A study ‘for love or money 2015’ reveals that Australians, particularly men, are more active in loyalty programs than ever before, boosting retail bottom lines. This is the third annual research study and provides a consumer pulse on loyalty programs, new insights that impact on customer loyalty and benchmarks results over the last three years.
The study also reveals 59% of members are active in all of their programs, a 31% incremental increase from 2013. They’re also spending more, with 82% buying more from brands with a program and 16% purchasing items they didn’t need just to earn rewards.
Commissioned by strategic loyalty consultancy Directivity and retention agency Citrus, the study, Report co-author and CEO of Directivity Adam Posner, (pictured) said while some retailers question the value of loyalty programs, the research confirms that successful programs have evolved from cost centres into key profit drivers, and provide a key competitive advantage for brands.
“This research is a good news story for retailers. While consumers are telling us they’re more selective with their programs, they’re also more active and engaged,” Posner said.
“Programs also drive impulse purchasing as evidenced by 16% of members who buy things they didn’t need just to earn rewards, which jumps to 26% for men under 45,” he said. “If you do the maths, that’s a reasonable additional spend that goes straight to the bottom line,” he said.
According to the research, 48% of members believe programs have improved, up from 41% in 2013. Additionally, fewer people are dropping out of programs, with member defection falling from 26% in 2013 to 22% this year.
“Reduced defection can be attributed to the fact that retailers are keeping their programs simple, with only 12% of people saying programs are too confusing, down from 19% two years ago,” said report co-author and CEO of Citrus, Peter Noble.
In other key findings the report also reveals:
- Coles flybuys is still no. 1: Coles flybuys program retained first place in the Top 10 unprompted most mentioned programs as ‘doing a very good job’ (33%), increasing its lead over Woolworths everyday rewards (13%). Qantas Frequent Flyer remained in third place since the first study in 2013.
- Don’t ditch the card: 67% of members still prefer a traditional loyalty card while only 10% prefer a mobile app to interact with a program.
Noble said that they found this one of the most surprising findings of all. “It goes to show that getting the card into a person’s wallet or purse is a critical piece of brand real estate and connection.”
When it comes to changes in benefits that members want, money still matters, with the top program benefit being immediate price discounts, followed by redeemable points-based programs. In addition, members showed an increased preference for exclusive offers (moving from fourth place to third).
The report also reveals members want to be rewarded for interacting with brands, with 53% indicating they want to be rewarded for answering surveys and 46 % for opening emails.
“While this is a good report card for retailers, consumers are more selective with their programs so retail brands need to work hard to retain that purse position,” Posner said. “Programs that are simple, keep cash-based rewards and exclusive offers in the mix and more opportunities to earn will continue to motivate members’ loyalty,” he said.
2015 Australia’s top 10 most mentioned programs (unprompted) as ‘doing a very good job’:
- Coles flybuys
- Woolworths everyday rewards
- Qantas Frequent Flyer
- Virgin Velocity
- MYER one
- Priceline Sisterclub
- Westpac Altitude Rewards
- Commbank Awards
- Hoyts Rewards
About the research
The research was conducted by First Point Research and Consulting in the first quarter of 2015 through a national online panel of 1,367 consumers of men and women aged 18+ who are members of at least one loyalty program. The research was structured to gain quantitative results with comparative analysis as well as qualitative insights.