Report: Loyalty programs don't always breed loyalty in Australia

Australian consumers buy more from retailers with loyalty programs, and are more likely to choose a brand with a loyalty program, but this doesn't mean they will be more loyal, according to a new report. 

The For love or money? 2013 consumer study into Australian loyalty programs report, commissioned by strategic marketing company Directivity and digital agency Citrus, surveyed over 1,000 consumers in February 2013 to see how Australians feel towards loyalty programs. 

And, the findings highlighted that while loyalty programs definitely influence buyer behaviour, they don't always equal customer loyalty. 

The loyalty landscape 

Almost 9 in 10 Australians over the age of 16 are members of a loyalty program and 11% of consumers are even members of more than 10 loyalty programs. 

Australian women are much more likely to be members of a loyalty program program than men (93% vs 82%) and women are also members of more programs (on average five compared to three for men). 

But surprisingly, men are more active with their memberships, with 49% presenting their card when purchasing, compared to only 41% of women. 

Older Australians (55+) are more likely to buy from companies that have a loyalty program than younger generations, yet this age group also believes more strongly that loyalty programs don't offer any real value. 

Loyalty programs do encourage consumers to spend more, with Australian consumers buying 80% more from companies they are a member of. Consumers also tend to buy more from companies that have a loyalty program than those who don't.

In fact, when faced with choosing two similar products/companies - one with a loyalty program and one without - 55% buy from the one with a loyalty program.

But none of this equals loyalty it seems. 

When consumers were asked if they feel more loyal to a brand whose program they are a member of, only 46% indicated that they did.

As one 25-34 year old female respondent said: 

A loyalty 'card' does not maketh a loyalty program. Unless being a part of this program entitles you to rewards, discounts, free gifts, exclusive invitations or something special over and above what other customers receive, I have no incentive to give retailers all my details. I am happy to give them this information for sales and statistical analysis of purchasing, however I deserve something in return. 

Show me the love, not just the money

The loyalty program reward that Australian consumers most want the most is financial, with 80% of respondents rating discounts when making purchases as very important. 

Points based programs where members can redeem points for vouchers, products or other rewards was the second most popular benefit (77%), followed by exclusive offers (65%) and access to more rewards based on spend (62%). 

But according to Citrus CEO Peter Noble, consumers also want to be surprised with unexpected rewards.

Ultimately financial rewards wins the day for consumers and is the main motivation for joining loyalty programs. 

But a winning program is one that also has multiple emotional and unexpected benefits creating an element of 'surprise and delight' and tailoring offers based on consumer needs and preferences. 

Adam Posner, CEO of Directivity, agrees with this saying that while basic monetary rewards give retailers a ticket to play in the loyalty game, the real opportunity lies in building deeper engagement with members through unexpected and emotional rewards.

This plays out in the research which shows surprise rewards such as a gift on your birthday, exclusive offers or special experiences go a long way to overcoming the belief that programs don't offer any real value. 

Australia's Top Ten

Wondering what loyalty programs are highest rated in Australia? According to the report, the most mentioned loyalty programs cited by respondents as 'doing a particularly good job' include:

1. Coles Flybuys (37%)

2. Woolworths Everyday Rewards (22%)

3. Qantas Frequent Flyer (11%)

4. MYERone (6%)

5. Priceline (5%)

6. Virgin Velocity (2%)

7. CBA Credit Card (1%)

8. IGA (1%)

9. Millers (1%)

10. Spotlight (1%)

[Image credit: whatleydude]