2013 Australian Loyalty Programs

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The study "For Love or Money 2013 Consumer Study into Australian Loyalty Programs" surveyed over 1000 Australian consumers and found 88% of those aged over 16 belong to a loyalty progam.
http://www.chrispattas.com/business/2013/5/29/do-consumers-buy-more-from-a-business-with-a-loyalty-program

All rights belong to: www.directivity.com.au & www.citrus.com.au

Published in: Business, Travel

2013 Australian Loyalty Programs

  1. 1. 1For loveor MONEY?2013 ConsumerStudy into AustralianLoyalty Programs
  2. 2. a
  3. 3. Welcome to thefirst Australianresearch studyinto consumers’relationships withloyalty programs.
  4. 4. 1.0 Introduction 12.0 Executive Summary 33.0 Research methodology and profile of participants 74.0 Findings in detail 9 4.1 Reach of loyalty programs in Australia 9 4.2 Who loves loyalty programs? 11 4.3 Who is more actively interacting with loyalty programs? 15 4.4 What behaviour does the love of loyalty programs drive? 19 4.5 Where can loyalty programs improve? 25 4.6 For love or money? What features and benefits of loyalty programs do consumers care about? 29 4.7 Who cares about which benefits? 37 4.8 The love of loyalty programs vs the benefits offered 39 4.9 Which communication channels do they love? 41 4.10 Which loyalty programs do they care about? 43 4.11 Consumers’ comments about loyalty programs – the good and not so good 455.0 Behind the research – the people who love loyalty programs 47Contents
  5. 5. 11.0Introduction
  6. 6. 2We sought to find out if being a memberof a loyalty program was for the love (ofthe brand) or for the money (rewards). Wewanted to find out if being a member madethem care enough to: Influence their buying behaviour. Be more loyal to the brand whose programthey were a member of.This research study conducted with morethan 1,000 consumers answers these twoquestions and explores:1. the penetration of loyalty programs withsome demographic differences2. who is more actively involved with theirprograms3. their view on the value that programs offer4. what’s important to them with regard toprogram structures, features and benefitsand5. communication preferencesThank you for your interest in the Australianconsumer’s point of view on loyalty programs.Directivity and Citrus together withFirst Point Research and Consulting arepleased to present what we believe isthe first research study into consumerrelationships with loyalty programs inAustralia.Loyalty programs, frequent buyer programs, VIPclubs, discount rewards and any combinationof these are continuing to clutter the Australianmarket and scream for the attention of theirmembers.There are many programs in the market andbrands continue to evaluate why they should havea program (if they don’t) or how to continuouslyimprove (if they do). While there have beena number of overseas research studies, wecould not find any in Australia that provided aconsumer’s perspective on loyalty programs theyengage in – or don’t.With this in mind, we wanted to get to the heartof how consumers in Australia really feel aboutloyalty programs and specifically those they aremembers of.Whether you are planning to implement a loyaltyprogram or already have a program, we areconfident you will find insights that will make youthink more about how your program can be evenmore relevant and valuable to your members, andtherefore more profitable for your business.Please read on and find out if Australianconsumers really care about the loyalty programsthey are a member of.1212345Adam PosnerCEODirectivityPete NobleCEOCitrus
  7. 7. 32.0ExecutiveSummaryDO LOYALTYPROGRAMSINFLUENCEBUYINGBEHAVIOURAND LOYALTY?
