The phenomena right now is that these retail advertising networks which are driven by loyalty program data, are stealing market share dramatically from Google and Facebook. The primary reason is that the data is richer. They can see inside the basket. They see what the customers are actually buying at the unit level, at the product level, and they can prove that 'if you place an ad it's got me sales.' "
— Tim Tyler, managing partner Ellipsis and Company
Flybuys is Australia’s best calibrated loyalty program based on what actually matters to consumers, pipping Woolworths Everyday Rewards by the thinnest of margins, according to this year’s For Love or Money report from loyalty expertAdam Posner.
Amazon Prime came in third.
Anna Lee CEO of Flybuys told Mi3:“We’re beyond excited to be crowned Australia’s #1 Loyalty Program in this years’ For Love or Money report! We’ve held the top spot for many years now, and it’s still a huge pinch me moment for the business to continue to be recognised for how simple we are to use and the personalised value we provide to our members.”
And in acoincidental hat tip to the finding in the report that consumers are turning to their loyalty programs to buttress themselves against tougher economic circumstance— such as higher inflation— Lee said, “ I'm proud of our team for being recognised for their tireless efforts in providing value to Aussies for their everyday shop, which is needed now more than ever, and look forward to continuing to build on the great work that's brought us here.”
Accor Live Limitless, Ikea Family were the worst performers, with Marriott Bonvoy and Adairs Linen Lovers tying at third last, according to the index, although industry insiders say direct comparisons can miss some of the nuance.
This year the For Love or Money study – now in its 11th iteration has introduced a new Loyalty Program Experience Index which tracks 68 programs. The index is based on three dimensions – how simple it is, how personal it is and how valuable it is in the minds of consumers, with the third metricgetting a 65 per cent weighting, reflecting consumer preferences.
“The higher the SPVX index, the closer the program delivers to an optimum experience for the member based on how simple, personal and valuable it is,“ said Posner, the founder and CEO of The Point of Loyalty.
Two of Australia’s top three airline loyalty programs actually registered sub par index scores with Velocity Frequent Flyer (65.8), Qantas Frequent Flyer (66.7) recording scores below the index average of 68.6. Club Jetstar faired much better with a score of 73.2 seeing it comfortably in the top 10.
However, those results are likely an artefact of the frequency with which consumers engage with frequency flyer programs generally, said Tim Tyler, managing partner Ellipsis and Company.
“It's frequency. Customers are emotionally attached to a program because they buy from it a lot. It's not the other way around. So we're not scared because we run, werun because we're scared."
“If you're shopping three times a week and the program is in your face three times a week and you're earning something then you think, aren't I smart? I've just made some extra money out of buying those groceries. And that's reinforced regularly.The people in Adam Posner’s sample are normal people so he's over sampled people who don't fly very often. If you talk to the people who fly for business six times a week or six times a month, theylove the programs.”
Presumably two hotel programs in the list – Accor which was the worst performer and Marriott Bonvoy equal third worst could make the same argument.
Yet that wouldn’t explain relative differences within categories however, such as why Club Jetstar is a top 10 performer while Qantas FF and Velocity are languishing in the lower half.
According to the report almost 90 per cent of Australian’s consumers are members of loyalty programs, and in fact on average consumers typically belong to just over four programs. A smaller subset of 10 per cent of consumers were members of 10 or more programs, and this cohort were more likely to be female and members of Gen Y.
And for the truly hardcore loyalty fans, 12 per cent of consumers said they would consider getting a permanent tattoo of the brand, logo or loyalty program in return for high value lifetime discounts or exclusive benefits.
Stronger economic headwinds in recent time once again have proved a boon for loyalty programs. The report says, “42 per cent of members indicated they became more actively involved with their loyalty programs during times of economic uncertainty to maximise their rewards and savings.”
With For Love or Money now in its second decade, we asked Tyler, and other loyalty industry stalwarts including former Flybuys and Velocity executives Phil Hawkins and Sean Cooper where they have seen the biggest changes to the loyalty sector. Data and technology ranked the highest in each instance, but so did the increasing sophisticationof consumers around their personal value to brands, via that data.
Per Hawkins: "The big areas of evolution have been around the data and I think the value equation. I'll let you sample my personal information, collect my information ifI see that there's a benefit. The classic story is there's a benefit in two ways [for brands]. Okay, I'll reward you with various bonuses or rewards from all rewards catalog. But secondly, I'll actually make your retail experience better."
Hawkins also believesAustralian consumers understanding of that value exchange is something that's become a more pronounced theme over the years.
"I think Australians are much more in tune with that value exchange," he said.
Tyler, whoseloyalty consultancy hasspecialisedin design and strategy for almost a decade, said“I think that when we first started, people really thought it was about increasing sales to customers and getting them to stick with you and other [partner]vendors. That hasn't disappeared. That's still a primary mode. But over time, it's become really clear that there's a golden egg in the customer data, which can be resold."
"What the big guys, the people that are top of that listhave discovered is that they've got this really big data asset that is envied by a lot of advertisers and promoters who are willing to pay for it."
He said that is what is powering retailer media's rise locally and globally.
"The phenomena right now is these retail advertising networks which are driven by loyalty program data, are stealing market share dramatically from Google and Facebook. So the primary reason is that the data is richer. They can see inside the basket. They see what the customers are actually buying at the unit level, at the product level, and they can prove that if you place an ad it's got me sales."
Sean Cooper, Director at Audience Group who previously had a 7 year stint At Velocity Frequent Flyers, offereda slightly different view on the impact of advertising channels. He said the best results come from integrating loyalty campaigns with other channels.
"If you serve somebody an offer where it goes through paid media, through Facebook [for instance] at the same time as sending them the email doubles the chance of using it. Integrating your loyalty program intoa person's everyday mediamakes a much bigger difference than just looking at emails."
He agrees with Tyler on the impact of data, and calls out the role of technology as well. "The ability of technology to remove friction from the user experience for instance by having an app on your phone was as important as the evolution in the use of data.That’s the thing that made the massive difference to the loyalty programs that I saw as well."
"So Uber did a great job. I think Qantas and does a good job. Youfoodz was a small example, but YouFoodzmade it really easy. Ola did as well.”
He said, “It's about embedding the loyalty process with the consumer's everyday behaviour and then combining data. If I was to look at Flybys ten years ago and Flybuysnow, that will be the massive difference. It's still ‘I go to Coles, I buy stuff, I get points.’ But now you can will integrate it, there's loads more data. And you can certainly customise offers.”