Paula: Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals. I’m your host, Paula Thomas, and if you work in loyalty marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
Hello and welcome to today’s episode of Let’s Talk Loyalty and Loyalty TV. This year is the first time that I am traveling to the annual conference being run by the Australian Loyalty Association, taking place on the Gold Coast on the 7th and 8th of August. One of the presentations I’m really looking forward to is the 2024 Loyalty Insights Report, which the Australian Loyalty Association recently launched in partnership with Power Retail which positions itself as Australia’s premier news and content hub for online retail professionals. This is the Australian Loyalty Association’s second loyalty insights report and this version focuses exclusively on the retail sector.
Together, the Australian Loyalty Association and Power Retail aim to help retailers understand their customers needs and wants and offer a guide for improving their loyalty program experience. It offers an impartial insight on consumer perspectives on retail loyalty programs within the Australian market. And is billed as the largest and most comprehensive report of its kind in Australia.
Joining us to share the 2024 Loyalty Insights Report is Sarah Richardson, CEO of the Australian Loyalty Association. I hope you enjoy our conversation.
So Sarah Richardson, welcome back to Let’s Talk Loyalty and Loyalty TV.
Sarah: Lovely to see you, Paula.
Paula: Always lovely, Sarah. My goodness, I’m sure the audience know we’re great friends now having done some great work together in the past couple of years. And I think it’s getting even better now with your amazing conference, which I’m so excited to be traveling to in, I think it’s just about a month from now.
So, loads of fun stuff ahead. And I think today’s conversation is really going to give our audience a sense of what’s coming at that event. But yeah, for me, it’s actually just really cool to be able to hang out with loyalty professionals at this amazing event that you’ve been cultivating and growing for so many years.
So listen, lots to talk about in terms of your research report today, which is the main topic for our chat. But before we do that, as you know, we always start this conversation asking our guests, even if they’ve been on the show before, what is their current favorite loyalty program? So Sarah Richardson, kick us off. What is your current favorite loyalty program?
Sarah: Yes, thanks, Paula. Well, I’ve been working with so many amazing programs who are presenting at the conference in August. And one of the presenters is from Adairs, which is a homewares retailer here in Australia, and that’s actually who you are going to be interviewing in your live Let’s Talk Loyalty. So that’s very exciting.
The reason I love this program is because it is a paid program, which is very unusual in the market here in Australia. Very hard to get that past management to say, right, we’re going to launch a program, but we’re going to make our members pay for it. And the reason why it’s so successful is because the front of house staff are so involved with the program and believe in it so much. And so they’re able to sell that in to their members. And consequently, that means that from a business perspective, the company has a great source of income constantly coming into the loyalty program. And also from the consumer’s perspective, it’s fantastic because they have a store that they really develop a relationship with throughout their time.
Paula: Yeah. Yeah. Brilliant example. And I said to you last time we spoke, it’s very relevant for us, Sarah, not only because other guests who come onto our show are increasingly talking about it. Not all of them of course have yet launched subscription based models, but it’s something that I think it’s essential for every business to really think about.
Because I think to me, like I’ve written about it actually. It’s like the ultimate form of loyalty. So it’s one thing to basically have somebody join a program, give their data and start to engage in a relationship, but committing to a recurring payment to a brand is absolutely the fundamental I suppose, bottom line in terms of what we all aspire to. So well done Adairs. And I can’t wait for my presentation when we when we have our battle discussion together.
Sarah: Yep. Me too.
Paula: Cool. Great stuff. So listen, as we said this year you have done more incredible research. I know it’s the second year that the Australian Loyalty Association has been investing time and resources in creating insights for your community.
But with the twist this year, so let’s get into maybe first of all, the research you did back in 2023. And then if you don’t mind to introduce what has changed for 2024 so what we’re going to hear about today.
Sarah: Yeah, absolutely. In fact, we have a. Larger report, which is across all industries launching in October, which is the same report that we did, in fact, in 2022, and this report is being sponsored by MasterCard.
This report that we’re going to be talking about today is one that the ALA has done in conjunction with Power Retail. Power Retail is a fantastic organization in Australia that represents the retail industry. So we thought, why don’t we do the same report, but just for retail? And it’s been so interesting to see the differences and the similarities, in fact, with consumers, the way that they react within the retail environment and in the other environments that they have loyalty programs.
Paula: Incredible. Brilliant. So today let’s talk about that absolutely the retail strategy. I’ve obviously had my own copy now for a couple of weeks, so I’ve been digging in to get some insights and particularly want to share, you know, with our audience, particularly what I suppose you noticed and really struck you in terms of what consumers are saying.
From my side, you know, love the breadth of the report. So I’d love maybe Sarah, if you don’t mind just for the audience to understand again, around the world, the scale of what you’ve done and how you completed the research and yeah, then we’ll get into some of the learnings.
Sarah: Yeah. So we surveyed almost 3,000 shoppers throughout Australia. And there were 44 retail specific loyalty programs that were included in this report. And so it’s the largest report that’s ever been done in Australia, and we’re really proud to bring it to market. It was a quant research piece primarily, but we did also do some qual research off the back of that. It looked at some social listening and and also, or did some one on one interviews with experts to find out what they had to think as well on this report.
Paula: Okay. Yeah. Brilliant. And demographic wise, Sarah, I mean, I think we can all probably make some assumptions about the age profile of the people who responded but just to, you know, give us a sense of what kind of demographics I always have to remind myself, by the way, I know the names of all these demographics.
