Woolworths is winning the reward card game

LOVE them or hate them, reward cards are here to stay. New figures show how Australians interact with loyalty programs, and where they’re shopping.

LOVE them or hate them, Australians are obsessed with rewards cards.

While complaining about them has become a national pastime, the vast majority of shoppers belong to at least one points-based program, new research shows.

And the Woolworths Rewards program, which sparked consumer outrage last year when it controversially ditched Qantas Frequent Flyer points, is the most popular.

The Roy Morgan analysis revealed that 71 per cent of Australians are rewards program members, with Woolworths laying claim to 49 per cent of the population, ahead of rival Coles’ Fly Buys program, which had 45 per cent.

Of course, having a customer loyalty card is different from actually using it, so researchers looked at the proportion of shoppers at each store who were members.

They found that the Woolworths Rewards program was “a clear leader”, with 78 per cent of shoppers in any given four weeks identified as loyalty members, and 62 per cent of those who shopped at Woolies-owned BWS liquor stores.

Over at Coles, 69 per cent of shoppers were FlyBuys, along with 61 per cent of customers at FlyBuys partner Liquorland, and 54 per cent at Kmart, Target and First Choice Liquor.

Popular customer loyalty programs by proportion of Australians who are members. Source: Roy Morgan

The results will be music to the ears of Woolworths executives, after the retailer was embroiled in a public-relations nightmare over its decision to replace Frequent Flyer points with “Woolworths Dollars” earned on select orange-ticketed items in December.

Backlash over the change forced the retailer to backflip, announcing last month that it will reinstate Qantas points under a revamped program.

Under the new scheme, which went live on August 31, shoppers earn one “Woolworths Point” on every dollar spent at Woolworths, affiliated Caltex service stations and BWS bottle shops.

When customers reach 2000 points, or $2000 of spending, they will be able to convert that into $10 instant discount at the checkout, or 870 Qantas Frequent Flyer points.

In June, market research firm Canstar Blue surveyed 2300 Coles and Woolworths shoppers about their supermarket rewards program. Only 41 per cent of Woolworths shoppers agreed that their rewards program was good value, compared with 65 per cent of Coles shoppers.

Norman Morris, industry communications director at Roy Morgan Research, said Woolworths Rewards was “a high-profile example of an extremely popular loyalty program whose members do form the majority of customers at Woolworths and BWS”.

‘GIVE US A REASON TO BE LOYAL’

The other major rewards card programs were MyerOne, which counts 21 per cent of Australians as members; Priceline’s Sister Club with 18 per cent; and womenswear chain Millers with 13 per cent.

Millers had cornered its niche, Mr Miller said, with almost three-quarters of its customers in any given four-week period belonging to its loyalty program.

He said retailers should be savvy about how they used customer data collected through rewards programs.

“While it is perfectly reasonable for retailers to want the consumer intelligence provided by a large loyalty program, it’s worth remembering that customer loyalty programs are about more than big data: They must also give their customers reason to be loyal,” Mr Morris said.

“Calling your program a rewards program but making it hard for customers to redeem their rewards is the first step to failure.”

Using data to better understand “what makes their customers tick”, “from their demographics and shopping habits, to their attitudes, activities and media consumption” allowed retailers to tailor their loyalty programs to “nurture a long-term, mutually beneficial relationship with their customers”, he said.

— With Frank Chung.