I was at the LCBO earlier today to buy some beer, and it struck me as strange that they participate in Air Miles. Air Miles, for those who don't know, is a customer loyalty program; they give you rewards if you buy enough stuff.
But the LCBO has a virtual monopoly over booze sales in Ontario, so it seems very strange that they would be part of a customer loyalty program. My understanding is that the point of these programs is to differentiate companies from their competitors in hopes customers will keep coming back. So gas stations, for example, usually sell almost identical products at almost identical prices, so a customer loyalty program would make sense because it gives customers a reason to patronize your station instead of the one across the street.
But it's not like there is lots of choice over where to buy booze in Ontario. If I want booze, I'm going to go to the LCBO whether or not they have a customer loyalty program. It makes me wonder what the LCBO's logic was in joining Air Miles.
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the logic is for people buy more booze from them because people want more air miles, it's not just a reward for brand loyalty, it's also a bonus for buying more stuff from them since it scales up with how much they buy. not hard to figure out at all.
ReplyDeleteI thought about that explanation, but I don't think it's very convincing. First, at the margin, an additional Air Mile doesn't get you very much at all. Second, the LCBO doles out Air Miles on a monthly basis. So while I could see someone topping up a $23 purchase with a little extra to reach the $25 threshold if Air Miles were only given out at the end of each purchase, if you know you'll break the threshold when you come back in a couple weeks, there's not much point in topping up a purchase. And when you think of other virtual monopolies (land line phone service, cable TV, BC Ferries, hydro) they don't usually have customer loyalty programs.
ReplyDeleteya I agree that is weird. I'll share another weird thing you can do with airmiles. It's too long for a comment but I put it into an article. http://www.ehow.com/how_5658961_earn-air-miles-rewards-fast.html What do you think? It has worked well for me.
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