Lord of loyalty

Alicia Buller meets Air Miles founder Sir Keith Mills, the man who turned an idea thought up on a dreary train trip into a global marketing phenomenon.

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By  Alicia Buller Published  June 11, 2006

|~|sir-keith-8-200.jpg|~|Cashing in: Inventing the Air Miles scheme earned Sir Keith Mills millions. Now he is planning to expand it in the region.|~|Alicia Buller meets Air Miles founder Sir Keith Mills, the man who turned an idea thought up on a dreary train trip into a global marketing phenomenon. Sir Keith Mills was 15 years old when he walked out of his school gates for the last time. The son of a Brentford factory worker, he had no qualifications to speak of. But Mills wasn’t one to worry about a few pieces of paper. He grins widely as he regales the story of the moment, some decades later, when he whispered a silent and relieved ‘Eureka’. He tells of a grey day. Of little England, and the rain trickling down the windows. The bumpy train-ride from Liverpool to London. And the epiphany that was to catapult him from the drudgery of advertising campaigns for insurance clients, to the big time. “I’d had a long week and I was trying to get a brief ready for a really boring client. I was racking my brains trying to think of some idea,” he says. “Then it came to me. It just popped into my head. And the rest was history.” From the − very pedestrian − muse of a passenger train sprung a revolutionary concept based around an entirely different mode of transport; aviation. That day, Mills dreamed up an idea that was to make him US$20 million, and much more − the world’s most renowned customer loyalty scheme, Air Miles. The programme allows points to be gained on currency spent at participating merchants, or stores. And Air Miles collectors can save up their points for everything from travel, to entertainment, to merchandise. Plus, unlike other frequent shopper programmes, Air Miles reward miles can be collected from all types of companies. “But any idea is very difficult to sell,” he admits. “Air Miles, though, was a very simple idea and they say the best ideas are simple. Yes, it was still quite a task to persuade people that it would work.” Fortunately for those of us who relish our air miles, Mills managed to convince British Airways (BA) to come in on the venture, and the company paid a reported sum of millions for a stake in the fledgling customer loyalty scheme firm. Crucially, while Mills could see the international promise of the programme, he managed to limit BA’s interest just to the UK market. And following the successful launch of the UK programme, the inventor took the concept to the US and European markets, launching a number of equally successful loyalty schemes. You get the sense that Mills had never previously dared to dream of such riches. Perhaps this is why since he invented Air Miles, he has continued to work around the clock − also finding the time to launch and manage the Nectar card, which is sponsored by 16 companies and is the most popular loyalty programme in the UK. So popular, in fact, that it’s rumoured to be worth around US$400 million. Today the self-proclaimed Essex boy is even said to have a soft spot for gold jewellery and the occasional yacht − neither of which are available in the Air Miles catalogue. But the serial entrepreneur says that his greatest achievement doesn’t lie in customer loyalty − it’s housed in an entirely new arena. This year, Mills was the proud chief executive behind London’s successful 2012 bid for the Olympic games, staving off fierce competition from Paris, New York, Madrid and Moscow. “I don’t think anything will compete with winning the Olympics games for London. At the time, I felt both relieved and elated,” he says. “Elated because we had worked for two and a half years to win it against all the odds, not being the favourite. And relief, because I was the only person in the organisation with a plan B. And plan B was what to do if we lost the bid − that would have meant telling 2000 or so media why we lost. And obviously it’s a lot easier to talk to the media about why you won, rather than why you lost.” This statement demonstrates the CEO’s logical character, and the very traits that those in the know say enabled Mills to win the bid − pragmatism and steady leadership. That said, Mills is relieved to now be in a less spotlight-orientated role as deputy chairman for the London Olympics organisational committee, which is set to become a non-executive position very soon. “I very gratefully handed over 23 live projects to the chairman (Lord Coe). It was a very full on, seven days a week position. But from now on I’m going to divide my time equally between my Olympic role and my businesses.” The largest of these businesses being Loyalty Management UK, the parent company of the businessman’s many retail schemes including Canada’s largest loyalty programme, plus clubs in the US, Spain, Holland, the UAE and Qatar, all under the same logo and trademark of Air Miles. “The Air Miles programme is now well established in the Middle East, with over a million card users in the UAE and Qatar. This is because the population has large amounts of disposable income and they travel a lot. And it’s certainly an emerging market and one of the reasons I’m here today is that there is a great potential to grow the business in this region,” explains Mills. “We’re planning to launch a programme in Bahrain, in Lebanon and probably in Saudi Arabia within the next 12 months, the airlines will vary from country to country. The core of the programmes will remain in retail – as such, in the UAE, our main partners are Spinneys and HSBC.” What made Air Miles different from the frequent flyer programmes of US airlines was the ability to collect points from a variety of participants which could then be redeemed for flights and other rewards. “With a predicted 250% rise in retail gross leaseable area by 2010, the Middle East is a shopper’s dream, and the power of this coalition allows members to reach their special treat quicker. The loyalty programme is unique in that it not only incorporates a wide range of brands but focuses on getting the best names for the consumer, such as HSBC which was a founder partner in the Middle East,” says Mills. “For the future we are looking at using Air Miles to promote special offers. Then cardholders will score three times if they pay with an HSBC card: once for the store, once for the offer and again for paying with a card. We are also constantly adding to the number of participants in the programme, giving our members even more choice of ways to obtain points.” Mills says that every market, even within the Middle East, has very different characteristics and is driven by two main factors: the scope of the retail market, and the specific rewards that customers want. “For example, in Canada, air travel to the US is a very popular reward. “Whereas in the UK, the Nectar programme does very well offering shopping as a reward, and is aimed at women. We always try to reward people with exactly what they want.” The CEO would also like to make Air Miles programmes interlinked, so that a Middle East cardholder could use points in the UK, for example. This is not presently possible but it might be if the CEO’s Loyalty Management Group is successful in its acquisition bid for Air Miles in the UK. Mills is understood to be one of several parties to have expressed an interest in acquiring the BA-owned asset. The airline has put Air Miles on the block after a strategic review decided it had no future within the company. However, sources say bidders may struggle to meet BA’s likely asking price of about US$150 million. But if the entrepreneur, who is worth around US$300 million, according to the latest Sunday Times Rich List, does buy the business, it would mark a reunion almost 20 years after he came up with the idea for the scheme. A mere 40 years after he walked out of those fateful school gates. “Tenacity is the biggest virtue,” says the man who was recently honoured by the Queen with a knighthood for his services to Britain. “Never give up.”||**||

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