There are no average customers

The Sydney Morning Herald carried an article entitiled "Consumers paying high price for loyalty card rewards". The article was based on research from Choice (most likely similar to New Zealand's Consumer magazine). Their research argued that shopper loyalty cards offer "little benefit to shoppers" and profiled the value the key grocery retail programs offered .

An average Australian shopper (according to Roy Morgan Research) spends a mere $156 per week.

To earn a $50 gift card in Fly Buys requires spend of $15,000 at Coles (or think New World in New Zealand). At an average shopper's purchase rate of $156 per week that would take 2 years.

It would be faster at Woolworths Everyday Rewards program (think Progressive Enterprises Onecard in New Zealand) with customers earning the same $50 gift card after $11,000 or 1 year and 4 months.

One could indeed argue that for the average customer a $50 gift card in return for either 1.3 (Woolworths) or 2 years (Fly Buys) worth of dedicated shopping may not be enough return. That's debatable and some of our data would say otherwise.

However the real issue here is the use of "Average". There are no average customers and loyalty programs serve to enhance differences, especially financial ones, between them.

The figure shows an extract from an actual retail program. The customer base is ranked from best (buys the most) to worst customer along the x axis. The y axis then shows total sales from these customers. It's clear that the first few customers produce significant sales and the bottom customers very little.

For instance - the customer base once laid out from best to worst - is then cut into 10 deciles of equal turnover. In this case total turnover is $44m and each of those deciles is worth $4.4m. The first $4.4m of sales (or Decile 1) comes from only 91 customers. Each spends $49,000.

The last $4.4m of sales (or Decile 10) comes from over 42,000 customers. Each of them spends only $104.

Looking at this distribution, different customers are treated differently and top customers get inordinate amounts of value. In return they provide inordinate amounts of sales.

You are what you eat

There has been a long running loyalty program battle in the UK between Tesco (who were first to launch a loyalty card strategy in 1995) and Sainsburys who are a member of the Nectar coalition loyalty program (which I've written about before here). Much of the reporting about these retailers right now relates to their use and expenditure on their respective loyalty programs.

The battle heated up just before Christmas with Tesco doubling the points customers could earn - effectively doubling the value. Sainsbury's seems ave followed suit this month with an increase in the number of nectar points offered.

Tesco also mailed out GBP 67 million of vouchers in November that would normally have been sent in February.

So - who's winning?

Christmas trading results are due out in the next few days for Tesco but there's a concern that they've not got it right. Some analysts expect that their sales growth will be below that of their rivals. They're also concerned that Tesco will include GBP 100 million worth of loyalty vouchers in their sales figures (though the same analysts suggest that if they do this - decreasing their reported figures by 1.5% will deliver a true reflection of like-for-like sales).

Sainsbury's has already reported better than expected results for the Christmas period. In headlining these results - Sainsbury's CEO Justin King noted that "There will be a big difference between the haves and have-nots, with data. Those with loyalty data can see what customers are doing. If they are going elsewhere for a certain product, we can incentivise them to buy it with us.”

This is language that, in the past, would only have been heard from Tesco and their loyalty program partners dunhumby. In the Nectar program this data is worked by LMG Insight and Communication for Sainsbury (full disclosure : LMG is a sister company to Carlson Marketing. We're both owned by Groupe Aeroplan).

At Carlson we have always promoted the use of data to drive customer programs. The data in question for these two giants of UK grocery retailing is all the food their customers buy. The data that flows from customer's purchases of food is so accurate in determining their future buying habits that, in the words of the team at LMG, "You are what you eat".

We've partnered with Welcome Real-Time for point of sale rewards

We recently inked a deal with loyalty technology company Welcome Real-time to deliver a combined solution in the Oceanic and Asia Pacific market. It's called Carlson Marketing Point of Sale Rewards and it provides personalised loyalty experience in real time, at Point of Sale (POS).

