Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

Why points based loyalty programs are a thing of the past for small business retailers like newsagents

Mark Fletcher
December 30th, 2015 · No Comments

Recent moves by the Woolworths supermarket chain in Australia have highlighted the sham that is major retailer loyalty programs.

Having to spend $300 and more on very specific products to get the right to request a $10 voucher that you have to spend in-store is cumbersome and not good value. It is not a reward for loyalty.

It has resulted in plenty of news stories about the Woolworths and other programs that work off points and that are more about basket analysis by the retailers than genuine shopper loyalty rewards.

Some reports have labelled points based programs old-school, yesterday’s loyalty. I agree with this assessment. That would not be a surprise to regulars here. In February 2013 I started using discount vouchers in my newsagency and I have not looked back since. Double digit growth year on year. I can track the start of it to the implementation of the discount vouchers.

Some newsagents have been late to realise this while the early adopters on of new loyalty have been benefiting for a while.

The points based programs look and feel like big business programs. Me too marketing rarely works for small business. Small business retailers need something different, more immediate, more easily understood. This is why I think the discount vouchers work well. They are simple and effective. From a  business perspective the cost and the liability are easily managed.

A well structured and professionally implemented discount voucher program can pitch your newsagency business differently to those with whom you compete. It offers genuine reward for loyalty and this is what drives shopper engagement and delivers the growth I write about.

I was talking with a retailer last week who is transitioning off a points based program because they have realised that their offer is not that different to the big retailers. Having a point of difference when it comes to loyalty is vital.

Footnote: I was talking to the new owner of a newsagency recently who had not allowed for rewarding loyalty accused while the business was under the previous owner. The previous owner refuses to fund the liability that had accused under their watch. They did not disclose the liability to the purchasers. The matter looks set to go to court as the new owner is quite aggrieved – and rightly so.

Regardless of the loyalty program you use, it is vital you track it as an asset and a liability of the business. The data must form part of what is sold with the business.

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Category: Leadership · Newsagency management

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