Reward the spenders

As Christmas is the focus of much of our annual shopping spend, and often that money is spent via credit/debit card, I have spent this week looking at shopper loyalty programs in stores.

I commented several months ago on the QANTAS and Woolworths group tie up, supporting it as a seriously good innovation. This was not just an arm chair pundit comment, but my thoughts based on a decade spent in incentive marketing, leading a company that has been at it for over 25 years managing incentive programs for more than 120,000 store staff, employees, airline frequent flyers and car dealers.

I’ve chosen to look at three well-run and high impact programs that are very visible at retailers in CBDs and regional Australian shopping precincts.

The biggest, most impactful and most strongly integrated incentive program has to be Woolworths Everyday Rewards and QANTAS Frequent Flyer. This is a powerful and well-executed theme across the whole of the Woolworths retail landscape, from grocery through mass merchant, liquor, petrol and convenience stores.

The ability to reward existing loyal Woolworths customers and reach out to new shoppers across the retail banner is seriously powerful. There cannot be a retailer with as high a penetration of shoppers with a single loyalty program across so many retail channels anywhere in the world. It was an inspired move that has been executed phenomenally well.

The breadth of rewards and the amount of money you the shopper can ‘corral’ into this program to earn points across the myriad of different purchase points is a huge and relevant attraction. The explicit experiential reward of travel with the QANTAS co-branding is again spot on for this shopper.

Not only Woolworths and QANTAS customers should be pleased, but QANTAS and Woolworths shareholders should thank Messrs Joyce and Luscombe for getting this deal done.

At Myer the in-store communication for Myer ONE and MyRewards, explaining what you get for what you do, is probably the clearest “do this and get this” messaging. How much you need to spend to receive how much in shopper credits is big and bold.

“Behavioural change” is the goal of all incentive and loyalty programs. Communication in the often buzzing and cluttered retail environment is crucial. The simpler it can be communicated, the better because, as a shopper, it is in the store that I can be persuaded to spend more that day – actually that minute. If I can see the instant benefit of the purchase, it will generate behavioural change.

In independent grocery, the Franklins Loyalty Club rewards program is doing the same thing again, but in a different geography and with a rewards structure aimed at the wants and needs of its own very loyal suburban and regional shoppers.

Clear links with points updated on your till receipt is simple, easy to understand and relevant to the Franklins shopper. The program doesn’t offer the breadth or richness of rewards that Myer or Woolworths does, but the rewards are aimed at helping customers lower their shopping basket bill next month, or buying a few luxuries for themselves and the kids. It’s right for Franklins shoppers and that’s really what matters.

All three of these programs hit the mark with behavioural change relevant to their own shoppers.

While I am hesitant to deliberately “diss” anything I see at retail in print, there is one program in the market at the moment that does miss the point.

The basis of all incentive and loyalty programs is built upon the work that Maslow and Herzberg undertook and published. Remember the stuff about needing to have food and shelter first and then, when we have those things, we ultimately need recognition? Well one of the things at the bottom of Maslow’s list was money.

Air, sex and money… when we haven’t got enough, it fills our every waking moment, but when we have enough we tend to forget about it. Very few people are truly motivated by cash – we are more motivated by what it can do for us: a better holiday, a better car, a better outfit.

Which leads to my point. There is a loyalty program call to action out there in the retail market at present that states (and I will paraphrase to protect the guilty): “Cash, the best reward!” This communication has no motivational link for the shopper and almost certainly inspires no desire for me, the shopper, to change my behaviour. I’m not sure how it’s doing, but I would bet the balance on my QANTAS Frequent Flyer account that it isn’t humming along!

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In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.