My frequent flyer status change almost ends "in tiers"

Nearly every loyalty program operator faces the question of whether to introduce status tiers into their program. If your program has many members with low activity, it's tempting to single out the higher earners and credit them with a superior status, and thus the familiar platinum, gold and silver labels loom as an option.  Although tiers and status levels appear with all sorts of loyalty programs, nowhere is this more prevalent than with frequent flyer programs.


My recent episode with an Australian frequent flyer program (er, a choice of two, and I'm not going to name which one) illustrates the challenges in  handling status changes sensitively and thoughtfully. I'm not the most frequent of flyers, but I had through a long and dusty trail garnered silver status, and for the past year had enjoyed the albeit modest benefits this afforded.

However, the great reckoning, the review date, loomed, and it looked as though I was going to miss out, not by much, but I wasn't going to make it.  I wondered, would they let me down gently?  Would they take into account my near miss, and allow me to hold my status for another year?  Anecdotal evidence from friends and colleagues suggested that this behaviour was possible if not probable.

... and then, I thought all my problems had been solved.  Out of the blue, I was asked to fly to the US, to collect a loyalty award (of course!)  My status was intact - well, as good as - I calculated that there would be a period of only four days when, technically, I fell short of silver status, before I could rightfully claim my retained status. No worries!

Imagine my surprise then, when I received an automated email from my frequent flyer program euphemistically titled "An update to your membership", which stated "We hope you have enjoyed the benefits of Silver membership. We have recently reviewed your flying activity over the past 12 months and you have not quite earned enough Status Credits during your review period to maintain Silver membership. Your membership pack will be with you shortly."

So, with brutal efficiency, I was demoted. Credit to them for detecting that I had "not quite" earned enough credits - well done on trawling their big data to declare that I was officially an unlucky loser.

But what had happened to their discretion, and their insight? Surely they could see that just a few breaths later I was travelling halfway across the globe with them and that this fleeting demotion was a waste of energy?  I contacted them and stated as much. Their response was perfunctory and dismissive; a templated robotic reply from "Terry" which showed "he" hadn't even bothered to look into my membership or my booked flights.

I duly flew to the US and returned (with award!) - while I was away, the new vanilla membership pack celebrating my demotion and withdrawal of benefits had arrived.  But I duly checked online - yep, according to their computer I was back at Silver! But where was my automatically triggered email, with congratulations?  Radio silence. I decided to write back to "Terry".  He replied, almost with a hint of resignation,  "Yes, we can confirm you have been upgraded to the Silver membership tier. As members automatically receive a new card when they move tiers it may take slightly longer to receive notification when upgraded. A new Silver card has been generated and should arrive for you in the next few weeks."

So, a nonsensical explanation for taking "slightly longer" to be notified of an upgrade. And a new Silver card to arrive "in the next few weeks." Next few weeks?!  Why had I been the victim of their ruthless efficiency when knocking me down to no-longer-valued status, and then subject to delays and lack of notification when I regained my status, four days later?

For me, this was a good illustration of what a tricky space status tiers are, in any loyalty program.  Status changes are a hassle - they entail issuing of new cards (two quite needless reissues in my case) and importantly the construction of rules and procedures for demoting their members.  Surely it's an unsavoury element of any loyalty program when you have to tell members that they're no longer as important to you as they used to be.

I've also observed first hand in the past the challenges of setting status tiers, and what ways to rewards status.  It's easier to establish with frequent flyer programs, perhaps harder to set with other programs. The program I was involved in made the mistake of making its silver status too easy to achieve, and was faced with such a groundswell of qualifiers that they couldn't afford to offer them much at all in additional benefits, and couldn't even afford to send them a different card! So much for status!

Final observation is that status tiers are sensitive and emotional for loyalty program members.  Some excellent research a few years back from then Monash Uni academic Nathalie-Chantal McCaughey showed definitively that flyers would regularly and consistently make uneconomic decisions about their flying, in order to maintain or gain status.  You might expect this more if you were tempted to advantage when your employer was paying for the flight, but McCaughey also showed it held true for personal travel.  This stuff is important, and as my own recent experience shows, it shouldn't be handled sloppily!

Aussie loyalty's signs of maturity

I enjoyed a customer loyalty conference in Sydney recently; not a large forum, but certainly one attended by very engaged Aussie loyalty-philes. Pleasantly surprised that loyalty could stand up on its own in a forum in this country, and a testament to the seriousness with which Australian retailers are addressing this topic.