  8. 8. 4Buying behaviourAustralian consumers certainly do buy more fromcompanies whose programs they are a member of.In fact, 80% buy more.They also tend to buy from companies who have aloyalty program versus those who don’t. When facedwith choosing two similar products/companies – onewith a loyalty program and one without – 55% ofconsumers tend buy from the one that has a loyaltyprogram.So if you are facing a competitive environmentand the behaviour you want is for yourcustomers to choose you over a competitor,then a loyalty program does influence thechoice of who they buy from.This means if you don’t have a program, you shouldseriously consider one.If you do have a program, then dig a bit deeper intothis research and see what customers value fromtheir loyalty programs and see if you match up.Let’s get to the point.Firstly, loyalty programs do influence buying behaviour – consumers buy more from companies whoseprogram they are a member of and they choose to buy from companies with a program vs those without.However, loyalty programs do not equal customer loyalty.Feeling of loyaltyAs for ‘feeling more loyal to a brand whose programthey are member of’ - less than half (46%) tend tofeel more loyal. This is a close call on whether aloyalty program actually drives a feeling of loyalty.It’s our view that loyalty programs on their own donot engender loyalty, as there are many factorsthat influence loyalty, not just a program.Therefore loyalty programs do not equal customerloyalty.80%buy more fromcompanies whoseprograms theyare a member of55%will choose a product/company with aloyalty program over one without46%feel more loyalto a brandbecause of aloyalty program
  9. 9. 5Key insights.It’s crowded - find your crowd.Loyalty programs are well established in theAustralian shopping community, with 88% ofconsumers over the age of 16 being members ofa loyalty program. So you need to really find a waythrough the crowd and be valuable to your crowd.There are some loyalty lovers out there, with 11% ofconsumers being members of more than 10 loyaltyprograms.Not all customersare equal.Men are members of fewer programs (average 3)but more active with the memberships, presentingtheir card at the point of purchase or activelylooking to accrue points. Women are members ofmore programs (average 5) and tend to spread theirspend across more programs. Keep an eye on oldercustomers (55+) as they tend to buy more, choosefrom brands that have a program, but believe morestrongly that programs don’t provide any real value.Just because you have a loyalty program, doesn’tmean it’s working.Only 41% of consumers feel that loyalty programs have improved in recent years and offer goodbenefits to members. This presents a great opportunity for loyalty programs to strive to be morevaluable. Program features and benefits that consumers prefer are still financial, although ‘surpriseand delight’ are also well regarded.88%belong to aloyaltyprogram12%don’t belongto a loyaltyprogram11%belong to morethan 10 loyaltyprogramsNO. OF CARDS123
  10. 10. 6Talk to me.At 81%, personalised email is by far the mostpreferred channel to communicate with members,followed by direct mail (37%). Mail particularlyappeals to tech-savvy consumers under 25 dueto the novelty factor and the association of ‘goodnews’ rather than older members who are likely toassociate letters with bills!Surprising members with unexpected rewards arehighly sought after. Programs which offer ‘surpriseand delight’ benefits will go a long way to overcomingconsumers’ belief that programs don’t offer any realvalue.Show me the money.Financial benefits are still the most sought afterprogram benefit, with 80% of consumers seekingimmediate price discounts when making purchases.Points-based programs that enable members toredeem points for vouchers or other rewards arealso important (77%). Exclusive offers (64%) andaccess to more rewards based on spend (62%)also rank highly with consumers.The key to asuccessfulloyaltyprogram45Surprise!Surprise!A winning program is one with multiple emotional and transactional benefits.Consumers who ‘tend to feel more loyal to the company/brand when I am a member of their loyaltyprogram’ consistently place higher importance (than the average consumer) on ALL listed loyaltyprogram features - from transactional to emotional.Programs with multiple financial and emotional benefits in their program framework are better placedto build genuine loyalty with their members.81%37%<25spreferpersonalisedemailpreferdirect maillike personalisedletters80%feel thediscountis mostimportant77%feel thepoints forrewardsare moreimportant
  11. 11. 73.0Researchmethodologyand profile ofparticipantsWHO GAVETHEIR POINTOF VIEW?
  12. 12. 8Researchmethodand profileof researchparticipants.The research was conductedindependently by First Point Researchand Consulting in February 2013through an online panel of Australianconsumers, men and women 16 years+.The research was structured to gain somequantitative results with comparative analysis aswell as free form questions to gain a sentimentof how consumers feel towards the programsthey are a member of and how programs shouldimprove.Programs were named - some shamed, somecheered. The richness of the free-form responsesis enlightening.The total sample of N=1010, provides a marginof error of +/- 3% at a 95% level of confidence.Broad quotas were set for age and gender.Gender LocationMarital Status57% Married68% No dependent children9% Widowed/divorced/separated32% Single32% Dependent children2% Prefer not to sayAgeDependent childrenHousehold income52%48%35%18%part ofNSW9%10%25%3%16-24years9%26%18%15% 17%9%15%25-34years29%45-54years16%55-64years17%65+years8%35-44years21%$50,000- $74,999$75,000-$99,999$100,000- $149,999$150,000or moreRefusedto sayUnder$50,000
  13. 13. 94.0Findings indetail4.1 REACHOF LOYALTYPROGRAMSIN AUSTRALIA
  14. 14. 10Loyaltyprograms inAustralia reachfar and wide.Not too surprising, however we nowhave a benchmark.of Australianconsumers overthe age of 16 aremembers of aloyalty program.88%NoYesTotal sample (N = 1010)
  15. 15. 114.0Findings indetail4.2 WHO LOVESLOYALTYPROGRAMS?
