Coles, Woolworths rewards programs: Do they actually work?
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The popularisation of rewards programs in Australia has seen a shift in the way businesses operate and how customers are treated. In the past, businesses would offer loyalty cards and rewards to their most frequent customers as a way of saying thank you for their business. However, with the increase in competition, businesses are now offering rewards to all customers as a way of enticing them to shop with them.
According to the 2019 Loyalty & Reward Co report, which was commissioned by the Australian Competition and Consumer Commission (ACCC), almost 80 per cent of Australians are participants in at least one loyalty program.
Now, the question is do these loyalty programs do anything that can benefit shoppers or do people just sign up for them out of habit?
In this article, we take a closer look at Australia's biggest rewards programs and examine whether they have any use to consumers.
Major retailers and their rewards programs
Currently, the country has two significant rewards programs: Flybuys and Everyday Rewards.
Flybuys has teamed up with Coles, Liquorland, Bunnings, Kmart, Officeworks, and Target to offer their rewards programs while Woolworths, Caltex, BWS, Big W, Bupa, and Qantas Frequent Flyer are partners of Everyday Rewards.
Additionally, other leading retailers, such as IGA and Myer, offer their own rewards schemes. Meanwhile, ALDI lacks a rewards program in favour of focusing on fostering customer loyalty through low prices.
Rewards programs are popular in Australia, with 80 per cent of Australians participating in at least one loyalty program. Credit: Getty Images.
Do members really get benefits from the programs?
In an effort to maximise their financial savings, Australia's most savvy customers are making the most of their membership privileges in loyalty programs. But, do they really help?
The simple answer is yes, they do help customers save a few dollars on their purchases.
The Flybuys 50, a collection of Australia's top Flybuys point earners, may serve as the best example of the benefits of maximising your rewards program.
Members of the Flybuys 50 were able to get their hands on a variety of goods, services, and experiences, including ‘free’ flights, microwaves, and a variety of other items after investing their time and effort in taking advantage of their customer loyalty memberships.
The Flybuys 50 members also shared their best practices to make use of this program, sharing that some of them include using a credit card associated with a supermarket and bundling it with insurance policies as well as choosing to spend with partner businesses.
Tips on getting the most out of your loyalty rewards membership
By 'stacking' or accumulating points, which can be done in the following ways, loyalty program advantages can be unlocked as quickly as possible:
Is there any downside to loyalty programs?
Macquarie University Business School Professor Jana Bowden said that as living expenses skyrocketed, loyalty programs offered families a practical way to save money.
She explained: 'With the cost-of-living crisis hitting consumers hard, and seemingly no relief in sight, a lot of Aussies are looking for ways to save money.'
'One way consumers save at the supermarket checkout is through signing up to supermarket loyalty programs, with 4 in 5 Aussies belonging to Woolworths and Coles' programs.'
'Free to sign up to, there is really no downside to consumers joining the programs.'
The trade-off that customers need to know
While there are many benefits, consumers should know that their 'spend data,' which allows businesses access to information about what they buy, when they buy it, how much they buy, and how often they buy it, is a trade-off for joining a rewards program.
But, don't fret, these ' data tradeoffs' is not necessarily a bad thing according to QUT Business School Marketing and Consumer Behaviour professor Gary Mortimer.
He explained: 'Ultimately when it comes down to food shopping, we are not necessarily loyal to any supermarket or food store.'
According to research, the majority of consumers would typically shop at least two, if not three, brands of supermarkets or retailers over the course of a fortnight to find deals and save money.
'So, the idea of a loyalty card that you are only loyal to one supermarket is probably not entirely correct,' Professor Mortimer added.
'There's nothing stopping a shopper from having a Flybuys card and an Everyday Rewards card and taking advantage of both retailers' offers.'
'However, in saying that, it is ultimately money for nothing; it costs nothing to enrol in these schemes.'
Rewards program members should be aware of the data tradeoffs that come with their memberships. Credit: Creative Commons.
It is also worth noting that Woolworths offers the Everyday Further plan, which offers extra benefits and costs $7 per month or $59 per year. However, many online supporters are content to absorb the additional expense considering the number of points and prizes that are returned to balance this.
Prof Mortimer said: 'Yes, you give away some of your data, as in your purchase data, but in return you get points. But not just points, you also get discounts.'
'Many plans, or loyalty programs like Woolworths, will give you $10 cash back at some point, but supermarket retailers will certainly use that data, in order to more effectively target you with relevant offers, so there is a bit of a ‘quid pro quo’. And that's sort of the relationship that exists.'
'The other thing is that these are sent to you offering great discounts that you may not get if you are not a particular member of a loyalty program.'
The marketing expert also commented on the age-old assumption that rewards schemes encourage customers to spend more money on items that they don't need.
'I don’t think being in a loyalty program is going to make you buy products that you don't particularly want,' he said.
'I'd imagine even the most active user is not going to go out and buy four or five tubs of laundry detergent in order to maximise points. But they'll certainly switch brands to maximise points if they are running out of laundry detergent.'
