Woolworths Rewards: The Verdict

So the new Woolworths Rewards program has been active for almost two months now and I must say I think Woolworths may have got it right. There are product categories that give shoppers the opportunity to earn bonus points and including BWS and Woolworths petrol stores in the mix has helped shoppers earn a substantial amount of points.

There are also promotions that enable customers to earn additional points by spending specified amounts of money each week for a certain amount of time if they wish. But even at 1 point per dollar spent, I think Woolworths has gone a long way to try and win back some of the customers they lost to Flybuys.

I personally think that it is now one of the better loyalty schemes out there at the moment. What are your thoughts?

What Makes a Good Loyalty Program?

In my last post I spoke about the Woolworths Rewards loyalty program and where it missed the mark as far as loyalty programs go. I thought I would continue on with that theme and look at what makes a good loyalty program

Almost all retailers have a loyalty program, you could say it acts as a guarantee of future purchases by customers. But what makes us want to join a loyalty program? Is it that we love the brand and want to be kept updated with product information and sales? Do we want to earn cash back or earn points that can be redeemed for products. Whatever the reason we are a population that loves a reward. 

In 2013 the Australian Marketing Institute conducted a study of loyalty programs. They found that 88% of consumers over the age of 16 were part of a loyalty program and 11% of consumers were members of more than 10 programs. 

That is a lot of customer data being made available for marketing purposes. So what makes us join and remain loyal to these programs? With so many programs out there how do you choose? Do you want membership to be free or are you happy to pay a membership fee knowing that the rewards will far outweigh any investment?

A common opinion is that a loyalty program that offers the opportunity to move up membership tiers is quite successful. A perfect example of this is the Qantas Frequent Flyer program. When you join you are on the bronze membership level. Now while you accumulate points whenever you fly or spend money at an affiliate, the real value is in accumulating status credits. Status credits can only be obtained by flying and depending on your destination that will determine how many status credits you earn. Once you have earned 300 status credits you go up to the Silver membership. This is where Qantas is smart. In addition to seating privileges and 50% bonus on your points,  as a gift for achieving Silver status, they give you two passes to the Qantas club. To maintain Silver status you need to accumulate 250 status credits but as you’ve had a taste of the Qantas Club, you now want to earn enough status credits to obtain a Gold membership which entitles you to access to the Global Lounges. So now you only fly Qantas so you can earn those coveted status credits regardless of how much more you are spending flying with Qantas rather than one of their competitors. Pretty smart!

So what will you be looking for when you join your next loyalty program?

Where Does Your Loyalty Lie?

Loyalty programs can play a big part in our behaviour as shoppers. They are also a valuable tool for retailers when it comes to collecting market research data. A good loyalty program can determine whether or not we shop with a particular retailer. Recently the Woolworths Rewards program has come under fire by shoppers and media.

I have to wonder what the Woolworths marketing department were thinking when they developed this program. In theory they had a good idea but when executed it fell short. If you’re not familiar with the program Woolworths offer a dollar amount cash back on products displaying their reward dollar ticket. Once you’ve accumulated $10, this comes off your next shop. 

There were a couple of problems with this. Firstly, they had a good loyalty program whereby you earned Qantas Frequent Flyer points when you spent over $30 in one transaction. This proved valuable to a lot of shoppers. When they introduced the reward dollars program they abolished their affiliation with Qantas. The other issue is there aren’t many products that are relevant to most shoppers that carry a reward, so to achieve a $10 cash back is no easy feat.

For months now social media has been inundated with shoppers complaining about the lack of reward products on offer therefore resulting in thousands of dollars being spent with no reward. A lot of these customers mentioned they no longer scan their card when they shop there, meaning that Woolworths doesn't get the valuable market research data. Quite a few customers mentioned going back to Coles for their Flybuys program.

While the Woolies marketing department may have got it wrong when it came to the new rewards program, they are at least listening. At the end of the month they will launch their new loyalty program.

They have once again reinstated their affiliation with Qantas and now shoppers will earn 1 point for every dollar they spend in Woolworths, BWS and Caltex. Once a total of 2,000 points has been accumulated, shoppers will get $10 off their shop. My question is: how long will it take to accumulate 2,000 points? It seems they’ve been paying attention to Coles and their Flybuys program. You can redeem 2,000 Flybuys points for $10 off your shop but its not at all hard to get to 2,000 points if you shop at all the Flybuys partners and take advantage of their bonus points offers. 

If Woolworths will be offering bonus points at any given time it may not take long at all to hit 2,000 points but if you base it on an average of $100 - $120 a week between groceries and fuel it will take approximately four to five months to get a reward. Will this be enough for shoppers? Time will tell.