Here’s a joke my 12 year old son told me yesterday. Q. What do you get when Woolworths burns down? A. Hot coals! I’m not sure he completely understands the subtext of the punch line but it’s very clever. And sadly there’s an element of truth to it.
It’s fair to say I’m a Woolies person. Further, I’ve been a ‘Woolworths Rewards’ loyalty card devotee since day dot. My desire to accumulate points is not obsessive however, I’ve been known to drive past more than one petrol station with my warning light on to reach a co-branded Caltex outlet!
My customer journey with Woolies is quite long and complicated but it’s effectively been fuelled by the loyalty program which I felt was fair compensation for Woolworths receiving around 95% of our family’s household grocery and petrol purchases.
Since the points qualification process kicked-in on Wednesday October 28, we have spent $768 at Woolworths supermarkets and earned the grand total of $3.01 in new reward dollars. Assuming the correlation of points to total spend is maintained, we would have to spend over $2500 to qualify for the “reward”, a mammoth $10 off the next shop, equating to a 0.40% discount. And that assumes I want $10 off my next shop and not something more tangible like a gift card or that I’d like to save them up so I can get $150 off my ‘turkey and trimmings’ shop next Christmas.
Clearly Woolworths are using supplier co-operative funding to pay for the discounts and the reward ‘dollars’ are only valid on certain products. As much as I love a reward, I’m not going to purchase brands and products that I don’t normally buy at inflated prices I don’t normally accept. Even more bizarre is that the reward dollars aren’t linked to the fresh food departments (deli, butchery, F&V, bakery) which completely undermines the whole ‘Fresh Food People’ palaver.
Woolies trotted out all sorts of statistics to justify the change to its rewards program and specifically its divorce from Qantas (like 33% of people hadn’t redeemed any QFF points in the previous 12 months …. maybe because they are saving them up for a holiday to Thailand, do ya think!?) but anyone who’s been around retail or loyalty programs for five minutes knows the real reasons – it’s heaps cheaper for Woolies to budget for and administer a one-dimensional program such as this plus they can dictate which suppliers fund the discount pool how quickly customers can take a dip.
Let me be frank … it’s a piece of crap. And they haven’t even tried and roll it in glitter. They’ve simply refreshed the artwork, sent everyone a new card, put up a few posters in store telling you how great it is and how much you wanted it. Methinks they ran a grand total of ZERO focus groups and conducted ZERO exit surveys.
The completely fake “we listened to what you wanted and made these changes for you” angle is the thing that has irked me the most. I understand loyalty programs are a complex beast and I get trading conditions are tough (plenty of people have written about the Masters hardware fiasco, boardroom troubles, senior staff turnover, aggressive behaviour to suppliers, the cost of the Jamie Oliver celebrity endorsement etc) but don’t roll-back the features and dilute the offer and then try and tell me I’m better off. It just doesn’t pass the sniff test.
When I was with Rebel Sport, I launched a national loyalty program that appealed to the minds and the wallets of anyone who was linked to a local sports club. It had broad appeal, was easy to administer and generated incremental income for the business. Most importantly it crated ‘brand fans’, loyal customers who knew they’d be personally rewarded for shopping at Rebel but would also be helping their club with every purchase.
Wesfarmers (Coles) announced a deal with Emirates the same day the new Woolworths program commenced. Very clever. I like dealing with clever retailers so from January 1 when the Qantas frequent flyer points are officially phased out on Woolworths purchases, I’m dusting off the Flybuys card and will focus on increasing my points balance with them.