Postcards from Perkistan

Okay, so after being asked by a range of media outlets what I thought of the Choice wrap-up of loyalty programs I thought I’d better sit down and pencil in a response for our members.

Firstly - if you haven’t read the Choice material, you should.

Here are some top of mind thoughts - I’d love to know what you think.

Loyalty Card Review or simply supermarkets?

Firstly (and I know this is being a bit trite) but headlining your article as a Shopping Loyalty Cards story and then only really reviewing two supermarket programs in detail and anecdotally looking at a couple of other larger programs seems a bit disingenuous.

I used Choice a lot when I was having kids and I didn’t expect them to do reviews of prams or cots and only look at the two major brands… If it’s a review of Supermarket Points Based Loyalty then call it that!

The reason this is important is that the media (and now Choice) can be guilty of not relating the loyalty market to a total consumer point of view. Supermarkets are important but a large amount of discretionary spending takes place in other retail segments - holidays, transport, insurance, fashion etc.

Picking one segment and then using this to say ‘loyalty programs don’t offer anything’ is simply wrong. Saying - ’supermarket programs in their current form offer low earn ratios when used without any related offer’ is a bit more correct. But it would have been a short report then!

I take on board that they also looked briefly at Myer, Priceline and a couple of others but this story was all about having a close look at the big two supermarkets (in my opinion).

We have over 650 loyalty programs in the Perkler database, ranging from membership entitlements and pure discount programs through to points accumulation. Each one of these types of programs, across multiple retail segments, is the consumer reality. This breadth of the industry simply isn’t addressed by Choice.

And that’s okay, just be clear about it when you are using the loyalty market to get publicity!

The maths of loyalty

The part of the report focused on the maths around earning points and the time taken to earn vouchers and flights is spot on (as you’d expect). I think Choice have always done an excellent job of breaking complex consumer interactions down to the simplest form to helppeople.

I guess what I also expected to see here is the linking of bonus deals and related programs that make this point generation more attractive. Phil Hawkins from FlyBuys certainly touched on this in the press that he did, and in fact Choice acknowledge the existence of these deals in one of their tables without then bothering to add those scenarios into their top line equations.

Under ‘What you get for your loyalty’ they say “You’ll earn more points and rewards sooner if you pay with an affiliated credit card, use your card at other program stores during the same week, do only one weekly shop, spend more or make use of bonus point promotions” Exactly. So where is the modelling to show how this affects the assumptions they made?

I think it’s a shame that Choice didn’t look into this. It could alter the story by a fair amount.

What those mean retailers really want!

This was the part of the story I found the most bewildering. Not because any of what was said was wrong, but because it seemed so naive. The report makes constant references to supermarkets and other retailers trying to trap consumers into giving away information, get them to shop exclusively at their stores and discriminate on discounts.

I would have thought that all of these tactics are widely known and accepted by consumers. Maybe I’m wrong, tell me if I am, but part of the loyalty dynamic is that consumers accept that the retailer is collecting information about them in exchange for a benefit!

So when I see “Discount Discrimination” in a story that is critical of programs not offering enough, I don’t get it.

I also think “Discount Discrimination” is “Tailored Benefit” something we’ve been trying to push programs to get better at. If it is a loyalty program, why should the guy who doesn’t buy as much get the same offer, even if we live under the same roof?

And Finally

I’ve only really touched on a few of the points here. I may be too close to this market now but I guess my overall feeling on the story was, yeah - so what?

The gaps in analysing the broad range of programs, investigating the relative worth of bonus shopping days and hidden member benefits like those you find in affiliated programs left me a bit underdone on this one.

From what I can tell, Choice got good press on this one so good luck to them - whether it helps anyone understand the loyalty market and how they CAN save I’m not so sure on.

But there’s always perkler.com for that

PS: no retailers were involved in the drafting of this response - not even our clients

Heya!
Graham here. It’s tough to find a great sale in the 6 weeks leading up to Christmas, but we’ve found some great loyalty deals that will help you save on some great gift ideas. We’re going to be updating the blog when new cool deals come out.