Impressive, too, to see some of the success of relatively new programs - Rebel Sport's "Season Pass" program, with its two-tier pricing and other benefits; and Hoyts new Rewards program, with a swag of treats - just to name a couple. Not only were these and other initiatives garnering impressive take up by customers, I was really impressed with the thoughtful planning and execution.

Intelligently applying a blend of science, cost-efficient tech-wizardry, data deftness and a liberal dose of common sense and pragmatism seemed to provide a recipe for sustainable success. The mix needs to be just right, because it was also very clear that these programs need to be executed in an environment of scarce resources. It seems no program, big or small, has the luxury of large budgets and certainly not large teams. This seems true in programs as diverse as Dymocks' successful Booklover program and the data-intensive Onecard program from Countdown supermarkets in New Zealand.

Academics aren't often touted as draw-cards at these gatherings, so it was a pleasant surprise to take in engaging presentations from John Dawes from UniSA and Nathalie McCaughey from Monash Uni. The team John hails from has been producing solid work on loyalty and related topics going right back to Byron Sharp's quantitative study soon after FlyBuys began, while Nathalie's data-rich expose on what makes frequent flyer programs tick was an absolute revelation.

Loyalty programs are no longer new in this country, but this recent gathering demonstrated that this field is burgeoning, even blossoming.

Only 131 kilometres to my "local" reward

As much as information collected by loyalty programs provides a great opportunity for relevant, personalised communications to, or indeed in these enlightened days, conversations with its members, it's something that occasionally gets lost in translation. With email marketing providing a low cost form of communication, I know from the program I work with, there's often the temptation to batch and blast a message to all and sundry.

But if that's a sin in loyalty land, I reckon an even greater one is attempting to provide a personalised, targeted communication and failing miserably in the execution. And without naming names, one of Australia's most prominent loyalty programs has managed to do that with an email stream in recent months.

A couple of days back I received my "exclusive January offers" promoting the program's affiliates. (Never mind it was received on the last day of January, I'm assuming the offers didn't expire that day). But tellingly the email is headed up "my range of local rewards". And that's where the problem really begins, since each time I have received these emails over the past ten months, they are full of retailers that are anywhere but "local" to me. Some examples:

• Hair salon in Wantirna, 24 kilometres away
• Coffee in Doncaster, 12 kilometres away
• Liquor from Fitzroy North, 16 kilometres away
• Jewellery in Frankston, 50 kilometres away
• Travel agent in Ringwood, 22 kilometres away
• Fruit from Cheltenham, 12 kilometres away

The pièce de resistance came on Monday, with an invitation to pop in for a spot of Japanese at Ballarat Tokyo Grill, a mere 131 kilometres away. About as useful an option for local casual eating as heading to Tokyo itself!

A couple of extra pointers here - it's not as if the above examples are the exceptions among a range of other truly local shopping options; these anything-but-local offerings form the majority. Also, you'll note that none of them are for specialised goods or services that warrant long travel to hunt down. A hairdresser can be found in suburban Melbourne without necessitating a 24 km trip. Fruit can also be quite handy.

However, the most disappointing aspect is this - they know from my purchase behaviour where I DO shop - and it's not in any of the suburbs listed above.

To be fair, the program in question often does a good job in using transaction data, even at a product level, to make relevant offers. In the particular case of the program affiliates, I suspect that there may be other commercial factors that get in the way. But despite ten months for them to get this right, targeting excellence, like these "offers", seems yet some distance away.

How my local coffee shop got loyalty all wrong

My local coffee shop near work has recently got competition, a short walk away. No surprises then, I suppose, that to provide a little disincentive for us to try out, or indeed switch to the opposition, a coffee card appeared. Every ninth coffee free.

The general vibe from customers appeared to be slightly on the cynical side - the shop didn't seem to particularly care about us before they had opposition. But a discount is not to be sniffed at, and pretty quickly we were filling up our cards with stamps.

But then, some strange behaviour. Unannounced, ordering a "medium" rather than "small" earned two stamps, not one. But the next day, "medium" reverted to one stamp. Then, a few days later, again unannounced, I received three stamps for a "small" - an unexpected bonus - customer surprise and delight, even.

But then the bonuses totally disappeared. A sense of frustration not knowing what behaviour I had to exhibit to be treated any more favourably.