  16. 16. 12Female (N = 525) Male (N = 485)93%82%Warning!Don’t let this mislead you! Further in the report findingsreveal that men are more actively involved with programsthey are a member of.of women are muchmore likely to bemembers of a loyaltyprogram than men.93%
  17. 17. 13CHILDREN: AGE:of people with dependent children are membersof at least one loyalty program which for thosefamilies looking for savings or rewards, loyaltyprograms make sense.There is a fairly even spread of age groups who participate inloyalty programs.92%16-24years25-34years45-54years55-64years65+years35-44years83%88%91%88%85%85%92%
  18. 18. 14How many programsare Australians amember of?Men are members of about 3 programson average and women closer to 5programs.Interestingly, 11% of all respondents aremembers of 10 or more programs.(Again, don’t let the volume of programsmislead you, as the level of activity in theirprograms is more enlightening).Male (N = 396) Female (N = 488)3.3 4.7loyaltyprogramsloyaltyprogramsClutter?Perhaps our wallets/purses are not as clutteredas you may think, which still presents anopportunity for loyalty marketers.
  19. 19. 154.0Findings indetail4.3 WHOIS MOREACTIVELYINTERACTINGWITH LOYALTYPROGRAMS?
  20. 20. 16Active = “you presentyour card or membershipnumber when makingpurchases”.ACTIVE:of consumers are activein all of their programs,by presenting theircards or membershipnumber when makingpurchases.Only45%Active = engaged?If active = engaged, then there is certainly room to improve.It’s fair to say that if your program is one of a few in your category, then it’s clear thatyou need to evaluate how to get your members to be ACTIVE in yours. More insights onhow to do that follows.I try to keep my card handy.I am cross when I don’t getto add points because I haveforgotten my card.Female, 45-54yo, NSWSome don’t engage with theirmembers as much as others &therefore I tend to not use thosebrands so much.Female, 25-34yo, NSW45%30%15%9%1%Use all of them Use most ofthemUse about half ofthemUse not many ofthemUse none ofthemBase: Members of a loyalty program (N=884)
  21. 21. 17Men are morecommitted totheir loyaltyprograms.MEN:of men are active in allof their loyalty programsvs 41% of women.With fewer cards, its clear that men are moredeeply committed to the loyalty programs theybelong to than women.49%We ignored Flybuys for many years when it took a huge amount of expenditure to get any benefit.Now, combined with fuel vouchers and Frequent Flyer points on the credit card, shopping at Flybuysretailers makes sense. So keep the rewards at an achievable and worthwhile level.Male, 55-64yo, QLDNearly everyone has a loyalty programme – and that diminishes the value of what they are for. Youseem to be treated liked an alien if you are not a member and use a business that has one.”35-44 YO male, NSWUse all of them Use most ofthemUse about half ofthemUse not many ofthemUse none ofthemTotal Men Women15%45% 30% 9% 1%Base: Members of a loyalty program (N=884)49% 29% 12% 8% 2%41% 31% 18% 9% 1%
  22. 22. 18Women areless engagedwith their loyaltyprograms.WOMEN:of women are activein all of the loyaltyprograms they belong to.of women are active inhalf or less than half ofthe loyalty programsthey are members of. While women belong to more loyaltyprograms than men, onlyAs the primary shopper in most cases, womenare exposed to more opportunities for loyaltyprograms, which in turn motivates womento spread their loyalty across those variousprograms.In competitive categories, the program reallyneeds to differentiate itself to gain a woman’stotal commitment.41%28%Please remember that Loyalty programs are a two-way street. It can’t just be about collectinginformation about the way a person shops – there needs to be a benefit for the cardholder as well.”35-44 YO female, NSWUse all of them Use most ofthemUse about half ofthemUse not many ofthemUse none ofthem15%45% 30% 9% 1%Base: Members of a loyalty program (N=884)49% 29% 12% 8% 2%41% 31% 18% 9% 1%
  23. 23. 194.0Findings indetail4.4 WHATBEHAVIOURDOES THE LOVEOF LOYALTYPROGRAMSDRIVE?