My mum always loves a good read, if yours does too keep your eye on the Borders Shortlist and Angus & Robertson A&R Rewards. A&R Rewards you need to make a purchase before you can become a member. If you aren’t already then you’re probably better off signing up for the Borders Shortlist. Free, online registration and they send an email once a month (usually in the third/fourth week). Discounts are consistently 20-30% off. This week’s offer is 25% off one non-fiction book.

Candles are also a great idea, and we’ve got another free email signup for you. This one’s with Dusk, pretty much the only decent candle store if you ask me. Go to their website and signup for the dusk candle club. Immediately after joining you’ll receive a 10% off voucher for your first ONLINE order. So get your shopping done early and snag a great bargain: Sign up now

It’s tough to find dad a present that isn’t socks or jocks, or just the same old thing that you get him every year. Give him some excitement this year by getting him a RedBalloon adventure. They’re normally pretty costly, so you’ll have no problems saving on this one. Use your Presidential Card to make the purchase and you’ll receive a $30 discount on any purchase of $129 or more. Nice! Don’t forget to enter your voucher code at the checkout. All the details. The same discount is applied for MBF’s In2Life program.

For all your christmas shopping you can save 5% with your Presidential Card or QRI Lifestyle card by pre-purchasing gift cards. What’s also kinda cool (I asked FlyBuys but they didn’t get back to me) is that you can still earn QANTAS Frequent Flyer points when you make your purchase with a WISH gift card at Woolworths. Sweet, huh?

If you’re in to the hamper market, let’s face it… we all are, you can usually save 10% by ordering through your motor club or by using your credit card. At the bare minimum you’re gonna get some bonus points for it. Confirmed discounts are available through RACQ (usually the other big motor clubs are reciprocal so be sure to check out RACV, NRMA, RACT, RAC, and AANT), ANZ Frequent Flyer Credit Card, Westpac Instant Offers, ANZ Rewards Credit Card, St. George Instant Benefits, Bank of Queensland Q-Rewards.

You can also save up to 20% on Hampers with a National Pharmacies Membership. Simply view the Christmas Catalogue.

Shopping for kid’s toys is always a bit of a hard one to find discounts on. Save 20% by buying online with your Presidential Card at GR8 Toys. Save 10% at Entropy using your QRI Lifestyle card. Sign up to the Australian Geographic Newsletter and receive an in-store coupon. We’ll try to nut this one out and bring you some more great bargains from the free programs out there

Decorations: Keep an eye out for great offers from Myer and David Jones in their monthly instant offers. Failing that you’ve got National Pharmacies with some great low-cost and discounted decoration options that are up to 20% off.

Christmas Entertainment: Reading Reel Club, Hoyts Movie Club, Cine Buzz weekly emails include an exclusive member offer for a discounted movie.
Christmas Entertainment: AMF Bowling AMF Roller club - 10% off everything. They usually include discounted school holiday offers, it’s free to join. Thursday night is cheap bowling night, too

We’ll be sure to add the latest benefits here as they come… Also, you can do your own search from our home page: Search Now!
-Me

One of the most exciting parts of our launch was being asked by A Current Affair to go on a spending spree to show just how much you can save with Loyalty Cards.

At first even we were a little dubious - our take on loyalty is that it is consistent spending over a period of time that gives maximum benefit, but with full faith in the programs out there we headed into central Sydney to the QVB and went shopping.

The results were pretty extraordinary. With no TV magic (really)!) we saved $187.00 in less than an hour. The brands were Oxford, Esprit, Kathamandu, Krispy Kreme and Wagamama.

Each of these stores had great specials on and all of the goods were things we actually needed (well, I didn’t need that Oxford knit but is was nice).

So overall we were very happy with our little adventure. You can see it here. ACA Shopping Spree

The story on ACA was the most popular of the night, so we were asked back to rank our favourite cards the following week. This is an interesting ask because programs are so different and people find value in different ways, but in the end we applied some key criteria to come up with a list. The criteria (loosely) were:

* Instant Benefits rule over accrual

* Local and multiple redemption locations are good

* No or low fee entry is a bonus

The winning card was Show Your Card and Save which is not only the largest in the world but offers significant discounts at thousands of locations.