Knowing the important information
To make the most of loyalty programs, Professor Bowden advised customers to become fully acquainted with all of their terms and benefits.
She remarked: 'It's all about two things: knowing what you are signing up to, and why the brand is offering the program, as well as knowing how you can use these programs to maximise the value from them.'
'Loyalty programs are strategic tools. They also enable the supermarkets to access and harvest your spend data to target you more effectively.'
'If you know this, if you are comfortable as a consumer handing over your data and information, if you are willing to be marketed to and if you know you are savvy enough to use the program to your benefit, then there's no reason not to sign up to a loyalty program.'
You can maximise the benefits of these loyalty programs if you equip yourself with the proper information regarding their use. Credit: news.com.au.
Professor Bowden also emphasised the ways that consumers were maximising the advantages of loyalty programs.
'Savvy shoppers can concentrate their weekly shop at one of the supermarkets so that they can accumulate points and apply these for discounts or rewards,' she said.
'The majority of consumers, 62 per cent, use their points to claim cashback rewards on their weekly shop.'
'Understanding how the loyalty offer algorithms work can help consumers to take greater advantage of the program's benefits. For example, holding off on some specific product purchases can lead the loyalty algorithm to generate even better points offers on the same products at a later date. Clued-in shoppers who have time can game the system in this way.'
'Consumers also use their points to collect frequent flyer points, with 16 per cent of consumers cashing points in for flights. Social media is rife with stories of smart shoppers who have used hundreds of thousands of points to fund international trips.'
Regarding the dangers of loyalty programs, Professor Bowden warned that consumers may overpay if they pursue advantages through certain promotions.
She added: 'But there is a buyer beware here.'
'Whilst the collector programs are fun for families, spending in order to collect these items can lead to overspending. Data shows these deals increase basket size sales for the supermarkets as well as transaction frequency.'
More tips for shoppers
To make sure you're maximising the benefits of your loyalty program, consider the following helpful tips:
1. Only sign up for a loyalty program if you can get clear rewards from doing so.
2. Always try to only purchase what you need. Keep to your game plan.
3. Look for discounts on the things you purchase, then purchase them when the price is right.
4. Bulk buy and stock up if the deal is good enough that you will be ahead in the long run.
5. Research sales at various supermarkets to ensure you are getting the best value possible.
6. If you have points, track them and use them.
There's no question that rewards programs are popular in Australia. So, if you're part of these schemes, you need to make sure that you're getting the most value from them!
We hope this article helps you with collecting points. If you know other tips for maximising your loyalty program memberships, please share them with us in the comments below so other members of the SDC can use them too!
According to the 2019 Loyalty & Reward Co report, which was commissioned by the Australian Competition and Consumer Commission (ACCC), almost 80 per cent of Australians are participants in at least one loyalty program.
Now, the question is do these loyalty programs do anything that can benefit shoppers or do people just sign up for them out of habit?
In this article, we take a closer look at Australia's biggest rewards programs and examine whether they have any use to consumers.
Major retailers and their rewards programs
Currently, the country has two significant rewards programs: Flybuys and Everyday Rewards.
Flybuys has teamed up with Coles, Liquorland, Bunnings, Kmart, Officeworks, and Target to offer their rewards programs while Woolworths, Caltex, BWS, Big W, Bupa, and Qantas Frequent Flyer are partners of Everyday Rewards.
Additionally, other leading retailers, such as IGA and Myer, offer their own rewards schemes. Meanwhile, ALDI lacks a rewards program in favour of focusing on fostering customer loyalty through low prices.
Rewards programs are popular in Australia, with 80 per cent of Australians participating in at least one loyalty program. Credit: Getty Images.
Do members really get benefits from the programs?
In an effort to maximise their financial savings, Australia's most savvy customers are making the most of their membership privileges in loyalty programs. But, do they really help?
The simple answer is yes, they do help customers save a few dollars on their purchases.
The Flybuys 50, a collection of Australia's top Flybuys point earners, may serve as the best example of the benefits of maximising your rewards program.
Members of the Flybuys 50 were able to get their hands on a variety of goods, services, and experiences, including ‘free’ flights, microwaves, and a variety of other items after investing their time and effort in taking advantage of their customer loyalty memberships.
The Flybuys 50 members also shared their best practices to make use of this program, sharing that some of them include using a credit card associated with a supermarket and bundling it with insurance policies as well as choosing to spend with partner businesses.
Tips on getting the most out of your loyalty rewards membership
By 'stacking' or accumulating points, which can be done in the following ways, loyalty program advantages can be unlocked as quickly as possible:
- Getting all family members involved
- Completing online surveys on the Flybuys website
- Activating all the offers sent to your account via email or in-app
- Making a large purchase while bonus points are available
- Earning points from travel expenses
- Downloading and using any relevant rewards program apps
- Reducing spending frequency so that you do more ‘big spends’
Is there any downside to loyalty programs?
Macquarie University Business School Professor Jana Bowden said that as living expenses skyrocketed, loyalty programs offered families a practical way to save money.
