Coles flags changes to loyalty program as shopper data becomes next battleground
Coles is reviewing its loyalty program after discovering that customer demand for flight rewards pales in comparison to more immediate rewards such as cash to spend in-store.
Both the major supermarket chains have flagged changes to their loyalty rewards programs in recent months as they look to enhance their understanding of customers and tailor more effective offers to suit their needs. Woolworths, Australia’s largest supermarket chain, outlined a relationship with Qantas late last year, which will see their customers earn Frequent Flyer points everytime they shop at their stores.
Late last week Coles highlighted a new promotion leveraging their FlyBuys program to offer instant cash rewards via gift cards. The success of which could lead to a change to FlyBuys allowing for a more effective points accrual system that offers shopper discounts.
The new promotion, the Giant Gift Card Giveaway, is a 12 week event that allows current and new FlyBuys members to accumulate Gift Card Credits through their regular shopping. Gift Card Credits will be earned each time a shopper spends $30 or more. The company will also have products marked “Gift Card Boost” across the store, which will provide extra rewards.
Coles Marketing Director Joe Blundell, who last year left UK retailer Asda to join Coles, said he expected the event would prove a hit with customers in these tight times, as households increasingly look to stretch their shopping dollar.
“At a time when there’s a lot of economic uncertainty and bad news, we think this offer will get a great response. In a recession, customers become even more value conscious, and retailers need to respond,” he stated.
FlyBuys without flight offers?
Mr Blundell indicated a permanent alteration to their rewards program is likely following research into the demands of their customer base.
“We conducted some research to gauge what customers wanted in terms of shopping rewards and benefits,” he advised. “The message loud and clear was that they wanted benefits to be tangible, easy-to-earn, and immediate. That’s what we’ve tried to deliver here.”
Flight rewards were not high on the priority list, and currently only 0.5% redeemed points for flights as opposed to 82% for cash or a cash-equivalent.
“We think we would be better focusing on value than covering a flights route,” he told The Age. “We are looking at ways of what we can do to make FlyBuys better – it is definitely on the radar.”
If they do rid themselves of a flights reward offer then it presents an obvious branding issue. It would be difficult to justify the name FlyBuys for a program which does not offer travel rewards, therefore leaving the door open to a costly rebranding.
The new program
Ideas for the new system are unlikely to come from Mr Blundell’s previous employer, which has remained steadfast in their belief that loyalty cards are a waste of money. Instead, Asda focusses on offering rewards via a credit card and also gains shopper insights by running the Asda Pulse of the Nation survey – which discovers the shopping behaviour of around 14,000 consumers. Beyond the credit card, Asda considers a focus on ‘everyday low prices’ a wiser alternative to rewards programs, with market research filling gaps for them in understanding their customers.
Given reports from Coles of a renewed focus on price as a hallmark of their offering they could consider following Asda’s lead of no loyalty card, but this would be a very bold move given their card currently gives them access to over five million households – making it the largest loyalty program in the country.
Instead, if changes are made, a simplified version of Tesco’s very popular Clubcard appears more likely – this would be largely based on their current promotion with gift card rewards offered for in-store spend.
Coles vs Woolworths
Woolworths has arguably used their loyalty offer in a more effective manner, with Coles now reporting a desire to leverage the data received from their cardholders more efficiently and introduce more targeted promotional campaigns in a similar vein to Woolworths.
Woolworths, which has around 4.5 million people signed up to the loyalty program, is sending an estimated 1 million emails each week to the 3 million who have registered their personal details, according to The Age. Their offering is focussed on petrol at the moment, with the card a simpler alternative to dockets for providing customers with fuel discounts. Their imminent tie-up with Qantas is anticipated to give their card a strong boost.
In the battle for loyalty differentiation is the key and Coles has realised that competing against a Woolworths offer encompassing Qantas’ Frequent Flyer program with their current FlyBuys program could be fraught with danger. Offering gift card rewards, however, could present the differentiation required to take advantage of their access to a larger membership base.
All produce suppliers to major Australian supermarkets and retail outlets are being reminded to ensu...
Select Harvests’ Managing Director, Paul Thompson, is pleased to announce the following update on c...
Two University of Sydney professors have proposed a radical new way of measuring human health and di...
The Australian wine sector is in its strongest position in more than a decade a new Australian Wine ...
Consumer advocacy group CHOICE has launched a campaign against a proposal seeking the removal of qua...
WOOLWORTHS’ counter attack to the Coles Little Shop toy promotion begins today and early social medi...
This month, Nespresso introduces new heights of sensory intensity with the introduction of a unique...
Traditionally grown to make tequila with in Mexico, MSF Sugar in North Queensland plans to start gro...