Other cards to make it to our final list were FlyBuys, Qantas FF, Woolworths Everyday Rewards, David Jones Amex, ANZ EDine, Krispy Kreme, Myer One, Virgin Velocity and Accor Advantage Plus. You can see our reasoning here.

You can also see the full video here. ACA Best Cards

Though naturally it was exciting to get national TV coverage for Perkler as part of our launch week what was the most exciting was the response. The fact that we were the most popular segment, and that hundreds of thousands of hits to the site resulted proved for us that there are plenty of people out there trying to use loyalty better!

While doing an update of the AAdvantage program I’ve stumbled across some interesting 2008 stats for the program:

Q: How many AAdvantage Awards were claimed in 2008?
A: The number of awards claimed in 2008 in each AAdvantage mileage redemption category were as follows:

MileSAAver® and AAnytime® Awards: 2,858,222
Upgrade Awards: 769,527
Product Redemptions: 407,074
Special Mileage Awards / Other Airline / Other: 780,533
Total Redemptions - 2008: 4,815,35

It’s pretty interesting to see that most miles (60%) are redeemed for flights using American Airlines even though there are 20 leading airline partners that members can redeem their points with. Total redeemed on Flights is an astounding 92%.

All flights within continental US are worth 25,000 points flying AA. A flight from New York to Los Angeles on American Airlines is worth around $382. Meanwhile, if we compare this with a 25,000 point merchandise reward we are looking at getting $250 worth of value for our 25,000 points. It certainly seems that AAdvantage members are making the most of their points.

-Me

From the previous blog post I mentioned that the NAB Gold Rewards program has turned into two different cards (linked to the one account), the NAB Qantas Gold Visa (or MasterCard), and the NAB Qantas Gold American Express.

David Jones has just released (2/3/2009) a David Jones American Express card where you can redeem points earned for ANY travel (anything that a travel agent can book can be purchased with their voucher. Booked through AmEx), including Qantas flights.

Here we’ll compare the earning and burning options of the NAB Qantas Gold American Express ($145.50 annual fee) and the David Jones American Express ($99 annual fee) cards.

Shopping In-Store:

DJs: 2 points per dollar, don’t expire, no cap
NAB (in-store means Qantas): 3 points per 2 dollars for the first $3,000 per month; 2 points per 2 dollars for $3,001 to $10,000; Nothing over $10,000.

We’ll assume that you always earn 3 points per 2 dollars for the NAB card as that is it’s highest points-earning capability.

DJs $100 Gift Card: 13,300 points. At 2 points per dollar that is $6,500 to get $100 back.
NAB $100 Myer Card: 13,500 points. At 3 points per 2 dollars that is $9,000 to get $100 back.

DJs $100 Travel Voucher (includes Qantas): 15,000 points. At 2 points per dollar that is $7,500 to get $100 of travel.
For NAB they don’t have a specific dollar amount to redeem on travel, so let’s take a domestic flight from Sydney to Coffs Harbour. 1 “zone”, 275 miles, from $104 economy class.
Sydney - Coffs ($104): 8,000 points + 3,000 points for taxes = 11,000 points. At 3 points per 2 dollars that is $7,334 to get $104 of travel.

In-Store Conclusion: DJs has a HUGE advantage if you plan on redeeming your points for a shopping voucher. NAB Qantas Gold has a slight (2.26%) advantage if you plan on redeeming your points for travel with Qantas.

Shopping Everywhere Else

DJs: 1.5 points per dollar, don’t expire, no cap
NAB: 2 points per 2 dollars for the first $3,000 each month; 1 point per 2 dollars for $3,001 to $10,000; Nothing over $10,000.

We’ll assume you always earn 2 points per 2 dollars with the NAB card as that is it’s highest points-earning capability.

DJs $100 Gift Card: 13,300 points. At 1.5 points per dollar that is $8,867 to get $100 back.
NAB $100 Myer Card: 13,500 points. At 2 points per 2 dollars that is $13,500 to get $100 back.

