As appeared in The Globe and Mail - November 23, 2004
Real-time Rewards Closer to RealityThe shopping experience is about to gain a new level of convenience with the introduction of instant point redemption. Imagine a day of shopping, perhaps picking up a DVD, some new clothes and movie tickets, and paying for what you purchase with the points you've earned in your loyalty program. All with a simple swipe of your credit card. No logging on or phone calls to make ahead of time to redeem your points. No delivery-time wait or extra cards or paper to carry. Next year, that kind of ultra convenience may be closer to reality. RBC Royal Bank Visa is planning to launch a new program in 2005 through which you'll be able to convert your RBC Visa rewards program points instantly, on-site, at participating retail partners across the country. "From our research, we know that customers want it to be easier to redeem their rewards. They don't like having to wait, they want them instantly," says Andrew Mitchell, managing director of RBC rewards and partnerships with RBC Royal Bank Visa. While a number of stores already convert points on-site, RBC's plan will take point-of-sale redemption to a new level. It will be even easier, more immediate, and available at a number of stores, says Mr. Mitchell. You'll build points the same as now, by using the credit card to pay for purchases at partner companies. But you'll also be able to redeem your points on the spot at stores that choose to participate, says Mr. Mitchell. "We've approached our partners and there's a lot of appetite for it, "he says, though he can't reveal potential participants at this time. Real-time redemption is especially effective for impulse purchases, such as DVDs and movie tickets, adds Mr. Mitchell. It will be one way to redeem, along with existing options, such as mail-out certificates. "It'll be the next big thing. I think within the next year or two we're going to see a lot more instant redemption all over the place. People want easier ways to redeem," says Patrick Sojka, founder and publisher of Rewards Canada in Calgary, (www.rewardscanada.ca), an on-line resource and guide to loyalty programs in Canada. Participating stores will use credit card terminals embedded with special software to connect to the RBC Visa rewards program database. When the card is swiped, the system can relay the number of points available and, if the cardholder decides to use some, another swipe will make the deduction. The points can be used in combination with cash to pay for merchandise at the counter, says Mr. Mitchell. RBC has already tested the program, in a 120-day trial two years ago with Radio Shack and Home Hardware stores in southwestern Ontario. The technology worked seamlessly, Mr. Mitchell says, without causing any great delay for people waiting in the line. "All the customers said it was a shame when it ended." says Mr. Mitchell. Point-of-sale redemption programs offered by individual retail companies have proved popular for some time, says Malcolm Fowler, vice-president and general manager of Ernex, which runs real-time loyalty programs, including the RBC trial, as part of its loyalty program services. Ernex is a division of Moneris Solutions Corp., a processor of credit and debit card transactions, owned jointly by BMO Bank of Montreal and RBC Royal Bank. Many stores have some version of on-site redemption, adds Mr. Fowler. With both Esso Extra and Petro-Points cards, for instance, you can redeem at certain stations for specific items such as chocolate bars and pop for a set number of points. At Shoppers Drug Mart, and many supermarkets, your points can be used to reduce the overall amount of your check-out bill. As partnerships in the retail world expand, opportunities to redeem points, as well as earn them, are increasing. With the new Starbucks Duetto Visa card, for instance, you can earn Starbucks points whenever and wherever you use Visa to pay for a purchase. The points are loaded into your Starbucks card account every month and, in most Starbucks locations, you can use the same Duetto card to obtain free rewards at the counter. Although it's a similar concept to the RBC Visa plan, says Mr. Fowler, the points can only be redeemed at Starbucks. Unlike individual companies that run their redemption systems over an in-house, closed network, what RBC is planning requires a more complicated open network to allow all the players to tie into the loyalty program database. There are technical, security and operational challenges, says Mr. Mitchell, but they're far from insurmountable. In fact, most retailers won't have to make a big investment in equipment cost or staff training to do the redemptions, Mr. Mitchell says. For instance, many of the Moneris terminals now used to process credit card transactions in-store are already embedded with software that can easily be upgraded to do real-time redemptions, although many merchants may not be aware of it, he adds. Redeeming rewards right on-site also is cost-effective, a lot cheaper than paying a courier to deliver $5 vouchers, Mr. Mitchell adds. Large-scale rewards systems through which consumers could earn and redeem points through multiple retailers have been tried before. Ernex has run several regional programs in the past, but they didn't last, Mr. Fowler says. "You need a lot of merchants who see the value proposition, who will be making a lot of redemptions on-site, and willing to market it in a big way to consumers." A national program involving major retailers is likely to have a better chance of taking hold, he adds. There's a lot of interest among retailers and loyalty programs, generally, in point-of-sale and real-time redemption. "It's something we've been looking into for a long time...we're testing something that would tie in with our own rewards program or others," says Andrew Sherbin, manager of corporate affairs at Famous Players, a division of Viacom Canada Inc. "Point-of-sale is on our radar, it's technically possible, if our members show demand," says Gillian Hewitt, manager of corporate reputation at Aeroplan. But Caroline Papadatos, vice president of marketing for The Loyalty Group, which runs the Air Miles loyalty program, says the total in-store experience is what really counts. Air Miles is working with sponsors in a number of areas, such as the technology to provide customers with their point balances at the counter, bonus offers, and staff who are enthusiastic and knowledgeable about the program, she adds. "People want a rewarding experience, not just the functional execution of a discount," says Ms. Papadatos. For sure, RBC Visa is at the leading edge of on-site redemption in North America, says Mr. Mitchell. But given the company's powerful national retail partnerships and the escalating demand from consumers for faster and easier access to retail rewards, he believes it's a good place to be. Related Articles and Links |  |
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