Carrots are Better and Cheaper Than Sticks: How Rewards Given for Canadians’ Everyday Purchases Make the World a Better Place
Hockey is Canada’s national sport, but skating close behind in second place is participation in customer loyalty programs that award points consumers can redeem for more than 1200 rewards items from electronics to merchandise. We Canadians love our customer rewards programs.
In fact, over two-thirds of Canadian households, representing over 10 million accounts, participate in the AIR MILES Reward Program, making it the largest loyalty program of its kind in North America.
But what if the immense size and influence of the 20-year-old iconic national program could be used to positively influence the behavior of millions, for the benefit of society and the planet? Enter AIR MILES for Social Change (AMSC), an innovative social venture loyalty platform introduced by LoyaltyOne that rewards Canadians for making choices that are good for their health and good for the environment. As a company, LoyaltyOne had already embed CSR into the culture of the organization by introducing corporate greening, giving back as a corporate commitment, and adding volunteer days for employees to name a few. The trick was finding a way to connect the corporate belief system into the work we do.
In just two years, the AIR MILES for Social Change program has blown away expectations and become a true game-changer. Where else in the world can an entire nation of consumers earn points for buying healthy food, taking a health survey, riding the bus or retiring an old electricity guzzling refrigerator.
AIR MILES for Social Change uses the power of rewards to inspire, motivate and mobilize positive behavior change among Canadians.
Historically, the public sectors in the United States and Canada have relied heavily on regulation and rebates to inspire behavior change among populations. The private sector, conversely, has found innovative ways such as consumer loyalty points to successfully change consumer behavior, especially in the travel, retail and banking sectors.
For over 20 years the AIR MILES Reward Program has helped Canadian retailers create value by inspiring consumer decisions. Over 40 billion AIR MILES reward miles have been issued. Canadians swipe AIR MILES cards 1,000 times a minute. A reward is redeemed every five seconds.
The AIR MILES Reward Program leadership team recognized they had their hands on the biggest steering wheel in the country and the opportunity to help impact and influence hundreds of thousands of consumer decisions everyday – not to mention the opportunity to truly become a world first in rewarding consumers for making better decisions. To act on that opportunity, we decided two years ago to create the AIR MILES for Social Change program.
Working with transit authorities, energy conservation bodies, health organizations, and NGO’s, AIR MILES for Social Change brings the cost effectiveness of incentive driven behavior change and data-driven campaigns to help move the needle on positive social change.
AIR MILES for Social Change has grown from just one organizational partner at launch in 2010 to over 25 private and public-sector partners in 2012, and has increased revenue five-fold between years one and two. The business has expanded its focus to five areas: healthy lifestyles, clean energy, conservation, waste diversion and transit adoption – with successful case studies in each area.
The world is in trouble, with challenges of climate change and increasing demands on resources, we needed innovative solutions in Canada to accelerate a sense of urgency and positive behavior change.
For years cleaning up the earth has mostly been driven by NGOs and charities, pitted against ‘evil capitalist corporations.’ Let’s face it, that’s a polarizing dynamic that has done little to help improve the state of the world
At AIR MILES for Social Change, we asked: Can we create value for our company and shareholders while also creating value of a more social and progressive nature? Can we use the Triple Bottom Line to benefit people, planet and profits? Can we make money AND do good?
We believe we’ve found the answer in harnessing the power of the AIR MILES currency to motivate healthier, greener lifestyle choices. Nothing drives innovation and change like capitalism, and we had a unique opportunity to be a pioneering company whose core business adopted a socially progressive mandate inspiring the majority of Canadians to shift their behavior.
Let me share a seminal team experience. Last fall AIR MILES for Social Change associates visited a global sustainability summit in New York City where UN Secretary-General Ban Ki-moon spoke to a business audience about the urgent and significant challenges the world is facing. He spoke of how the UN and governments are doing what they can but are challenged by politics and slow decision-making.
Ban Ki-moon’s key message was that he alone can’t do it. Governments alone can’t do it. He implored the audience to take action and to please help – saying that business MUST help lead the way if we are to implement significant change soon. The AIR MILES for Social Change program is answering that call.
- 2005: Associates at LoyaltyOne created a grassroots movement called LEAF to improve the environment. We set up new internal processes that reduced waste, increased recycling, and cleaned up the community. This team was passionate and implemented numerous excellent improvements over its multi-year life.
- 2008: Andreas Souvaliotis, now president of AIR MILES for Social Change, had a dream. He had a vision of a loyalty program that would reward participants for making sustainable choices. He created a business called Green Rewards that was set to launch in 2008.
- 2008: Angela Simo Brown, now General Manager for AIR MILES for Social Change, believed that AIR MILES could be used to get people to increase their residential recycling. The City of Toronto just launched a goal to divert 70 percent of city waste away from landfill to recycling by 2010. Angela knew that AIR MILES could help with that and worked with Toronto to run several first-of-their-kind pilot programs that were very successful. These pilots built the foundation of AIR MILES for Social Change’s early case studies.
