A new study into Australian shoppers has found 82 per cent of us are members of some sort of retail loyalty program, although the figure was down from 84 per cent in 2015. The average number of memberships per person remains steady at nearly 3.9 (3.8 in 2015).
Commissioned by strategic loyalty consultancy Directivity, the study, for love or money 2016 is the fourth annual research study that provide a consumer pulse on loyalty programs, new insights that impact on customer loyalty and benchmarks results over the last four years.
The study found 57 per cent of Australian consumers believe that brands need a loyalty program to keep their customers loyal and this jumps to 68 per cent for Millennials.
In other key findings the report also reveals:
- Coles flybuys is still no. 1: Coles flybuys program retained first place in the Top 10 unprompted most mentioned programs as ‘doing a very good job’ (36 per cent), increasing its lead over Woolworths everyday rewards (9 per cent). Qantas Frequent Flyer remained in third place since the first study in 2013.
- The banks are getting it right: Of 25 randomly selected loyalty programs by the report author and rated as excellent by members, Coles flybuys (43 per cent) was equal first place with CommBank Awards (43 per cent ), followed by ANZ Rewards (40 per cent) and Westpac Altitude Rewards (34 per cent).
- Mobile app on the rise, card still king: 65 per cent of members still prefer a traditional loyalty card while 16 per per cent prefer a mobile app to interact with a program (up from 10 per cent).
When it came to Australia’s top loyalty programs these 10 were all said to be “doing a very good job” according to the report:
- Coles flybuys
- Woolworths Rewards (formerly Everyday Rewards)
- Qantas Frequent Flyer
- Virgin Velocity
- MYER one
- Priceline Sisterclub
- CommBank Awards
- Boost Vibe Club
- Petbarn Friends for life
- Optus Perks
For the first time, this study looks deeper into the Millennial generational cohort and report author and CEO of Directivity Adam Posner said that programs are connecting more with the Millennial generation, however programs need to evolve to meet their expectations.
“Interestingly Millennials have a stronger desire for non-transactional methods of being rewarded such as travel and entertainment experiences as well as being rewarded for interacting with the brand, not only transacting” he said.
“Specifically for Millennials, loyalty programs need to evolve to reward them for interactions such as sharing on social media, writing reviews, completing surveys and even loyalty games or gamification are highly regarded by them,” he said.
According to the research when it comes to privacy, loyalty program members have become more sensitive about their membership data since the topic of privacy was researched in their ‘share the love’ 2014 study.
Although members are still happy to provide their data for rewards/ benefits, they want to understand why programs need their information.
“Transparency builds trust and loyalty programs, which are an extension of brands, need to live up to that promise,” Posner says.
The research indicates almost two thirds of members (64 per cent) are happy to receive discounts or special offers based on their purchasing habits. But there is a limit, with only 20 per cent agreeing to have their personal details shared with other organisations for a reward or benefit.
For the first time this research study explored the impact on members if the programs they are a member of were to close down, with 36% indicating that there would be no impact on them.
“This is a reality check for owners of programs and a warning sign that programs are just not meaningful enough to have an impact” said Posner.
However, the research also reveals that if a brand’s program were to close there would be an impact on revenue, with nearly a third (31 per cent) of members indicating they would not buy as often as they do from the brand and 23 per cent would not buy as much – both having an impact on the brand’s revenue.
Members’ defection from programs remains consistent with previous research results with 23 per cent leaving their programs both passively and actively in 2016 vs 22% in 2015.
“No matter what the rate of defection is, members leaving a program are more than likely leaving the brand, so brands with programs need to be on their toes,” said Posner. “Interestingly changes in program structures, like Woolworths did in 2015, is the second ranked reason for defection after not earning rewards fast enough.
“We still find this to be surprising,” said Posner. “I do believe this will slowly change as mobile becomes a commonly used payment device with links into loyalty programs.”
When it comes to the features, benefits and experiences that members want when engaging with programs, it’s all about keeping it simple, easy to earn benefits, easy to redeem for rewards and easy to understand. Also, members do not want their points or rewards to expire.
“Programs that are simple to interact with and also realise that members believe the points and rewards they earn, are theirs, will become the royalty of loyalty programs,” he said.