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How to choose and maximize a loyalty program

By Josephine Lim

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"Are you, or would you like to be, part of our loyalty rewards program?"

Chances are you've heard these words from countless cashiers and salespeople. Whether you're the kind of person who signs up for every available program, or someone who rejects them all, know that loyalty programs can be useful, more so when not overdone. Here's a guide to choosing the right number and kinds of programs for you, and how to maximize the benefits.

In 2015, the number of loyalty programs Canadian consumers are enrolled in grew to 11.1 programs from 9.8 programs in 2014, according to the 2015 Loyalty report produced by Bond Brand Loyalty and sponsored by Visa Canada. loyalty-programs

There are a wealth of loyalty programs to choose from and, as a consumer, the biggest advantage for us is we can save money, whether it's through rewards or discounts, says Stephen Weyman, Founder of HowToSaveMoney.Ca.

"The reward comes when you maximize your rewards program or choose the program that gives you the best value," says Weyman.

While more people are signing up for loyalty programs, the study found that fewer people are actually engaging with those programs.

"We were observing that customers were only active in a portion of the programs they were participating in," says Scott Robinson, senior director, loyalty consulting & solutions with Bond Brand Loyalty. "Customers active in all programs ... were enrolled in far fewer programs."

Nonetheless, loyalty programs certainly affect consumers' spending habits. According to the report, 71 per cent of those surveyed said they are particular about when and where they shop so as to maximize points. Thus, choosing one should be a careful decision.

What to look for when choosing a program
The average Canadian should be actively engaged with two or, at maximum, three rewards programs, says Patrick Sojka, Founder of Rewards Canada. If you're loyal to too many, you're spreading yourself too thin and you may never reach a reward in any of the programs you're signed up with, he adds.

The exception is if you shop at more than three places frequently, in which case, there's no harm in signing up for their loyalty program since you're earning points on money you would have spent anyway, says Weyman.

When evaluating a program, consider both sides of the equation: how you earn points and how you redeem them, says Sojka. Take a look at your spending habits and any credit cards linked to these programs to evaluate how you will earn points, he adds.

Calculate the rate of return from a loyalty program, which includes calculating how much money you need to spend to earn a point and how much money you'll use to redeem your rewards. The typical program will usually have a 1 per cent to 2 per cent rate of return, says Weyman. Some loyalty programs stand out by offering bonuses, which is another factor to consider. Simple online research can tell you whether the program you're interested in offers such bonuses.

Earning rewards is only half of the loyalty program, though, so you should check the reward redemption options, too. There's no point saving up points if there isn't something you want to redeem them for.

Many cards offer either cash, discounts, travel rewards or gift cards to restaurants and retailers. It's a good idea to talk with existing members of the program about online redemptions, since some programs have limitations, restrictions or extra fees when you redeem your points that way, says Sojka.

Calculate how much a reward option will cost you, says Weyman.

"Ultimately, the value [in a reward program] comes down to what makes you happy," says Sojka. "It comes down to how you want to be rewarded, whether it's discount off for travel or free flights in business class [for example]. Set a realistic goal of how you want to be rewarded, and you can define value without putting a dollar sign behind it."

Here are some ways you can maximize your return with loyalty programs:

  • Look for a credit card affiliated with the rewards program, or a gift card deal that lets you spend the gift card while earning points. Both of these methods contribute to double dipping -- earning double the points on one purchase;
  • Try to stack discounts along with rewards from your loyalty programs, if possible, to save more money;
  • Sign up for email lists or refer-a-friend offers to take advantage of bonus rewards;
  • Consider signing up for a hotel's rewards program. These programs offer flexibility in redeeming your points, for example by using points combined with cash. There are usually no taxes for most programs, Sojka says.

Redeem your points for flights that will give you maximum value, such as for business- or first-class seats, or coach class seats that are not on sale.

See related: Rewards, spending temptation less with debit than credit, Bump up your rewards, not your spending

Published: May 5, 2015