For Love or Money 2016_ExecSummary_FINAL

Consumer research study taking the pulse on Australian
loyalty programs and their impact on customer loyalty
Executive Summary
© COPYRIGHT DIRECTIVITY 2016

Welcome to the Executive Summary
edition of ‘for love or money 2016’.
It provides an overview of the full edition
that takes the pulse on trends, changes
and challenges while providing new
insights into consumers’ relationships
with loyalty programs and their impact
on customer loyalty.
© COPYRIGHT DIRECTIVITY 2016 - EXECUTIVE SUMMARY EDITION
To find out more or purchase the FULL edition visit www.theloyaltypoint.com.au
or contact Adam Posner: adam@directivity.com.au or call 0433 818 190

Contents
1.0 Introduction - welcome to ‘for love or money 2016’ 4
2.0 Research methodology and profile of participants 7
3.0 Executive summary of key findings, trends and new insights 11
4.0 Findings in detail
All the detailed findings and insights are available in the full 87 page in-depth edition
of ‘for love or money 2016’.
To find out more or purchase the FULL edition visit www.theloyaltypoint.com.au
5.0 Behind the research - who loves loyalty? 23
Copyright © 2016 Directivity
‘for love or money 2016’ Consumer Study into Australian loyalty programs and customer loyalty is for single use only. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any means, electronic or mechanical including photocopy or printing without the prior permission in writing
from the copyright owners, nor be otherwise circulated in any form of binding or cover other than that in which it is published and without a similar condition including
this condition being imposed on the subsequent publisher. No responsibility for loss occasioned to any person acting or refraining from the action as a result of the
material in this publication can be accepted by the author.
3
EXECUTIVE SUMMARY EDITION

1.0
Welcome to ‘for love
or money 2016’
Introduction

5
Hello and welcome to the Executive Summary edition of the 2016 research
report into consumers’ relationships with loyalty programs and customer loyalty
in Australia.
This is the fourth research study to follow the 2013, 2014 2015 research reports
available at www.theloyaltypoint.com.au
The Executive Summary edition provides an overview of the results and insights
uncovered in the full 87 page in-depth edition of ‘for love or money 2016’.
To find out more or purchase the FULL edition please contact Adam Posner
adam@directivity.com.au or call 0433 818 190
What’s in the FULL report that will make a difference
to your customer loyalty strategies and loyalty
program success?
1. Tracking changes in the Australian Loyalty Landscape
This 2016 research study continues to track changes to benchmark
results from the previous studies ‘for love or money 2013 and 2015’
and ‘Share the Love 2014’.
It identifies the pulse of change in results and draws on key insights
that impact on loyalty programs and customer loyalty including:
• Membership of loyalty programs and activity
• Who is doing a very good job - top 10 programs for 2016 (unprompted)
• Card vs mobile app
• Defection from programs - why and when (new insight)
Privacy and Members Data
New benchmark results are revealed in this report based
on comparison to the ‘Share the Love 2014 study’…
and the results are a reality check!
Thank you for your interest in ‘for love or money 2016’
for love or money 2015
share the love 2014
for love or money 2013

6
2. Revealing five new insights that will make an impact on brand loyalty and your loyalty program
The 2016 research study continues to investigate and identify new insights that will help businesses and brands
improve their customer loyalty strategies.
It reveals answers to questions such as:
• Program engagement: Are members taking advantage of the benefits their programs offer?
• Impact of closing a loyalty program: What impact would closing a loyalty program have on a business?
• The 3 Motivations of Loyalty: What are the three motivations for consumers to join a loyalty program?
• Acquiring new members: How do programs best on-board new members?
• Improving loyalty program structures: What are the 24 ingredients of successful loyalty programs?
3. Reviewing 25 Australian loyalty programs – top 20 excellent programs revealed
The 2016 research study continues to analyse randomly selected Australian loyalty programs based on their members’
own experiences, as to which ones are doing an excellent job.
4. What’s a tattoo got to do with a customer’s brand loyalty?
A fascinating result!
As you continue to enhance and build customer loyalty
engagement and loyalty program success,
then ‘for love or money 2016’ will give you the results,
observations and insights to guide you along that journey.
Adam Posner
CEO
Thank you for your interest in ‘for love or money 2016’
This symbol in the report
identifies a new insight

