Loyalty program customers send mixed messages around sharing personal data

New report on Australian customer loyalty programs by Citrus and Directivity shows three quarters of members are happy for loyalty program owners to analyse their data; just don't give it to a third-party

Nearly three-quarters of Australian loyalty program members are happy for organisations to analyse their data for personal benefits, but half don't want third-party organisations getting their hands on their information, new research has found.

The new Share the Love: 2014 Consumer Study into Australian Loyalty Programs report is aimed at understanding the relationship Australian consumers have with loyalty offerings by looking into their views on the seven sharing aspects of belonging to a program.

The report was produced by customer loyalty strategy consultancy, Directivity, and digital marketing agency, Citrus.

It found 73 per cent of respondents are happy to receive special offers based on their buying behaviour and personal data being analysed. Data sets they are more likely to provide are gender (87 per cent), postcode (83 per cent) and email addresses (78 per cent). Information less likely to be provided includes a mobile phone number (45 per cent) and income (33 per cent).

But value-based exchange only goes so far. In fact, 52 per cent of members disagreed with giving permission for a loyalty program to share their information with other organisations even if there are benefits to be gained, such as more places to earn points or receive discounts.

The report follows up Directivity and Citrus’ first study, For Love or Money: 2013 Consumer Study into Australian Loyalty Programs released last May. That research showed 88 per cent of Australian consumers belong to a loyalty program and 11 per cent belong to more than 10.

“This has implications for big coalition programs,” CEO of Directivity, Adam Posner, commented. “When people join they know their data will be shared with program partners, but 52 per cent are saying they’re uncomfortable with it, even if they get more points or rewards.”

Another major finding is the untapped opportunity for loyalty program providers to give members the chance to share their benefits. Sixty-five per cent of survey respondents wanted to share their benefits with family, friends or even a charity, and an equal number wanted to leave their rewards or points to someone else when they die.

In return, 70 per cent said they would shop more often, and 45 per cent would spend more. Posner pointed out that apart from the big programs, which offer a community connection or the option to give points to someone else, sharing is not a big feature of Australian loyalty programs.

Interestingly, despite the rapid rise of smartphones, 57 per cent of loyalty members still prefer a traditional card over a mobile-based app, and just 12 per cent specifically wanted an app only. Noble suggested a large part of this could be the status factor of pulling out a Black Amex or Myer Gold card.

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Coles Flybuys retained its position at the top of the loyalty program list as the one most recommended by respondents, followed by Woolworths everyday rewards and Qantas Frequent Flyer. Much further down the list in fourth and fifth place were the Velocity and Myer one programs.

The research also showed 26 per cent of participants had left a loyalty program in recent years, key reasons being the speed of earning or redeeming points, and unappealing offers. Of these, 20 per cent simply stopped using card or apps, and younger members proved the most likely to walk away from a program (39 per cent).

Posner told CMO he was surprised by the high percentage defecting from loyalty programs.

“The impact on the brand can be substantial if nearly a quarter of members are leaving a program and hence the brand … just calculate the lost revenue and lifetime value that disappears," he said.

“What was even more alarming was when we looked deeper into who was defecting and we found younger members [25-34 year olds] were defecting at greater rate, with 39 per cent walking away from their programs and therefore the brand.

“Brands who have programs need to be vigilant in knowing that their loyalty program is their brand and if it is not valuable to their members, then they will walk away.”

“Make no mistake - if members have defected from a program they’ve defected from the brand,” CEO of Citrus, Peter Noble, added. “Loyalty programs are big business and a key touch point for a brand so marketers need to ask themselves: Remove a quarter of your membership and what impact would that have on your brand?”

The latest research was based on a survey conducted by First Point Research and Consulting across more than 1000 consumers in the last quarter of 2013. These were fairly evenly split between male and female respondents and spread across the country.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO Australia conversation on LinkedIn: CMO Australia, or join us on Facebook: https://www.facebook.com/CMOAustralia

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