Loyalty Programmes – Are You Dazed and Confused?

Posted 31 January 2017.

​By Ben Goodale, Managing Director, justONE

​Over the last couple of months, across New Zealand boardrooms, loyalty programmes have been a hot topic of conversation.

The soothsayers (who have often spouted that loyalty programmes are a thing of the past) clearly haven’t had their voices heard too much around here. Fly Buys, Air New Zealand Airpoints, New World Clubcard, Farmers, Mitre10, Smartfuel and Onecard have all seen change in the last few weeks – some of which is making a big difference to where and what you collect as a reward for your shopping loyalty.

Similarly, other players like Life Pharmacy have stepped up activity, Z has upped its value in the Fly Buys programme with the launch of Fly Buys Pumped, and other organisations are in the process of evolving their loyalty and rewards offerings.

Like many Kiwis, even educated experienced executives will be a bit confused by all the recent changes; there are more loyalty cards in market than ever before. The parallel ‘uncoupling’ of Air New Zealand Airpoints and Fly Buys, (while Onecard and Smartfuel got together), has led to inevitable noise and confusion. Along with that, some retailers are taking on more than one rewards currency, so you could be forgiven for needing an app to work it all out for you. But what does this mean and is it a bad thing?

Firstly, why are they doing it? Loyalty programmes are on the rise because businesses want to know who their customers are. They want to harness the behavioural data that a scheme collects to help them improve ranging and relevance and to drive preference. Having a direct, smart and relevant communication programme makes sense. And a strong loyalty scheme is a key brand pillar. That’s a lot of plus points.

There are some basic facts here. Shoppers spend and visit more because of these programmes. One US study found that “70% of consumers modify the when / where they purchase from in order to maximise points”[1]. However, does the same apply to New Zealand? Throughout programmes we’ve worked on, we’ve seen significant improvements in customer visitation based on launch, relaunch, or the implementation of simple and smart customer insight-driven mechanics to motivate shopping behavior. New World’s Clubcard success at the New Zealand Direct Marketing Awards over the last couple of years is testament to a significant increase in these metrics, and that was before their recent launch into North Island stores.

A good loyalty programme should be a pillar of your brand. Statistics here are compelling. In the US, “73% of loyalty programme members say they are more likely to recommend brands with good loyalty programmes[2].” And, from the same study, they found that “81 per cent of consumers are more likely to continue to do business with a brand that does offer a loyalty programme.[3]” Subway found that the launch of Subcard in New Zealand (a world first for Subway, and then again when launched on an app), afforded the brand valuable technology kudos and, in turn, Subcard holders became the most frequent and highest spending customers.

And it can provide true competitive advantage. In two words: big data. Loyalty programmes are increasingly appealing to companies as an opportunity to deliver customer-centric relationship programmes. The richness of data around sales – other things purchased, last purchase, value, competitor product purchasing, location, time, on sale or not – means there is huge opportunity to build sophisticated and effective marketing information systems that can precision target people who buy your products.

Are New Zealand brands using this now? Absolutely. Data is part of the compelling proposition of being in group schemes like Fly Buys or Airpoints.

There is a massive appetite for loyalty programmes in New Zealand – Kiwis love them. Consequently, the exciting thing with the ‘loyalty arms race’ is that there will be more, ever improving ways to connect relevantly with customers, reduce the wastage of untargeted marketing, and drive highly measurable sales.

[1] Source: The 2016 Bond Loyalty Report, Bond Brand Loyalty.

[2] Source: The 2016 Bond Loyalty Report, Bond Brand Loyalty

[3] Source: The 2016 Bond Loyalty Report, Bond Brand Loyalty