2.0
Who gave their point of view?
Research methodology
and profile of participants

8
Research methodology
and profile of participants
The ‘for love or money 2016’ research was
commissioned by Directivity and conducted
independently by First Point Research and
Consulting in the first half of 2016, through
an online panel of Australian consumers
(men and women aged 18 years +) who are all
members of at least one loyalty program.
The research was structured to gain
quantitative results with comparative
analysis. Open text responses were included
to gain actual feedback and comments from
loyalty program members.
The total sample of N=1005, provides
a margin of error of +/- 3% at a 95% level
of confidence. Broad quotas were set for age.
A note on this tracking study A consumer tracking study is generally designed to ‘track’ any shifts in
consumer sentiment or behaviour over time. They are sometimes conducted ‘continuously (i.e. daily
or weekly),or may be ‘ad-hoc’ or periodic measures, as is the case with this series of Loyalty studies.
Tracking studies are generally conducted with large sample sizes so that the data is reliable and robust
and conclusions can be drawn confidently about any statistically significant shifts in response to questions
from one point to another. The sample size is an important indicator of the confidence we can have in the
data. With a sample of around 1,000 Australians in our studies, we expect the results to deliver the same
result (within +/- 3% of the observed result) on 95% of occasions. The implication of a sample with a 95%
confidence interval is that the results, assuming identical questions, WILL and SHOULD be very similar
from one period to another. This is an indicator of high data integrity. Any significant shift in results can
be attributed to a genuine shift in consumer sentiment or behaviour that is likely to be reflection of one of
many factors including (but not limited to): A change in the economy (eg. Higher interest rates or rise in
unemployment rates); A change in competitive conditions (eg. New arrivals in the market place); A change in
marketing or advertising activity (a new product, innovation or campaign highlighting new features or USP)
GENDER 2016 2015 2014 2013
Female 56% 60% 53% 52%
Male 44% 40% 47% 48%
STATE 2016 2015 2014 2013
NSW/ACT 31% 30% 36% 35%
VIC 23% 25% 26% 25%
QLD 19% 17% 15% 18%
WA 15% 16% 11% 10%
SA 8% 8% 9% 9%
TAS 3% 3% 2% 3%
AGE (YEARS) 2016 2015 2014 2013
18-24 11% 6% 10% 9%
25-34 19% 18% 24% 29%
35-44 22% 18% 20% 21%
45-54 17% 19% 15% 16%
55-64 15% 20% 20% 17%
65+ 17% 19% 10% 8%

9
Loyalty and the generations: Millennials
Millennials as a generational cohort are widely discussed and researched based on their attitude and lifestyle across
many variables including purchasing power, technology, education, work and generally the way they live life.
For the first time, this 2016 research explores Millennials as a generational cohort, to identify their
relationships with loyalty programs with insights provided where relevant.
This image in the report identifies insights on millennials
2016
18-24 11% Millennials: Aged approx 16 - 34
Born approx 1982 - 2000 and part of
Generation Y25-34 19%
35-44 22% Gen X: Aged 35 - 50
45-54 17%
Boomers: Aged approx 51 - 6955-64 15%
65+ 17%
Source: http://www.pewresearch.org

10
Loyalty program members and household income
Most members of loyalty programs are in
the median household income band with
high income households representing
over a quarter.
* Source: Australian Bureau of Statistics: 6523.0 - Household Income and Wealth, Australia, 2013-14
In real terms, the average equivalised disposable household income in 2013–14 was $998 per week, this
increased from $964 per week in 2011–12. This has increased over the last decade from $746 per week
in 2003–04. The median weekly equivalised disposable household income was $844 per week, similar to
2011–12 ($830 per week). Equivalisation accounts for increased consumption needs as household size
increases.
The average weekly equivalised disposable household income for high income households rose from
$1,903 to $2,037 between 2011–12 and 2013–14. The income share of high income households was 41%
in 2013–14, similar to 2011–12. For low income households, their average weekly equivalised income rose
from $395 to $407 between 2011–12 and 2013–14.
Annual Household Income
Proportion
of 2016 Members
ABS Household Income*
Up to $20,999 7%
21% Low annualised household income = $21,164
$21,000 - $39,999 14%
$40,000- $59,999 14%
42% Median annualised household income = $43,888$60,000- $79,999 14%
$80,000- $99,999 14%
$100,000- $149,999 18%
27% High annualised household income = $105,924$150,000 -$199,999 5%
$200,000 or more 4%
Prefer not to say 10%

