Loyalty programs have always been part of retail campaigns, and for big retailers such as Myer and Coles they have been of great value.
However, according to research by Power Retail, 35 per cent of online retailers who have a loyalty program feel that it is not at all important to their ongoing business success. But 65 per cent of retailers believe that loyalty programs have the potential to deliver a positive outcome across all aspects of the customer journey, including new customer acquisition.
Power Retail managing director, Grant Arnott, says it is ridiculous that loyalty programs aren’t top of the list.
“Given the size of the prize on offer with a great loyalty program, it’s ludacris that this area is not the top priority for every retailer,” he says.
“Retailers who have a lacklustre approach to loyalty, and aren’t prioritising value and retention, are destined to suffer long term. Currently, there is a lack of education and discipline around loyalty in Australia. However, I believe this will change with better data and insights, and greater competition (especially international) that will enter and threaten the retail industry.”
According to the report, providing general insights into customers was a reason given by 67 per cent of retailers who currently operate a loyalty program. Interestingly, it is believed by many that the recent explosion and subsequent commoditisation of consumer data will eventually lead to the phasing out of loyalty programs.
“If you look at the value created globally in programs such as Amazon Prime, and locally with Myer One and Coles Flybuys, they’re acquiring invaluable data and insights, and providing their customers with genuine benefits―no doubting leading to a more loyal audience and increased sales.
“It’s notable that both Amazon Prime and eBay Plus were listed in our ‘Top 25 Most Popular Retailer Loyalty Programs’ in our report. Although they’re only just entering the Australian market, their programs are continually gaining popularity as they’re offering digital benefits, such as music and video content. I urge Australian retailers to take note and think outside of the norm for their program.”
Indeed, 92 per cent of online shoppers engage with at least one program, while 15 per cent belong to 10 or more, says the report.
“I believe the benefits and structures of loyalty programs will also continue to evolve, and key players in the online shopping sector such as Catch and Amazon Prime will continue to dominate. I also anticipate that non-competing retailers will partner to create larger-scale loyalty program that offer benefits across a broad range of categories e.g. travel, homewares and grocery in order to survive,” adds Arnott.