  24. 24. 20of consumers buy morefrom companies whoseprogram they are amember of.80%They buy more.Consumers who are a member of aloyalty program do buy more.BUY MORE:If you are developing a loyaltyprogram, here is one very good reasonfor a program – consumers buy more.I tend to buy more from the companies whose program Iam a member ofWhen choosing between two similar products/companies,one who has a loyalty program and one who does not, Itend to buy from the one that has a loyalty program.I tend to feel more loyal to the company/brand when I ama member of their programLoyalty programs have improved a lot in recent years andtend to offer good benefits to membersMost loyalty programs don’t offer me any real valueMost loyalty programs just don’t seem to understand howto communicate appropriately with their members% Strongly Agree / Agree80%55%46%41%40%27%The more that customers are rewarded, the more likely they are to shop at a particular store. If retailsales are in such a slump, retailers have a perfect opportunity to offer loyal customers incentive tospend.” 25-34 YO female, VictoriaI like it when they give you 10% discount ifyou spend over $50 and it is taken off yourgrocery bill immediately. When that happens Iwill make a special effort to spend $50 (whichis more than my regular weekly spend).”55-64 YO female, NSWBase: Members of a loyalty program (N=884)
  25. 25. 21of consumers when faced with choosing two similar products/companies, one who has a loyalty program and one who doesnot, tend to buy from the one that has a loyalty program.55%They chooseto buy from thecompany with aprogram.More than half of Australian consumerstend to buy from companies who have aloyalty program vs those that don’t.CHOOSING:If your competitors have a loyalty program and you do not, good chanceyou are losing business.Base: Members of a loyalty program (N = 884)I tend to buy more from the companies whose program Iam a member ofWhen choosing between two similar products/companies,one who has a loyalty program and one who does not, Itend to buy from the one that has a loyalty program.I tend to feel more loyal to the company/brand when I ama member of their programLoyalty programs have improved a lot in recent years andtend to offer good benefits to membersMost loyalty programs don’t offer me any real valueMost loyalty programs just don’t seem to understand howto communicate appropriately with their members% Strongly Agree / Agree80%55%46%41%40%27%Don’t create a program for the sake of it. Loyalty needs to be earned. While the benefits don’t haveto be big, they have to be in proportion to what the company does or sells. One free coffee in 10 isgenerous. $10 off a $200 grocery bill is not.” 45-54 YO female, NSW
  26. 26. 22of consumers strongly agree/agree that theytend to feel more loyal to the company/brandwhen they are a member of their loyalty program,which leaves the rest who are neutral or do notagree.Consumers are not loyalto a brand just becausethey are a member oftheir loyalty program.Loyalty programs do not equal customer loyalty.Less than half feel more loyal to a brand when a member of their program.FEELINGS OF LOYALTY:I tend to buy more from the companies whose program Iam a member ofWhen choosing between two similar products/companies,one who has a loyalty program and one who does not, Itend to buy from the one that has a loyalty program.I tend to feel more loyal to the company/brand when I ama member of their programLoyalty programs have improved a lot in recent years andtend to offer good benefits to membersMost loyalty programs don’t offer me any real valueMost loyalty programs just don’t seem to understand howto communicate appropriately with their members% Strongly Agree / Agree80%55%46%41%40%27%Although it’s a close call on whether a loyalty program actuallydrives loyalty, it’s our view that it does not as there many otherfactors that influence loyalty, not just a program.As a pensioner on a limited income any kind or reward is a bonus but thelow rewards do not make me want to be loyal to the business.”45-54 YO female QLD46%only
  27. 27. 23A loyalty ‘card’ does not maketh a loyaltyprogram. Unless being a part of this programentitles you to rewards, discounts, free gifts,exclusive invitations or something special overand above what other customers receive, Ihave no incentive to give retailers all my details.I am happy to give them this information forsales and statistical analysis of purchasing,however I deserve something in return.”Female, 25-34 yo, Victoria
  28. 28. 24Which age groups care aboutloyalty programs even more?I tend to buy more from the companies whose program Iam a member ofWhen choosing between two similar products/companies,one who has a loyalty program and one who does not, Itend to buy from the one that has a loyalty program.I tend to feel more loyal to the company/brand when I ama member of their programLoyalty programs have improved a lot in recent years andtend to offer good benefits to membersMost loyalty programs don’t offer me any real valueMost loyalty programs just don’t seem to understand howto communicate appropriately with their members80%77%80%85%55%49%55%63%46%46%46%48%41%41%39%45%40%41%43%54%27%31%27%22%TotalN = 884<35 yearsN = 33835-54 yearsN = 34055+ yearsN = 206More mature Australians stand out.When cross analysing the different age groups tothe behaviours and beliefs, some interesting andsignificant differences were highlighted.55 YO +• tend to buy more than the rest• choose more from those brandswho have a program• believe more strongly thatprograms don’t offer them anyreal value
  29. 29. 254.0Findings indetail4.5 WHERECAN LOYALTYPROGRAMSIMPROVE?
