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No s%#t, Sherlock.

Businesses are not charities. Loyalty schemes are designed to make more money. They make more money by encouraging people to buy from a particular store or chain.

Choice magazine found that consumers need to spend $100 to earn $1 dollar in rewards in loyalty programmes like Flybuys.

You could save that much by walking down the road and buying a single bottle of Coke on special, rather than paying full price at your loyalty card issuer’s store.

Research …  shows to earn a $50 voucher, using FlyBuys and Woolworths Everyday Rewards schemes, customers must spend almost $11,000 at Woolworths and more than $15,700 at Coles.

The findings are based on Roy Morgan Research figures that show in the year to last June, the average Australian shopper spent $156 a week in supermarkets. It would take seven years to gain enough points for a Virgin Blue flight from Sydney to Melbourne using the FlyBuys system, the report claims.

And since points expire after three years, all that loyal shopping and swiping your Flybuys card is not going to earn you anything.

Even if you don’t use a loyalty card, and shop for specials wherever you find them, you are still paying for loyalty schemes, because extra staff time, stationery and other costs of administering the scheme have to be built into store pricing.

2 Responses to “Choice Magazine: Loyalty Schemes Cost Consumers Money”

  • Choice’s analysis was misleading and inaccurate. There is not one of 10 million FlyBuys cardholders that relies solely on grocery purchases to gain points. Unsurprisingly, those same households that buy groceries also fill their car with petrol, buy liquor, own credit cards and visit the likes of Kmart and Target. And they collect FlyBuys points across all of those activities, and more. If I was to take your conclusions and Choice’s headlines literally then how would I account for the millions of rewards FlyBuys hands out every year? The truth is that Australian households find they can get a FlyBuys reward in as little as 2-3 months, just by doing their everyday shopping. Disclaimer: this response comes from Loyalty Pacific, which operates FlyBuys.

  • Peter says:

    Yes, some people do get rewards.

    But that doesn’t address the main point which is that overall, loyalty schemes do not save people money, because the cost of administration, advertising, stationery, etc, has to be added to prices.

    You are certainly better off ignoring reward schemes and just shopping for specials, but even so, you are still paying your share of those additional costs.

    It’s a bit like Lotto – a tax on stupidity – except that in this case you pay even if you don’t join.

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