Why loyalty schemes arent worth the effort

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DO you feel like every time you’re at a cash register these days, a retailer is offering you membership of their loyalty scheme?

Its not surprising, with hundreds of loyalty programs operating in Australia and the number growing as online operators multiply.

However, signing up to every loyalty scheme is likely a waste of time.

Adam Posner, a customer loyalty specialist and CEO of consultancy Directivity, says businesses benefit when you join their scheme because they get your spending data and demographic details.

He says while some people use loyalty programs to get great rewards, it usually depends on how much you spend.

If you shop around too much in a category, you will never get the benefit.

The biggest problem today is people are changing their programs all the time.

Credit card programs are reviewing their benefits ahead of changes to surcharge rules and bank interchange fees, while Woolworths watered down its rewards program last year.

New research by Directivity found that Coles flybuys remains the most respected loyalty program in Australia, and that people who use loyalty programs have an average 3.9 memberships.

Consumer group Choice isnt a fan of loyalty schemes, and in a report earlier this year outlined the rich data that they provide retailers.

It reported that Woolworths, for example, was able to work out that people who drink lots of milk and eat lots of meat are a better car insurance risk than those who eat lots of pasta and rice and buy their petrol at night.

Loyalty schemes are a bit of a waste of money and tend to benefit retailers much more than they benefit consumers, Choice spokesman Tom Godfrey says.

You are giving up a great deal of data about yourself. If theres a better deal next door with another retailer, you may as well take it.

A Woolworths spokesman says its rewards program is first and foremost a way of rewarding loyal customers.

The supermarket giant copped a consumer backlash after it revamped its program in late 2015, removing rewards based on every dollar spent and replacing them with a program that only rewards purchases of a small proportion of its grocery items.

Our members have responded positively to the core concept of automatically getting money off their shopping, the spokesman says.

At the same time, we have acknowledged that while many members are earning well, a number are not.

From the end of August members will earn rewards on every dollar they spend in Woolworths Supermarkets and BWS stores, and for the first time, members will also earn on every dollar they spend at Caltex Woolworths outlets.

@keanemoney