  30. 30. 26of consumers feel that loyalty programs haveimproved in recent years and tend to offergood benefits to members. There is certainlyroom to improve.41%onlyLoyalty programs haveroom to improve –what a great opportunity.IMPROVEMENT:I tend to buy more from the companies whose program Iam a member ofWhen choosing between two similar products/companies,one who has a loyalty program and one who does not, Itend to buy from the one that has a loyalty program.I tend to feel more loyal to the company/brand when I ama member of their programLoyalty programs have improved a lot in recent years andtend to offer good benefits to membersMost loyalty programs don’t offer me any real valueMost loyalty programs just don’t seem to understand howto communicate appropriately with their members% Strongly Agree / Agree80%55%46%41%40%27%Flybuys is far and away the best loyalty program for me.... I get the most cash back from it. Millers give generous discounts. Video Ezy also have specialoffers for members only, although they are spasmodic. Everyday Rewards is a disappointment - seems all you get is a fuel discount. I expect to becontacted by stores with whom I have a card, yet Blooms, Noni B, Target, Adairs, Rockmans, bras N Things never contact me with product information.To me, that’s a wasted opportunity for them. Female, 45-54yo, NSWBase: Members of a loyalty program (N=884)
  31. 31. 27of consumers strongly agree/agree that loyalty programs don’t offer anyreal value. 36% are neutral and 24% disagree, which means there aremore consumers who are either on the fence (ready to be proven thatthere is value) and the rest who think they are getting value.40%WHERE’S THE VALUE?I tend to buy more from the companies whose program Iam a member ofWhen choosing between two similar products/companies,one who has a loyalty program and one who does not, Itend to buy from the one that has a loyalty program.I tend to feel more loyal to the company/brand when I ama member of their programLoyalty programs have improved a lot in recent years andtend to offer good benefits to membersMost loyalty programs don’t offer me any real valueMost loyalty programs just don’t seem to understand howto communicate appropriately with their members% Strongly Agree / Agree80%55%46%41%40%27%I have some cards that don’t do anything.Needs to have a value to make it worth mywhile.” 25-34 YO female, VictoriaThey can bemore valuable.There are great opportunities forloyalty programs to strive to be morevaluable to their members.There are more insights into whatconsumers love (what they value) aboutloyalty programs further along in this report.only
  32. 32. 28Programs with minimum number ofpurchases before you earn points, rewardsprograms where you need to pay annualmembership fees erode the value gained.”45-54 YO female, NSW
  33. 33. 294.0Findings indetail4.6 FOR LOVEOR MONEY?WHAT FEATURESAND BENEFITSOF LOYALTYPROGRAMS DOCONSUMERSCARE ABOUT?
  34. 34. 30It’s all about the money!financial benefits are still highly sought after by consumers.Immediate price discounts when making purchasesPoint based programs that allow members to redeem‘points’ for vouchers, products or other rewardsSurprise gifts or surprise rewards that arrive without youmaking a redemptionExclusive offers available to members onlySending me information that is tailored and personal tomeAccess to more rewards based on the more you spendwith the companyUpdates on relevant news about the company and itsproducts or servicesPartnerships with other businesses/brands that canincrease the opportunity to accrue rewards or pointsDifferent levels of reward based on different levels ofspending (eg Gold, Silver and Bronze membership tiers)% Very important /80%77%67%64%46%62%37%61%36%Base: Members of a loyalty program (N = 884)It’s clear that members of loyalty programs are looking for thehard benefits - especially financial, as a reward for their loyalty.
