Woolworths’ Rewards woes may have impacted consumer faith in other loyalty programs

Results of a global study of loyalty programs have revealed that doubts over Woolworths’ new Rewards scheme and its decision to dump Qantas points may have had a knock-on effect on people’s overall perceptions of Australian loyalty programs.


Simon Morgan says backlash over Woolworths Rewards may have impacted other loyalty programs

Customer loyalty specialist agency ICLP found that Australians’ “devotion” to brands was one of the lowest in the world, which was having a direct impact on their perceptions of loyalty programs.

Simon Morgan, general manager at ICLP Australia, said the result was, in part, driven by the perception by Australian consumers that many loyalty programs simply did not offer enough ‘rewards’ back to consumers.

And he believes that anger over Woolworths’ handling of changes to its loyalty scheme may have been a factor in Australian loyalty schemes getting a poor report card.

After announcing changes last year to how its rewards would work, dropping the ability to earn Qantas Frequent Flyer points and limiting products on which points could be earned, the retailer was forced to back track on many of the changes.

woolworths-rewards-468x207“I think there is a gap between what customers want and what they are getting,” Morgan told Mumbrella.

“There’s no doubt that the spotlight’s been shone very brightly on customer loyalty in a retail context in this market and as we know a large program has come up and been found wanting. There is no doubt about that.”

Morgan said that on a broad set of measures Australian’s feelings about the value of loyalty programs was trailing the world.

“There are seven dimensions – including intimacy, passion and commitment, and in brand terms we are thinking of intimacy in terms of the willingness to share information, passion is all about how enthusiastic customers are about their brand and commitment is how much a customer will spend with a retailer.”

The survey describes the highest level of connection with a consumer as “devoted”, with just 3% of Australian consumers showing devotion to brands, well below the global average of 9%.

“Not only do they spend more (with you) and less with competitors but they are more likely to talk about your brand.

“Australian retailers have got to work harder than their global counterparts, who create customer devotion.”flybuys coles

He said that gap between the promise of reward schemes and what they delivered was a major issue.

“I do think that Australians feel somewhat shortchanged with retailer rewards,” he said.

“73% of Australians said they would buy more if they were rewarded more, and that is a pretty high number.

“Often retailers will look to store-wide pricing discounts to drive sales and I think one of the things we can take from this is perhaps keep some powder dry to invest in some extra value back to customers.”

He described consumers as having a “perception of stinginess that customers get presented with”.

With data sitting at the heart of loyalty schemes there was still a failure of companies to deliver something perceived to be of value.

He said the customers were happy to share their data but expected for it to be used to provide more relevant and meaningful experiences.

“It has to evolve beyond the transaction,” he said.

However, Morgan warned that brands such as Woolworths, which had built trust in its loyalty schemes, needed to guard it carefully.

“Like a human relationship, trust takes time to earn and can disappear in the blink of an eye via a single mishap,” he said.


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