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Marketing Air Miles controversy is a headache for partner companies

Jas Brar founder of Entripy

Entripy

In August, Jas Brar and his team at Entripy Custom Clothing, an Oakville, Ont. company that provides embroidery and screenprinting, inked a new partnership with Air Miles that they hoped would help set the company apart from its competitors. But the timing couldn't have been worse.

As Entripy launched its marketing campaign this fall, Air Miles collectors across the country began lashing out against the loyalty program on social media, complaining about a policy that would have seen miles five years or older expire.

"We're here with staff all excited about the fact we're now offering Air Miles and meanwhile our customers are reading in the paper that Air Miles is about to screw everybody," says Mr. Brar, founder and CEO. "It definitely put a damper on things."

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In recent years, Air Miles has attempted to persuade small and mid-sized businesses across Canada to offer Air Miles to their customers. These businesses don't have to sign up as official partners. Instead they buy Air Miles on a promotional basis and then give them away to their customers as gifts or incentives or tie them into a promotion for their business.

But the program isn't cheap, and many small- and medium-sized businesses were dismayed to find storm clouds brewing over Air Miles' announcement earlier in 2016 that customers must use up their miles or see them expire in five years. Although collectors initially paid scant attention, as the deadline loomed they grew increasingly irate. On Dec. 1, LoyaltyOne, the company that runs Air Miles, announced it would reverse its decision.

Read more: Air Miles is facing fresh backlash after its decision

Rob Carrick: Air Miles reversal is a bogus victory

Mr. Brar says he originally signed on to offer Air Miles because it allowed business owners, who are one of his primary customer groups, to be rewarded for their purchases with points. Ordering $500 to $1,000 worth of custom T-shirts, hats or aprons "can get you a lot of points fairly quickly, as opposed to trying to get them $10 at a time at the grocery store," he says.

He was attracted to Air Miles by its long track record and national reach, with about 11 million users across Canada. "That's important to us because we ship coast to coast," Mr. Brar says. "It seemed like a good fit because so many households in the country were already using an Air Miles card."

But although the reaction from Mr. Brar's customers wasn't aggressively negative, he says, "we'd get these quasi-sarcastic comments like, 'Wow, you're offering Air Miles – great! We'll just add these up and they'll be taken away in a few months anyway.'"

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The issue he heard about most from customers? It took forever to get through to the call centre to redeem points. "I think it was the panic to redeem that was the bigger concern," he says.

On the plus side, clients were still eager to hand over their collector numbers. "Collectors who recognized that Air Miles logo were very quick to start submitting their Air Miles numbers with us," Mr. Brar says. "We haven't done a full quantitative report, but at first glance I'd say about two-thirds of transactions have some kind of Air Miles component to them."

Chris Warwaruk, co-owner of craft brewer Farmery Estate Brewery in Neepawa, Manitoba, is hoping there won't be any residual bitterness on the part of his clients over the controversy. "We made the commitment [to offer Air Miles] a couple of months ago," he says. "And to be honest, I was completely in the dark – I didn't even realize there was this controversy in the background."

For his company, which currently sells its craft beer in Manitoba and Saskatchewan, Air Miles represented a significant marketing investment, he says. "Companies like ours actually pre-buy the Air Miles," Mr. Warwaruk says. His company paid 39 cents per mile, with a minimum purchase of seven per case of beer. "That means I'm paying Air Miles $2.80 on each case to purchase Air Miles and give them to the consumer," Mr. Warwaruk says.

In a strange twist of fate, Farmery Estates' Air Miles offering went live the same day Air Miles announced the deadline to use up points would be eliminated. "We took a breath of relief," Mr. Warwaruk says. He hopes the "any publicity is good publicity" principle will apply. "Having Air Miles in the news and on everyone's lips might not hurt now that the controversy has been ironed out," he says.

However, some Air Miles collectors remain angry, including some who rushed to redeem their points before the reversal was announced. A class action lawsuit is also in the works. Mr. Warwaruk says he'll be better able to evaluate his Air Miles partnership in the weeks to come.

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"We're taking the plunge and investing our money in this program and we expect to have a good bang for our buck. If we don't see a big bump in sales then it's going to be a very easy decision to go with a different option in future."

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