  35. 35. 31“Offering a change to go in a draw or lotteryis not a reward. Cash and decent discountshave value. Most other offers have very littlevalue.” 35-44 YO male, NTOffers that have an immediate discountare better than non-tangible and confusingschemes such as points.16-24 YO male, TasmaniaCash is king and all of these reward programsoffer a choice of cash or store vouchers so Ican choose what to buy are better.35-44 YO male, NSW
  36. 36. 32Surprise! Surprise!Share the love!Surprising your loyalty members with rewards that are not expected, are highly sought after!Base: Members of a loyalty program (N = 884)Immediate price discounts when making purchasesPoint based programs that allow members to redeem‘points’ for vouchers, products or other rewardsSurprise gifts or surprise rewards that arrive without youmaking a redemptionExclusive offers available to members onlySending me information that is tailored and personal tomeAccess to more rewards based on the more you spendwith the companyUpdates on relevant news about the company and itsproducts or servicesPartnerships with other businesses/brands that canincrease the opportunity to accrue rewards or pointsDifferent levels of reward based on different levels ofspending (eg Gold, Silver and Bronze membership tiers)% Very important /80%77%67%64%46%62%37%61%36%
  37. 37. 33There could be things given randomly fromtime to time – eg: bonus points after shoppingor monetary voucher or just for being a‘valued customer’. 45-54 YO female, VICI buy all my cosmetics and healthcareproducts in this store and receive a loyaltycheque in the mail which comes as a nicesurprise. 65-74 YO female, NSWThe (MYERone) gift cards are automatically sentout, you don’t have to log on and ‘redeem’ anythingso it’s a nice surprise to open the letterbox andhave a gift card waiting.” 25 YO female, QLD
  38. 38. 34They also care about exclusivity and a lot more.They also care about the love they get through exclusive offers for being a loyalty program member,Access to more rewards based on their spend and more opportunities accrue rewards/points through partners.Base: Members of a loyalty program (N = 884)Immediate price discounts when making purchasesPoint based programs that allow members to redeem‘points’ for vouchers, products or other rewardsSurprise gifts or surprise rewards that arrive without youmaking a redemptionExclusive offers available to members onlySending me information that is tailored and personal tomeAccess to more rewards based on the more you spendwith the companyUpdates on relevant news about the company and itsproducts or servicesPartnerships with other businesses/brands that canincrease the opportunity to accrue rewards or pointsDifferent levels of reward based on different levels ofspending (eg Gold, Silver and Bronze membership tiers)% Very important /80%77%67%64%46%62%37%61%36%
  39. 39. 35They DON’T care that much about the companyand tiered rewards are not important.Consumers are NOT that interested in news about your company, they are more focused on WIIFM.Immediate price discounts when making purchasesPoint based programs that allow members to redeem‘points’ for vouchers, products or other rewardsSurprise gifts or surprise rewards that arrive without youmaking a redemptionExclusive offers available to members onlySending me information that is tailored and personal tomeAccess to more rewards based on the more you spendwith the companyUpdates on relevant news about the company and itsproducts or servicesPartnerships with other businesses/brands that canincrease the opportunity to accrue rewards or pointsDifferent levels of reward based on different levels ofspending (eg Gold, Silver and Bronze membership tiers)% Very important /80%77%67%64%46%62%37%61%36%Only a third of consumers feel that tiered rewards are important.Base: Members of a loyalty program (N = 884)
  40. 40. 36Levels (bronze, silver and gold) are nolonger relevant. All members should betreated as Gold.” 35-44 YO male, QLD
  41. 41. 374.0Findings indetail4.7 WHO CARESABOUT WHICHBENEFITS
  42. 42. 38Consumers over 55 are morefocused on transactional benefits.77%72%68%64%62%60%41%33%37%80%78%69%63%61%61%49%36%35%85%64%64%63%63%36%TotalN = 884<35 yearsN = 33835-54 yearsN = 34055+ yearsN = 206They also place significantlygreater importance on the ongoingcommunications from loyalty programs.Point based programs that allow members to redeem‘points’ for vouchers, products or other rewardsSurprise gifts or surprise rewards that arrive without youmaking a redemptionExclusive offers available to members onlySending me information that is tailored and personal tomeAccess to more rewards based on the more you spendwith the companyUpdates on relevant news about the company and itsproducts or servicesPartnerships with other businesses/brands that canincrease the opportunity to accrue rewards or pointsDifferent levels of reward based on different levels ofspending (eg Gold, Silver and Bronze membership tiers)80%77%67%64%46%62%37%61%36%51%43%84%I can use the points on other things and thepoints are valuable.Male, 65-74 yo, Victoria, member of QFF andeveryday rewardsThe immediate discount at the register is agreat incentive to shop.Female, 65-74 yo, Victoria, member ofSpotlightGood communication and excellent rewardssystem when compared to other similarcompetitors. Great recognition of customers.Male, 55-64 yo, Tasmania, member of Virgin’sVelocity programImmediate price discounts when making purchases