Then, today, shock above all shocks, only a matter of weeks on, they are not handing out any more coffee cards! End of program looms! "Head office directive", mumbled the barista. I'm wondering now whether they'll "lose" the stamp, leaving me with unredeemed cards!

The prevailing theory among we, the hapless clientele, is that the coffee shop feels it has weathered the onset of the new competition just down the road. Therefore, they need not "pay" for our loyalty any longer.

Phew! My reflection is that this little whirlwind over the last two months has provided a salutary microcosm concerning things loyalty.

The "launch" phase, while unremarkable, was flawed. The sell-up of the offer seemed to lack a raison d'etre, or sufficient promotion at the least, that it came across as a disingenuous ploy only because decent opposition loomed. Certainly not part of an integrated customer-focused strategy.

Secondly, the rather bizarre, inconsistent crediting of bonus stamps left a sense of confusion rather than goodwill. A loyalty currency, even in the base and unsophisticated form of coffee stamps, can provide a strong mechanism for behaviour change. Yet it was never clear what behaviour they were seeking in order to gain the extra benefit. And having had a brief taste of the complimentary stamps, they disappeared. Such is the challenge for a loyalty marketer that the introduction of bonus points - or any additional benefit - creates an ongoing obligation to keep up that supply. And for it to be crystal clear what a customer has to do to earn a premium.

And finally, this tawdry vignette adds another chapter to the book entitled "it's harder to end a loyalty program than start one". In the case of our coffee shop, the end game could hardly have been executed in a less customer-friendly manner. The fact that it is being shut down so soon after beginning has reinforced a notion that we poor customers have been mere pawns in a brazen and coarse exercise.

Of course, in the larger loyalty landscape there have been any number of much higher profile (and very costly) failures. Any loyalty strategy needs to be finely planned and carefully executed. The ultimate cost for my coffee shop has been customer disaffection and distrust. Any modicum of goodwill that was tentatively established when the cards and stamps appeared has been more than wiped away by the brusque nature of its abandonment. Ironically, from this sad exercise the coffee shop has indeed created a unique "point of difference" from its competitors - just not the one it was looking for!

Counting the beans

Nescafe's Cup of Rewards is a new player in the Aussie loyalty space, and represents a brave play in a loyalty market which has been almost devoid of product-specific programs.

Loyalty watchers are quite familiar with some of the big global players in this space, with My Coke Rewards weighing in as possibly the biggest, with 14 million members in the US. Programs in the FMCG sector (read CPG in the US) have been quietly garnering a corner of the loyalty territory traditionally claimed by retailers. Not that this has been a smooth pathway, as LoyaltyOne's Sol Zia recently neatly summarised.

However, it's not surprising that Australia has to date provided a barren landscape for FMCG programs. Although older Australians may recall exchanging Robur or Lan Choo tea labels for teapots in years past, the simple lack of scale has hindered the economics of such initiatives here.

So will the Nestle program work? The program is simple to join, and the website has a contemporary, friendly feel. A head start of 50 "beans" (plus a further 25 if I refer a friend) means that rewards are instantly within my reach. There's been a deliberate attempt to have the lowest possible bar on rewards, but I think it comes at a cost. Low-level rewards such as $30 off a $130+ Red Balloon experience, or a free game of bowling for every paid one, can come for nothing with existing member benefit programs. The balance of the reward catalogue seems a little sparse at present and surprisingly there appears to be no current link to social media but I expect these aspects will come in time.

The giveback is by necessity generous, given the narrowness of the category. With a 150 gram jar costing $8.50 earning me 150 beans, a $20 Repco voucher or iTunes benefit for 1,900 beans implies a very healthy giveback of just under 20%. Beans remain "fresh" for 24 months.

It's early days for Cup of Rewards. With the increasing appetite of Australian shoppers for private label products, programs like this have potential to provide additional brand stickiness. More than a few bean counters will be watching!

Good one for Myer?

The Myer One program has risen in less than five years to the position of one of Australia's better loyalty offerings. Importantly, Myer appears to "get" loyalty programs. Myer chief Bernie Brookes made a few marketers sit up and take notice when he recently revealed that the department store now spends more money on Myer One than it does on its entire above-the-line marketing. Now, you have to take into account the millions spent on those reward gift cards, but when one considers Myer's massive triumvirate of TV, press and catalogues, that's still saying something.

