Customer Loyalty Programs – Creepy stalker or loyal friend?

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I am a shopper, I love shopping. The only problem is that it is the end of the month and I am broke. Still, I fulfilled my desire to look and salivate at things that I don’t really need and contemplate whether I want to buy it or not. I visited Target, Coles, Woolworths, Myer and K-Mart last week and yes, I ended up buying stuff that I may not use at all.

I hate using the self-checkouts at these stores. Every time I use these counters, I end up with embarrassment dripping off of my face while an attendant helps me out and all the other customers look at me like I don’t know how to operate a computer. Due to this tiny issue, I always use the manned cash register. That too has its own problems.

“Do you have any flybuys at all?”

“No”

“Would you like to sign up for it? It’s really easy, you just have to go to this website and put in your details and accumulate points”

“No, Thank you”
The one singular conversation I have with every cashier which results in awkwardness for all parties involved. I might stop grocery shopping all together.

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(Source: Business Propel, 2014)

So what’s this whole thing about Flybuys and Woolworths Everyday Rewards and Myer One about? Do they really care about me that much that they give me special discounts while every other regular joe pays .50c more for a pack of ready to eat noodles? Or is it them trying to stalk on my buying patterns to come up with new marketing decisions to make me want to buy more from them.

In my opinion, it’s the latter.

A customer loyalty/rewards program is an initiative designed by retail outlets to accumulate and analyze marketing metrics.  Marketing metrics are measures that help data crunchers analyze, compare and interpret performance. This data can help managers make the right marketing decision. These metrics provide an idea of how the business is doing and how it can improve the current situation. It helps bring a sense of accountability to marketing.  There are several different marketing metrics used by organisations throughout the world to gain a better understanding of what customers like. Some of them include : Financial, Behavioural, Memory, Physical Availability, Marketing Activity and Customer Profile Metrics.

The loyalty programs that I have mentioned above are a mix of both Customer Profile metrics and Behavioural Metrics. The former helps describes a customer by finding out their age, income,  gender, retail branches used, and what kind of things do I buy being from a particular segment of the market while the latter helps explains how many units of a brand have been sold, how often do customers visit an outlet and how often do they come back for more.

Screen Shot 2016-05-23 at 10.07.14 PM.png (Source: IHG trends report challenges brands to build “trust capital”’ 2008)

Scanning a rewards card pushes data to the analysts waiting to understand what you buy and what more you can buy. They get a complete account of each brand, product and the quantities they are purchased in. Using these techniques, retailers launch special discounts and perks for rewards/loyalty card members to ensure they come back for more all the while being able to accumulate points which can be converted into dollars that can only be spent at specific outlets mentioned. If you look at it from the outside, it is one elaborate scheme to squeeze more money out of customers while giving them very less in return.

The one customer loyalty program that I really love is the Starbucks “My Starbucks Rewards” program. Customers can sign up by loading any denomination into a gift card, register it and then use it to buy coffee and accumulate stars. One dollar gives 2 stars, earning 5 stars gets customers to the green level which enables them to get a free refill on coffee among other perks and accumulating 30 stars gets them to the Gold level where a free drink is given for every 15 points earned.

I understand that loyalty programs are a 2 way street. It can’t be just about the consumer. It is widely known that loyalty and rewards programs helps boost profits immensely. It provides essential data for analyzing the market and increases sales. Coles and Woolworths are going to great lengths to understand the customer. They want to increase Customer Lifetime Value by building customer relationships by intelligently responding to new challenges in the market while keeping customers happy and making them come back for more. This process shouldn’t just be about knowing what I buy, it should be about fairer pricing and rewards policies, availability of a diverse range of products and the creation of a core offering that I simply cannot refuse. Starbucks’s core offering is great coffee in a fantastic environment with their rewards program saying a thank you for all the visits by giving free coffee. With Coles and Woolworths, it feels like a mundane process whereas Starbucks’ offerings feels like they care and I know for a fact that both companies are only looking at increasing profitability.

So until Coles, Myer and Woolworths come up with modifications to the existing loyalty rewards program, you data crunchers will never find out how many packets of crisps I gorge on in a month.

REFERENCE LIST

 

 

Student Name:Archana Ramakrishnan

Student No: 215228701

 

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