Change is exciting for some, frightening for others.

Today, one of the biggest global brands in the Loyalty Marketing business changed its name. Groupe Aeroplan has become Aimia.

I can’t imagine what it takes to plan such a change, as the stakes are high and the implications, while seemingly subtle to some, are immensely significant to the broader market. Changes of this nature are not done because someone decided it was time for a new logo, or that there was need to “freshen up our image”. To make a change of this nature, there has to be a core message that is being delivered to the market, and the message is one that couldn’t be adequately delivered under the former branding.

So, what’s the message?

First, listen to what Aeroplan, er Aimia is telling us. In a branding fact sheet, they make clear that the names of the well established coalition loyalty programs they operate (Aeroplan, Nectar (Chile, Italy and the UK) and Air Miles Middle East) will not change. Clearly the new image and branding is not targeted to consumers.

The business-to-business brands LMG Insight & Communication and Carlson Marketing, however, will operate under the Aimia name. Retiring a long-tenured name like Carlson is a bold move.

As press releases and brand sheets explain, the new name is “inspired from the word ‘aim’: highlighting focus and precision, describing our expertise in targeting the right consumers with the right messages”. The name also has roots in French words which inspire the importance of friendship, partnership and relationships. The brand essence here is compatible with the core tenets of loyalty marketing and lays the foundation to build in many different directions.

There are a few other interesting aspects to the new brand. The tagline is “Inspiring Loyalty” and there is intent to point towards the sweet spot where “the needs of clients and the wants of consumers overlap”.  As Aimia states in its new website, “we see relationships differently”.

I think very soon, we will see the landscape of global loyalty quite differently. Airmiles recently announced expansion of its Dotz program in Brazil, and American Express purchased Loyalty Partner at the end of last year.

Through its rebranding, Aimia has further distanced itself from its frequent flyer roots and sets the stage to become the dominant player in creating coalition and other forms of loyalty programs around the world. Global leader has a nice ring to it. Airmiles and American Express won’t stay silent for long but, for now, Aimia has created a nifty advantage to achieve its longer term goals.

Anytime we review a loyalty or rewards program for our readers, we use the available facts as assumptions in a model that estimates the effectiveness of the program.

Because all customers are not the same, we normally create a customer profile based on spending patterns and objectives and project the earning velocity for those segments. As a result we are able to offer insights into the program’s customer value proposition and then bake in evaluation of the communication methods used to engage the customer and the extent to which data is used to deliver relevant and targeted offers.

A final factor in this methodology is to assess whether the program creates a defensible competitive advantage to the sponsor. In layman’s terms, we run the acid test of differentiation – does the program have unique and proprietary features or is it another example of “me-too”?

Recently we ran across the rewards program at FreeConference.com. Thinking that services like this were “liked” by smaller businesses on a budget and seeking to avoid higher-priced subscription based alternatives, we constructed a customer profile that assumed a take rate of just the two premium level service packages.

The math showed that collecting airline miles through the FreeConference.com Rewards program would result in a round trip domestic airline ticket after a mere 12 years of usage. Another point of criticism was that requiring the customer to put in a credit card in the midst of the sign-up process would hurt enrollment rates. This requirement has historically hurt take-rates, therefore our assessment.

Our final comment concerned the use of airline miles as a currency. The granddaddy of all rewards currencies still appeals to consumers, but no barrier exists to prevent competitive response, and miles are expensive on a unit basis relative to other currency options.

Taken together, we gave the program poor marks. To my delight, FreeConference.com CEO Chad Clawson wrote in to tell us our assessment was incorrect. Mr. Clawson informed us that Freeconference.com has a premium toll-free conferencing offer in which customers spend tens of thousands of dollars per month, meaning the customer profile FreeConference is seeking to engage and retain has a spending profile that generates earning velocity to an acceptable level.

Because these premium customers already have a credit card on file, enrollment in the reward as program is easy and the response rates have been “terrific” according to the company. Mr. Clawson pointed out that only paying premium customers are eligible to join the rewards program, and they have already provided a credit card number to establish their account. New premium customers enter a payment card as well therefore FreeConference is not asking for anything the customer is not already willing to give as part of the premium offering.

