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Canada: Air Miles PR fallout hits partners

The Toronto Globe & Mail, which seems to have made Air Miles-bashing a regular feature, has a new story detailing the hit that Air Miles' retail partners have taken thanks to the recent struggles of the coalition loyalty program. Coalition loyalty programs provide tremendous benefit for partners, but it is a partnership in every sense of the word - everyone takes the hits together.
 
By Rick Ferguson
 
We've documented Air Miles' troubles over the course of the past year - you can read more here and here and here - but for the unititiated, suffice it to say that the coalition handled poorly a proposed five-year expiry on Air Miles, and after both collector and legislature outrage forced the company to backtrack on the expiry, they then somehow managed to badly botch the reversal. It was a textbook execution of how not to handle program changes, member communications, and public affairs. The end result left everyone angry, Air Miles reeling from the disaster, and parent company LoyaltyOne facing a significant revenue writedown.
 
Now the Globe and Mail details the effects of the aftershock on Air Miles' sponsor partners, and it isn't pretty. Air Miles SVP Blair Cameron told the paper that both in-store promotions and card use dropped at the end of last year, and that they don't have enough data to determine whether that decline in card swipes is permanent.
 
Then there are the money quotes from Air Miles partners, all courtesy of the Globe & Mail:
 
  • Hélène Bisson, VP of communications for Jean Coutu Group Inc: "'We did feel the pressure,' at drugstores, [as] feedback intensified in December with the approaching expiry deadline. The most common complaints had to do with long waits to contact Air Miles customer service, and the difficulty of redeeming Dream Miles for rewards. 'At that point, we had a lot of negative comments.'"
  • Jamie Bliss, director of marketing at Fountain Tire: "We definitely heard some negative feedback. There were concerns about the expiry policy and a lot of those concerns were expressed to our team. People asked whether we were sure it was delivering value to customers."
  • Derek Tupling, director of corporate communications at Rexall Pharmacy Group: "We did hear some concerns from our Rexall customers."
  • François Vimard, former interim CEO of Sobeys parent Empire Co. Ltd.: "Our customer wasn't happy [with] the way the partner managed that relationship with them. It did affect us directly." 
  • Metro Inc. CEO Eric La Flèche: "'It has been rocky this fall with Air Miles, no doubt about that,' [La Flèche] said, adding that Metro would consider its options when it was time to renegotiate the loyalty program contract."
That so many partners were either willing to go on record speaking about their dissatisfaction with Air Miles, or spoke publically in other forums, speaks volumes about how dissatisfied those partners are. Had Air Miles handled the whole affair better, those companies might have voiced support for the coalition, or at least declined to comment. The public tongue-lashing means that the fallout continues.
 
On the positive side, no partner has publicly said they will withdraw from the partnership - not that any would do so, pending a formal review. The bet here, however, is that the partners will stick with Air Miles for now, understanding that this event was akin to a "100-year storm" unlikely to be repeated. 
 
The real test will be whether the damage to collector loyalty is permanent, or whether Air Miles can rebuild the trust damaged by the debacle. The company has a long road ahead of it; here's hoping they navigate it with aplomb.
 
Rick Ferguson is CEO and Editor in Chief of the Wise Marketer Group.