Loyalty cards are mutually beneficial. Supermarkets get valuable detailed information on their shoppers and shoppers get to enjoy savings and various rewards from their purchases.
Australian consumers are saying they want discounts on products they buy regularly. In return, retailers gain in-depth knowledge on their customers shopping behaviour. Thus, you get shopper retention and consumer insights to build more effective marketing strategies.
For the two supermarket giants Woolworths and Coles, which are still battling it out with hefty discounts and re-vamped loyalty cards, they are no doubt benefitting from all the swiping their customers are doing.
That is, the transactional information they already collect, can now be matched with basic consumer demographics of the loyalty card holder. This reveals real patterns of consumer purchasing behaviour. It lets the supermarkets gauge how their customers react to substitutes, their private labels, new products etc.
So far Woolworths has 6.5 million loyalty card members regularly using their cards, whereas Coles has 5 million.
In response to this, Coles has stated that it's rewards program was not created to obtain customer data but more to give greater value to its customers, to say "thank you". Regardless of the intent, there is no denying you’d be silly not to make use of the information gathered!
Overall, the fundamental aim of a loyalty program is to create loyal customers. You give them value and reason to swipe, you get data, activate promotional activities from the results of the data, make them a relevant and appetising offer which encourages them to buy,swipe and stay. And repeat.
But, another issue is Australians are prone to shopping around. As Citigroup Equities Analyst, Craig Woolford puts it, "’The goal [of the programs] is customer loyalty. But cross-shopping in Australia is very high, so it remains to be seen whether these programs will genuinely create loyalty or just reward shoppers."
An interesting point, what do you think of the rewards programs? Do you use them? Are you "loyal", why, why not?
If you have more questions about customer loyalty or want to learn more about other strategies that work, or ones to avoid, there is a great loyalty event on in Melbourne this year. Click here to find out more.