3.0
Key findings, results,
and new insights
Executive Summary

12
Following is an Executive
Summary of the trends, results
and new insights from
the FULL in-depth research
study ‘for love or money 2016’.
Australian Loyalty Landscape
1. Tracking changes in the
2. Revealing new
insightsfor
Loyalty Program
ssuccess
To find out more or purchase the FULL
edition visit www.theloyaltypoint.com.au
Or contact Adam Posner:
adam@directivity.com.au
or call 0433 818 190

13
Membership of a loyalty program remains steady
• In 2016, 82% of Australians over 18yo are enrolled in at least ONE loyalty program
(84% in 2015)
• Average number of memberships in 2016 = 3.9 (3.8 in 2015)
Active engagement is changing
Whilst loyalty program members have become less actively* engaged with ‘All of their programs’
since the 2015 study (down from 59% to 51%), they are more inclined to spread their loyalty
across ‘most’ of their programs (up from 24% to 28%).
‘Active’ engagement is a key success metric for programs and should be closely monitored.
Do members think brands need a loyalty program
to keep their customers loyal?
We continue to challenge the need for loyalty programs in the landscape
of customer and brand engagement.
• Whilst there is not an overwhelming ‘yes’, it is still at similar levels
to 2015, with 57% of members saying ‘yes’, brands need a loyalty
program to keep their customers loyal (58% in 2015) .
• The “yes” jumps to 68% for millennials looking to be rewarded for their
loyalty to brands.
?
1. Tracking changes in the Australian loyalty landscape
82%
*Active = member presented their card or membership number when making purchases
or accruing benefits in the last 12 months
2013
4.03.83.9
20152016
Millennials want to be rewarded for their brand loyalty
For more on these insights or to purchase the FULL edition visit www.theloyaltypoint.com.au

14
67 loyalty programs were mentioned unprompted by members
as doing a very good job
Who is doing a very good job?
Q Can you tell us about a specific loyalty program that you think is doing a very good job? Base: Total Sample
The 2016 top 10 most mentioned programs
(unprompted) as doing a very good job
Coles/flybuys
Woolworths Rewards
(everyday rewards)
Qantas Frequent Flyer
Virgin – Velocity
MYER one
Priceline – Sisterclub
CommBank Awards
Boost Vibe Club
Petbarn Friends for Life
Optus Perks
Other Programs
None
9%
6%
4%
2%
2%
1%
1%
2%
1%
11%
26%
36%
FO R
L O V E O R M O N E Y 2 0 16
TOP10
Loyalty Programs
doing a very good job!
( U N P R O M P T E D )
Australian
w w w . t h e l o y a l t y p o i n t . c o m . a u

15
In 2016, the loyalty program members are more sensitive about their personal information
Since the 2014 ‘Share the Love’ study, there has been a decrease across all variables of ‘exchanging’
personal information with loyalty programs.
Importantly, the majority of members are still happy to provide their data
for benefits and if they understand why programs need the information.
Personalisation vs privacy
I am happy to receive discounts or special offers
based on my purchasing habits
I am happy to provide personal details about my
shopping interests in return for discounts or special
offers on things I like to buy
I am happy to provide personal details provided
I understand why the loyalty program needs them
I am happy for my smartphone to determine my
location and send me discounts or special offers
based on where I am shopping
I would give permission for a loyalty program I am a
member of to share my personal details with another
organisation in order for me to gain access to more
64%
73%
53%
63%
52%
59%
25%
32%
20%
23%
20142016
vs

16
Mobile App on the rise, card is still king
After three research studies, the card is still the most preferred mechanism
for interacting with loyalty programs.
While the member appetite for a mobile phone app to engage with loyalty programs
has increased significantly over the last 12 months (16% in 2016 vs 10% in 2015),
65% of members have remained steadfast in their preference for a traditional
membership card.
Card vs App
…Would like a traditional card …Would like a mobile phone app
2016 20162015 2015
10%16%67%65%
?

