeroplan
Overview
Recent news
PC Plus
Overview
Canadian Tire Money
Overview
Recent news
Starbucks Card
Overview
BRAND COMMUNICATION AND PROMOTION
Key points
RBC is the largest direct mailer of loyalty/rewards cards
Figure 17: Top loyalty (rewards) direct mailers, February 2014 to February 2015
Selected Campaigns from Mintel Comperemedia
RBC Visa Infinite Avion Travel Rewards Card Card
University of Toronto Platinum Plus MasterCard
Rogers First Rewards MasterCard
THE CONSUMER – SWITCHING OF MAIN FINANCIAL INSTITUTION
Key points
Most Canadians are loyal to their main financial institution
Figure 18: Switching of main FI in the past five years, February 2015
Young males most likely to switch their main financial institution
Figure 19: Switching of main FI in the past five years, by age and gender, February 2015
About a third switch due to better deals
Figure 20: Reasons for switching main FI (top three reasons), February 2015
THE CONSUMER – LOYALTY PROGRAM PARTICIPATION
Key points
Travel rewards top the list of Canada’s most popular loyalty programs
Figure 21: Types of loyalty programs participated in the past year, February 2015
Females have a higher participation rate across most programs
Figure 22: Loyalty participation by gender, February 2015
Quebecers have a lower participation rate in loyalty programs
Figure 23: Loyalty program participation (any), by region, February 2015
Some 56% of Canadians participate in three or more loyalty programs
Figure 24: Repertoire analysis of participation in loyalty programs, February 2015
Key Driver Analysis
Methodology
Receiving special status drives leisure/entertainment program participation
Figure 25: Key drivers of Loyalty Program Participation, February 2015
THE CONSUMER – MOST IMPORTANT LOYALTY PROGRAM FEATURES
Key points
Convenience, cashback and immediate discounts rated as the most important features of a loyalty program
Figure 26: Most important features of a loyalty/rewards program (top five), February 2015
Status and better service appeal more to men
Figure 27: Loyalty program features rated higher by males relative to females, February 2015
A quarter of high income earners would like to be granted special status by their loyalty program
Figure 28: Differences in feature preferences between low and high income earners, February 2015
Older Canadians place a higher value on convenient reward redemption
Figure 29: Differences in feature preferences, by age, February 2015
THE CONSUMER – ATTITUDES TOWARDS LOYALTY
Key points
Summary of Attitudes
Figure 30: Summary of attitudes towards loyalty, February 2015
Females aged 35-54 are most likely to be strategic shoppers influenced by loyalty programs
Figure 31: Attitudes related to the strategic use of loyalty programs, February 2015
Younger Canadians are relatively less satisfied with loyalty program communications and tracking
Figure 32: Attitudes related to tracking of loyalty programs, February 2015
About half of Canadians have a perception of unfair customer treatment from the financial services industry
Figure 33: Attitudes relating to value and fairness, February 2015
THE CONSUMER – CHINESE CANADIANS AND LOYALTY
Key points
Chinese Canadians have a higher membership rate across most loyalty programs
Figure 34: Membership of loyalty programs, Chinese Canadians vs overall population, February 2015
Chinese Canadians place more value on receiving cashback on purchases and being granted special status
Figure 35: Importance of loyalty program features, Chinese Canadians vs overall population, February 2015
Chinese Canadians more likely to be strategic shoppers who aim to maximize rewards
Figure 36: Agreement with loyalty attitudes, Chinese Canadians vs overall population, February 2015
Table of Contents Loyalty in Financial Services
Key points
LGBT customers have a higher propensity to switch their main financial institution
Figure 37: Switching of main FI in the past five years, LGBTs vs overall population, February 2015
Movie theatre and airline loyalty programs resonate more with LGBTs
Figure 38: Participation in loyalty programs, LGBT Canadians vs overall population, February 2015
LGBT customers are less trustful of the financial services industry
Figure 39: Agreement with select attitudes towards loyalty, LGBT Canadians vs overall population, February 2015
THE CONSUMER – TARGET GROUPS
Key points
Three target groups
Figure 40: Target groups, February 2015
Disengaged (38%)
Cynics (32%)
Traditionalists (30%)
APPENDIX – KEY DRIVER ANALYSIS
Interpretation of results
Figure 41: Credit or debit rewards program participated in the past year - key driver output, February 2015
Figure 42: Store loyalty program participated in the past year - key driver output, February 2015
Figure 43: Leisure or entertainment loyalty program participated in the past year - key driver output, February 2015
CANADA RESEARCH METHODOLOGY
CONSUMER RESEARCH
Sampling and weighting
Secondary Data Analysis
Qualitative Research
Further Analysis
Social Media Research
Trade research
Informal
Formal
Desk research
STATISTICAL FORECASTING

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