That article annoyed me so much I thought I would write a response. Hopefully someone at Woolworths reads this...
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Dear Ingrid,
Your piece in
Business Insider Australia shows that you're out of touch and don't really understand what your customers want at all. Which is bizarre, considering you're the director of loyalty and customer data at Woolworths.
We expect personalised experiences, instant gratification and automatic rewards.
No, we don't want automatic rewards. We want a choice.
When it comes to loyalty, there’s growing ‘points fatigue’. There are more programs than ever and deciphering their value is often impossible, given varying redemption rates for the same points depending on how they are used.
So that's why you introduced another program where deciphering the value is impossible, as the number of "Woolworths Dollars" earned on a select few eligible products changes from week to week?
Woolworths-commissioned research suggests around one third of supermarket loyalty members actively linked to points programs have never redeemed points; not for flights, holidays, coffee makers, nothing at all.
This means that two thirds of your customers have redeemed their points. As for the other third, they are probably either saving them up or could use a bit of help in working out the best way to redeem them. They already have the option to convert Qantas points to savings at Woolworths, if that's how they choose to spend them.
For most, the length of time it takes to accumulate points is a frustration, for some, the level of spend required to get a reward is too great...
Most Woolies customers report that they have earned between $0 and $2 in Woolworths dollars for spends of several hundred dollars since the new program was introduced. They're just so keen to spend another ~$1000 just to potentially get $10 off in a few months' time. Thank goodness they no longer have to wait a long time or spend a lot of money to redeem their rewards.
The issuing of points that are never redeemed is known in the loyalty trade as ‘breakage’. It’s part of the business model for loyalty program operators that sell points to third parties.
Breakage of Qantas points is only an issue if customers do not visit a Woolworths store (or earn or redeem Qantas points in any other way) for over a year and a half. If your customers are not visiting Woolworths at least once every 18 months, then you're doing something wrong.
But this model works as a result of members failing to get value from your program.
I can think of many people that fail to see any value from a program that requires you to buy overpriced products just to get a delayed discount that they would get instantly if they shopped with your competitors! By comparison, I know many people that get a great deal of value out of the Qantas Frequent Flyer program. Myself included.
So when Woolworths decided to revitalise its customer loyalty program, we started with a blank sheet of paper...
...and got the work experience kids to fill in the blanks?
We asked our customers what they wanted from a loyalty program, and designed it around their needs.
Which customers did you ask??? None that I know of.
We consciously abandoned the opportunity to create a loyalty business with a revenue goal, trusting that if we gave customers what they wanted, more would choose to be loyal to their local Woolworths supermarket.
Which is why you've taken away the main incentive that kept tens of thousands of customers loyal, causing them to vow never to set foot in a Woolworths supermarket again?
Our research was definitive: For a clear majority of customers – 68% – money off their normal supermarket shopping is the preferred option versus only nine per cent who prefer a points-based scheme.
Surveys can get any result you want, depending on how the question is asked. How about conducting another survey and asking this:
"Do you want a rewarding loyalty program that lets you redeem points for a wide range of great products, including free flights around the world and upgrades to First Class? Or a terrible program where you only earn rewards on things you would never buy, and those rewards simply cover the extra cost you incur by buying those products at Woolworths?"
By simplifying the program and redirecting all of our investment straight to customers, Monash Business School analysis demonstrates our core program delivers $10 of value to the customer twice as fast as in our major competitor’s scheme.
Actually, Flybuys points can be earned a lot more quickly than Woolworths Dollars as they have clever, well-targetted bonus point promotions on a regular basis. And Flybuys points are earned for every dollar spent on every product; not just for every dollar spent over $30, or on a tiny range of packaged products that change weekly. Comparing redemption rates only is not a fair comparison - you must also compare the burn rates. Plus, Flybuys now give customers a
choice of cashback
or frequent flyer points. So which is the better program, exactly?
Crucially, customers will achieve that result without having to change their shopping patterns
Actually, they will have to change their shopping patterns completely in order to gain any sort of reward in your scheme purporting to be a "rewards" program. Based on my regular shopping patterns, I have earned $0 in Woolworths dollars so far having spent several hundred dollars since the new program was introduced.
As a mother of four-year old twins, I’m extremely time poor, so I don’t want to receive generic e-mails advertising products that have no relevance to me.
Oh, that explains why the products you have been featuring in the emails you're sending to me have no relevance to me. I would like to unsubscribe - but wait, your website won't even let me!
That's right. They not only want choice, but they have it to - the choice to go to Coles and Aldi instead.
Warm regards,
Shoppers all over Australia who think Woolworths Rewards is a joke :evil:
