I don’t get why any small business retailer would run a loyalty program based on points when the supermarkets have ruined the value of points programs with change after change and a value proposition that is dreadful.
News Corp. published an article about this in August. Consider the Woolworths supermarket pitch:
$1 spend will earn one Woolworths Point, with no minimum spend.
$2000 spend on anything in the supermarket, BWS and Caltex will earn 2000 Woolworths Points, which can be redeemed for $10 off your next shop.
Now, take a look at the Coles supermarket pitch:
$1 spend will earn one FlyBuys Point, with no minimum spend.
$2000 spend on anything in the Coles supermarket, Target or Kmart will earn 2000 FlyBuys Points, which can be redeemed for a $10 gift voucher in Coles or Shell petrol, effectively $10 cash off your next shop.
Now, if you run a points program, think about your offer. I know newsagents who accuse a point per dollar spent and the points are worth 2.5 cents each. In this scenario, $2,000 in purchases results in a value to the shopper of $50.00 – considerably more than the $10.00 you get from the same value purchase at Coles or Woolworths.
The comparison is reasonable because the currency is the same – the currency is points. Regardless of the value of the points.
I don’t understand why any retailer would offer a loyalty program that can be easily compared with a big business competitor, especially where the competitor actively runs a loyalty program that is anything but.
In small business especially, the loyalty program you run needs to be an easily understood point of difference. It needs to be something people will switch to your shop for.
If you run a points program, ask your customers if they understand it. Next, run your management reports to assess whether you are actually making money from the program. you know what it costs each year, are you achieving incremental business to justify the investment?
Many years ago we all jumped into points based loyalty because it was the big new thing and because we wanted to be like big businesses because that’s what we thought was right back then. However, that sea quickly became competitive and bloody. In fact, now it is so cluttered and confusing that copying big business is not a smart move at all.
Be smart about your loyalty offer. Ensure it is easily understood, differentiating and offering understood and appreciated value.