And for me, the true sign of success of a loyalty program is when it pervades the entire organisation and occupies a position in the middle of the organisation - as opposed to being viewed as a discretionary marketing activity. The Tesco Clubcard is the much-cited international example of this. But Myer One is heading in the Tesco directionin my view. For it is clear that the profound power of the data that Myer collects upon every swipe of the card (and the resulting gift cards) is being used by management to gain insight into all parts of its business - from store selection, to product ranging, to price points across different stores and so on. Additionally, Myer is going to great lengths to speak (generally) in a relevant, timely and appropriate manner to its members.

The recent tiering introduced by Myer (the first attempt in 2004 was a bit of a mess) is a step in that direction, with its best and better customers plonked into Gold and Silver categories. Myer takes this a step further by encouraging each store manager to develop a dialogue and close relationship with that store's best customers. Even chief Bernie gets into the one-on-one action, stating he's had Myer's five best customers nationwide around for dinner.

To Myer's credit it appears to have found sufficient resources to unearth the jewels in the database that Myer One has provided. In this respect, it provides a salutary lesson to its fellow major retailers in Australia. It is the power of the data above all else that will generate a return on loyalty investment. Myer seems to get that point best of all.

Books and cards: an update

Further to my engaging treatise on loyalty in the Aussie book retailing space, there's been some movement. Angus & Robertson, which incidentally failed in its recent bid to buy out the Borders chain in Australia has recently jumped into the loyalty space with its own program. It appears to be a fairly standard spend-$100-get-a-$5-voucher deal, similar to Dymocks Booklover, which rewards you at the same 5% level without the need for the $100 threshold.

A&R ignored my sage advice that they were previously creating a point of difference via their mouth-watering $5 discount tables. Presumably that wasn't doing enough for them, but I wonder if this program is more a defensive strategy. And interestingly, A&R has used as its platform the graphic card interface promoted by NZ-based Visible Results. The neat looking technology rewrites the loyalty entitlements and other marketing info on the loyalty card at each successive visit to the retailer. While this technology has been bouncing around for some years now (Mobil Max, an early competitor to Fly Buys in New Zealand was among the first in 1998), and the Brazin Pulse program is the most "visible" Australian client, it's curious that Dymocks moved on from this technology in favour of a traditional card format when it revised Booklover a few years back. I don't know the ins and outs but presumably A&R is happy to jump into a format that didn't appear to suit its competitor. Can't wait till the next chapter!

Reverse thrust for Boost loyalty?

Boost juice bars have been one of the retail success stories of this decade, with rapid expansion and acquisition taking the chain from its first store in 2001 to not much short of 200 stores today under the leadership of entrepreneur Janine Allis. The fresh, bright, youthful execution of the brand has been one of the keys to the success of the venture.

But in the loyalty stakes, I'm not sure the execution has been handled as brilliantly. Boost's first loyalty device was an unremarkable stamps-on-card, get-nth-juice-free deal. Then came the VIBE club, accompanied by a nice bright piece of plastic, and an unfettered 10% discount on every juice purchased. Great deal for the consumers, but who were they rewarding? Well in my case, I was by any measure an infrequent visitor to my local Boost juice bar, but on one such visit, I was given a VIBE club card - no questions asked! I think I may have just had to hand over an email address - easy-peasy.

So I was a happy camper, but I couldn't help but wonder, why were they frittering away 10% of their margin on me? In my case, I enjoyed the discount, but I'm just not so keen on those bars and it certainly didn't increase my frequency, and I don't think I particularly hunted out a Boost bar compared with the competition. So any sense of rewarding your best customers, or providing an incentive targeted at gaining the maximum sales uplift appeared to be missing.

Fast forward a few years and the impact of whatever happened in the intervening period meant that Boost had to change their tune for their valued club members. And they did so via a simple message - the 10% off deal was gone.

Withdrawing a benefit isn't easy. Perhaps if Boost had garnered its best customers under this scheme, say the best 20% of their juice-buying public that was generating 70%-80% of their revenue, they would have considered providing a 10% discount ongoing. As it turned out it was hard not to avoid leaving a pithy taste among their juice-buying public.

Loyalty: inside the shoppers purse

Vogue Australia's website forum provides an often fascinating insight into the hearts and minds of a interesting slice of Australian heartland.And a thread I came across recently gives us a sly peek inside the purses of what I suspect is probably a hard-core shopping sisterhood.For those seeking insights into the each of loyalty programs and discount cards, it's some interesting research that comes for free!

