Australian Loyalty Programs
Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior – behaviour which is potentially beneficial to the firm. They are generally used in retail marketing.
In marketing generally and in retailing more specifically, a loyalty card, rewards cards, point card, advantage card, or club card is a plastic or paper card, visually similar to a credit card or debit card, that identifies the card holder as a member in a loyalty program. Loyalty cards are a system of the loyalty business model. Cards typically have a barcode or magstripe that can be easily scanned, and some are even chip cards. Small keyring cards (also known as keytags) which serve as key fobs, are often used for convenience in carrying and ease of access.
By presenting the card, the purchaser is typically entitled to either a discount on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is the visible means of implementing a type of what economists call a two-part tariff.
Application forms usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store uses aggregate data internally (and sometimes externally) as part of its marketing research. These cards can be used to determine, for example, a given customer’s favorite brand of beer, or whether he or she is a vegetarian, what days they shop, what time, etc.
Where a customer has provided sufficient identifying information, the loyalty card may also be used to access such information to expedite verification, track purchasing behavior for further marketing efforts, or for other membership privileges (e.g., access to a club lounge in airports, using a frequent flyer card).
Some interesting facts about Australian Loyalty Programs according to a recent study titled, ‘For the Love of Money: 2013 Consumer Study into Australian Loyalty Programs:
- 88% of Australians over 16 are members of at least one program
- 11% of Australians are members of 10 or more programs
- Women are more likely to be members, but men are more actively involved with programs they are a member of
- 80% of people participating in loyalty programs want immediate discounts
- 45% of people in loyalty programs say they use all of the loyalty cards.
It is interesting to note that the top 10 Australian Loyalty Programs for 2013 as stated in the latest issues of Marketing Magazine include:
- Flybuys, Coles
- Everyday Rewards, Woolworths
- Qantas Frequent Flyer
- Myer One
- Velocity Frequent Flyer, Virgin Australia
- Commonwealth Bank of Australia Credit Card
- Rewards Central
According to the same article, there are basically three types of reward programs:
- Connector – enjoy special privileges and discounts and/or information without a purchase required.
- Collector – spend $ and collect points, stamps etc for free or money off purchase.
- Surprise and Delight – when members receive something unexpected just for being a member, and can also include incentive-based spending.
So, is a loyalty program relevant for your business? Some key questions to ask:
- What is the purpose and is the offer valued by customers?
- Do you have the proper IT support to ensure ease of use of cards and data?
- Is the added revenue and customer loyalty higher than the cost?
- Is the program sustainable?
Blog and tagged Hall of Fame Marketing Bendigo, Loyalty Programs, Target Marketing