The solution enables customers to redeem points for purchases at the till (instead of using money) and helps credit and debit card issuers to deliver personalised offers at the point of sale. It provides retailers with a great opportunity to market to their customers through their cards. retailers can treat different customers differently based on the RFM (Recency, Frequency, Monetary Value) of the payment card at their outlets. They don't need to know who the customer is and can provide an automated offer at the bottom of the till slip.

Welcome Real-time has customers in 30 countries and in the past year inked two serious deals. The first is with BarclayCard in the UK and the second with Maritz in the USA. Though not yet launched, these clients will bring Welcome Real-time into the G20 frame.

Groupe Aeroplan Concludes Acquisition of Carlson Marketing

Montreal, QC – December 7, 2009 - Groupe Aeroplan Inc. (TSX: AER) today announced the

completion of the acquisition of Carlson Marketing, a privately-owned marketing services

provider headquartered in the United States.

“We are pleased to officially welcome Carlson Marketing to Groupe Aeroplan. As stated, the

combination of our companies positions Groupe Aeroplan as the global leader in loyalty

management,” said Rupert Duchesne, President and CEO. “This acquisition provides

immediate geographic diversification and accelerates Groupe Aeroplan’s international

expansion strategy into the G20 countries. Moreover, Carlson Marketing’s solid US presence

secures an important footprint in one of the largest consumer markets in the world.”

Groupe Aeroplan’s existing businesses and Carlson Marketing will continue to operate

separately and independently. Jeff Balagna, President and CEO of Carlson Marketing, and his

executive team, will continue the management of Carlson Marketing. Jeff has also been

named Executive Vice President, Groupe Aeroplan.

Carlson Marketing is widely recognized for its leading-edge global knowledge of loyalty

marketing services, and engagement and events management. It has strong client

relationships, which include some of the world’s most respected brands in important sectors

including financial services, automotive, high tech, consumer packaged goods and

pharmaceutical. Carlson Marketing has a presence in North America, Europe, Asia Pacific and

the Middle East.

Groupe Aeroplan to acquire Carlson Marketing

GROUPE AEROPLAN TO ACQUIRE
CARLSON MARKETING

COMBINATION CREATES THE WORLD'S LEADING LOYALTY MANAGEMENT PROVIDER

---

MONTREAL, CANADA and MINNEAPOLIS, MINNESOTA, November, 3, 2009 - Groupe Aeroplan Inc. (TSX: AER), a leading international loyalty management corporation, headquartered in Canada, today announced that it has entered into an agreement with Carlson Companies, Inc. (CCI) to purchase Carlson Marketing, a privately-owned, US-based loyalty marketing services provider for a net purchase price of US$175.3 million (Cdn$188.0 million), including transaction costs of US$6.5 million (Cdn$7.0 million) and subject to certain working capital adjustments. In addition, Groupe Aeroplan expects to incur one-time costs of approximately US$15 million (Cdn$16.0 million), primarily related to the migration of technology infrastructure in the US out of CCI's systems. The acquisition is subject to customary closing conditions and standard antitrust approvals in the United States and Canada. The transaction is expected to close by early December 2009, and will be financed with cash on hand and bank facilities.

Carlson Marketing's solid US presence secures an important footprint for Groupe Aeroplan in the largest consumer market in the world. Moreover, the transaction provides Groupe Aeroplan with immediate geographic diversification and accelerates the company’s international expansion strategy into the G20 countries.

Carlson Marketing is widely recognized for its leading-edge global knowledge of loyalty marketing services, and engagement and events management. Carlson Marketing has strong client relationships, which include some of the world’s most respected brands in important sectors including financial services, automotive, high tech, consumer packaged goods and pharmaceutical. Carlson Marketing is truly global with a presence in North America, Europe, Asia Pacific and the Middle East, and over the last 18 months, has successfully positioned itself for growth.

"This acquisition is a logical extension for our company, as we diversify our business model to include a broader range of services within the loyalty management space in the US and internationally," said Rupert Duchesne, President and CEO of Groupe Aeroplan. "Acquiring a proven leader in the loyalty marketing space is the most cost effective and timeliest route to broadening our loyalty services offering. Carlson Marketing is widely recognized for their innovative thinking when it comes to understanding consumer behaviour, rewards and data analytics, areas that are pivotal to driving future growth in the global loyalty arena."

