Will third time be the charm as grocer changes loyalty program again?
Setting up a loyalty program that effectively keeps customers happy without giving away the farm is a balance retailers always have to consider. It’s one that Australian supermarket Woolworths has had severe difficulty finding, as it is now retooling its loyalty program for the third time in response to customer dissatisfaction.
Things got complicated for customers and Woolworths alike when, in October of 2015 according to The Australian Business Review, the supermarket first revamped its loyalty program. The old program, based on a relationship with Australia’s Qantas Airways, allowed members to accrue frequent flyer points. The Qantas points program was scrapped in favor of a program called Woolworths Dollars, which moved away from discounts tied to a third-party. Woolworths Dollars allowed the accrual of points only on select, orange-stickered items, good for in-store discounts. In response to social media outcry, Woolworths reneged and made Woolworths Dollars transferable into Qantas points at a rate of 10 Woolworths dollars for 870 Qantas points. That was the first backpedal.
In late August, Woolworths will replace the current system with a “Woolworths Points” program, which rewards customers with one point per dollar spent on any item in-store, according to Australian Business Traveler. When customers reach 2,000 points by spending $2,000, they can convert their points into either a $10 discount or 870 Qantas points. Purchases at Caltex, a gas station affiliated with the supermarket, and liquor retailer BWS, also count toward points.
In a discussion on Australian Business Traveler, users PatD and Mark77 noted that the old program privileged big transactions, while the new one rewards cumulative spend. Many of the other comments were skeptical of Woolworths’ move.
The numbers back up the unpopularity of Woolworths’ pre-August iteration of its loyalty program, with only 41 percent of respondents surveyed in June said that their rewards program offered good value, according to news.au.com.
The chain has been struggling with issues other than its loyalty program. In July, Woolworths CEO announced that he would be closing 30 underperforming stores, selling a recently acquired online business and cutting parts of a planned $2 billion restructuring attempt according to Australian Financial Review.
- Woolworths backflips again on in-store loyalty program – The Australian Business Review
- Reports Woolies is bringing back frequent flyer points – News.au.com
- Woolworths brings back Qantas points in revamped rewards scheme – Australian Business Traveler
- Woolworths cuts 500 jobs, slows store roll-out, explores Ezibuy sale – Australian Financial Review
DISCUSSION QUESTIONS: Where do you think Woolworths went wrong with its loyalty program and can the most recent restructure help renew customer confidence? Should retailers acquiesce to customer dissatisfaction with loyalty programs as Woolworths has? What can other retailers learn from the move?