Do retailer loyalty programs actually foster customer loyalty? Not according to this market research, but they do encourage spending, and Coles’ offering is perceived as the best around.
According to new research conducted on the loyalty program landscape in Australia, consumers are seen to choose brands that offer loyalty rewards – and spend more with them – over those brands without.
The report, dubbed For love or money? 2013 consumer study into Australian loyalty programs found that loyalty marketing initiatives have wide-ranging effects on consumer behaviour, and although they can have a marked impact on spend, they don’t necessarily result in customer loyalty.
Commissioned by strategic marketing company Directivity in partnership with digital agency Citrus and conducted by First Point Research and Consulting, the report finds that loyalty programs are far-reaching, with 88 percent of consumers over the age 16 belong to at least one program.
Interestingly, the report also shows that while men are members of fewer programs than women (on average it’s a ratio of three to five), they’re more active with their memberships, with 49 percent presenting their card upon purchase compared to 41 percent of women.
Further Findings of the Research:
- Consumers most prefer financial rewards programs, with 80% rating discounts on purchase as ‘very important’.
- Points-based programs where members can redeem points for vouchers, products or other rewards were the second most popular benefit at 77%.
- Tiered rewards systems (e.g. Platinum vs. Gold memberships) were relatively less popular, with only 36% rating them as ‘very important’.
- Older Australians (55+) purchase more in general, but also buy from companies that have a loyalty program more than younger consumers. Conversely, they also more strongly believe that loyalty programs don’t offer any ‘real value’.
“Basic monetary rewards give retailers a ‘ticket to play’ in the loyalty game but the real opportunity lies in building deeper engagement with members through more personally relevant, unexpected and emotional rewards,” said Adam Posner, CEO of Directivity. “This plays out in the research, which shows surprise rewards such as a gift on your birthday, exclusive offers or special experiences go a long way to overcoming the belief that programs don’t offer any real value.”
Citrus CEO Peter Noble believes that retailers should be ensure they are crafting a loyalty program that offers true value for consumers, and this means tapping into consumer psychology and emotion.
“Ultimately financial rewards win the day for consumers and is the main motivation for joining loyalty programs. But a winning program is one that also has multiple emotional and unexpected benefits creating an element of ‘surprise and delight’ and tailoring offers based on consumer needs and preferences,” Noble said.
Australia’s top 10 loyalty programs
The most mentioned loyalty programs cited by respondents as ‘doing a particularly good job’:
- Coles Flybuys
- Woolworths Everyday Rewards
- Qantas Frequent Flyer
- Virgin Velocity
- CBA credit card