DJs $100 Travel Voucher (Includes Qantas): 15,000 points. At 1.5 points per dollar that is $10,000 to get $100 of travel.
Using the same Qantas flight from Sydney to Coffs:
Sydney - Coffs ($104): 11,000 points. At 2 points per 2 dollars that is $11,000 to get $104 of travel.

Everywhere else conclusion: DJs extends it’s advantage over the NAB card when redeeming your points for a shopping voucher. NAB Qantas Gold loses it’s slight advantage and DJs gains the slight advantage (10% now though! 12.26% change…) when redeeming your points for travel with Qantas.

Of course you may need to consider your shopping habits and your financial needs when choosing a credit card that is right for you and this is a mere glimpse of what both programs have to offer.

Just did a bit of an overhaul of all our credit card programs due to some big changes happening with the Qantas Frequent Flyer (QFF) program. A lot of banks have had to re-organise their rewards programs to create QFF specific cards and non-QFF cards. A lot of cards have been axed and there is a whole breed of new QFF specific rewards programs. One of the more interesting outcomes is with the NAB. NAB Gold Rewards card holders previously had one card, but with the new QFF program NAB Gold Rewards members will have two cards: Either a Visa or MasterCard and an American Express card. The Visa/MasterCard is so card holders can still use their credit card and earn QFF points where AmEx is not accepted. The AmEx card is provided so that card holders can gain maximum QFF points-earning potential wherever AmEx is accepted. Don’t we all have enough cards in our wallets already? And who wants to deal with another decision to be made at the checkout?

Also having a bit of a look at all the programs I’ve noticed some really sweet deals. Top programs include the ANZ eDine Add On and the David Jones Store/AmEx Cards.

eDine has thousands of participating restaurants, hotels, cafes, and entertainment locations across Australia and NZ where the discounts are often 20% or greater. The annual fee weighs in at a low $35 per year, so using the card just twice will often result in a discount that is more than what the program costs you each year. They are updating and finding new partners all the time, with their last update having in excess of 100 additions to the program. Pretty sweet!

DJ Cards are awesome! Every month they release a catalog that includes 25-30 exclusive offers, the smallest of which is a neat 20% discount and the largest is normally 30% (sometimes greater). The discounts come off a wide range of products including men’s, women’s and children’s fashion, manchester, and crockery. The discounts are always off leading brands, some of which are only available at DJs.

One of the things we want to do at Perkler (and Adam is working hard to implement) is to not only allow you to search across your loyalty portfolio in one place, but receive special offers or discounts, on top of the current loyalty offering, to get you in the store.

As we build relationships with retailers we’ll be pushing this as an opportunity for them and consumers and will offer coupons for use on the phone and web to facilitate this.

It’s a good space to be in as belts tighten and interestingly the idea is gaining traction in markets that you wouldn’t expect.

The US is traditionally big into coupons - thanks to green stamps and the Great Depression there is a strong culture of coupon use. The UK on the other hand has has a good tradition of coupons, but don’t tend to attack them with the same veracity. Until now!

New Media Age out of the UK reports today  (you’ll need to register with NMA to see the whole article) that searching online for coupons is up 133% in the past year (my guess is that demand and searching will double again in the current climate in just a few months). At the same time Google is talking about the move to mobile advertising.

Perkler - mobile based search results linked to an additional discount coupon AS WELL as your current entitlements is looking pretty good in this space.

Justin

I was put onto a post on Read Write Web this morning by a twitter connection ( @paulmckeon ) which highlighted a very interesting reaction to a technology we are investigating here at Perkler.

The story talks about price comparison smart phone apps - based on bar code scanners. It’s a cool idea and, I think, one of the next big moves in retail. For ages retailers have been talking about ‘real time inventory’ this is ‘real time pricing’.

RWW give examples of stores not really knowing how to cope with customers scanning products for their own purposes (in this case price comparison). The RWW article even links to an even more interesting (worrying?) blog post warning retailers to install phone jammers or have ‘no scan policies’ to stop people doing this.

