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How popular are customer loyalty programs really?

October 14, 2016 Headline News No Comments Print Print Email Email

egtmedia59Customer loyalty programs are big with airlines – from the carriers’ own frequent flyer schemes to the deals they run with supermarkets, petrol stations and other outlets.

Qantas, for instance, announced just a couple of weeks ago that its frequent flyers could earn Woolworths Points for every dollar they spend in-store or online at Woolworths Supermarkets and BWS. They can also earn Woolworths Points on fuel purchases at 530 Caltex Woolworths petrol sites across Australia.



Popular customer loyalty programs by proportion of Australians who are members


Apart from the hype and media attention, however, just how popular are customer loyalty programs? Despite detractors’ claims that they are too complicated, offering little real value for consumers, 71% of the Australian population are members of at least one store loyalty program, latest findings from Roy Morgan Research reveal.

With 49% of Aussies 14+ numbering among its ranks, Woolworths Rewards (formerly Everyday Rewards) has the largest membership base, ahead of the Coles-powered Flybuys program (45%). More than one in every five Australians (21%) are members of department store Myer’s customer loyalty program, MyerOne, and 18% belong to Priceline’s Sister Club.



Stores with highest proportions of loyalty program members among their customers


Women’s-wear chain Millers also has a popular loyalty program (13%): not surprisingly, its members are overwhelmingly female. In fact, women comprise the majority of members for almost all the customer loyalty programs measured by Roy Morgan. The one exception is Dan Murphy’s, whose My Dan Murphy’s program has a slightly higher proportion of male members than female.

Of course, just because someone has a customer loyalty card doesn’t mean they’re going to use it. Who hasn’t enlisted for a loyalty program only to promptly forget they ever joined, or lost their card before they could use it, or decided it was simply too much effort to commit to? With this in mind, one of the measures of any store’s loyalty program’s success must surely lie in the proportion of its customers who are members (ie. demonstrating their loyalty by shopping there).

In that regard, the Woolworths Rewards program is a clear leader. Almost eight in every 10 shoppers (78.2%) at Woolworths/Safeway in any given four weeks, as well as over six in every 10 (61.8%) people who shop at Woollies-owned BWS, are members of the program.

This shows that Qantas, Australia’s biggest airline, has gone with the strength in linking with Woolworths.

Similarly, FlyBuys members comprise a resounding majority of Coles customers (69.2%), as well as over half of all shoppers at FlyBuys partners Liquorland (61.0%), Kmart (54.4%), Target (54.3%), and First Choice Liquor (53.6%).

Miller’s Rewards, Priceline Sister Club and MyerOne are also among the more successful loyalty programs when measured by the proportion of their shoppers who are members.

Commenting on the findings, Roy Morgan Research’s industry communications director, Norman Morris, said that a large membership was obviously important for a store’s customer loyalty program, “but if members are inactive and don’t actually shop at the store/s in question then it can’t really be considered successful”.

“Woolworths Rewards is a high-profile example of an extremely popular loyalty program whose members do form the majority of customers at Woolworths and BWS.

“Much more niche in size is Miller’s, but with almost three-quarters of its customers in any given four-week period belonging to its loyalty program, it can certainly be considered a success! Clearly Millers Rewards members see the value in their loyalty program, and shop accordingly.

“While it is perfectly reasonable for retailers to want the consumer intelligence provided by a large loyalty program, it’s worth remembering that customer loyalty programs are about more than big data: they must also give their customers reason to be loyal.

“Calling your program a rewards program but making it hard for customers to redeem their rewards is the first step to failure.”

Edited by Peter Needham

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