The high price of loyalty
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How can loyalty programs help save money during a cost of living crisis?
In a cost of living crisis, we're all looking to save wherever we can, and loyalty programmes seem like a good way to pocket a few extra dollars at the till.
We'd like to welcome everyone aboard KORU, Air New Zealand's loyalty programme, with even more rewards influenced by our customers.
Zed Rewards gives you a discount on fuel every day and points for almost everything you buy, including EV charging and fuel.
If you're a New World Club Card member like me, starting June 15, New World's saying goodbye to Club Card and hello to Club Plus. It's everything you love about Club Card, just smarter.
All you need is 2,000 points to earn a $15 voucher. Spend $100, $500, or sometimes even thousands of dollars and get some of your money back, or even a free coffee. But as the saying goes, there's no such thing as a free lunch. So what are you giving up in exchange for a couple of bucks back?
You know, sometimes loyalty programmes, for instance, airlines' loyalty programmes, can be worth more than the airline itself.
What changes are being made to popular loyalty programs like New World Club Card?
So, you know, it clearly shows something about the value of the data.
That's Associate Professor Laszlo Sajtosz from the University of Auckland's Business School. Later on in the podcast, I'll talk to him more about how loyalty programmes create a personalised experience and the clever ways they're costing you. Kia ora, I'm Chalice Tansey and today on The Detail, is the price you pay for being loyal a fair one? Loyalty programmes were created for the purpose of attracting new customers, keeping the current ones, and enticing people to buy more. And they're becoming a big part of Kiwi's shopping habits. According to Consumer NZ, 9 out of 10 Kiwis are part of a supermarket loyalty programme, and it's not just the supermarkets running them. Of course, there's Everyday Rewards and Foodstuff's new Club Plus, but we've also got Kuru, Mecca Beauty Loop, Mobile Smiles, the list goes on.
Let's start with where they started. Here's Consumer NZ's research lead, Rebecca Stiles.
What are the hidden costs of participating in loyalty programs?
Well, I think the biggest one in New Zealand was probably flybys, and that started in the late 90s. Of course, flybys is no longer, and we see more these days as individual stores that are offering their loyalty programs rather than sort of a collective of retail outlets that are controlling the reward points.
And how have they developed over time?
Well, I think they've developed as it's gotten easier to collect shoppers' data. So, for instance, when you go to the supermarket and you swipe the card, the supermarket is getting a view of... Everything you buy, where you live, they can contact you. So for instance, Woolworths is closer, so I go there, so I'm signed up to their rewards program and it will now send me, there's like bonus offers or deals, so it sort of can target particular products. to you it all can also see you know what brands what you're willing to pay for particular products as well so it's getting these really useful insights basically to collate and you know see if they can get as much money from you as possible essentially and outside of collecting our shopping data what other information may consumers give when they're signing up for these loyalty programs
Sort of, you know, your phone number, your email, your address, so they know where you live and they can, you know, use that to extract the demographics of that particular area and get more of a picture of a neighbourhood and what they're willing to spend on, you know, whether it's clothes or shopping or what have you. It can seem quite benign, data, as we're giving it away, but it is actually used to the most benefit for businesses to see, you know, in what specials work, what specials don't work, what promotions we respond to, what stuff falls flat. So it's a huge data pool that can extract this really useful information for businesses to see what we respond to and what we're likely to spend money on.
And that is really important data. How valuable is that to these companies?
I think it's super, super valuable.
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Chapters
8 chapters
1
How can loyalty programs help save money during a cost of living crisis?
0:02–1:03
2
What changes are being made to popular loyalty programs like New World Club Card?
1:03–2:05
3
What are the hidden costs of participating in loyalty programs?
2:05–4:47
4
How do loyalty programs collect and use consumer data?
4:47–6:27
5
What vulnerabilities do consumers face when sharing their data with loyalty programs?
6:27–8:21
6
Why are loyalty programs still popular despite their drawbacks?
8:21–9:42
7
How do loyalty programs affect consumer spending habits?
9:42–11:04
8
Do loyalty programs provide real value to consumers?
11:04–22:04