17
Member defection When do members leave?
Defection is typically passive. In total, just under a quarter (23%) of
members in 2016 are defecting from a program, either passively or
actively, which is only a marginal increase on 2015 (22%).
Let’s not forget: Defection from a program can (and does) = defection
from a brand!
For the first time, the 2016 research study identified the time periods
after joining a program when members stopped participating.
Almost one in five (19%) of members stopped participating in their
loyalty program less than 3 months after joining.
Defection from a program
= defection from the brand
Why do members leave? Top 5 reasons 2016
I wasn’t earning points/rewards
fast enough
*The program changed it’s benefits
and rewards
I no longer shop there
The rewards didn’t appeal to me
Too much of a hassle
to participate
51%
29%
29%
29%
19%
NEW
* Not asked in previous research studies
Year 1
19%
15%

18
Program engagement:
Are members enjoying the benefits of loyalty program membership?
One of the indicators of program engagement is whether members are actually
taking advantage of the rewards and benefits that their programs provide. Just
over half (54%) of members believe they are taking advantage of their loyalty
programs’ benefits. Nearly a third (31%) believe they are NOT.
A question for loyalty program managers: What % of your loyalty base are
NOT taking advantage of their benefits?
Impact of closing a loyalty program:
What impact would closing a loyalty program have on a business?
This is a critical question to challenge the value and viability of a loyalty
program.
Just over a third (36%) indicated that the closing of loyalty programs they
are a member of, would have NO impact on them.
That’s a reality check and a warning sign that the programs are just not
meaningful enough to have an impact!
However, there are some strong indicators that closing a program would have
an impact on revenue, including 31% of members would NOT buy as often as
they do (with a program) and 23% would NOT buy as much!
Revealing five new insights that impact on loyalty program,
brand loyalty and business success
1.
2. However, there are some strong indicators
that closing a program would have an
impact on revenue and advocacy:
• How often they purchase = revenue decline
• How much they spend = revenue decline
• Movement to a competitor = revenue decline
• Less likely to recommend = loss of advocacy
$
$
$
LOYALTYPROGRAM
54%
… of members feel
they take advantage
of most of the rewards
and benefits available
to them through their
loyalty programs.

19
The 3 Motivations of Loyalty:
Why do consumers join a loyalty program?
This research reveals and quantifies the 3 Motivations of Loyalty based on why consumers join a loyalty program.
I purchase from the brand/business
anyway, so I might as well get rewarded
The benefits and rewards offered
are worthwhile
I love the brand and it’s
products/services
Something else
55%
34%
10%
1%
CONVENIENCE
TRANSACTIONAL
EMOTIONAL
CLOYALTY
TLOYALTY
ELOYALTY
3.
Acquiring new members:
How do programs best on-board new members?
Simplicity and immediacy ranked as the most important
factor for on-boarding new members (49%).
Requesting limited information on joining
also ranked highly (37%).
4.
49%
… of members say that the
most important factor when
asked to join is that the
experience of joining
is simple and immediate.

20
Improving the loyalty program structure:
Revealing the SPV ingredients of successful loyalty programs = Simple, Personal Valuable.
The SPV of a successful loyalty program is the combination of many and varied features,
benefits and experiences that members want when engaging in programs.
We have identified 24 of these various features, benefits and experiences, classifying them as
Simple, Personal Valuable.
Here are the top 7 (out of 24) that members want*
5.
My rewards/benefits/points do not expire
The rewards/benefits/points are easy to earn
The program is easy for me to redeem rewards benefits
The program is easy to understand
I can accumulate points over time that can be redeemed for benefits or rewards
I can earn rewards and benefits based on how much I buy
I am recognised for being a loyal customer
88%
75%
85%
88%
84%
88%
75%
% of respondents who STRONGLY AGREE or AGREE ( 5 point scale )
* Complete list of 24 available in the FULL edition of ‘for love or money’.