Groupe Aeroplan's businesses and Carlson Marketing will continue to operate separately and independently. Carlson Marketing's experienced and well-respected management team, led by President and CEO Jeff Balagna, will continue to run the operations. The two companies, with solid leadership and highly capable workforces, will benefit from leveraging intellectual capital across the entire corporation.

"This transaction is good news for the employees and customers of Carlson Marketing and a great opportunity for Groupe Aeroplan," declared Carlson President and CEO Hubert Joly. "It also frees up resources for Carlson that the company can deploy to accelerate the growth of its hotel, restaurant, and travel businesses at a time when significant opportunities exist in these markets."

"We look forward to joining forces with Groupe Aeroplan and significantly strengthening the scope of our loyalty marketing, program management, and engagement and event offering for customers, employees and distribution channels,” stated Jeff Balagna. "Together we become the world's leading loyalty management provider, able to offer a vastly-expanded network of loyalty marketing capabilities.”

"This acquisition makes good business sense," said Chief Financial Officer of Groupe Aeroplan, David Adams. "It will be immediately accretive to adjusted net earnings and free cash flow per share as Carlson Marketing is expected to generate positive free cash flow. In addition to substantially diversifying our revenue base, we will grow our consolidated top line by approximately 45% to over Cdn$2 billion. Through careful evaluation, we have concluded that this transaction truly represents a superior use of capital - even when excluding any potential synergies and including one-time transition costs related primarily to technology and infrastructure."

The Corporation will deploy a dedicated team, supported by external advisors, to pursue all forms of synergies and to identify potential collaborative initiatives to be rolled out over a period of 12 months.

---

About Groupe Aeroplan
Groupe Aeroplan Inc. is a leading international loyalty management corporation. Groupe Aeroplan owns Aeroplan, Canada's premier loyalty program and Nectar, the United Kingdom's leading coalition loyalty program. In the Gulf Region, Groupe Aeroplan owns 60 per cent of Rewards Management Middle East, the operator of Air Miles programs in the United Arab Emirates, Qatar and Bahrain. Groupe Aeroplan also operates LMG Insight & Communication, a customer-driven insight and data analytics business offering international services to retailers and their suppliers. For more information about Groupe Aeroplan, please visit www.groupeaeroplan.com.

About Carlson Companies, Inc.
Carlson is a global hotel, restaurant and travel company headquartered in Minneapolis, Minnesota. Carlson brands and services include: Regent Hotels & Resorts®, Radisson Hotels & Resorts®, Park Plaza Hotels & Resorts, Country Inns & Suites By Carlson, Park Inn® hotels, T.G.I. Friday’s® and Pick Up Stix® restaurants, and Carlson Wagonlit Travel®. Carlson brands and services employ more about 150,000 people in more than 150 countries. For more information about Carlson, please visit www.carlson.com.

About Carlson Marketing
Carlson Marketing is the world’s leading relationship building company. Carlson Marketing designs and delivers loyalty, engagement and event programs for some of the world’s best known brands. Carlson Marketing’s two global service offerings – Brand Loyalty and Engagement & Events– are supported by six core capabilities: Strategy & Brand Planning; Creative and Communications; Decision Sciences; Award Services; Technology Services and Customer Service. Headquartered in Minneapolis, MN, Carlson Marketing has large regional offices in Toronto, London and Sydney. For more information about Carlson Marketing, please visit www.carlsonmarketing.com