For as much as loyalty practitioners understand about loyalty programs, shared data from sponsors is hard to come by. The advantage for many of us working in the business is that we have an accumulated perspective based on the results of programs we have designed and helped to operate. There are surveys that help to round out our viewpoints, but attend an industry event and you’ll see that the slimmest part of every presentation covers program results.

It’s for that reason exactly that I was delighted to hear from Mr. Clawson and further pleased that he was willing to engage in a conversation to discuss his program in turn allowing us to “get it right” at Loyalty Truth. Mr. Clawson fairly asserted that “I can understand how, from the outside, the Loyalty Rewards program may not seem to make sense, but that is only because of a couple of factual errors.” From that point, we cleared up the factual assumptions leading to this post.

Loyalty Truth holds its ground on the use of airline miles as the chosen currency to support the program. The offer can be copied easily by a competitor, meaning the program could become table stakes at any moment. Also the airlines have a much publicized capacity issue which creates a perception among consumers that airline miles are difficult to redeem.

The bottom line is that the program is working for FreeConference.com. Corporate customers like to accumulate airline miles and we believe that several new initiatives will be introduced in the near term providing a relief valve to the capacity issue.

Our discussion with Mr. Clawson is one of the reasons we established Loyalty Truth and indicative of why we chose the name. I’m also delighted to have been named a member of the “Honest Blogger Club” in the process.

Something all of us who pound the keyboard and spin our opinions should remember that there is a perception about bloggers that many are crafted hastily with minimal research and little regard for the impact on third parties. To receive correction and “go dark” is the mark of an unreliable information source. To engage the conversation and make corrections earns entry into the Club.

I’m grateful for this interaction with FreeConference.com and hope to have more information to share about their program in the future. It would be great to know the size of the membership, the extent of revenues represented by members, and the delta between customers of similar profiles pre and post enrollment.

Most importantly, I’ve got a conference call to organize and know just where to go to continue to get the good quality service offered by FreeConference.com.

Every day I play on the seesaw.

It seems like I have one call with a person who expresses doubt about the efficacy of traditionally structured loyalty programs, and then turn around and inadvertently encounter a new program to add to my growing list that I have catalogued and reviewed.

Every seesaw has a balance point.

In this case, the criticism is usually based on impressions formed by poorly conceived programs, meaning I can take it with a grain of salt. On the other hand, the programs I am finding these days tend to lack imagination and justify the loyalty skeptics I meet.

Today I went to freeconference.com to organize a call and was greeted with an invitation to join their newly launched “Loyalty Rewards Program” (yes, they really called it that). The program is simple, earn one airline mile for every dollar spent on premium call services. Participating airlines include American, Delta, and United.

I’m always interested in customer earning velocity as a measure of loyalty program success. From a consumer point-of-view, if you can’t gather enough equity in short order to cash-in for a meaningful reward, the program will be perceived a waste of time.

Free Conference has two key premium services, unlimited recording and storage for $9/month and unlimited desktop sharing for $14.95/month. Imagine if a customer engages both services and spends $288/year. That equates to 288 frequent flyer miles. Let’s be generous and say a premium customer spends about $200/month or $2,400 per year. At that rate, it would take 12.5 years to earn a round trip domestic ticket given a “cost” of 30,000 miles.

Even though the program is free to join, the enrollment form requests credit card information right off the bat, increasing the likelihood of customer disconnect at that juncture.

I spoke with a potential client today who told me his company tried a similar approach to loyalty a few years back and that the slow earning rate turned out to be a club that customers would beat him with on a regular basis. After collecting for a period of time and realizing that the point total was not enough for a $5 gift card, many customers rebelled and the “loyalty” program became a negative from an overall marketing perspective.

There is a truism that I have believed in for some time in this business “loyalty programs are easy to launch, but more challenging to make successful”.  Just about anyone can arrive at a simple construct for a rewards program and to generalize, the more simple the offer, the worse it might end up for the customer.

The old automotive tagline “pay me now or pay me later” comes to mind. It’s worth an investment in program planning and a commitment to execution to make the programs work. Much too often, “do it yourself” only results in customers who go their own way.

