Poorly structured loyalty program defeats its purpose

Today marks six months since Woolworths made one of the poorest decisions in Australian loyalty marketing history by ditching its Everyday Rewards scheme. The disastrous move to near-impossible-to-acquire Woolworths Dollars has removed many of the incentives for customers to spend more – and left them with virtually no reason to share their data with the supermarket. This is the thinking of Mumbrella’s Tim Burrowes (see the full article here – Mumbrella Article).

For a number of years now the major supermarket chains have been mining your data for ways and means of getting customers to spend more. So, everytime you would scan you Everyday rewards card, before this disastrous change six months ago, Woolworths would benefit from attaching your shopping list to you and your demographic data. Overtime they built a formidable mine of data that would enable them to pinpoint specials or to try to drive your shopping into areas you may not have previously gone. Special offers would be email to customers and they simply had to click to activate. They had created HABIT.

Now Woolworths have replaced the rewards scheme with an arcane Woolworths Dollars scheme, the proceeds of which are almost impossible to acquire. I’m not sure if everyone has reacted as I have, but I simply don’t bother to scan anymore. I used to get Qantas Frequent Flyer points for purchases over $30, that isn’t on offer any more. In the interim, their main competitor Coles has quietly done precisely nothing to their loyalty program – the easy to use and understand Flybuys (one point for each dollar spent) and continue to access the mine of data.

In addition to Coles’s action (or inaction), Aldi has ramped up its assault on the two major chains in search of increased market share, and they are making significant inroads – quite possibly at the expense of Woolworths – without the need for a loyalty program. Meanwhile Woolworths have shot themselves in the foot. Its hard to see why new customers would bother to sign up, and existing customers will feel that they’re not getting those points they used to get. To earn Woolworths Dollars as stated is near impossible and there are anecdotal stories of a customer spending in excess of $1200 and earning $4 Woolworths Dollars. The Woolworth’s Facebook page has endless miles of posts by unhappy customers.

So, why did they do it? Its difficult to fathom the answer to that question. It would seem that now is the time to admit they were wrong. But will they?

What rewards?

What rewards?

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