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persuasion

Air Miles members scrambled to redeem their points last year as the program approached a deadline for expired miles.

Fewer shoppers are pulling the Air Miles card out of their wallets at checkout in some stores, and many retailers have faced pressure from unhappy customers over their partnerships with the loyalty program.

And now Air Miles parent company LoyaltyOne Inc. says it plans to issue an apology to its members, and to offer an increased number of promotions with retailers, in an attempt to win back customers.

Late last year, as the program approached a deadline for miles five years and older to expire, members were scrambling to redeem them in time and faced long waits for customer service. Amid a legislative push in Ontario to ban expiry of loyalty points, Air Miles abandoned its expiry policy – leaving more members questioning why they had rushed to lock in rewards they didn't really want. And members who do not have enough miles to redeem for rewards they do want remain unable to transfer those "Dream Miles" into a new category that gives them cash-back at checkout at participating retailers; they can only collect those "Cash Miles" going forward, once they have made changes to their accounts.

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Retailers have become a conduit for members' frustrations.

"We did feel the pressure," said Hélène Bisson, vice-president of communications for Jean Coutu Group Inc. At its drugstores, feedback intensified in December with the approaching expiry deadline.

The most common complaints had to do with long waits to contact Air Miles customer service, and the difficulty of redeeming Dream Miles for rewards. "At that point, we had a lot of negative comments," she said.

Jean Coutu has noted a decrease in people swiping their Air Miles cards at checkout at its chain of drugstores.

"We definitely heard some negative feedback. There were concerns about the expiry policy and a lot of those concerns were expressed to our team," said Jamie Bliss, director of marketing and communications at Edmonton-based retailer Fountain Tire, which has locations across Canada. "People asked whether we were sure it was delivering value to customers."

"We did hear some concerns from our Rexall customers," said Derek Tupling, director of corporate communications at Rexall Pharmacy Group Ltd. The company summarized some of the most common complaints and forwarded them to Air Miles, and also directed customers who complained about the program to contact Air Miles directly.

"Our customer wasn't happy [with] the way the partner managed that relationship with them," François Vimard, then interim chief executive officer of Sobeys parent Empire Co. Ltd., said on an analyst call in December. "It did affect us directly." (Sobeys did not respond to requests for comment on this story.)

The Liquor Control Board of Ontario, which offers Air Miles promotions at its retail stores, said that feedback "fluctuated" late last year. LCBO spokeswoman Christine Bujold emphasized that it is not involved in the administration of the program and does not influence its policies. "However, when customers contacted LCBO to express concerns regarding changes to the program, we relayed those concerns to Air Miles, and encouraged customers to also contact the provider directly," she said.

Air Miles saw both in-store promotions and customers' card use drop at the end of last year, said Blair Cameron, senior vice-president at LoyaltyOne who oversees Air Miles operations and strategy, adding that it's too soon to tell whether the drop in members' use of their cards has continued into this year.

The company is stepping up its promotions to improve its relationship with members, and has been meeting with retailers to communicate those plans to them. Those include a cruise giveaway for members later this year, and an offer currently for free movies to members who sign up to use coupons at two retail partners. At least one partner has been doing damage control on its own: In the fall, partly to cope with the negative sentiment, Fountain Tire offered more miles than usual for purchases of Goodyear tires, which was received positively, Mr. Bliss said.

"We need to apologize for where we let collectors down. We need to own our shortcomings, and be transparent about it, and make a commitment to be better," Mr. Cameron said. The details of that apology are still in the works, and he said the company plans to communicate directly with collectors.

Despite complaints, retailers including Rexall, Global Pet Food Stores Inc., Staples Canada and Fountain Tire, said they have no plans to discontinue partnerships with the program. Pharmasave Atlantic, Hilton Hotels Corp., and Shell Canada Ltd., which all offer Air Miles to customers, did not respond to interview requests.

Last month, Metro Inc. CEO Eric La Flèche said that the grocery chain had faced complaints from shoppers about Air Miles. "It has been rocky this fall with Air Miles, no doubt about that," he said, adding that Metro would consider its options when it was time to renegotiate the loyalty program contract. That is normal procedure, Metro spokesperson Marie-Claude Bacon subsequently emphasized, saying the company has no plans right now to abandon the partnership.

Ms. Bisson would not comment on whether Jean Coutu is considering other options for its loyalty program. She said the company does not believe the negative feedback has affected its relationship with shoppers.

"We are following the situation with Air Miles closely, the satisfaction of our customers always remains our highest priority," Lowe's Canada spokesperson Valérie Gonzalo said, declining to comment further. The company offers Air Miles at Lowe's, Rona and Ace Hardware stores.

InterContinental Hotels Group said it has not received "any relevant comments" about Air Miles from its IHG Rewards Club members. The club partners with Air Miles at IHG hotels including Holiday Inn, Candlewood Suites, Intercontinental, and Crowne Plaza.

Part of the attraction of a program such as Air Miles is that it allows retailers to offer bonuses for loyalty without having to build their own programs from scratch and manage issues such as shopper data analytics, information security and customer service.

"Last year was rough for us, and it was rough for some of our partners given the situation we found ourselves in with expiry," Mr. Cameron said. "… In 2017, we need to turn that around."

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