How popular are customer loyalty programs really?

rewards cardThey attract a lot of hype and media attention, but how popular are customer loyalty programs?

Despite detractors’ claims that they are too complicated and offers little real value for consumers, 71 per cent of Australians are members of at least one store loyalty program, according to the latest Roy Morgan Research.

With 49 per cent of Aussies aged 14 years old and above, Woolworths Rewards has the largest membership base, ahead of Coles’ Flybuys program (45%).

More than one in every five Australians (21%) are members of the customer loyalty program MyerOne and 18 percent belong to Priceline’s Sister Club. Women’s-wear chain Millers also has a popular loyalty program (13%) wherein most of its members are overwhelmingly female.

In fact, women are the majority of members for almost all the customer loyalty programs measured by Roy Morgan. The one exception is My Dan Murphy’s program which has a slightly higher proportion of male members than female.

It doesn’t mean that everyone who owns a customer loyalty card will use it. Some signed up for a loyalty program only to forget they have one, or lost their card before they could use it, or decided it was simply too much effort to commit to? With this in mind, one of the measures of any store’s loyalty program’s success must surely lie in the proportion of its customers who are members (i.e. demonstrating their loyalty by shopping there).

In that regard, the Woolworths Rewards program is a clear leader. Almost eight in every 10 shoppers (78.2%) at Woolworths/Safeway in any given four weeks and over six in every 10 (61.8%) people who shop at Woollies-owned BWS are members of the program.

Similarly, FlyBuys members comprise a resounding majority of Coles customers (69.2%), as well as over half of all shoppers at FlyBuys partners Liquorland (61%), Kmart (54.4%), Target (54.3%), and First Choice Liquor (53.6%). Miller’s Rewards, Priceline Sister Club and MyerOne are also among the more successful loyalty programs when measured by the proportion of their shoppers who are members.

Norman Morris, industry communications director of Roy Morgan Research said, “A large membership is obviously important for a store’s customer loyalty program, but if members are inactive and don’t actually shop at the store/s in question then it can’t really be considered successful.”

According to Morris, Woolworths Rewards is a good example of an extremely popular loyalty program whose members are the majority of customers at Woolworths and BWS.

“Much more niche in size is Miller’s, but with almost three-quarters of its customers in any given four-week period belonging to its loyalty program, it can certainly be considered a success! Clearly Millers Rewards members see the value in their loyalty program and shop accordingly,” he said

Customer loyalty programs must also give customers a reason to be loyal. He said calling their rewards program as such but making it hard for customers to redeem their rewards is the first step to failure.

“With its deep consumer data, Roy Morgan Single Source allows retailers to better understand what makes their customers tick: from their demographics and shopping habits, to their attitudes, activities and media consumption. [It] will then allow them to tailor their loyalty program so that it not only encourages return visitation, but nurtures a long term, mutually beneficial relationship with their customers,” Morris said.

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