What if you could cash in all those airmiles for something other than, well, more air-polluting flights? Canada’s Green Rewards program, set to launch this summer, takes as its premise the idea that consumer incentive programs can offer rewards that are both “fun” and also “good” (think of applying those points to an electric scooter instead of that free trip to Bermuda). We asked Green Rewards mastermind Andrew Souvaliotis about this pioneering program, and why he’s launching in Canada before dipping his toe in the much larger U.S. market.

---

SLM: Please give some background on the Green Rewards program. What first gave you the idea, and how did you realize there was an unfilled demand here?

Andrew: Actually, the main source of inspiration may be specific to Canada. I live in a country with one of the highest success rates for consumer loyalty programs. Specifically, we have two dominant national loyalty coalition programs - Aeroplan and Air Miles - in which a number of retail brands come together to offer the same loyalty currency to consumers as a reward for shopping with them.

The inspiration for Green Rewards was that the space is busy and successful in Canada but also quite fatigued. Canadians say they're looking for a more member-friendly, creative program. At the same time, recent surveys have shown that “green” is becoming a huge priority in consumers' minds. Our latest research shows that 82% of Canadians believe they should be doing more to help fight climate change, but they don't know how. That's a staggering percentage. So the popularity of consumer rewards programs in this country, coupled with the desire for a greener lifestyle, led us to create Green Rewards: a coalition loyalty program that allows consumers to spend their points not on polluting activities such as unnecessary air travel but rather on things that are fun for you, but not bad for the environment.

To be clear: We're not expecting the coalition to be green in terms of where people shop and how they collect their points; we’re not trying to change the fundamental ways in which people live and shop each day. We're simply trying to change the footprint of the rewards that people get from their points. And the current footprint is significant. We recently conducted a large-scale survey to determine how many of the approximately five million free reward flights Canadians take each year are actually unnecessary. Stunningly, we found that about one and a half million trips, or 27% of all the free reward flights, would not have been taken if they weren’t free. Those figures alone show a huge opportunity to offer consumers meaningful points that don't harm the environment but still have a high "fun factor."

SLM: Let's talk about that "fun factor," because that's really how consumers look at these reward points - as an opportunity to spend on something they otherwise wouldn't. How does Green Rewards appeal to that expectation?

Andrew: There have been seven or eight green rewards programs that have launched around the world in the past couple of years - a few in the U.S., as a matter of fact - and in my opinion they've all got it wrong. They're all focusing on redeeming points only for the zero-fun stuff like carbon offsets and donations. There's nothing wrong with those things, but quite frankly they wouldn’t appeal to the vast majority of the population because most consumers wouldn’t consider them to be a true “reward.”

In Canada in particular the prevalence of rewards programs has created a built-in expectation that loyalty rewards must have a very high fun factor. So we structured the program to ensure that the rewards are as "fun" as they are "good." Think of zipping around in a cool electric scooter instead of driving a car. Or downloading music for your iPod, which has no environmental footprint whatsoever. Here are the four categories we focus on:

1. Transport: People like to get around on their points, so in this category we offer items like train tickets, transit passes, electric scooters, bicycles, etc. - the only thing we do not offer is free flights!


2. Home: Consumers are spending so much on greening their homes these days - in fact, we expect this to be our biggest category. Items include energy-efficient appliances, CFL or LED light bulbs, smart thermostats or lighting systems, and even services like home energy-use assessments.


3. "Clean fun": This category includes personal items and activities such as music downloads, eco-friendly clothing, cool green gadgets (imagine having a portable solar re-charger for your iPod?!), spa packages, massages and even gym memberships.


4. Conscience: This is the category for those who feel so passionate about environmental issues that they want to simply donate their points to a cause. This area is one in which we stand out even from our green competitors, because we will always make sure every point (or penny) of our members’ donations will reach its destination – we will never take a service fee of any kind.

Changing consumer behavior is an uphill battle, and it's one we're trying to avoid. What we're saying is, you don't always have to change the way you live and shop every day. You can start becoming a better environmental citizen simply by not collecting the "dirty" rewards points - the kinds of points that put the majority of their redeemers on planes. Green Rewards guides consumers toward a more "justifiable indulgence" in points that don't have a negative effect on the environment.