When prompted to empty their purses and handbags for their favourite or most-used cards, three were heavily mentioned - FlyBuys, Myer One and Priceline. No surprises there I suppose. For me, it shows that the Myer program has come a long way in relatively short time. And for Priceline, an affirmation of its place in Oz loyalty land despite my misgivings. What came next, or didn't come next, was of more interest. Clothing retailer cards are dime-a-dozen, and Country Road, Cue and Portmans stood out from the pack. But food-related cards were surprisingly prevalent, with the Boost Juice card the 4th most cited overall. The Dymocks booklover program got a few mentions, but after that it was the ones not mentioned much that was of interest.

The ubiquitous Qantas frequent flyer program rated only a handful of mentions. Is it not regarded by shoppers as a loyalty program? Is the overlap of heavy shoppers with frequent flyers that small? That had me guessing. Also, the various pharmacy programs were rarely mentioned. Amcal Club, with its million-plus members, barely hit the radar. Is visiting the pharmacy seen as drudgery, to the point that its hard for these programs to engage? The comparison of supermarket / petrol purchasing and FlyBuys perhaps suggests something else is at play? Has Priceline moved into Amcal's space?

Bulletin boards and forums aren't immune from bias and even viral marketing, although there's not much evident in this thread. Readers of Vogue may not perfectly match middle Australia, but their news and views do provide loyalty food for thought.

Seduced between the covers

There’s a nice little battle taking place in my local strip shopping centre. Within a stone’s throw of each other, there’s each of Dymocks, Angus & Robertson, and Borders. The latter, definitely cast in the role of foreign interloper, has made a splash since its arrival in my local centre a year or two back. Massive range, extended hours, adjoining coffee shop, unlimited browsing. Not quite the David & Goliath battle tellingly portrayed in You’ve Got Mail, but certainly a massive threat for the local incumbents.

Part of Dymocks initial response was flawed, appealing to local bookworms’ sense of patriotism, proudly pointing to its long tradition of Australian ownership. For what does this count in the loyalty stakes? Not much at all, I'd suggest. Retail Australia is littered with the remnants of Buy Australian campaigns. However, it is worth reflecting on the other loyalty devices used by these chains. Dymocks has invested over the past few years in its Booklovers program. Quite a neat loyalty card, where 5% of your purchase price is redeemable as a discount on your next visit. Options to receive email newsletters, but unimpressive servicing options (their web page refuses to recognise my card number).

Over at Borders, you're encouraged to receive their weekly emails, which contain the usual book reviews etc, but also contain weekly discount offers. These discounts are variously targeted by product (e.g. DVDs only, children’s books only), by quantity (buy 3 books, get 20% off) or sometimes just a sizeable unconstrained discount (30% off any book). The gregarious nature in which the emails are offered combined with the attraction of the discount suggests that a reasonable proportion of their sales are subject to these discounts. Mere observation of the number of Borders customers armed with the discount coupons at point of sale tends to reinforce this. How much is this loyalty device costing Borders? A hint that Borders itself is questioning this device came in the form of a recent online survey which queried whether there was anything in the email newsletters that was of interest, apart from the discount coupons.

Across the road, Angus & Robertson has bravely resisted jumping into structured discount programs, either the formalised loyalty card of Dymocks or the emailed discount schedule from Borders. If anything, the bargain bins have been A&R’s go. And I have to say I was mightily impressed this month to see some reasonable titles thrown out for just $5 – genuine bargains. That in itself has been sufficient for me to make sure I pop my head in to see what’s on offer. You don’t always need a highly structured or technologically elegant loyalty solution.

Who’ll win out in the end? Borders seems likely to have the resources to come on top in any fight. For the others, who knows? For the time being, the winner just at the moment appears to be the book loving public – bigger choice, longer hours and good prices. Or have I just been sucked in?

One-derful for Myer?

The Myer One loyalty program seems, on the face of it, to have been a winner for Myer. These are heady days for the department store group, with every statement from supremo Bernie Brookes intended to impress. And with Jennifer Hawkins standing up nicely to DJ's M. Gale, things appear headed in the right direction.

And amid Bernie's latest profit announcement came an update on the Myer One program. Bernie stated the program had 1.6 million customers on board, growing by 30,000 a month, and that over 55% of sales were on the program, compared with 43% at the time Coles sold Myer.