21
What’s a tattoo got to do with
a customer’s brand loyalty?
This research aims to uncover a deeper insight into a customer’s brand loyalty.
We asked members if they would ever consider a permanent tattoo of an image of a brand, logo or their (loyalty)
program on their body in order to gain a high value lifetime discount or exclusive benefit.
Strange but true... 12%said YES!
32 brands, logos and loyalty programs were mentioned… some more than once!*
* List of brands, logos and loyalty programs mentioned are available in the FULL edition of ‘for love or money’.

3. Ranking of 20 Australian loyalty programs rated as excellent
% who rate the programs as excellent (6 or 7 out of 7)
Base: Members enrolled in that program.
Coles Flybuys
CommBank Awards
ANZ Rewards
Westpac Altitude Rewards
The Coffee Club VIP
Optus Perks
Amcal Rewards
43%
43%
40%
34%
32%
31%
30%
Q. Looking still at the programs you are a member of, use the scale (1-7) to indicate the impression you have of that program based on your own experiences.
Members’ impression of overall quality – rating excellent
7 of the top 20 in 2016*
22
NOTE: The author of this research study has no vested interest in any of the listed loyalty programs.
They were chosen randomly from the Australian loyalty program market place.
These 25 programs were also randomly sorted in the research to avoid bias of selection.
Ratings were only asked of consumers who are enrolled members of the respective programs.
‘for love or money 2016’ research provided loyalty program members with a list
of randomly selected Australian loyalty programs, to identify:
* List available in the FULL edition of ‘for love or money’.

5.0
Who loves loyalty?
Behind the research

Who loves loyalty?
Established in 2007, Directivity provides customer loyalty strategies
and programs for organisations operating in sectors as diverse as
retail, accommodation, leisure and entertainment, trade, education
and manufacturing.
Adam Posner (CEO and founder) is one of Australia’s leading loyalty
program strategists and has been a data-driven direct marketer for
more than 23 years. He started his loyalty life in the mid ’90’s with
a shopping centre loyalty program initiative called “Scratch Save”.
Since then he has been involved in a range of loyalty and retention
programs from large retail programs such as the flybuys program
re-launched in 2012 as well as developing financial ‘Return on
Loyalty’ models for retail, trade, pharmacy, entertainment and large
accommodation networks.
He has developed and utilises the proven and best-practice loyalty
and retention program methodologies:
• “Do You Really Need a Loyalty Program?” diagnostic to gain
alignment and clarity on whether a program is right for the
business and for their customers.
• The “9 Steps to a Valuable Loyalty Program” to design,
develop and deploy programs that are meaningful to the
member and profitable to the business.
• The review and revamp model to assess the value and viability
of existing loyalty programs.
• The 3 Motivations of Loyalty model that identify levers
to move members to be more engaged with brands
Adam is co-author of 3 of Australia’s most in-depth research studies
on Loyalty Programs (‘for love or money 2013, 2015 and ‘Share the
Love 2014’) and also the author of one of Australia’s only practical
book on loyalty programs – ‘Give-back to Get-back - 9 steps
to a profitable loyalty program’.
He has been widely interviewed on customer loyalty and loyalty
programs including on radio (3AW and ABC Radio National – Money
Show) and published in Marketing Magazine, Herald Sun, BRW,
CMO, Colloquy, eConsultancy, AdNews, and SmartCompany.
Adam has presented on customer loyalty and loyalty programs at
Loyalty World (2013), The Customer Show (2014) and ADMA Forum
(2012 and 2013), ADMA Retention and Loyalty Marketing (2014,
2015, 2016), Customer TECHX Show (May 2015), Clarinden Global
Faculty Director for July 2015 ‘Designing High Impact Customer
Loyalty and Retention Programs’ , No Vacancy Accommodation
Conference (2016) as well as tailored loyalty keynotes for clients
including Accor Pacific, Choice International, and Horseland.
To find out more or purchase the FULL edition visit
www.theloyaltypoint.com.au or contact Adam Posner:
adam@directivity.com.au or call 0433 818 190

© COPYRIGHT DIRECTIVITY 2016
All the detailed findings and
insights are available in the full
87 page in-depth edition
of ‘for love or money 2016’.
To find out more or purchase
the full edition please contact :
Adam Posner
CEO Directivity
t. 0433 818190
e. adam@directivity.com.au
w. theloyaltypoint.com.au

For Love or Money 2016_ExecSummary_FINAL

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