Independent retailers beat big business in loyalty stakes (more)

I was standing in line at the supermarket last night and thinking about customer loyalty schemes again. If my calculating are right the Coles Myer FlyBys loyalty program (tag line – make it count) provides me with benefits equal to about .6% of every dollar spent.

Later I bought petrol using the Coles discount fuel coupon I got from the supermarket. After that purchase I checked prices at three non supermarket affiliated outlets and discovered, as you would expect, that I could have easily saved three cents a litre – making the Coles four cents saving just one cent per litre. This is a discount of .8% – around the same as the FlyBys benefit.

At my local coffee shop if I buy five coffees the sixth is free. For $15.00 in spending I get a tangible benefit equal to 20%.

In my retail newsagency after buying 11 magazines (at any price) you get your 12th magazine (to $10.00 in value) free. Than equates to a benefit of between 9% and 23% depending on the cover price of the magazines purchased. (The average value equals 10% discount.)

At my local butcher if I buy four sausages (fresh made on the premises) I get a fifth at no cost. A 20% discount.

At the local baker if I buy four muffins I get another two for no extra cost. 33% discount.

If I buy meat, bread items and magazines at a Coles, the very best I can do, if my sums are right, is .6%. Not even 1% but .6%.

When they use the tag line make it count I now understand what they mean. Use flybys so they can count what you buy, with what and when.

Independent retailers have a perfect opportunity in the loyalty stakes to demonstrate their real value to consumers. A bit of comparative advertising never went astray.

Independent retailers demonstrate loyalty every day through personal service. National and global chain retailers can’t match this so they come up with gimmicks that fake loyalty and fake good service. And I guess they do this because they know that enough consumers will be hoodwinked.

Loyalty programs are on my mind at present because we’re (at my software company) playing in this space wise to finesse our offering. However, I don’t want to provide tools which will deliver discounts without tangible benefits for users of our software. Like in my own retail business for example. We can see the benefits to us of our magazine promotion. It’s paying for itself every day. But that takes discipline to measure it’s performance so closely. Others may not be as vigilant.

There is no point in giving something away if you get the business anyway. I’ve seen too many software packages which put loyalty facilities in without the appropriate business case and small business users end up giving away more than they need to or should.

While I’m not sure where we will end up, I am sure that it will be economically viable for our small business colleagues and more valuable to consumers than anything the major retail chains offer.

My preference is for quick gratification programs where you early the reward quickly and where the benefit is genuinely valuable to the consumer.

I think I’ll send my FlyBys card back to Coles and stick with the independents.

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