  43. 43. 394.0Findings indetail4.8 THE LOVEOF LOYALTYPROGRAMS VSTHE BENEFITSOFFERED
  44. 44. 40Cross analysing how they feel towhich benefits are important.84%78%74%66%60%62%45%36%36%TotalN = 884“Most loyaltyprogramsdon’t offer meany real value”N = 338“I tend to feel moreloyal to companies/brands when I ama member of theirprogram”N = 340Programs which have a core element of‘surprise and delight’ will go a long wayto overcome consumers’ belief (74%) thatprograms do not offer any real value.Consumers who feel that ‘loyalty programs don’toffer any real value’ are far more likely to place highimportance on ‘surprise gifts or surprise rewardsthat arrive without you making a redemption’.Point based programs that allow members to redeem‘points’ for vouchers, products or other rewardsSurprise gifts or surprise rewards that arrive without youmaking a redemptionExclusive offers available to members onlySending me information that is tailored and personal tomeAccess to more rewards based on the more you spendwith the companyUpdates on relevant news about the company and itsproducts or servicesPartnerships with other businesses/brands that canincrease the opportunity to accrue rewards or pointsDifferent levels of reward based on different levels ofspending (eg Gold, Silver and Bronze membership tiers)80%77%67%64%46%62%37%61%36%Loyalty also appears to be more likelywhen programs implement a multi-faceted approach.Consumers who ‘tend to feel more loyal to thecompany/brand when I am a member of theirprograms’ consistently place higher importancethan the average consumer on ALL listed loyaltyprogram benefits (transactional and emotionalrewards).This suggests that those programs with multiplefinancial and emotional benefits in their programframework are better placed to build genuineloyalty with their members.Immediate price discounts when making purchases 88%87%75%76%77%78%58%49%47%
  45. 45. 4.0Findings indetail4.9 WHICHCOMMUNICATIONCHANNELS DOTHEY LOVE?Email then mail.EMAIL:of consumers preferpersonalised email.81%Text Message/SMS20%81%Personalisedemail37%Personalisedletter10%Facebookalert or update41Base: Members of a loyalty program (N=884). Option to select more than one channelprovided in this survey question.(Woolworths)emails are fantasticand makes youfeel updated asa member. Theircommunication isthe best out of theclubs. 35-44 YOfemale, QLD
  46. 46. 42Older = email vsyounger = mail.78%77%69%38%36%43%17%28%34%12%14%16%87%39%18%7%9%4%TotalN = 88435-44 yearsN = 33825-34 yearsN = 338<24 yearsN = 33845-54 yearsN = 34055+ yearsN = 206PersonalisedletterPersonalisedemailText message/ SMSFacebook alertor update81%37%20%10%34%Several differences can be observedacross the age groups:89%The theme overall is that younger consumers are likely to be open to engaging in a variety of differentplatforms, whereas consumers over 45 years have a distinct preference for email.Personalised email is favoured far more byconsumers aged 45+, relative to youngerconsumers.Personalised letters are very appealing toconsumers under 25.The insight here is that old style letters are ofmore novel value to younger consumers and aremore likely to be associated with ‘good news’ asopposed to older consumers who are more likelyto associate letters with bills!This highlights a little used opportunity to engagewith younger consumers via mail.Text message or SMS is considered to bea good option for engagement amongstthe Under 35s in particular.Similarly, Facebook alerts and updates arefar more appealing to the Under 35s.From my own experiences, personalisedemails are completely ignored. Contacting byother means would draw more attention.16-24 YO male, VIC
  47. 47. 434.0Findings indetail4.10 WHICHLOYALTYPROGRAMSDO THEY CAREABOUT?Programs and brandsmentioned.843 consumers commented on the programs they are amember of.AccorAirmilesAliBabaAltitude RewardsAmexAmcalANZ RewardsAutographAthletes FootCoffee ClubBB’sBetts KidsBoost JuiceBrumbysChoice HotelsCBA credit cardCrown SignatureClubEB GamesEmiratesEvent CinemaEveryday rewardsFusionFlybuysGloria JeansHorselandHoytsHudsonsIGAIKEA familyJeans WestKatiesMillersMychemistMYERoneMuffin BreakNational PharmacyOxfordPet BarnPricelineQFFRewards CentralRiversRockmansSnowys OutdoorsSportscraft VIPSpotlightSumo SaladSupabarnTerry WhiteToys r UsVillageVirgin
  48. 48. 44Programs that got the nod asdoing a ‘good job’.The most mentioned loyalty programs as doing a “particularly good job” are:Flybuys / ColesEveryday Rewards, WoolworthsQantasMYERonePricelineVirginCBA Credit CardIGAMillersRewards CentralSpotlightAll OthersNone37%22%11%6%5%2%1%1%1%1%1%<1%12%Base: Members of a loyalty program (N = 884)The fact that 78% ofrespondents, without beinggiven a list of options, providedthe name of a program theyconsidered to be doing a‘good job’, suggests that thevast majority of Australians doactually see merit in joining aloyalty program.
