Woolworths faces criticism after dropping frequent flyer points in new-look loyalty program

Woolworths claims shopper value but faces customer criticism after overhauling Rewards customer loyalty program

Woolworths has insisted its decision to ditch Qantas Frequent Flyer points from its restructured customer loyalty program will benefit shoppers, despite social backlash from its customers suggesting the contrary.

This week, the supermarket giant unveiled a new-look loyalty program, ‘Woolworths Rewards’, which kicks off on 28 October and will reward shoppers with dollars off their grocery shop. The company claims members will have the ability to earn $10 off their shopping at least as twice as fast as the major competition.

Woolworths Food Group managing director, Brad Banducci, defended its decision to drop frequent flyer points, saying that 68 per cent of customers surveyed by Catalyst Research on its behalf wanted money off their shopping, versus just 9 per cent who preferred a points-based scheme.

The same research showed the majority of supermarket shoppers think it takes too long to earn enough points in loyalty programs to redeem rewards in points-based schemes, he said.

“Woolworths Rewards is totally re-inventing our loyalty program, putting our customers’ needs first,” Banducci said in a statement.

“Woolworths Rewards gives customers money off their shopping, fast. The beauty of the program is customers just shop as normal and the rewards look after themselves. It’s 100 per cent relevant to 100 per cent of our shoppers, totally automatic and hassle free.

“Customers are increasingly value conscious and when it comes to loyalty.”

Under the new scheme, shoppers earn ‘Woolworths Dollars’ in participating supermarkets and BWS stores when they buy any select ‘orange ticket’ items across a host of product categories. Once the Woolworths Dollars balance reaches $10, that amount will be taken off a customer’s next shopping bill.

The decision is expected to also save Woolworths up to $80 million a year in payments to Qantas for frequent flyer points.

The company pointed to analysis from Australian Consumer, Retail and Services (ACRS) research unit at Monash Business School, which claims current Woolworths’ loyalty members typically will see more than double the value through the revitalised program. A typical shopper spending $108 per week, for example, could now earn $10 Woolworths Dollars to take off their shopping in seven weeks.

Family will typically achieve $10 off their shopping in under six weeks and typical senior couples will take under seven weeks to gain the same result, ACRS stated.

Such figures haven’t stopped existing loyalty program cardholders taking to social media to express their criticism of the new scheme, however, and several said they’ll be switching supermarkets as a result.

One particularly vocal critic said earning frequent flyer points as a non-frequent flyer from everyday spending had been very important. As a result, the customer is looking to the recently struck alliance between Coles rival loyalty program, Flybuys, and its new airline partner, Etihad.

“After 31 Dec, I’ll be shopping more at Coles except for the few products I like that only Woolies stocks. I expect a lot of miles and points collectors will be doing the same,” the customer said in a dedicated blog post.

Several others said points were the only reason they shopped with Woolworths.

Woolworths said Everyday Rewards customers would continue earning frequent flyer points until 31 December. In addition, avid points collectors will continue to be able to earn points on their Woolworths’ shopping by using a debit or credit card linked to their chosen frequent flyer program.

“Woolworths will consider any partnership option that does not dilute the core offer and that will add further value for its customers,” the company said in its statement. “Woolworths values its long association with Qantas and will look to work with them to endeavour to bring additional value to Woolworths Rewards’ members.”

Woolworths said it has nine million Everyday Rewards program members.

Speaking to CMO, chief of loyalty marketing agency Directivity, Adam Posner, said the retailer was striving to reposition its brand around direct shopper value while separate itself from the rest of the supermarket pack. He also noted the three-tiered pricing system of red-ticket items (low prices), yellow-ticket items (short-term promotions) and now orange for rewards items.

"The challenge they have is communicating that value - the message, as a consumer, could get confusing," he said. "But if they can get the messaging right, they've got the basis for something strong and can educate people around that. That's as long as they prove back that value."

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