SLM: What kinds of retailers are participating in your program right now?

Andrew: On the earn side of our program, we are partnering with prominent brands that are "green enough." In addition to our credit card issuer - which will be a huge part of the program - we're going to have about six prominent national retailers at the time of launch. We're also in talks with a major automaker that the average citizen would agree is a relatively green company. We can't afford to be purists, because if we were we would be back on the impossible task of trying to drastically change consumer behavior - and we would have to eliminate most of the retailers where consumers could collect their points.

On the burn side of things, though, we absolutely will be purists. The things that you get by spending your points are guaranteed to be good. We have set up a robust and very visible ‘accreditation’ process that will immediately convince consumers that every single reward they can get with their points is authentically green.

SLM: How are they guaranteed?

Andrew: We are setting up an accreditation process with two strategic partners: The first is a small Montreal-based firm, Ethiquette, an accreditor of "greener" products (they use a relativity scale to assess a product’s environmental impact). They are a completely independent third party with no incentive to over-approve rewards. We also have a relationship with Deloitte, who will audit us to make sure we never cheat against those accreditation standards.

SLM: How exactly does the program work?

Andrew: It's really no different than the frequent-flyer model. You buy an airline ticket and earn points based on distance or expense. Or, you use a credit card with a miles program and earn points that way. The exact same thing applies in a retail setting. What is a bit unique with us is that if you're a Green Rewards member, you have three potentially overlapping ways to earn points:

1. By using a participating credit card. It doesn't matter where you spend your money, you get a point for every dollar you charge on that card.


2. By making purchases at participating national retailers. Again, you earn points for each dollar you spend. But keep in mind, if you use the right credit card for that purchase you'll be able to double-dip, earning points from the credit card and more points from the retailer for every dollar spent.


3. By purchasing certain big-ticket items made by a participating manufacturer. So you'd get, say, 1000 points for a $1000 TV from the manufacturer. And if you use the right credit card at the right retailer to buy that TV, you can get an extra 1000 points from the credit card and another 1,000 points from the retailer - for a total of 3,000 points.

Additionally, since we don't mark up our currency (one point earned translates to exactly one penny of reward value),  government agencies are now considering using Green Rewards points as the currency for green rebates. So one day, Canadians may receive Green Rewards points instead of cash for making the right renovations to improve the energy efficiency of their homes or for buying the right kind of car. We've also signed an exclusive deal with Maritz, a global provider of employee incentive programs, which will make our currency a new kind of employee reward in a variety of eco-conscious organizations.

SLM: And the benefit for participating retailers is...

Andrew: A national coalition rewards program has such a large membership base that the currency appeals to a consumer base far larger than that of any single retailer. A lot of retailers in the U.S. have proprietary rewards programs, but the difference is that, in a coalition setting, a group of brands across many different categories offer the same points, the same currency. Essentially, participation in a common currency and a common marketing campaign gives each of these brands another customer acquisition opportunity. In addition, there's a lot of cross-motivational potential: Once people understand the value of accumulating the same points at a variety of outlets, they will start to concentrate their shopping among those particular outlets.

But these benefits are true of any coalition rewards program. The bonus for retailers participating in the Green Rewards coalition is the very powerful positive brand association for environmental responsibility and, as many recent studies have shown, that carries real weight among consumers these days.

SLM: Why isn't there a similar type of program in the U.S.?

Andrew: It's easier to bring a diverse group of retailers under the same umbrella once there's a participating credit card on which to anchor the program. That's the best way to accumulate points quickly. In Canada, Britain, and Australia, where these coalition rewards programs are most popular, we have national banks that issue the same credit cards to consumers across the country. In the U.S., the financial landscape is much more regional, which is why no one yet has created a true national coalition program there – yet.

SLM: So what about plans to launch Green Rewards in the U.S.?

Andrew: I think the time is just about right. What we want to do is finalize our launch plan in Canada and iron out all the details before we try it in the States. Then we are immediately looking at launching in the U.S., U.K., and Australia. In fact, we've had preliminary talks with potential partners in all three markets.