I think retailers who even countenance such an approach are missing the point. Surely, if your customers are price matching and comparing - the best place for them to be doing that is RIGHT UNDER YOUR NOSE!

If they are there and doing it, you are uniquely placed to counter their bargain hunting and get the sale.

Ironically, emerging apps that use bar codes to provide reviews and ratings on individual products could actually lead to shoppers spending more money. If I scan a product that is $14.99 and a review tells me the $16.99 version is better, doesn’t the store win?

The reason this technology (and retailer behaviour) relates to Perkler is two-fold. Firstly, we think the use of scanning technology on smartphones is a great way for retailers to entice shoppers into the store.

When a Perkler does a search on the perkolator for a loyalty program in a location near them (on our iphone and storm apps that Adam is building as we speak), what better way to motivate them in-store by offering a small, additional, tailored on-phone perk. We think it is the next phase of loyalty and builds on a combination of on-phone coupons and loyalty infrastructure. And because the consumer initiated the search through the Perkolator, it isn’t a global offer and isn’t sent to them without warning (we hate ‘push’).

Neat.

The second way it relates to us gets me back on topic. I simply can’t understand retailers who aren’t willing to jump in to a consumer-driven competitive landscape. When meeting retailers to discuss Perkler most are very keen. They understand that if they work with us they will learn more about their brand and program performance than if they simply stick to their current research methods alone. They also know that our data will tell them if they are under-performing (not coming up in search preferences, not having perks that stack up or missing perks completely). Seems to me that is exactly the kind of information you would want to know.

Sure, it might be confronting. But if you don’t have a perk that is up to scratch, would you prefer consumers switching off without you knowing or would you like the heads up so you can evolve your program to meet the needs of the consumer. Isn’t that why loyalty programs are there?

So - let them scan I say! And partner with Perkler (and other social media tools like twitter) to learn things about your program before they disengage.

Justin

Ok so I’ve written already about my foray into the DJ’s Amex card. I now own one and am a big fan of their simple program. 

I have to however now tell you just how much punch their perks possess. I was just comparing DJ’s perks against my other credit card - National Australia Bank’s Gold Rewards Visa and the perk value could not be more marked:

NAB has a $100 David Jones Voucher so the comparison is straight down the line. 

NAB:
Points needed for voucher: 15,000
$1 = 1 NAB point
Therefore need to spend $15,000 to earn the voucher

DJ’s AMEX 
Points needed for voucher: 13,300
1st 6 months: $1 = 3 DJs points
After 6 months: $1 = 1.5 DJs points
Therefore need to spend *$4,433* to earn the voucher or $3,325 if you spend it in an actual DJs store in the first 6 months. After 6 months you need to spend $8,866 or $6,650 respectively.

That analysis highlights what commonly is called a no-brainer. Even under normal perk earning conditions it takes half the spend to earn a $100 voucher! in the first 6 months its up to 5 times as quick. Now you may say that if you add in interest rate differentials and differences in interest free periods it changes but not in this case…rates are line ball and the Amex has up to 56 days interest free…NAB can only muster 44. To top it off annual fees are the same.

Did I mention that I have received $150 in vouchers for just signing up?

Nice work DJ’s…easily the perk program of the month.

Well, yesterday we went from Private Beta to Public. So Perkler is open and we are now setting about building this community of ours.

When people join Perkler and set up their virtual wallet they get a ‘rewards card’ placed at the top called Perkler Champions. This is Perkler’s very own loyalty program (stand to reason we should have one considering we are a loyalty community).

As well as offering perks, Perkler Champions is also the place any user can start a discussion about the site or our very own perks. All of our messages to Perkler members are delivered via the comments function in the wallet. Nice and neat.

So as well as offering feedback through our contact us, members of the Perkler community can (and should) join in the dialogue directly from their wallets - as they can about any program in their wallet.

So get in there, build your wallet, and while you get the most out of your programs thanks to the features we’ve developed help us make loyalty better by joining in the conversation.

Justin