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Loyalty and Rewards in Financial Services - Canada - August 2017

“Consumers generally understand and appreciate the concept of sharing data in exchange for value so the challenge for loyalty programs is to better understand what specific customers want in exchange for their data.”  
–    Sanjay Sharma, Senior Financial Services Analyst

This report will look at the following areas:

  • Nine out of 10 Canadians are enrolled in a retailer loyalty program
  • No annual fee and cash back rewards are the top influencers
  • Older members more aware of loyalty program data tracking
  • Around a third have too many unused loyalty cards
  • Around one in four prefer to use apps rather than carry a card

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Table of contents

  1. Overview

      • Regional classifications
        • Income
        • Executive Summary

            • The issues
              • Nine out of 10 Canadians are enrolled in a retailer loyalty program
                • Figure 1: Loyalty program participation, June 2017
              • No annual fee and cash back rewards are the top influencers
                • Figure 2: Factors influencing use of primary credit card, June 2017
              • Older members more aware of loyalty program data tracking
                • Figure 3: Attitudes related to data collection (% agree), June 2017
              • Around a third have too many unused loyalty cards
                • Figure 4: Attitudes related to loyalty program communication and tracking (% agree), June 2017
              • Around one in four prefer to use apps rather than carry a card
                • Figure 5: Attitudes related to use of apps (% agree), June 2017
              • The opportunities
                • Finding untapped segments in a largely saturated credit card market
                  • Increasingly the value-add of loyalty programs
                    • The evolution of rewards
                      • Data, privacy and their exchange for value
                        • Loyalty apps can help consumers manage programs better
                          • What it means
                          • Market Factors – What You Need to Know

                            • Canada’s population is aging
                              • Increased diversity means greater considerations for loyalty programs
                                • Household debt drops marginally lower as the Bank of Canada raises rates
                                  • Some 15% of Canadians have used a rewards app
                                    • Rewards apps are among the most “liked” apps by users
                                    • Market Factors

                                      • Canada’s population is aging
                                        • Figure 6: Population aged 0-14 and 65+, as of July 1, 1995-2035*
                                        • Figure 7: Canadian population, by age, 2016
                                      • Opportunities and challenges come with an aging population
                                        • Canada will become increasingly diverse
                                          • Increased diversity means greater considerations for loyalty programs
                                            • Household debt drops marginally lower as the Bank of Canada raises rates
                                              • Some 15% of Canadians have used a rewards app
                                                • Figure 8: Awareness and usage of digital financial products and services (select), March 2017
                                              • Reward apps are among the most “like” apps
                                                • Figure 9: Proportion of “likes” among product users, March 2017
                                            • Key Players – What You Need to Know

                                              • Air Canada to launch own loyalty program
                                                • Air Miles makes changes to loyalty program in effort to retain customers
                                                  • Data breaches hit Canadian loyalty programs
                                                    • RBC Rewards goes mobile
                                                      • Toronto based start-up Drop hopes to dominate North America’s loyalty market
                                                        • Mobile wallet Curve launches 'time travel' tool to let you 'shop in the past'
                                                          • Birch Finance helps keep track of credit card rewards
                                                          • Industry Developments and Innovations

                                                            • Air Canada to launch own loyalty program
                                                              • Air Miles makes changes to loyalty program in effort to retain customers
                                                                • Data breaches hit Canadian loyalty programs
                                                                  • RBC Rewards goes mobile
                                                                    • Toronto based start-up Drop hopes to dominate North America’s loyalty market
                                                                      • CIBC uses Snapchat Spectacles to capture the spontaneous moments
                                                                        • International Innovations
                                                                          • Mobile wallet Curve launches 'time travel' tool to let you 'shop in the past'
                                                                            • How Birch Finance helps keep track of credit card rewards
                                                                              • The Select Card
                                                                              • Marketing Campaigns

                                                                                • Select campaigns from Mintel Comperemedia
                                                                                  • Air Canada and CIBC multicurrency prepaid card
                                                                                    • Figure 10: CIBC Air Canada email advertisement, June 2017
                                                                                  • TD offers Aeroplan miles for setting up pre-authorized payments
                                                                                    • Figure 11: TD aeroplan visa email, July 2017
                                                                                  • PC Financial MasterCard offers a chance to double points by using its travel service
                                                                                    • Figure 12: PC travel direct mail, June 2017
                                                                                • The Consumer – What You Need to Know

                                                                                  • Nine in 10 Canadians are enrolled in a retailer loyalty program
                                                                                    • No annual fee and cash back rewards are the top influencers
                                                                                      • Older members are more aware of loyalty program data tracking
                                                                                        • Around a third have too many unused loyalty cards
                                                                                          • Around one in four prefer to use apps rather than carry a card
                                                                                            • Loyalty program members do not have high levels of trust with regard to data safety
                                                                                            • Participation in Loyalty Programs (By Industry)

