Woolworths rejects claims Rewards card backlash could cost ‘hundreds of millions’
Woolworths claims its rewards scheme is providing “encouraging results”
Woolworths has rejected claims in Fairfax Media that it will have to redirect hundreds of millions of dollars into cutting prices to counter negative consumer response to changes to its Rewards program.
Fairfax journalist Sue Mitchell claimed that an analysis of one shopper’s behaviour over four months revealed a Rewards point earn rate of 0.3%, far less than the 1.25% rate announced by Woolworths when changes to the scheme were revealed last year.
Woolworths received the biggest backlash from Qantas Frequent Flyer customers who were angered by the retailer’s decision to dump QFF from its Rewards scheme, and replacing it with in-house bonuses.
The furore forced Woolworths into an about-face, offering customers the choice of redeeming their Woolworths Rewards for Qantas points.
However, a spokesperson for Woolworths said the scheme remained on track and was delivering “encouraging results”.
“Our research clearly shows shoppers want to be rewarded for their loyalty above and beyond getting great low prices,” the spokesperson said.
“It’s very early days and we have always said we will continue to listen to our customers and adapt the program to ensure our customers enjoy Rewards on products they know and love or are likely to want to try.
“For instance, we are currently running a Woolworths Rewards promotion on fresh produce.
“Woolworths Rewards has allowed us to significantly increase our program of tailored offers, sent directly to individual shoppers, and this is delivering very encouraging results.”
After reporting a first half loss of $972m, driven largely by the retail group’s failed investment in the Masters hardware brand, settling in the loyalty program is one of the major priorities for CEO Brad Banducci.
The retailer admitted that issues surrounding its ticketing for rewards needed to be addressed with consumers claiming they are struggling to match the value they were receiving under the previous scheme.
Simon Canning
The new Rewards programme has been an unmitigated disaster of their own causing. Whoever created the strategy fails to understand the basics of retail loyalty.
The new bilge plan has:
Confused and annoyed customers with points, dollars and delayed redemption.
Failed to drive incremental benefit over the former program.
Indeed, managed to drive switching behaviour in loyalty program core users on high margin lines.
Failed to unite the Woolworths value proposition, especially into its Service division.
Which actually takes some skill to eff up so royally. When will Woolworths corporate slow-mo trainwreck stop?
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Rewards is a disaster.
Clearly however devised this does not listen to customers or understand how loyalty works.
Brad Banducci needs to rethink this team.
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Woolworths rewards scheme is a waste of time to get it you have to buy certain products. Therefore it is not driven for customer benefit at all. just wondering where they got their information from as from the level of negative response they were obviously wrong.
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Woolworths loyalty program is a disaster. Are Quantium still involved with their loyalty data analytics ?
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Woolworths is a disaster.
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I second the comment about Quantium and their failings, and I feel they should be brought to account. At the very least an article highlights their failure.
This company is considered best in class with regards to providing data-driven
strategies and insights and has failed BIG TIME.
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<<"Fairfax journalist Sue Mitchell claimed that an analysis of ONE [my emphasis] shopper’s behaviour over four months revealed a Rewards point earn rate of 0.3%, far less than the 1.25% rate announced by Woolworths when changes to the scheme were revealed last year."<<
I'm sorry, you call this journalism ?
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Scoff all you like, but her figures feel accurate to how it’s working in the market, Harold. She’s has been probably the most on the ball journo on the issue over the past six months. But then again, you probably know how to do her job better.
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The base part of the new program is fairly ordinary and seems to favour some shoppers over others.
The targeted offer part of the new program is fantastic. I’m getting offers every couple of weeks and saving 15-20% on either Woolworths dollars or instant discounts. In the weeks I don’t get offers I spend as small amount as possible and then I can easily meet the targets in the offers.
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I would argue that reward schemes of this type have seen their day. The fact that woolworths only recently launched this one is to my mind a sight of where the business is at – lackin g in ideas. I visted a relatively new Woolworths store last week and it was a less than impressive experience. Woolworths seems to have no concept of excellence. It seems to be a business in decline on so many levels. They do not seem to understand how important the product is to effective marketing today.
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