With Woolworths again planning to re-launch their Rewards Program this month, QUT’s retail expert, Associate Professor Gary Mortimer, suggests the days of rewards cards are numbered.
“Rewards programs, specifically cards that accrue points, do not drive consumer loyalty,” Associate Professor Mortimer said.
He said that while 82 per cent of Australians are in a program, on average shoppers were members of at least four schemes.
“So, we are really not that loyal.”
Professor Mortimer examined commercial research by Roy Morgan that indicated over 70 per cent of consumers shopped across all four brands of supermarkets for groceries each month.
“Shoppers are less ‘active’, with only half of us actually scanning our cards at the checkout, down from 60 per cent in 2015.”
He suggests concerns about the time it takes to collect points, gain rewards, lack of differentiation and personal privacy is driving this decline.
“Points fatigue has become a real issue. The revamped Woolworths program is said to accrue one point for every dollar spent, with shoppers able to redeem 2000 points for a $10 discount,” he said.
“Recent commercial research has found 23 per cent of members are ‘defecting’ from their programs, because they feel they won’t earn enough points fast enough, or the business has changed its program or they no longer shop with that business.”
Professor Mortimer said there was very little differentiation between schemes today.
“Research group Directivity found that when questioned, shoppers were able to name at least 67 different loyalty programs.
“The problem today is that everyone from sporting goods retailers, supermarkets, airlines and coffee shops have some sort of transactional based rewards program,” he said.
“Almost half of shoppers surveyed by Directivity expressed concerns about sharing personal information and in an age of growing identity theft, this too is another factor impacting on programs.
“Only about half (54 per cent) of respondents are ‘taking advantage’ of the rewards available on the programs and over 30 per cent don’t bother redeeming points.
“However, long before FlyBuys and other rewards programs entered the market, shoppers were loyal to their favourite café, green grocer and dress shop.
“When 42 per cent of shoppers don’t feel brands need loyalty programs to keep them loyal, it suggests there are other drivers of loyalty, like engagement, great service, recognition, acknowledgement, and unique offers. More concerning, 36 per cent of people said if a retailer closed their loyalty program, it would have no impact on them.
“The ‘traditional loyalty card’ is on the decline – only 65 per cent of shoppers prefer a card, while there is a growth in digital wallets and app-based loyalty platforms.
Professor Mortimer said shoppers today were looking for differentiation and that individual, customised offers, immediacy of reward and technology would deliver that.
“We are seeing innovative retailers implementing near-field-communication ‘beacon’ technology to reconnect with their customers. Such technology enables retailers to ‘push’ individual, targeted offers direct to the customer’s smart phone when they are in-store or close by,” he said.
Media contact: Rose Trapnell, QUT media team leader, 07 3138 2361 or 0407 585 901 rose.trapnell@qut.edu.au