Frequent Flyer Miles, American Express Membership Rewards Points, Citi ThankYou! points,  AirMiles – which loyalty currency holds the crown as the world’s most recognized and highly valued?

While that debate rages on, let me suggest that the answer might be “none of the above”.

It’s not the points or miles that will drive consumers to shift their shopping habits in favor of  your brand.  It might be the TIME those points represent.

What’s more important, Time or Money? That question has been debated since the industrialized world has matured.

The conversation has reignited in the US as Americans have experienced tough economic times, triggering self evaluation of lifestyle and priorities. In a fascinating story on CBS Sunday Morning, Jim Axelrod reported that, “of the 33 richest countries, the U.S. is the only one with no legally-required paid vacation for its workers”. The finding came from a study authored in part by John Schmitt of the Center for Economic and Policy Research. Axelrod went on to say “Even when times are good, people don’t take their vacation – they don’t want to be seen as ‘That guy who’s always taking his time off,’ who values his time off more than being at work”.

This angst over taking what vacation time we do have is in direct conflict with the fact that “69% of all middle class Americans say their number one desire in life is to have more free time”. At least, that is what Congressman Alan Grayson (D Orlando) cited on CBS as part of his motivation to introduce legislation in Congress to require companies with over 100 employees to offer paid vacation by law.

This is more than a casual social issue as the US now has one of the highest gaps between rich and poor among all industrialized nations. A report from the Organisation for Economic Co-Operation & Development (OECD) stated that, on average in 2005, the richest 10% of the population in OECD countries have 9 times more income than the poorest 10%. In Mexico the ratio is 26 to 1, the United States is over-indexed at 16 to 1 while Canada and the UK were at par with the global average.

Time is a currency that all of us desire, whether rich, poor, or somewhere in the middle. It is highly liquid and does not come with capacity or fulfillment issues ala frequent flyer miles.I can see a new category of rewards options opening up that save time, make time, or share time for program members.

I won’t go into specifics, but let’s just say we’ve got lots ideas to make this work and, once again, change the game in Loyalty Marketing.

Got time to hear about it?

The proven model worldwide to form a multi-partner Coalition loyalty program is essentially the same, regardless of the local language.

Operators normally chase down the one or two leaders in each high frequency category (retail, grocery, fuel, banking) to form the foundations of their value proposition. With regional coalitions easier to launch than ones of national stature, consider a new path to partner identification and recruitment, one that is practical to execute and could lead to big results.

What if marketers started the identification process with the consumer, not the partner? Imagine if they paused to understand the way consumers feel about individual brands and which ones fit together best to achieve a partner network that connected with large consumer groups on an emotional level?

A conversation with a friend provided me an example of how bundled preferences become a purchase-decision reality. My friend will remain unnamed, but the complexity of his purchase decision making process is worth some server space.

After bragging a bit on his country’s Olympic Hockey Gold medal, he shared an unsolicited opinion about his favorite Canadian rewards program. His description was transparent and blended logic, emotion, and value.

After ticking off  his range of choices for loyalty programs in his market – AirMiles,  Canadian Tire Dollars, Esso Extras, HBC Rewards, Petro Canada’s Petro Points and Shopper’s Drug Mart, he surprised me by saying “I collect everything through my Aeroplan card“.

Why? Not for just one reason, but several:

• He likes the speed and convenience of paying at the pump with a RFID device and chose Speedpass for its ubiquity over Shell’s Easy Pay device.
• He’s a big Tim Horton fan, which has lots of stores within the Esso C-store footprint.
• He’s an RBC loyalist, having banked there since a young age, and Esso tends to have RBC branded ATM machines at their sites.
• His family has always considered Esso to be their “family brand” of retail fuel.
• And, the more he sticks with Aeroplan, he finds he can accelerate his collecting through his Elite status that triggers partner offers.

Through my quick conversation, I found that it was the combination of brands assembled by Aeroplan that made the difference. I realize that my conversation constitutes a “focus group of one” but it is illustrative of how we can re-engineer partner selection processes to launch and operate multi-partner loyalty programs that are more effective.