She explained: 'With the cost-of-living crisis hitting consumers hard, and seemingly no relief in sight, a lot of Aussies are looking for ways to save money.'
'One way consumers save at the supermarket checkout is through signing up to supermarket loyalty programs, with 4 in 5 Aussies belonging to Woolworths and Coles' programs.'
'Free to sign up to, there is really no downside to consumers joining the programs.'
The trade-off that customers need to know
While there are many benefits, consumers should know that their 'spend data,' which allows businesses access to information about what they buy, when they buy it, how much they buy, and how often they buy it, is a trade-off for joining a rewards program.
But, don't fret, these ' data tradeoffs' is not necessarily a bad thing according to QUT Business School Marketing and Consumer Behaviour professor Gary Mortimer.
He explained: 'Ultimately when it comes down to food shopping, we are not necessarily loyal to any supermarket or food store.'
According to research, the majority of consumers would typically shop at least two, if not three, brands of supermarkets or retailers over the course of a fortnight to find deals and save money.
'So, the idea of a loyalty card that you are only loyal to one supermarket is probably not entirely correct,' Professor Mortimer added.
'There's nothing stopping a shopper from having a Flybuys card and an Everyday Rewards card and taking advantage of both retailers' offers.'
'However, in saying that, it is ultimately money for nothing; it costs nothing to enrol in these schemes.'
Rewards program members should be aware of the data tradeoffs that come with their memberships. Credit: Creative Commons.
It is also worth noting that Woolworths offers the Everyday Further plan, which offers extra benefits and costs $7 per month or $59 per year. However, many online supporters are content to absorb the additional expense considering the number of points and prizes that are returned to balance this.
Prof Mortimer said: 'Yes, you give away some of your data, as in your purchase data, but in return you get points. But not just points, you also get discounts.'
'Many plans, or loyalty programs like Woolworths, will give you $10 cash back at some point, but supermarket retailers will certainly use that data, in order to more effectively target you with relevant offers, so there is a bit of a ‘quid pro quo’. And that's sort of the relationship that exists.'
'The other thing is that these are sent to you offering great discounts that you may not get if you are not a particular member of a loyalty program.'
The marketing expert also commented on the age-old assumption that rewards schemes encourage customers to spend more money on items that they don't need.
'I don’t think being in a loyalty program is going to make you buy products that you don't particularly want,' he said.
'I'd imagine even the most active user is not going to go out and buy four or five tubs of laundry detergent in order to maximise points. But they'll certainly switch brands to maximise points if they are running out of laundry detergent.'
Knowing the important information
To make the most of loyalty programs, Professor Bowden advised customers to become fully acquainted with all of their terms and benefits.
She remarked: 'It's all about two things: knowing what you are signing up to, and why the brand is offering the program, as well as knowing how you can use these programs to maximise the value from them.'
'Loyalty programs are strategic tools. They also enable the supermarkets to access and harvest your spend data to target you more effectively.'
'If you know this, if you are comfortable as a consumer handing over your data and information, if you are willing to be marketed to and if you know you are savvy enough to use the program to your benefit, then there's no reason not to sign up to a loyalty program.'
You can maximise the benefits of these loyalty programs if you equip yourself with the proper information regarding their use. Credit: news.com.au.
Professor Bowden also emphasised the ways that consumers were maximising the advantages of loyalty programs.
'Savvy shoppers can concentrate their weekly shop at one of the supermarkets so that they can accumulate points and apply these for discounts or rewards,' she said.
'The majority of consumers, 62 per cent, use their points to claim cashback rewards on their weekly shop.'
'Understanding how the loyalty offer algorithms work can help consumers to take greater advantage of the program's benefits. For example, holding off on some specific product purchases can lead the loyalty algorithm to generate even better points offers on the same products at a later date. Clued-in shoppers who have time can game the system in this way.'
'Consumers also use their points to collect frequent flyer points, with 16 per cent of consumers cashing points in for flights. Social media is rife with stories of smart shoppers who have used hundreds of thousands of points to fund international trips.'
Regarding the dangers of loyalty programs, Professor Bowden warned that consumers may overpay if they pursue advantages through certain promotions.
She added: 'But there is a buyer beware here.'
'Whilst the collector programs are fun for families, spending in order to collect these items can lead to overspending. Data shows these deals increase basket size sales for the supermarkets as well as transaction frequency.'
More tips for shoppers
To make sure you're maximising the benefits of your loyalty program, consider the following helpful tips:
1. Only sign up for a loyalty program if you can get clear rewards from doing so.
2. Always try to only purchase what you need. Keep to your game plan.
3. Look for discounts on the things you purchase, then purchase them when the price is right.
4. Bulk buy and stock up if the deal is good enough that you will be ahead in the long run.
5. Research sales at various supermarkets to ensure you are getting the best value possible.
6. If you have points, track them and use them.
There's no question that rewards programs are popular in Australia. So, if you're part of these schemes, you need to make sure that you're getting the most value from them!
We hope this article helps you with collecting points. If you know other tips for maximising your loyalty program memberships, please share them with us in the comments below so other members of the SDC can use them too!