The growth figures are impressive. But I'm interested in 55% "penetration" of sales being a similar badge of honour. So is it a case of the higher the better? To my way of thinking, with $1,000 spend attracting a $20 gift card on Myer One, that means that 55% of Myer's sales are subject to this 2% discount. It all depends. If that discount is helping to lock in those sales, then fair enough. But what proportion of those sales was Myer going to get anyway? Does Myer know?

Because the tricky little key to loyalty programs is to offer the carrot in return for "sympathetic" shopping behaviour from your customer. If the carrot is being snapped up by customers who remain indifferent to you, then you've not gained.

Ignoring the above, with so many customers on board, Myer is collecting a lot of great information about its shoppers. And that in itself is valuable. And with Myer sharing a place in the same family as Debenhams, you'd hope that some of the learning gained by TPG with that retailer may be of benefit in harnessing the power of the data within Myer's grasp.

The Myer One program, in global terms, is in the middle of the pack as far as department store loyalty offerings are concerned. Certainly the changes they made about a year go turned it from something that was possibly too smart (read "complicated") for its own good, into an uncomplicated offering that delivers some benefit for its loyal shoppers. The new store card, and the soon-to-be-launched Visa Card may well work in well with the program. There are some signs that they're starting to do some good things with their data. Measuring the actual incremental benefit is a critical question that remains outstanding, but among all the arrows in Bernie's quiver, this One may well hit the target.

Sub Club sunk

I am old enough to have observed my children’s tastes swing markedly over the years from McDonald's to Subway. While Maccas seems stuck in a no-man's-land between cringing promotion of its healthier-than-healthy options while still trying to satisfy the basic urges of the chip-and-burger brigade, Subway has successfully ridden the public wave of better eating.

Subway’s offering is straightforward and uncomplicated. While none of its franchisees or their staff has attended a Subway equivalent of Hamburger University, it seems to offer reasonably healthy food at reasonable prices with reasonable service usually thrown in.

But one change has been the demise of Subway’s loyalty program, Sub Club. It was long lasting, fairly simple to execute and rated about a three out of five stars for customers. In classic green stamps fashion, you were handed a number of coupons or stamps based on what you’d bought, affixed them to your Sub Club card, then redeemed when you’d filled up the card. Fairly simple mechanism.

Where Subway lost points was that it wasn't quite simple enough. While the stamp-earning formula was fairly straightforward (one stamp for a "six-inch", two for a "foot-long"), it was more confusing how the “burn” end worked out. I always had to remind myself from the fine print on the card what I really would get out of it. And it was - collect 8 stamps (one full card), then if I buy "one medium fountain beverage", I’d get a free six-inch sub for nothing. Alternatively, I could collect 16 stamps and get a free foot-long sub if I purchased a fountain drink.

With loyalty programs it matters less if I don’t perfectly understand the "earn" rate, but if the “business end” is hard to understand – the “what’s-in-it-for-me” bit, then that’s more of a problem. Also, if it has too many hurdles – in this case the mandatory drink purchase - then it can start to lose gloss.

Nevertheless, with Subway’s Sub Club, I soldiered on. With all my family members happy to frequent Subway, we racked up he stamps rather quickly, and I got used to the way the deal worked. I was even handed stamps at a Subway in London, fully redeemable in Warrigal Road, Ashburton!

But Subway wasn't enjoying the deal as much as I was, and last year announced the end of the party. No more Sub Club.

Now, loyalty programs are hard to start up, but they’re a darn sight harder to stop. It’s a bit like the boss handing out the turkey at Christmas – whatever goodwill he or she gained in year 1 is more than wiped out when he or she forgets or decides against it in year “n”.

Subway didn’t fare too badly. It gave customers plenty of notice about when the stamps would no longer be handed out; it gave them plenty of time to cash in their chips and then when it was all over it actually handed out cash discounts for any cards not filled up – a 100% redemption rate play at the end of the promotion. Hard to fault that. The only thing that irked was their mixed messages about why they were pulling up stumps. The notice in-store stated that the Club meant that only some customers, not others, were getting the goodies, so it was somehow inequitable. Purlease! Try extending that principle elsewhere in society! The reason more widely promoted, even by Subway, was that the opportunities for fraud, no doubt coupled with general moral decay was pushing up the share of chancers and sheisters getting unscheduled access to treats. When Sub Club stamps became widely available on eBay, Subway's owners were not overly impressed. Even worse was the talk of staff theft of the stamps, evidenced by entire rolls of stamps appearing online! So maybe the demise was inevitable.