This little tale provide evidence into why coalitions work but also points to the reality that even individual loyalty program sponsors should consider the power of developing partnerships in the future.

Either way, it is clear that consumer loyalty is not triggered solely by the collecting activity itself but by brand affinities and the customer experience taken as a whole.

Almost 10 years ago, I wrote an opinion piece for COLLOQUY questioning whether Frequent Flyer miles were still the most valuable currency in the Loyalty Marketing landscape.  The premise was that the weakening value of the FF mile might open the door for a better offer to capture the loyalty imagination of consumers. The next best high-value loyalty currency was thought to be coming from a US based coalition ala Nectar or Airmiles.

It’s 2009 and time to ask the question once again.

Consumers and the press are piling on with criticism of airline mile programs. Combine the higher thresholds for cashing in for a free ticket, the seemingly steady decline in the quality of in-flight experience, and the airline’s fascination with un-bundling and charging for services that used to be included in a ticket price and it’s easy to make a case for the demise of FF miles.

The COLLOQUY article was cautious in criticism of the almighty MILE, noting that “Americans are so attuned to earning airlines miles that it’s hard to create a value proposition, either in a standalone program or in a coalition, that can equal them.”

Time and change go hand-in-hand however and the challenge of creating that value proposition to match or exceed the perceived value of an airline mile might be easier to tackle as each month goes by. A recent Wall Street Journal article “Air Rescue: Saving Miles From the Ax” highlighted the many ways which airlines are adding restrictions and tweaking program rules to burn more miles before they can be used.

Many of the rule changes highlighted in the WSJ article are activity related and American Airline’s change from no expiration to an 18 month activity related rule has garnered lots of attention. There are two sides to every story and, if you were running AAdvantage or any other big loyalty program, you too would be under pressure to manage program liability more closely. It’s easy to see why stewards of loyalty programs conclude that customers who have not transacted for 18 months are maybe not your customers any more.

The flaw in the activity rule highlights the dirty secret of airline mile programs: that customers are less loyal to a particular airline than the industry would like to believe and carrier choice is often dictated by lifestyle and business changes more than brand affinity.  I’ll share a personal example. At one time, most of my my travel was in Latin America and I was a privileged flyer with American. Later, the work load swung to the US and I rose in the ranks of Delta Skymiles members while I watched my American status diminish. When I ventured back into LAC, I had lost my status with the airline and had to be patient until I became “visible” again.

The airlines should be able to recognize me as an inherently valuable customer and provide some relief for my straying. Through the data collected, the airlines could identify my return, send me a welcome back email and inquire if I was here to stay. I bet most people would respond to such an email with indication of preferences and plans if they were offered incentive to provide the information. That incentive, of course, would be to have the opportunity to earn accelerated status with the airline. In the current situation, I am more tempted than ever to just shop by schedule, price and airport location.

The other main criticism of airline miles is that they are difficult to redeem.  If you’re like me and redeem miles to take the family to exotic destinations like Buffalo or Cleveland, you’ll never have a challenge redeeming your miles. Try to go to New York for Christmas and you’ll have a different story to tell.

It’s possible that the airlines are their own worst enemy. They have given miles to everyone and are still inviting people to join their programs with in-flight announcements. Even the Economist agreed that this non-selective behaviour would spawn MILE inflation:

“Miles outstanding have risen by an average of 20% a year since 1995 – two-and-a-half times as fast as the supply of dollars.”  Equating this inflationary expansion of airline currency to a key global currency, the article continued, “central bankers would suffer sleepless nights at such reckless  monetary expansion were it not for the fact that they are usually up in first class collecting double or triple miles.”

The state of the FF mile is really quite a mess. There are diverging forces at work: Consumers are less interested to wait and accumulate miles as they know that rules will continue to shift against their interests and their ability to redeem will be challenged. At the same time, the cost of using miles to promote a cobrand or reseller relationship is probably the highest among options in the marketplace.

Invest the same cost per mile into a value proposition that promotes YOUR brand and is truly tailored to YOUR customers and quite likely you will have constructed a value proposition that beats the heck out of FF miles.

Turbulent times for the airlines, opportunistic times for smart marketers……