Caution Concerning Forward-Looking Statements
This news release contains forward-looking statements. Such statements may involve but are not limited to comments with respect to Groupe Aeroplan's and Carlson Marketing's strategies, expectations, planned operations, future actions, anticipated financial performance and business prospects. Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business and its corporate structure. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, risks related to the business and the industry, Air Canada liquidity issues, dependency on top four commercial partners that purchase loyalty marketing services, including Aeroplan Miles, Air Canada or travel industry disruptions, airlines industry changes and increased airline costs, reduction in activity, usage and accumulation of Aeroplan Miles, retail market/economic downturn, greater than expected redemptions for rewards, industry competition, supply and capacity costs, unfunded future redemption costs, failure to safeguard databases and consumer privacy, consumer privacy legislation, changes to the Aeroplan and Nectar Programs, seasonal nature of the business, other factors and prior performance, regulatory matters, VAT appeal, reliance on key personnel, labour relations and pension liability, technological disruptions and inability to use third party software, failure to protect intellectual property rights, currency fluctuations, interest rate and currency fluctuations, leverage and restrictive covenants in current and future indebtedness, dilution of the Corporation's shareholders, uncertainty of dividend payments, level of indebtedness-refinancing risk, managing growth, as well as the other factors identified throughout the Management Discussion & Analysis on file with the Canadian Securities regulatory authorities. Material factors and assumptions that were applied in drawing a conclusion or making a projection or forecast are also set out throughout this document. We believe that the expectations represented by our forward-looking statements are reasonable, yet there can be no assurance that such expectations will prove to be correct. The purpose of the forward-looking statements is to provide the reader with a description of management’s expectations regarding the matters described in this news release and may not be appropriate for other purposes. The forward-looking statements contained in this discussion represent the Corporation’s expectations as of November 3, 2009, and are subject to change after such date. However, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

Media Contacts:
Groupe Aeroplan:	Michèle Meier	514-205-7028	michele.meier@aeroplan.com
	JoAnne Hayes	416-352-3706	joanne.hayes@aeroplan.com
Carlson Marketing:	Mike Kust	763-212-1797	mkust@carlson.com
Carlson Companies Inc.:	Sam Macalus	763-212-2477	smacalus@carlson.com
Investor Contact:
Groupe Aeroplan:	Trish Moran	416-352-3728	trish.moran@aeroplan.com

Don Peppers responds

From Don Peppers: Just to clarify, what I said was that Coles (or any other retailer) should use a loyalty program primarily to bujild and maintain ongoing, one-to-one relationships with individual customers. Data is indispensable for this. Coles could continue with FlyBuys, but only IF the supplier were to make available to Coles all of the shopper data - and this is something I've been told either isn't possible or wouldn't be considered.

And yes, I was hired by Woolworths for a series of appearances this week and last. But I gave them the exact same advice more than two years ago. Whether my advice was influential or not, the fact is that they have now implemented a very good program. - @DonPeppers

"Coles Should Ditch FlyBuys" Loyalty marketing Guru Don Peppers

Loyalty marketing and customer strategy guru Don Peppers of the Peppers & Rogers Group described FlyBuys as ''trinkets and trash'' program that offers little value to the merchants or the shoppers. Peppers recommend that Coles Supermarkets in Australia exit FlyBuys and "get their own program".

Peppers & Rogers Group, which used to be a Carlson Marketing group company, introduced the marketing strategy of 1to1 10 years ago with their book "The One to One Future".

The Sydney Morning Herald reports on "Supermarket Sleuth" Peppers, who helped Coles competitor Woolworths with their new Qantas loyalty program partnership in Australia. Peppers readily admits that he is biased.

As we've discussed before - Peppers likens the supermarket and loyalty program battle that FlyBuys finds itself in to the experience of the UK market. Sainsbury's, who use a scheme similar to FlyBuys called Nectar, was overtaken as the leading supermarket chain in Britain by Tesco less than three years after Tesco launched its Clubcard scheme in the mid '90s.

Peppers said Coles should ditch FlyBuys and find a program that gives it control over customer purchasing data, otherwise it risks losing more market share to Woolworths.

''FlyBuys isn't the right program as they [Coles and teh other partners in FlyBuys] don't own the data,'' said Mr Peppers. ''It's just a trinkets and trash program. We pay you for loyalty and you know what, we don't pay you too much.''

The Sydney Morning Herald also reports [which we've discussed here] that Coles dumped the frequent flyer mechanism of FlyBuys this year so shoppers could accrue points and get discounts on their shopping.