Woolworths faces protracted battle to maintain loyalty after ditching Qantas deal says expert
Woolworths will have to dig deep and invest heavily for at least six months to regain customer loyalty after announcing it is splitting with Qantas as part of the revamp of its Everyday Rewards Program, according to a loyalty expert.
The retailer has triggered a wave of customer outrage over the decision to part with Qantas in a move that will see many members lose unredeemed Qantas Frequent Flyer Points. Woolworths will instead offer members cash discounts as part of the rewards scheme rebranded Woolworths Rewards.
Both Woolworths and Qantas informed their members of the decision in emails on Sunday morning with the social media backlash almost immediate.
Chris Doufas, co-founder and managing director of The Loyalty Group, said while travel rewards were not as valued by consumers as more immediate recognition of loyalty such as cash discounts, the loss of the partnership with Australia’s biggest loyalty scheme was going to have deep repercussions.
“People ultimately want to get something back that’s tangible,” Doufas told Mumbrella.
Now if Coles decide to offer Virgin FF points; this would hammer another nail into the coffin of Woolworths and QANTAS!
With Woolworths seemingly playing catch up to Coles, while Coles is increasing market share and Woolworths losing market share, its interesting that Woolworths announced axing its FF arrangement at about the same time FlyBuys announced bringing Etihad (a substantial owner of Virgin Australia) on as an airline partner. Someone doesn’t seem to be reading the market, but i guess time will tell if this move was successful.
It’s been reported elsewhere that more than half of Woolworths Everyday Rewards members weren’t actually linked to Qantas, while the new program is obviously relevant to everyone. A marketing strategy that moves from 50% relevance to 100% relevance would usually be seen as genius…
Strange play I smell a finance dept here… must be a cost reduction to free up $ to put into price.
The note from WW said they’d done a survey. Not sure with who but odds are they are going to lose from this as there is very little points of difference between Coles & WW… Well one, there is half decent customer service at Coles….
Everyday Rewards was a huge con. I kept swiping my card at the self serve checkout and nothing ever happened. There were *no* rewards at all. There was only one time Woolies had something I bought which had a discount for Everyday Rewards members.
Yep, it smells of bean counters to me
Only the deeply stupid will think this is a good idea.
Well, flybuys have partnered with Etihad,
Etihad are partnered with Virgin.
Ipso facto, Coles are partnered with Virgin…
And it’s absolutely a cost cutting exercise from WW, everybody it abandoning QFF points for being too expensive.
The psychology of a big number of points is far more valuable than the actual value of the points.. The cost of QFF point prevented EDR competing with flybuys big bonus points offers on a weekly basis.
If you read the WW statement closely I think you’ll see the new program isn’t points based it’s basically going to be save “WW Dollars” on specific items.
So pretty much more supplier gauging, I mean funding…
This will probably hurt Qantas, financially rather than marketing wise, pretty heavily if not more so than WW I’d think as well, QFF is a very lucrative part of their business, at while they were in turmoil a few months back.
Agree with the gist of the article. EDR was always a distant poor cousin to QFF and it gained more from the relationship than QFF (at least in terms of the customer – I’m sure Qantas lined their pockets with Woolies money through the sale of points).
Without QFF Woolworths Rewards is nothing.
Meanwhile, the communications from both parties make Qantas come off as the jilted partner, and they have lost nothing in all of this. Woolies failed to emphasise the value that customers would receive by backing out of the deal, or something – anything – than the drivel that they ended up putting out.
Trunking Symbols – with EDR you get EITHER the 4c discount or the FF points when you fill up. The default is the 4c discount. You have to login to the EDR website and change your preference to QFF points if that’s what you wanted.
For the ill informed this move will cost them more than QFF by a large number if the $500M price tag is correct.
QFF program cost significantly less, the SMH had it pretty close.
http://www.smh.com.au/business.....kid73.html
What members did they survey.. maybe they asked the spin doctors in the marketing department or the accountants in financial department. Woolworths market share drop is because they failed to understand not everyone wants home brands. typical of all market dominated by one or two major players.. they think they can put anything on the shelve snd people will buy it.. aldi does well cos it understand cheap doesnt mean inferior quality.. they need to go back and asked their customers that r leaving in droves what will mzke them feel good . Dropping the qff is a bad decision but themn some director will get a bonus for it ..
Not really going to affect me – I didn’t sign up for FF points in the first place.
Monash University have crunched the real numbers on both Woolworths Loyalty schemes. For every product purchased with an orange price tag (selected items only!!), consumers will receive a 15 cents discount. When these lots of 15 cents add up to $100, shoppers will receive a $10 discount. On average shoppers will accumulate $1.30 for every $100 they spend.
Under the old scheme were with Qantas, shoppers would receive 10 cents to 20 cents for every $100 they spend.
New scheme: $11.30 for every $1,000 spent
Old Qantas scheme: $1 to $2 for every $1,000 spent
That’s a shitload of groceries before you accumulate a discounted 1 way economy fare to Melbourne. Can anyone honestly tell me they would switch supermarkets because this old Qantas scheme is being dumped?
Is it any wonder that so many people have switched to Aldi as the loyalty schemes are a crock and clearly seen through by consumers who just want to save money!
yes tony! what woolworths and you fail to appreciate is that the scheme kept qff members points alive and growing. it isn’t all about the money. Qantas is an iconic Australian Brand – one of the few left. I don’t care about saving $11.30 per $1000 on stuff I don’t want to buy (as it is selective) versus $1 – $2 dollars per $1000. I care about contributing to my next family holiday with my favourite Aussie airline!
(by the way I also shop at Aldi and Coles and only shopped at woollies for the QFF points)
I have sent the new Rewards card back to them and told them what they can do with it. Their stores are tips, prices are rip off and the managers don’t care.