Rrrolll Up The Rubbish

From the "What Were You Thinking?" department comes news that Tim Hortons is launching a loyalty program that is linked to a co-branded CIBC credit card. 

 

From what I have read, customers will collect Tim points whenever they buy their favorite items using the CIBC card. My experience at Tims tells me that, for example, if the average amount spent at lunch is about $8 and if you don't have $8 in your pocket, what the hell are you doing with a credit card? 

 

First, I have to wonder what Timmy expects to get from this. Greater customer loyalty? As far as I can tell, Tim's customers are loyal. Very loyal. I have even seen tour buses stop on busy city street so passengers can run in to grab coffee and snacks. I have never seen that at Starbucks. Ever. (SNARK ALERT: Maybe it's because hipsters don't take tour buses unless it's to an alt/indie/vinyl conventions?)  I believe Tim's customers are buying as much as they can now and the program won't change that.

Second, credit card-wielding customers don't seem to resemble the typical Tim customers—at least as far as I can tell. They are the construction workers, the retirees, the moms going to soccer practice, the dads going to hockey practice. Everyday Canadians. And either they pay with cash or Interac, which tells me they spend what they can afford, and Tim sells affordable products.

Third, to be cost effective, the program needs to attract customers who are heavy buyers in the category but do so infrequently at Tim Hortons. Research shows, however, loyalty programs are poor at doing that.  

Finally, Loyalty programs are expensive to run and reward to loyal customers for doing something they already do, so it is likely it will produce no noticeable change in behavior. They are also quite difficult to end: customers will complain about losing their points (and place more value on them than the actual worth; there can be some formidable legal hurdles to wrapping it up; and there would be sizable infrastructure costs to write off. 

The positive announcements from the company are that it will tackle long lines in its stores, shorten the menu by dumping seldom ordered items, and launch new seasonal items. It also has taken Cold Stone Creamery out behind the barn and put a bullet in its head. These changes make sense and may attract lighter purchase customers, which increases penetration; a tactic that is cheaper than running a program that tries to increase market share. But that's just my two bits worth.