Wednesday, 17 Apr 2024

Tim Hortons launches rewards program — here’s how it compares to the competition

Tim Hortons kicked off its Tims Rewards program Wednesday, adding one more coffee loyalty program to the several others already offered in Canada.

The new program offers customers a coffee, tea or select baked goods after seven purchases made at least 30 minutes apart. Customers get a free rewards card and can track their purchases through a mobile app.

The company boasted about the rewards program in a press release, saying it has “some of the most loyal guests in Canada.”

“Tims Rewards allows us to say thank you,” Tim Hortons president Alex Macedo said in the release.

Tims Rewards comes long after some of the coffee chain’s biggest competitors, such as Starbucks and McDonald’s, launched their rewards systems.

Meanwhile, Starbucks recently announced that it is going to roll out an “enhanced” reward system in April that would offer customers more flexibility.

Previously, Starbucks customers had to accrue 300 points before being able to redeem rewards. Starbucks explained in a press release this week that customers will be able to redeem more frequently now on “small treats” or choose to save points for bigger purchases.

“This change means members can begin earning Stars to redeem a Reward in as few as two to three visits,” the release explained.

Starbucks Canada’s rewards program memberships have grown 25 per cent in the past two years, the company noted.

How do the coffee loyalty programs compare?

Alyssa Furtado, CEO of Ratehub.ca, explained that Tim Hortons’ reward program is quite similar to McDonald’s and is simpler than the one Starbucks offers.

The company recently compared the major coffee rewards programs in Canada and found that they offer different perks that will appeal to different customers, depending on spending habits.

“It’s really hard to compare apples to apples because you have to think about what the customer is buying to get the points and then what they’re redeeming for,” Furtado said.

She noted that Starbucks’ program, for example, is based on how much money is spent, but Tim Hortons’ is about the number of visits.

“If you’re a consumer that goes to Tim Hortons regularly and your cheque size is pretty small, that’s when this program is really valuable,” she said. “For Starbucks, it’s more strong if your average cheque size is quite large and you want to redeem for fancier drinks.”

How will this affect Tim Hortons’ reputation?

Furtado added that brands such as Tim Hortons take on loyalty programs knowing there will be a cost to giving out free products but do so for two main reasons.

The first is getting information on customer behaviour.

“What’s in it for them is data that they get. Every time you are tapping in with your loyalty card, that’s linked back to a customer profile and then they can start linking behaviour together,” she explained, noting that collecting such information helps companies make decisions about products and services.

The second reason companies take on loyalty programs is to keep customers happy — and get a better reputation.

That’s something Tim Hortons has struggled with in the recent past. Last April, a survey by Leger research group found that Tim Hortons’ brand reputation took a hit amid employee benefits disputes between franchisees.

Tim Hortons’ ranking fell to No. 50 in 2018, down from No. 4 in 2017.

“This helps in two ways. It builds loyalty with their customers,” Furtado said, adding that Tim Hortons is also “showing franchisee owners they’re providing value by helping them launch programs like this.”

Choosing a rewards program

Matthew Lau of PointsHogger.com explained to Global News that there really doesn’t seem to be a catch or any hidden costs associated with the coffee chain’s rewards system.

“Whenever it’s free to sign up, it’s going to be free returns,” Lau explained.

He added that Tim Hortons’ reward system “forces you to redeem” every few purchases, which helps ensure that consumers will actually reap the benefits — rather than end up saving up points or forgetting about them.

Lau noted that a program like this probably won’t make customers go out of their way to purchase Tim Hortons coffee.

“I think more people decide based on taste so if you’re like, ‘I can’t drink Tim Hortons coffee,’ and you only like Starbucks then you might not poach those clients,” he explained.

But for those who aren’t too picky about their coffee, Lau suggested “diversifying” and getting more rewards cards.

“If you’re a coffee drinker and you’re not super picky, why not have both?”

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© 2019 Global News, a division of Corus Entertainment Inc.

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