  49. 49. 4.0Findings indetail4.11CONSUMERS’COMMENTSABOUTLOYALTYPROGRAMSPricelineThey are constantly in contact with me, lettingme know what’s on sale and what’s going tobe available and what competitions, bonusbuys and offers that members can utilise.Keeping the brand in my mind by being intouch all the time.Female, 24-34 yearsMYERoneI like that you don’t need your card toredeem points in store (via app is great) Ihave received vouchers from them - tangiblerewards for spending. It is easy to collectpoints as they sell a broad range of products.Also have had Myer VIP shopping nights as areward to customers.Female, 25-34 yearsSportscraft VIP programI think it’s quite good value that when you signin online as a VIP you get instant discount onall items on the website. They also have lotsof sales online just for VIP members. I think itwas also great that the sign up was so simpleand could also be done online.Female, 16-24 yearsMillersMillers is great because not only do they havecheap clothes, they give you discounts offsale items too..Female, 45-64 yearsflybuysBecause they update regularly, sendemails with my points balance and discountvouchers.Female, 25-34 yearsEveryday rewardsI like that it can be linked to my Qantas FFprogram. I also like that you can accrue pointssimply by purchasing your everyday items,you don’t need to go out and buy somethingthat you may never use to accrue points.Recently, they sent me a keychain to useas well as my card, this is really handy assometimes you don’t have your purse with you,but you almost always have your keys.Female, 25-35 years843 customers gave their point of view.A few of the good.45
  50. 50. 46Just make the rewards worth staying with youfor. Don’t make the customer need to spendmillions to redeem chicken feed.”45-54 yo male, QLDSome rewards programs are designed forbig spenders in the higher income brackets.People with low funds, small spenders cannever hope to accrue enough points etc. tobenefit from the program.55-64 yo female SAPoints that expire are one of the biggest turnoffs. Paying to belong to a loyalty program...I’m already spending my money at yourbusiness and you expect me to pay you tobelong to your program too??45-54yo female, SAI do feel negatively when asked to pay to bea part of a loyalty program. I did pay $10 Ithink to join Bras N Things, but I have to buy2 bras a year to benefit, so don’t think I willbother again. I expect a loyalty program tobe free, and to actually have a benefit to me.I think Just Cuts, for example, is fairly lame,as they keep no records of me on their pc,so if I forgot to offer up my discount card,then it’s as if I never got a haircut. It’s like theyknow people will forget, so one never earnsthat free hair cut. I don’t think I have everbenefited from some of the cards I have, sowhy do they even bother to have them?45-54 yo female NSWPlease don’t make the programs toocomplicated or time intensive to gain rewards.And reward points that expire are a waste oftime and misleading.16-24 YO female, QLDI just think loyalty programs are all about thecompany selling more. It’s not about rewardingthe customers as it’s really aimed at peoplewho are big buyers.45-54 YO female, WA.A few of the NOT so good.
  51. 51. 475.0Behind theresearch –THE PEOPLEWHO LOVELOYALTYPROGRAMS
  52. 52. 48Directivity was established in 2007 to providecustomer acquisition and loyalty strategiesfor organisations in financial services, energy,tourism, manufacturing, education, IT and retail.Adam Posner (CEO) has been involved in a rangeof loyalty programs from large retail programssuch as the new flybuys program launched in2012 as well as the development of self-fundingfinancial modelling for loyalty programs forpharmacy and large accommodation networks.Adam’s obsession with loyalty drove him to initiatethis research study as the first of its kind that digsdeep to understand what Australian consumersreally feel about loyalty programs.Adam is also the author of the practical bookon loyalty ‘Give-back to Get-back - 9 steps to aprofitable loyalty program’.Citrus is a specialist digital agency focused ongrowing the value of the relationship betweenbrands and their consumers through key digitaltouch points.With more than 15 years’ experience and a strongheritage in retail, Citrus has delivered awardwinning solutions to leading brands includingSportsgirl, Metalicus, Review, adidas, Coopers,Samsonite, TaylorMade, John Frieda, and theVictoria Racing Club.Our full service digital capabilities enable usto build and enhance consumer relationshipsthrough digital communications and loyaltyprograms across web, email, mobile and social.Adam PosnerCEODirectivityPete NobleCEOCitrus
  53. 53. 49Directivityt. 0433 818190e. adam@directivity.com.auLevel 7, 390 St Kilda RoadMelbourneVictoria Australia 3004www.directivity.com.auCitrust. +613 9681 5333e. info@citrus.com.auLevel 8, 100 Albert RoadSouth MelbourneVictoria Australia 3205www.citrus.com.au

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