05/26/2011 08:44 EDT | Updated 07/26/2011 05:12 EDT

Aeroplan: Consumer Analysis Expertise Will Bring More Growth

MONTREAL (CP) - Groupe Aeroplan Inc. expects more growth from its expertise in being able to analyze how consumers shop, a key trend in loyalty reward offers, the company's chief executive said Thursday.

Aeroplan (TSX:AER) expects to sign more clients this year that will use the services of its LMG Insight & Communication data analytics firm in the United Kingdom, CEO Rupert Duchesne said after the company's annual meeting in Toronto.

"It's the kind of data that the I & C subsidiary sort of crunches and munches and spits out into real insights," Duchesne said in a phone interview.

"So, we feel this is a very important part of our growth," he said.

Duchesne used the example of a consumer buying puppy food and logging the purchase with a loyalty reward card. That consumer would then be emailed a voucher for a discount on dog food.

"That all sounds very simplistic but that granularity of data is really crucial to retailers, many of who have suffered in the recession and are looking for every product sale they can."

Software gleans information from loyalty cards about how consumers shop and that is used to make specific offers to individual shoppers. Duchesne noted that individual names aren't revealed and privacy is protected.

Aeroplan's data analytics firm's customers include more than 100 companies such as Sainsbury's grocery stores, Unilever and Coca-Cola in the United Kingdom as well as U.S.-based CVS Pharmacy and leading Australian supermarket chain Coles.

"In terms of selling it as a stand alone service, we're in the multiple tens of millions of dollars of revenue in that area," Duchesne said. "Five years from now, I would see that data analytics would be one of the absolutely central things that we want to be known for."

Groupe Aeroplan, the loyalty points program operator of the popular Aeroplan card, also manages customer loyalty cards for a host of other clients.

Duchesne said Aeroplan targets offers to individual members and added in the United Kingdom that two out of three members of its Nectar loyalty program receive a unique offer every quarter.

"We now have the capability to do that on a mass scale down to literally an individual customer basis."

Aeroplan will also looking at making some small acquisitions in the next 12 to 18 months either in the digital or data analytics fields, he said.

"What you won't see us doing is making really big acquistions. We've got the global scale we want. It's really filling in some small gaps that we're now looking at."

Duchesne also said that more than two million airplane seats are redeemed under Aeroplan Canada a year and about 20 per cent of seats are taken two weeks before travel. He said recent statistics don't bear out any complaints about seats not being availabl.

Aeroplan said it earned $25.1 million, or 12 cents per share, in the first quarter of 2011, with $546.2 million in total revenue. That compared with a profit of $15.3 million, or eight cents per share, and $508.3 million in revenue in the first quarter of 2010.

The company also increased its annual dividend 20 per cent to 60 cents per share from 50 cents. The increased represents an annualized yield of 4.6 per cent.

RBC Capital Markets analyst Drew McReynolds said Aeroplan's dividend increase was a positive surprise though the company's earnings were below expectations mainly due to the its Carlson operations in the United States.