                                                                                              • Nine out of 10 Canadians are enrolled in a retailer loyalty program
                                                                                                • Figure 13: Loyalty program participation, by industry, June 2017
                                                                                              • Women have a higher participation but in different types of programs
                                                                                                • Figure 14: Loyalty program participation (select), men vs women, June 2017
                                                                                              • 18-24s have a lower overall participation rate
                                                                                                • Over-55s have a higher participation in hotel, airline and department store programs
                                                                                                  • Chinese Canadians have different preferences
                                                                                                    • Figure 15: Loyalty program participation (select), Chinese Canadians vs overall, June 2017
                                                                                                  • LGBTQs more likely to participate in specialty retailer loyalty programs
                                                                                                    • Figure 16: Loyalty program participation (select), LGBTQs vs overall population, June 2017
                                                                                                • Participation in Loyalty Programs (By Program Type)

                                                                                                  • Air Miles is the most popular loyalty program
                                                                                                    • Figure 17: Loyalty program participation, by type of program, June 2017
                                                                                                  • Three in four women are Air Miles members
                                                                                                    • Figure 18: Loyalty program participation (select), by gender, June 2017
                                                                                                  • Younger Canadians have a higher participation in My Starbucks, SCENE, Amazon Prime and Beauty Insider
                                                                                                    • Figure 19: Loyalty program participation, by age, June 2017
                                                                                                • Credit Card Ownership

                                                                                                  • Nine in 10 Canadians own a credit card
                                                                                                    • Figure 20: Credit card ownership, by age and household income, June 2017
                                                                                                  • Finding untapped segments in a largely saturated credit card market
                                                                                                  • Factors Influencing Use of Primary Credit Card

                                                                                                    • No annual fee and cash back rewards are the top influencers
                                                                                                      • Figure 21: Factors influencing use of primary credit card, June 2017
                                                                                                    • Entertainment rewards and free gifts are stronger influencers for younger consumers
                                                                                                      • Figure 22: Factors influencing usage of primary credit card (select), by age, June 2017
                                                                                                    • Special access and charity affiliations are of more interest to LGBTQs
                                                                                                      • Figure 23: Factors influencing usage of primary credit card (select), LGBTQs vs overall population, June 2017
                                                                                                    • Travel rewards and special status appeal to high income earners
                                                                                                      • Figure 24: Factors influencing usage of primary credit card (select), high income earners vs overall population, June 2017
                                                                                                    • Men relatively more willing to pay a higher fee for better rewards
                                                                                                      • Figure 25: Attitudes related to credit cards and rewards (% agree), June 2017
                                                                                                    • Analyzing attrition
                                                                                                    • Earning Rewards

                                                                                                      • Around half of credit card owners prefer cash-back rewards
                                                                                                        • Figure 26: Attitudes related to rewards (% agree), June 2017
                                                                                                      • LGBTQs more likely to question the value of loyalty programs
                                                                                                        • Figure 27: Attitudinal statement related to value and rewards (% agree), June 2017
                                                                                                      • Increasingly the value-add of loyalty programs
                                                                                                        • Around half believe earning rewards requires too many purchases
                                                                                                          • Figure 28: Attitudes related to rewards, June 2017
                                                                                                        • The evolution of rewards
                                                                                                        • Data and Privacy

                                                                                                          • Older members more aware of loyalty program data tracking
                                                                                                            • Figure 29: Attitudes related to data collection (% agree), June 2017
                                                                                                          • Men are relatively more concerned about data collection
                                                                                                            • Figure 30: Attitudes related to data collection (select), men vs women, June 2017
                                                                                                          • Around a fifth of consumers are willing to share more data to get more discounts
                                                                                                            • Figure 31: Attitudes related to privacy (% agree), June 2017
                                                                                                          • Loyalty program members do not have high levels of trust with regard to data safety
                                                                                                            • Figure 32: Attitudes related to trust, June 2017
                                                                                                        • Loyalty Program Tracking and Communication

                                                                                                          • Around a third have too many unused loyalty cards
                                                                                                            • Figure 33: Attitudes related to loyalty program communication and tracking, June 2017
                                                                                                          • Younger members more likely to have trouble with tracking and usage
                                                                                                            • Figure 34: Attitudes related to loyalty program communication and tracking (% agree), by age, June 2017
                                                                                                          • Loyalty apps can help consumers manage programs better
                                                                                                            • Around one in four prefer to use apps rather than carry a card
                                                                                                              • Figure 35: Attitudes related to use of apps (% agree), June 2017
                                                                                                            • Young males are the keenest on app usage
                                                                                                              • Figure 36: Attitudes related to use of apps, men by age, June 2017
                                                                                                            • 55-64s more satisfied with loyalty program communication
                                                                                                              • Figure 37: Attitudinal statement related to loyalty program communication (% agree), by age, June 2017
                                                                                                            • Quality of loyalty programs more likely to influence younger consumers
                                                                                                              • Figure 38: Attitudinal statement related to loyalty program reputation (% agree), June 2017
                                                                                                          • Appendix – Data Sources and Abbreviations

                                                                                                            • Data sources
                                                                                                              • Consumer survey data
                                                                                                                • Consumer qualitative research
                                                                                                                  • Abbreviations and terms

                                                                                                                  Companies Covered

                                                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                                                  Loyalty and Rewards in Financial Services - Canada - August 2017

                                                                                                                  US $3,995.00 (Excl.Tax)