- 2009: LoyaltyOne CEO Bryan Pearson, a passionate environmentalist, met with Andreas Souvaliotis about combining the power of the AIR MILES Reward Program with Green Rewards to create a revolutionary initiative that could suddenly influence millions. Green Rewards was purchased and brought into the fold. A task force was created to determine how best to integrate the Green Rewards strategy. AIR MILES for Social Change was born.
- 2009: Creation of a formal LoyaltyOne corporate sustainability program – numerous award-winning initiatives were implemented including the building of Canada’s largest solar-powered building.
- 2010: AIR MILES for Social Change launched with one partner, Ontario Power Authority, with an offer to Ontarians to earn AIR MILES reward miles for pledging to conserve energy that summer. Results were incredible and set into motion an innovative model that led to . 25 similar initiatives across the country. AIR MILES for Social Change had found its sweet spot and went on to create a national strategy of working with governments and NGOs to help them get their messages out more effectively and with much better ROI.
LoyaltyOne, owner of the AIR MILES Reward Program, has over 200 partners communicating regularly with over 10 MM Collectors. Numerous processes must be employed to manage this incredible volume and the the innovative and entrepreneurial nature of AIR MILES for Social Change posed a healthy challenge to some of these processes. We overcame these early growing pains with collaboration and frequent communication updates to all stakeholders. Success depended on significant buy-in from all associates, especially the senior leadership team and subject-matter-experts on whom who we lean. Strong supportive leadership from our CEO Bryan Pearson has been key to our success with internal support. Keeping everyone up to date on our many successes, helping them see the role they personally played and celebrating the successes have all been equally important in AMSCs success.
As well it was decided the best way to give AIR MILES for Social Change the space needed to grow in its own way was to make it a separate business unit. This worked well – AMSC could run at a very fast pace with great freedom. The business soared as a result.
AIR MILES for Social Change uses its power and reach to get our social change partners’ messages out more effectively. We help to accelerate awareness of social change issues and drive action.
This can be viewed as a triple win for three stakeholders. Social change partners benefit from increased participation rates in their programs, significantly reduced costs, increased sales, brand enhancement and greater customer loyalty. The AIR MILES Reward Program deepens it engagement with Collectors, enhances brand loyalty and increases revenue. Canadians are the big winners, achieving a healthier and greener society.
By connecting Canadians to programs with positive social benefits, AIR MILES for Social Change has helped the public sector save millions of dollars that would have otherwise been spent on expensive mass marketing, while increasing program participation significantly.
Here are two prime examples of successful case studies with measurable benefits:
AIR MILES for Social Change partnered with Ontario Power to cost-effectively reach more than two-thirds of Ontario provincial households with a pledge campaign that rewards utility customers for conserving energy. The Power Pledge increased participation levels 7-fold – for half the cost of the organizations previous pledge program.
AIR MILES for Social Change worked with the Toronto Transit Commission to create the Metro Discount Plan, rewarding riders who purchased annual transit passes – and driving sales up 57 percent. The program has demonstrated how a rewards currency can be offered as an incentive for switching to long-term passes, for adopting electronic smart cards or even for shifting daily commutes outside of peak times. Toronto is the fifth largest city in North America.
1. Set a Big Hairy Audacious Goal (BHAG): a strategic business statement which is created to focus an organization on a single medium-long term goal which is audacious, likely to be externally questionable, but not internally regarded as impossible. The term 'Big Hairy Audacious Goal' (BHAG) was proposed by James Collins and Jerry Porras in their 1994 book titled Built to Last: Successful Habits of Visionary Companies. A BHAG encourages companies to define visionary goals that are more strategic and emotionally compelling.
2. Everyone benefits when you focus on the “Triple Bottom Line: ” Your management team may already be talking about the triple bottom line, otherwise known as "people, planet and profit." But does it recognize the power that loyalty has to invite customers into the social responsibility initiative?
3. What gets measured gets managed. AIR MILES for Social Change embraced Peter Drucker’s famous quote because only when companies measure their social and environmental impact will we have socially and environmentally responsible organizations.
4. Carrots are better and cheaper than sticks. Using rewards and positive reinforcement to motivate behavior change is more effective and cost efficient than punishment or negative consequences. AIR MILES for Social Change is encouraging Canadians to live healthier, greener lives.
5. Address consumer skepticism with authenticity. There is a risk that jumping into any type of social change can look insincere. The critical definer is whether your initiative is a good fit with your brand, core business and customer. Companies must align themselves with social causes in which they can show a track record of commitment. Otherwise, the effort can look opportunistic.
Angela Simo Brown, GM, AIR MILES for Social Change
John Coombs, National Leader, Energy Conservation, AIR MILES for Social Change