Aimia Inc., the owner of Aeroplan and other loyalty programs, is continuing its round-the-world flight, now departing for China.
The Montreal-based company on Wednesday announced the latest phase in an aggressive global expansion of its loyalty-program business, with a minority investment in the Shanghai-based startup China Rewards.
The move reflects a potentially lucrative and so far largely untapped resource of consumer data, one of the most valuable commodities in the marketing world.
The investment is small: Aimia is co-investing with Toronto-based Points International Ltd., with each company putting in $5-million, a reflection of how young China's loyalty market is.
"It's young, but it's evolving rapidly," said Aimia's chief financial officer, David Adams. "Loyalty is going to be something that will rapidly become very visible in that market."
Aimia has been investing more heavily around the world, often partnering with a local company. Last spring, it received Brazilian regulatory approval for a joint venture for a loyalty marketing company. It launched in Italy in 2009 and, through a partnership with Groupe Auchan, has vaulted to nine million members and is expecting to drive more than $75-million in revenues this year.
Aimia's business in Mexico, where it partners with Grupo Aeromexico, has doubled in value in about 18 months, and Aimia recently upped its stake in the partnership. In India, where Aimia has been doing business since 2010, it has a joint venture with Tata Group and is competing heavily with other companies such as LoyaltyOne.
Mr. Adams believes competition for the loyalty market in China will expand as it has in India. China Rewards has a relationship with bank-card association China Union Pay, which counts 700 million credit and debit card holders in the country.
"[The strategy is] a combination of wanting to take advantage of high-growth areas in this world, and … to establish a footprint before our competitors," he said.
The loyalty industry sees high potential in emerging markets, and there is an opening for global players: People in countries such as China, India and Brazil are much more open to foreign brands, according to a loyalty study released last year by research firm Colloquy. Forty-three per cent of respondents said they "strongly agree that competition from foreign companies is a good thing" – compared to just 9 per cent in the U.S. and 8 per cent in Canada. And in China, 9 out of 10 consumers responded that they find global brands more trustworthy than domestic ones. The study also found that rewards programs sway shoppers' purchasing behaviour roughly twice as much in China as in the U.S. and Canada.
And once it has access to a base of consumer data, a loyalty company can use it anonymously to sell analytics about purchasing behaviour to other businesses. For example, in the U.S. Aimia invested in a firm called Cardlytics, which provides technology for Bank of America's "Amerideals". The bank's customers who use Internet banking can get targeted promotions on their bank statements – deals that are made for them based on purchasing behaviour. If a customer receives an offer from a coffee shop for example, and then uses her bank card to take advantage of it, that coffee shop pays a commission to Cardlytic – which it splits with the bank – and also covers the discount on the offer, for the privilege of getting that consumer into its store.
"It may be an overused expression, but data is the new oil," Mr. Adams said. "As the Chinese market develops, the data accumulation and analytical insights that you glean from that can be universal."