Tag Archives: airmiles

The Cost Of Loyalty Programs (Part II)

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I wanted to finish up our look at loyalty programs from two weeks ago.

All the details on a flight to Victoria are posted here – just scroll back to the last story in full. It’s a flight I’m on today, so it’s all broken down. If you’re hooked on the loyalty program of one of the airlines, you need to pay attention: On this $200 flight example, you have to pay EXTRA to get loyalty points. With Air Canada it’s an extra $23 to get half your miles or $44 more for 100%. With Westjet, pay $160 for the flight or $23 more for their Westjet dollars.

But look at their program: Westjet gives you 0.5% of your qualified spending in reward bucks. That’s one half of one percent! You’re paying $23 extra to get less than $1 in rewards. Yes, spend $23 to earn a buck! Tell me how that gets you ahead?

The other great example is from 7-11 and their new reward program. They’ve been doing a lot of TV ads, especially on CFL games. One of the ads is an offer to get a free small bottle of Coke for 1500 reward points.

OK, stop. I went to the store to check it out: The small Coke is 99 cents at 7-11, and pretty much every other retailer. So one dollar divided by 1500 reward points is 0.0007 cents. 7-11 rewards you shopping at less than ideal prices with seven one hundredth of a dollar. That’s to redeem your points. Flip it around to see what you earn: If it’s 2 AM and they’re close and open – buy what you need at 7-11. They’re convenient, good service, and open. But make sure what you’re buying isn’t costing you more than somewhere else because that seven one hundredth of a dollar isn’t making up for overpaying in the retail price!

Petro Points are $0.001 and Airmiles average $0.121. At most you’ll earn 1.5%. That’s the Westjet MasterCard, Aeroplan card, Costco MasterCard and others. It can also be as low as seven one hundredth of a dollar. Breaking news: I have NEVER had a millionaire tell me that their success was because of loyalty points!

Need I say more?

Tricks and Gimmicks Everywhere

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I have to confess: Stupid gimmicks, traps and tricks, and misleading ads drive me crazy. But it seems that right now there are a bunch of them around designed to separate you from your money:

Right now, there is a BC car dealer, and one in Ontario on my Facebook page, advertising that they’ll give you 250 airmiles when you purchase a vehicle from them.

Does anyone know what you’re really getting? The wholesale value of an airmile is about 1 ½ cents! That translates to less than $4 of value. On your end, 250 redeemed airmiles gets you around $30 of gas coupons. Let me see: You’re spending $20 or $30,000 and the extra incentive is $30? Are you kidding me? But I wonder how many people chase the points and think it’s some kind of good deal.

There’s an ad for a pawn shop chain with the claim: We’re another kind of bank. THAT is one big stretch. I know the industry wants to clean itself up, and promote itself away from their current image, but a pawn shop is not a bank – give me a break.

Nationally, and it may just be marketed in the US on television, there is now a huge promotion to buy a 24 karat gold coin. They claim it’s a limited edition $50 value for $9.95. Wow – that sounds like a deal…on the surface, especially with the gold mania that’s gone way beyond reasonable and rational.

However, in the ad they mention that the coin contains 14 mg of pure gold. OK, most people know what an ounce is. But hands up if you know what 14 milligrams are? I didn’t think so. At the current value of gold, that 14 mg is worth 78 cents, because it’s 0.000494 ounces.

The ad goes on to claim that this is an incredible investment. How is that? 78 cents worth of actual gold for ten bucks is an investment? It may be shiny, but it’s not all gold.

But a gold fever is a gold fever, and lots of companies are taking advantage of it. In Boca Rotan Florida you can actually find a vending machine that will sell you gold. Just insert your credit card, make your so-called investment selection and buy it, just like you would out of a candy vending machine.

Gold is the only safe investment says one advertisement. Oh, really? As though investing in good growth mutual funds with a long track record hasn’t historically averaged around 12%?

Tim Horton now has an ad campaign designed to get people to automatically re-load their gift cards through their bank account:” Could I get one of these and one of those and get my friend here whatever he wants.” A pre-loaded gift card is like a credit card. Tim Horton, and everyone else in the small cash purchase industry, knows that you’re likely to spend way more money with a card instead of cash!

With a pre-paid card, or credit card, McDonalds average purchase increases 47%, and vending machine purchase per person increases 178%. Small wonder these companies want you to use anything but cash!