Everyday Rewards… Pulling the Wool over our eyes

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Loyalty is big business, with many consumers willing to hand over their personal details in exchange for a card, hoping it will provide them shopping benefits. A recent market industry study suggests that when choosing between two competing brands, 55% of buyers said they will choose the one with the loyalty program.

With consumers having more and more choices when it comes to where they buy their groceries, are loyalty cards rewarding shoppers with what they want or are they just profiting the big supermarkets? The Woolworths’ Everyday Rewards program has close to nine million members, who receive discounts on specific (orange non-essential ticketed) items in-store. The purchase discounts are accrued only on products that have the orange ticket, these add up to monetary savings in future at the check-out. A recent Monash University study suggests that a typical loyalty card shopper will save about $1.25 per $100 spent. That is $1.25 to spend on items selected by the supermarket… sounds like an everyday reward right?

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A measure of success

Loyalty programs provide retailers with a significant amount of data-metrics and information about the consumers and their purchasing behaviors.

Marketing metrics can be used to help quantify marketing actions and their impact on financial statements, and can be used to evaluate past performance and to help fine tune future strategies. Collected data over time can provide a broader understanding of a customer-type and can formulate strategies based around this – taking marketing from being seen as just a “superstition” into more of a science.

Metrics measurements can be displayed as follows:

MMetrics

And the reward goes to…

Loyalty programs provide organisations with a significant volume of data. From the moment the customer signs up, (where they put in their gender, age, address, personal situation and shopping preferences), this information is recorded. Once the customer starts making transactions using the loyalty card, data starts being collected and a profile is immediately formed, tracking buying habits; when, what and how much of these items you buy. Or as Woolworths puts it collecting data: to “learn of your likely preferences so that we may promote our goods and services to you in a way which may be of most interest to you“. In other words, to try to find new ways to make you spend more, they will offer you targeted deals to try to encourage greater spend. This is targeted marketing at its best; relying on quantifiable collated metrics over time that gets better with age.

Big data is big business and is helping to transform the way companies market. Woolworths spent $20M to acquire a major share in the analytics firm Quantium, to help them manage their data more effectively and to help them build some more financially quantifiable ROI from their marketing – taking it “from data to dividend“. The results of this business move, opened pathways for Woolworths to then be able to cross-examine their loyalty card purchasing habits with claims made in their Woolworths – branded insurance. This helped them to predict risk and allowed them to market better to low-risk customers (or to those who drank more milk and ate more red meat), whilst also helping them to save on advertising.

The benefits of loyalty programs are clear for big business, with them collecting large amounts of quantifiable data and deeper insights over periods of time. But… to the consumer there is a trade-off between the small rewards and maintaining your privacy.

drevil

So shall we all hide under rocks to escape the big data targeted metrics marketing revolution? That is one option, or you can just pay cash…

 

By Damien Mulhall Student ID: 212241227 WordPress User Name: damienmu

 

References

Angus Kidman 2016, Woolworths Everyday Rewards becomes Woolworths Rewards: Everything you need to know, Retrieved 20th April 2016, <http://www.finder.com.au/woolworths-rewards-faq>.

Author Unknown 2013, Big data gets bigger: Supermarkets approaching 10 million FlyBuys or Everyday Rewards cardholders, Retrieved 20th April 2016, <http://www.roymorgan.com/findings/5277-big-data-at-supermarkets-flybuys-vs-everyday-rewards-june-2013-201311032158>.

Daniel Graham 2016, Discounts for data, Retrieved 20th April 2016, <https://www.choice.com.au/shopping/consumer-rights-and-advice/your-rights/articles/loyalty-program-data-collection>.

David Flynn 2016, Woolworths brings back Qantas frequent flyer points for shoppers, Retrieved 20th April 2016, <http://www.ausbt.com.au/woolworths-brings-back-qantas-frequent-flyer-points-for-shoppers>.

Iacobucci, D. 2015. Marketing Management. First Edition. Cengage Learning, Stamford, USA

Jayson DeMers 2014, 10 Online Marketing Metrics You Need To Be Measuring, Retrieved 20th April 2016, <http://www.forbes.com/sites/jaysondemers/2014/08/15/10-online-marketing-metrics-you-need-to-be-measuring/#5c96ba5f355f>.

Jemima Whyte, 2015, Which supermarket loyalty points get you a better deal: Coles or Woolworths?, Retrieved 20th April 2016, <http://www.afr.com/business/retail/which-supermarket-loyalty-points-get-you-a-better-deal-coles-or-woolworths-20151028-gkl7k4>.

Kevin Cain 2012, Measuring Marketing Effectiveness: 6 Metrics You Need to Track, Retrieved 20th April 2016, <http://contentmarketinginstitute.com/2012/10/measuring-marketing-effectiveness-metrics/>.

Monash Business School, ACRS Review of Woolworths ‘Woolworths Rewards’ program, Retrieved 20th April 2016, <http://business.monash.edu/__data/assets/pdf_file/0003/356556/ACRS-Review-of-Woolworths-Rewards-program.pdf>.

Myriam Robin 2013, Why loyalty cards are Woolworths’ secret weapon in supermarket wars, Retrieved 20th April 2016, <http://www.smartcompany.com.au/people-human-resources/managing/39563-why-loyalty-cards-are-woolworths-secret-weapon-in-supermarket-wars-2/>.

Natasha Wallace, Sarah Whyte 2013, Supermarket spies: big retail has you in its sights, Retrieved 20th April 2016, <http://www.smh.com.au/digital-life/consumer-security/supermarket-spies-big-retail-has-you-in-its-sights-20130914-2trko.html>.

Professor David J. Reibstein 2013, The Importance of Marketing Metrics, Retrieved 20th April 2016, <http://www.insead.edu/executive-education/interviews/marketing-sales/the-importance-of-marketing-metrics>.

Rachel Browne 2015, The price of loyalty: are rewards schemes worth it?, Retrieved 20th April 2016, <http://www.smh.com.au/business/retail/the-price-of-loyalty-are-rewards-schemes-worth-it-20151029-gklqxh.html>.

Sharp, B 2013, ‘Marketing: theory, evidence, practice’, Oxford University Press, Melbourne, Australia

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