Author Kristy Loveday
Coles Flybuys to Nowhere…
As a customer, we are sold on the benefits of accumulating points in the hope of going on our dream holiday, but rarely do we stop to consider the benefit of the Flybuys program for Coles. The Coles Flybuys program captures mass amounts of data about our shopping behaviours every time we present our card. Flybuys along with similar loyalty reward programs use this data to market products to us. Is this really a reward program or are we fooled into thinking so? Who has the greater gain, Flybuys or customers? Do the points we gain amount to much? Is this indirect market research at its best?
Flybuys was established in 1994 by Coles, NAB and Shell. In 2011 Coles took over full ownership of the program and its ten million members at that time (Sprague, 2011). Flybuys is a rewards program, where for every dollar you spend you collect reward points. These reward points can then be used to either make a purchase, with one of the programs twenty-five alliance partners, receive a gift card for certain stores within the alliance, or receive money off your purchases made at Coles. In 2015, flybuys was judged Australia’s most popular rewards program according to independent research published by First Point Research and Consulting (Coles, 2015).
Flybuys gained popularity faster than other rewards programs as it was one of the first to launch a loyalty/rewards program in the grocery segment market. In an attempt to challenge the popularity of Flybuys, Woolworths decided to revamp their rewards program. Woolworths undertook Catalyst Research (Catalyst) to perform market research to address how they should revise their program. Catalyst engaged the research technique of using surveys for assessing customer satisfaction (Iacobucci, 2014). However, Woolworths has received backlash about their revised rewards program, embedding Flybuys as the preferred rewards product.
Every time a customer presents their Flybuys card, personal data such as location, shopping times, dates, frequency and customer purchases are recorded. The data then becomes Coles property. This data is known as scanner data and links the information to each customer (Robertson Bednall, 2016). A recent article (Thompson, 2014) claimed Coles shares this data with up to thirty other countries. So, how can we protect ourselves from other countries using this data when they do not need to adhere to the Australian privacy laws? Is it more important to have privacy over discount?
The rewards that customers receive varies between 0.5% and 0.0005% return on each dollar spent. So we must question, do we actually get any reward at all? With the average earning at one point per dollar, for both Coles and Woolworths reward programs, it’s a slow road to earn ten thousand points for the reward of a fifty dollar gift card. Recent media reported “supermarket loyalty schemes deliver greater savings and rewards to disloyal customers, new research reveals” (Rolf, 2014). If supermarkets are providing greater rewards to disloyal customers, is the scheme a loyalty program at all? It hardly seems fair to the loyal shopper.
Another issue lies in the lack of transparency companies must provide to customers when utilising scanner data. With technology so advanced, it is possible customer profiles could be matched with facial recognition to drive more personalised shopping experiences. If the scanner data was then compromised in another country Coles shares their data with, identities could be leaked across the globe. We never think to question when we sign up to a rewards program what data is captured and how it is used. It should be questioned, are customers really the ones who are rewarded for shopping at Coles, or is it Coles being rewarded for customers blindly handing over personal information?
Thompson, 2014, The Sydney Morning Herald, http://www.smh.com.au/national/coles-shares-personal-flybuys-and-online-data-20140308-34efw.html
Sprague, 2011, Financial Review, http://www.afr.com/business/coles-captures-flybuys-20110216-ilqqo
Coles, 2015, Coles Annual Report
Iacobucci, 2014, Marketing Management
Robertson, Bednall 2016, MPK732 Marketing Management, lecture 1, week 5: Marketing Research, lecture PowerPoint slides, viewed 11 April 2016, https://echosystem.deakin.edu.au/ess/portal/section/4948ea72-f292-4b46-a8d5-306108d931be/