The bit of data I don’t have regards the residual impact of stopping the loyalty program. Of course there’s no public data available on that. And it would be hard for the Subway bean counters to work that out as well. Because ultimately loyalty programs only offer the cream on top. The world’s most effective loyalty program is only going to add a marginal benefit to the bottom line. Could be worth millions if you’re big enough, but not so easy to read off a 3-D column chart or a low-angled, tilted, chunk-out pie chart!

In some countries, a new Subway loyalty card has sprung up. But for us in the rest of the Subway world, we're missing our stamps. Would Subway be regretting its move? What do you think?

Forgot to show my card and save

Show Your Card & Save is the benefit program adopted by Australian Auto Clubs over the last few years, apparently lifted from a scheme set up in the US in 1993.

I was intrigued by the long list of benefits on offer when it was first spruiked by RACV, the automobile club to which I belong. Certainly in terms of volume it seems to beat any similar offering I've seen.

And yet there is something intrinsically frustrating about this benefit program. And that is, I just can’t remember who the benefit providers are. The only one I've been able to commit to memory is Rebel Sport, 5% discount there, quite useful. But of all the rest, I just can’t recall. At one stage I kept the page out of the RACV mag that has the list of participants, but it’s not as if I’m going to carry it with me.

Yet here’s the rub. You can bet that nearly all the benefit providers won’t be putting up in lights that they’re part of the Show Your Card & Save program. After all, what’s in it for them, once you're in the store? They’d be hoping that before I set out to purchase an item, I’d check out the list and head their way, but I'm afraid it’s just not going to happen that way. And they’re not about to ask me at the check-out if I'm an RACV member – it would be akin to them asking me “how would you like to claim 5% of my margin that you weren’t really expecting as a discount?”

So I see it as a bit of a loyalty program with your hands tied behind your back. For the participating retailer, they’ll be handing out the occasional discount, but it’s hard to see members seeking them out, if like me they suffer from the can’t-remember-who’s-in-it problem. For an RACV member like me, there’s the frustration of finding out some time later that I had foregone a discount, if only I’d remembered to show my card and saved. And what’s in it for RACV? Well, maybe they’re the winner in all of this – they get to paint the picture to members that there’s a world of discounts waiting for them. Maybe only the astute (or anal) member will delve deep into the list and find out that some of the participants are giants of commerce like Wombat Gully Plant Farm or Wooling Hill Memorial Garden Estate.

Of course, benefit programs aren’t solely the domain of auto clubs. The Virgin Money credit card, in its tip-our-nose-at-those-nasty-banks mode, touts its Mates Rates deal as some über-offer to trump the standard credit card reward programs. Behind the veneer is a slightly underwhelming collection of offers. And only slightly more distant cousins are the likes of the well-worn Presidential Card, Entertainment Book, and a newer entrant - the My Rewards program.

My Rewards seems to have had some recent success in offering itself as a kind of club plug-in, a small something that might make a point of difference in seeking subscribers to a particular service. Sturt Football Club, the SANFL team for which I retain a deal of affection, offers it with every membership pack, while the other day Gary & Warren Smith offered it to me as a point of difference among Honda dealers. Again, perhaps helpful for the entity offering it to clinch a sale, but I fear of marginal utility to the unsuspecting consumer. Perhaps just another chance to forget to show my card and save?

Some opening points

This blog has been created to discuss retail loyalty programs, from an Australian perspective. "If you want loyalty, get a dog" claimed one loyalty commentator, thus inspiring A Loyalty Doggerel. In the Australian landscape, loyalty programs have reached some state of maturity or at least steady state, after a journey of fifteen or so years or more.

From the frequent flyer programs of Ansett and Qantas in the early 1990's, the watershed introduction of FlyBuys in1994, the proliferation of credit card programs in the wake of FlyBuys, through to the crafted retail programs of the 21st century such as MYER one or EmailCash, the Australian loyalty landscape is worthy of commentary.

What have Australian retailers got to learn? Have these programs made a difference? Why do companies invest? Do customers really care? What if they all disappeared? What makes one program more effective than another? How do Australian loyalty program shape up against similar programs overseas? What about the Australian retail scene makes a loyalty program more or less effective in Australia compared from their overseas counterparts? How do similar markets such as New Zealand compare? There are many points to ponder. I hope, if you've stumbled by, it's a rewarding journey!