Today’s blog entry is by Andreas Souvaliotis, President of AIR MILES for Social Change – the first such social venture in the world, created entirely within a popular consumer loyalty points program.
In today’s western corporate world, filled with intense environmental awareness and social responsibility pressure from all stakeholders, corporations fit into just three categories: The vast majority are now considered to be ‘compliant,’ that is they satisfy the expectations of their customers, shareholders and stakeholders. They waste less, care more and reduce their negative footprint on the environment.
Then are even better players who can be described as ‘strategic,’ those corporations that have intentionally taken commercial innovation risks by placing themselves ahead of the heir customer expectations. (Think Nissan with its remarkable shift of R&D dollars towards electric vehicles even though today that market is still tiny or Philips, who stopped making incandescent light bulbs.)
And finally there are a small number of substantial corporations that realize there is a unique opportunity to be ‘transformative’ players in our society by harnessing their heft and influence to inspire change in the world around them. (Think Wal-Mart with its ability to prescribe packaging and environmental efficiency standards to its vast supply chain around the world.)
A few years ago, we at LoyaltyOne, the company that runs the popular AIR MILES program in this country, looked at this new social responsibility landscape and saw some very tantalizing options. We knew we could be compliant very easily because our overall footprint is small – we don’t manufacture anything or run fleets of transport trucks. We could achieve this marker by simply housing ourselves in great buildings, producing solar power from our rooftops, enrolling our employees in car-sharing programs, reducing our waste and our paper use and partnering with the right NGOs.
We then realized that we could also easily and quickly become a ‘strategic’ innovator. We harnessed the vast popularity of our points program to educate millions of Canadians on better lifestyle choices. We changed the mix of rewards that we offer to our Collectors so they could actually choose from a new menu of strictly accredited environmental options, such as transit passes and electric scooters.
Then we came to realize that our greatest opportunity lay in our ability to become a ‘transformative’ force. This inspired us to create the type of social venture that hasn’t existed anywhere else in the world. After we ‘greened’ so much of our core AIR MILES business, we discovered that government agencies all across the land were hungry for innovative solutions in their quest to inform, inspire and ultimately reward a shift in day-to-day behaviours among their citizens.
Public utilities everywhere are trying to teach (and motivate) citizens to conserve more electricity, gas or water; municipalities want us to leave our car at home, or to get us to reduce household waste; health authorities are looking to inspire us to exercise more or make better everyday food choices. All these entities, in Canada and around the world, have always really had just type of ‘carrot’ to get our attention: cash!
That’s really the only form of incentive that government agencies could access easily, so they offer it in the form discounts, coupons, rebates and all sorts of other cash ‘treats’ to help change behaviour.
And while we all like cash, there are three serious problems with it as a mass-appeal incentive:
1. Cash is expensive to administer. The processing of a $5 rebate or coupon probably doubles or triples the cost of the rebate itself!
2. Cash incentives are expensive and difficult to market. In order for any one of us to learn that your city offers a $60 rebate when we buy an efficient new toilet for our home, the city has probably spent millions in advertising and promotion campaigns just for that one rebate program!
3. Cash rewards carry very little ‘trophy value.’ Cash is ubiquitous in our lives and most of it is spent on necessities. When we first receive that $5 reward we may smile a little, but we soon forget that we got it, let alone why we got it.
By contrast, Canadians love collecting loyalty points. In fact we seem to love them more than just about any other nation in the world! The average Canadian consumer belongs to almost 10 different loyalty programs – and they’re available to us almost everywhere we shop each day. In the midst of such a uniquely active loyalty landscape, the most popular points program in our country is the AIR MILES reward program – with about 70% of the households actively engaged in it.
People love hearing from loyalty points providers like us because we don’t sell them anything – we simply give them more free rewards. They open our mail keenly, follow our recommendations, change their behaviour in order to collect more points. And because we’re so well connected with millions of them across the land, it costs very little for us to speak to them. And it costs absolutely nothing for us to distribute miles to their accounts.
So that’s precisely where we saw an opportunity to change the way government incentive programs work in this country. If you could achieve greater results and realize cost savings and speak to a very engaged and broad audience across the country, isn’t that better than spending on non-targeted incentives for the general population when you don’t know who they are and where to reach them?
Our first experiment – and, truly, the first of its kind in the world – was in 2010 in partnership the Ontario Power Authority. We attached a small AIR MILES incentive to their annual Power Pledge conservation campaign. Almost unbelievably, we got seven times more Ontarians to participate, while the cost of the entire campaign for the OPA was reduced by a stunning two-thirds compared to the previous year!
That was less than a year ago. And in that short time AIR MILES for Social Change has grown into a remarkably successful national social venture, running incentives in most provinces to support transit adoption, energy conservation, waste diversion, smoking cessation, physical activity and – starting in just a few weeks’ time – the world’s first government-funded incentives for making healthier shopping choices at the grocery store!
The results have been terrific everywhere and they’re being celebrated as a model of social innovation in far away places as well! Some months ago Prince Charles, known for his endless passion around environmental and social responsibility, asked if there was a way for us to transplant our model to the United Kingdom and elsewhere!
In building these world-leading examples of social innovation we intentionally partnered with some of the most prominent NGOs in Canada, including WWF, the Heart & Stroke Foundation and ParticipACTION. We did this because we wanted to create the best and most authentic marriage of our expertise in incentives and loyalty with their expertise in socially-responsible behaviours and standards.
We are uniquely proud of what we have accomplished and, while we’re still the only example of this type of social innovation in the world, we hope our model will be copied in other countries where consumer loyalty programs are popular.
http://www.AirMilesForSocialChange.com