Coles trumps Woolies in loyalty battle, but half of customers 'up for grabs'

By Frank Chung | 20 May 2013
Directivity chief executive Adam Posner.

New research has shone light on how Australians feel about customer loyalty programs – in terms of ‘mind-share’ at least, Coles Flybuys has topped the list.

The wide-ranging report, For Love or Money?, commissioned by strategic marketing company Directivity and digital agency Citrus, found that while loyalty programs influence buying behaviour, they don’t actually influence loyalty.

When respondents were asked which loyalty programs they thought were doing a ‘particularly good job’, Coles Flybuys came out on top at 37%, with Woolworths Everyday Rewards second at 22%.

But Directivity chief executive Adam Posner said: “In no way does it mean that Woolworths is worse. My point of view on that is that with the recent relaunch of the Flybuys program it’s a much more consumer-friendly experience in terms of its rewards and so on.

"They each have different structures and benefits. In most people’s wallets you’ve got an Everyday Rewards and Flybuys card, and really 50% of those shoppers are shopping on convenience. It’s the other 50% that’s up for grabs.”

He said the financial benefits offered by loyalty programs were the first entry point or “ticket to play”, but there was then “significant opportunity” for brands to build a deeper emotional connection through the context of the program.

And the best way to do that? Through “unexpected” rewards. “A great example is when you get a bonus voucher without doing anything, or when you get a free upgrade without even knowing you’re due for one. That’s when the brand really starts to connect.”

The best loyalty programs, he said, had a strong combination of financial and emotional benefits, but skewed towards the “unexpected surprise”. He cited Mecca Cosmetica, which offers makeup experts and personalised product showings, as a good example.

According to the study, 88% of consumers over the age of 16 belong to some sort of loyalty program. Financial rewards ranked as the greatest incentive with 80% of respondents rating discounts as ‘very important’. At the other end, programs with tiered rewards structures were found to be a turn-off for consumers, with only 36% of respondents saying they were important.

The study, conducted in February by First Point Research and Consulting, covered a national online panel of 1,010 consumers over the age of 16.

This article first appeared in the 17 May 2013 edition of AdNews, in print and on iPad. Click here to subscribe for more news, features and opinion.

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