Profile: Alliance Data Systems Corp (ADS)
9 Dec 2013
Alliance Data Systems Corporation, incorporated on February 23, 1995, is a provider of transaction-based, data-driven marketing and loyalty solutions serving consumer-based businesses in a variety of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, marketing strategy consulting, analytics and creative services, direct marketing services and private label and co-brand retail credit card programs. It focuses on facilitating and managing interactions between its clients and their customers through all consumer marketing channels, including in-store, on-line, catalog, mail, telephone and email, and emerging channels, such as mobile and social media. Its products and services operate under three segments: LoyaltyOne, Epsilon and Private Label Services and Credit.
The Company’s client base of more than 1,000 companies consists primarily of consumer-based businesses, including well-known brands, such as Bank of Montreal, Canada Safeway, Shell Canada, AstraZeneca, Hilton, Bank of America, General Motors, Victoria’s Secret, Lane Bryant, Pottery Barn, J. Crew and Ann Taylor. Its client base is diversified across a broad range of end-markets, including financial services, specialty retail, grocery and drugstore chains, petroleum retail, automotive, hospitality and travel, telecommunications and pharmaceuticals.
The Company’s LoyaltyOne clients are focused on targeting, acquiring and retaining loyal and profitable customers. It uses the information gathered through its loyalty programs to help its clients design. Its clients within this segment include financial services providers, supermarkets, drug stores, petroleum retailers and specialty retailers. Its AIR MILES Reward Program is a coalition loyalty program in Canada, with over 170 sponsors participating in the program. The AIR MILES Reward Program enables consumers to earn AIR MILES reward miles as they shop within a range of retailers and other sponsors participating in the AIR MILES Reward Program. These AIR MILES reward miles can be redeemed by its collectors for travel or other rewards. The three primary parties involved in AIR MILES Reward Program are: sponsors, collectors and suppliers.
As of December 31, 2012, more than 170 brand name sponsors participate in the Company’s AIR MILES Reward Program, including Canada Safeway, Shell Canada, Jean Coutu, RONA, Amex Bank of Canada, Sobey’s and Bank of Montreal. The AIR MILES Reward Program is a full service outsourced loyalty program for its sponsors, who pay them a fee per AIR MILES reward mile issued, in return for which it provides all marketing, customer service, rewards and redemption management.
Collectors earn AIR MILES reward miles at thousands of retail and service locations. Collectors can also earn at the many locations where collectors can use certain cards issued by Bank of Montreal and Amex Bank of Canada. This enables collectors to rapidly accumulate AIR MILES reward miles across a portion of their everyday spend. The AIR MILES Reward Program offers a reward structure that provides a quick, easy and free way for collectors to earn a broad selection of travel, entertainment and other lifestyle rewards through their day-to-day shopping at participating sponsors.
The Company enters into agreements with airlines, movie theaters, manufacturers of consumer electronics and other providers to supply rewards for the AIR MILES Reward Program. The broad range of rewards that can be redeemed is one of the reasons the AIR MILES Reward Program remains with collectors. Over 300 suppliers use the AIR MILES Reward Program as an additional distribution channel for their products. Suppliers include well-recognized companies in diverse industries, including travel, hospitality, electronics and entertainment.
Epsilon is a marketing services firm providing end-to-end, integrated marketing solutions that leverage transactional data to help clients to acquire and build stronger relationships with their customers. Services include strategic consulting, customer database technologies, permission-based email marketing, loyalty management, data, predictive modeling and a full range of direct and digital agency services. The Company distributes marketing campaigns and communications through all marketing channels based on the consumer’s preference, including digital platforms such as email, mobile and social media. Epsilon has over 750 clients, operating primarily in the financial services, automotive, travel and hospitality, pharmaceutical and telecommunications end-markets.
Through the Company’s consulting services the Company analyzes its clients’ business, brand and/or product strategy to create customer acquisition and retention strategies and tactics designed to further optimize its clients’ customer relationships and marketing return on investment. On November 30, 2012, it acquired HMI, a marketing services agency, which offers ROI-based targeted marketing services through digital user experience design technology, customer relationship marketing, consumer promotions marketing, direct and digital shopper marketing, distributed and local area marketing, and analytical services that include brand planning and consumer insights.
The Company designs, builds and operates complex consumer marketing databases for consumer-facing brands, such as Hilton HHonors and the Citi ThankYou programs. Its solutions are customized and support its clients’ needs for real-time data integration from a multitude of data sources, including multi-channel transactional data. The Company provides behavior-based, demographic and attitudinal customer segmentation, purchase analysis, Web analytics, marketing mix modeling, program optimization, predictive modeling and program measurement and analysis. Through its analytical services, it gains a better understanding of consumer behavior that can help its clients as they develop customer relationship strategies.
Private Label Services and Credit
The Company’s Private Label Services and Credit segment assists some of the known retailers in extending their brand with a private label and/or co-brand credit card account that can be used by customers at the clients’ store locations, or through on-line or catalog purchases. Its Private Label Services and Credit segment provides risk management solutions, account origination and funding services for more than 100 private label and co-brand credit card programs. It process millions of credit card applications each year using automated scoring technology and verification procedures to make risk-based origination decisions when approving new credit card accountholders and establishing their credit card limits.
The Company’s accountholder base consists primarily of middle- to upper-income individuals, in particular women who use its accounts primarily as brand affinity tools as well as pure financing instruments. These accounts generally have lower average balances compared to balances on general purpose credit cards. Securitizations involve the packaging and selling of both current and future receivable balances of credit card accounts to a master trust, which is a variable interest entity (VIE).
The Company performs processing services and provides service and maintenance for private label and co-brand credit card programs. It uses automated technology for bill preparation, printing and mailing, and also offers consumers the ability to view, print and pay their bills on-line. By doing so, it improves the funds availability for both its clients and for those private label and co-brand credit card receivables that the Company owns or securitizes. The Company provides focused training programs in all areas to achieve the highest possible customer service standards and monitor its performance by conducting surveys with its clients and their customers. Its call centers are equipped to handle phone, mail, fax, email and Web inquiries. The Company also provides collection activities on delinquent accounts to support its private label and co-brand credit card programs.
The Company competes with Visa, MasterCard, American Express and Discover Card.
Alliance Data Systems Corp
Suite 700, 7500 Dallas Parkway
PLANO TX 75024