CIBC launches upgraded travel rewards card

TORONTO – CIBC has enhanced its travellers’ loyalty program two weeks after agreeing to sell about half of its Aeroplan customer base to TD Bank, in a bid to step up its offerings in the increasingly competitive arena of customer incentives.

“The travel reward business in Canada is a big deal for Canadians, and it’s also a fast-growing space,” David Williamson, senior vice-president of retail and business banking at CIBC, said in an interview Tuesday.

“If your objective is to accelerate your revenue growth and improve client experience, it takes you to this area.”

The Aventura lineup was developed “based on extensive research with Canadians on what they want in a travel rewards program,” and offers the most choice of any program, he added.

The changes follow a decision by Aimia (TSX:AIM) to pick TD Bank (TSX:TD) as the primary issuer of Visa credit cards for its flagship Aeroplan program, even though CIBC (TSX:CM) had been the primary Aeroplan credit card issuer for more than 20 years.

CIBC contested Aimia’s decision and eventually reached a deal last month that gives each bank the rights to half of the portfolio of Aeroplan Visa accounts.

Williamson said the enhanced program isn’t meant to compete with Aerogold but to complement it, noting that CIBC can now appeal to clients who want to fly Air Canada and those who want to fly with other airlines.

He said there was no friction with Aimia over CIBC’s new program, which was in the works long before the two parties began talks about renewing their partnership.

“Throughout the whole discussion, because our work was underway on enhancing a fly-any-airline card, that’s been fully transparent and out in the open,” Williamson said.

The Royal Bank of Canada (TSX:RBC), which runs its own popular rewards program called Avion, welcomed CIBC’s announcement as proof of just how dynamic the marketplace for rewards programs has become.

“It’s causing a lot more people to think about and talk about their credit cards,” said Linda Mantia, executive vice-president of cards and payment solutions at RBC.

She said Avion differentiates itself from its competitors by making it easy to redeem points as well as by the variety of offerings carried. It also allows clients to convert their points into cash that can be contributed to RESPs, or even towards points for programs RBC partners with, like Shoppers Optimum.

Scott Robinson, head of loyalty solutions and consulting at Maritz Loyalty Marketing, said his firm’s research shows 51 per cent of Canadians will modify when and where they buy a product because of the rewards they may get and 54 per cent of people have said they wouldn’t consider getting a payment card that didn’t have a good program attached to it.

“Canadians have very positive things to say about the programs they participate in,” said Robinson.

“Two thirds of Canadian say programs are definitely worth the effort of participating.”

But to Jonathon Hamburg, chief strategy officer at Berkeley Payment Solutions, a Toronto firm that helps companies set up incentive programs, one of the key drivers for consumers when choosing loyalty programs is choice, because people want to feel like they are getting the most value out of their rewards.

“You’re dealing with people from different generations, different backgrounds, different geographies, and it’s very difficult to deliver value to all these varied interests,” he said.

“Unless you’re finding ways to exchange the points that they’re earning for something of value, they’ll fatigue on the program.”

CIBC said Tuesday the enhancements to the Aventura program meant customers will be able to redeem their points on any airline, select any destination they want and have access to every seat on the plane.

They will also be able to use their points to pay for flight taxes and fees, and get additional perks like bonus points when they sign up, as well as have the option to earn points faster and opt for trip cancellation or medical insurance.

TD declined to comment on CIBC’s announcement Tuesday, but Aimia said it was aware of the changes.

“When it comes to redeeming miles, we deliver more seats than any other loyalty program and we also offer unparalleled value for business class rewards,” Aimia spokesperson JoAnne Hayes said in an email, adding that Aeroplan offers a multi-partner loyalty program that gives members the ability to earn miles with more than 75 partners.

“We’ve been doing this for almost 30 years and have built a strong program with a loyal membership base.”

Aerogold will also see upgrades in 2014, including a new tiered recognition program, as well as greater availability and value on Air Canada flights.