And I know I’m Gen X, but I always have to remember exactly what the age bands are. But would you mind just talking through, you know, what we’re hearing in terms of yes, the, the, the strength of response rate from each of the different typical marketing demographics that we all know.
Sarah: Yeah, well, we actually make sure that the sample is representative of the population. That’s really important to us. So when we, when we send the survey out, if one of the generations that answers the survey is overrepresented, we actually stop including them. So the report is across baby boomers, Gen X, Gen Y, Gen Z, and not this generation alpha who are zero to 14 years old who are coming up quickly into the, into the buyer’s sides.
Paula: Yeah, absolutely. Yes. So yeah, I mean, you know, it obviously does go alphabetically. So having done our Gen Z, we’re now back to the start of the alphabet. So yeah, it will be a bit scary when we start to see Gen A actually becoming, I suppose, commercially active because yes, just below the rate, I guess, for most programs, but certainly one to watch for sure.
So, I’m dying to get into, as I said, what struck you as most interesting, Sarah. I like the very simple, I suppose, statistics which just give us a sense, particularly for people like me who are outside of Australia. So simple insights, for example, like 84 percent of Australians are active members in a retail loyalty program. So that to me does sound very high. And 5.1 is the average number of retail programs of which Aussie shoppers are members. That one probably struck me as quite low given how many different sectors of retail, and that’s actually probably the next obvious question, Sarah. You know, retail spans so many different things. So, you know, what were the key sectors within retail that you were making sure to include in this research?
Sarah: Well, all the sectors were included, and there are some that don’t appeal to a large segment of the population. So, in general, women buy homewares, for instance. And so the men that were surveyed, as we did do, 51, 49 percent between females and males.
And females generally don’t buy products related to, you know, cars or home improvements, although that is thankfully changing in Australia and so that we’re not so surprised by that five, because if you think about the fact that those consumers are also members of fast food restaurants and banks and entertainment and hotels, et cetera. That number only rises to just under eight, and that really is as many programs as consumers can get their heads around. Luckily we don’t have cards and wallets really here anymore in Australia. It’s all on apps which is fantastic from many different points of view. So that means that the amount of programs that consumers are engaged with is higher than it would otherwise be.
We’ve seen that improve slightly, but that seems to sweet spot in terms of the amount of programs that consumers can probably even remember that they’re members of. To be honest, Paula, they probably are members of a lot more, but we all know the problems with the amount of dormant customers, but that’s what they’re citing. We have to actually name those programs. So they might get a bit of stage fright and go, Oh, I don’t really remember if I am or I’m not.
Paula: Well, I’m totally guilty of that, Sarah, even as an industry professional. Like when I think about the ones that I really do engage regularly, it’s probably actually three. The last time I really thought about it. So probably pretty shameful, but obviously I’m talking about it all of the time and looking to learn from every sector. So, so great to hear. Absolutely. So I know we’re going to talk about all of them, whether it’s FMCG or, you know, fashion and department stores.
And again, as you said, other kinds of general retail loyalty programs as well. And there’s some kind of interesting insights could come through and all of those. I’d love to briefly mention just which ones came out in the overall ranking. So again, 44 surveyed schemes and within this cohort that you know, did respond to the survey.
The number one in terms of active loyalty came out as Woolworth’s Everyday Rewards, which is just under 85% in this report. Second one is Coles Flybuys and third is My Dan’s from Dan Murphy’s who is on our show recently. So great results. Did any of that surprise you in terms of what the top 20 programs are in Australia by membership size, or is that exactly what you might know and expect?
Sarah: Yeah, look, I’m not sure it says about our drinking habits here in Australia, that that DMF is, is number three. But like Dan, Dan makes it, Dan Murphy’s makes it extremely easy to interact with the program and all the staff are extremely engaged. And I suppose at some point or another, most of the population are buying alcohol and obviously groceries is something that we buy on average two or three times a week.
So it, it does, I don’t think it’s an indication of how good those programs are, although they are both amazing programs, but it is, it is the fact that the frequency of use and how embedded those programs are in those businesses, the staff, again, you know, just so incredibly important to have them engaged and involved in those programs.
So no, not, not particularly surprised. And I think, you know, we need to take those results within that context. As well, and on that, you know, those massive businesses are not what most of us are running. And so to get into that consideration list, which in fact is three in terms of when you’re thinking about where you’re going to shop from a retail perspective and more of a pure retail perspective, it’s very hard to get into that consideration list.
Paula: Yeah. Totally. Totally. Okay. So well said. So let’s get into a couple of the insights, Sarah. I know you said obviously it’s, it’s a 40 page research report. So, and it’s available, of course, we should mention free of charge. We’ll make sure to be linking to that. Obviously we’ll, we’ll talk about it throughout the show today and we’ll link to it in our show notes. So super easy for everybody who’s interested to go and read the report from start to finish.
But tell us, you know, as a, as the people behind the report, I know you’re here representing Power Retail as well. What were the kind of main kind of key insights that you felt came through in in this research?
Sarah: Well, following on from our generational discussion, the thing that was really interesting surprising and heartening for anybody running a loyalty program was that Gen Z were in fact, the most engaged with loyalty programs. They believe that loyalty programs provide a high level of value. So 67 percent of them have a high engagement in the loyalty programs that they’re members of. So that’s pretty incredible.
And looking deeper into those statistics, speaking to some people from the Gen Z generations, it seems to be around the fact that they have more goods and services than our generation and Paula had when we were their age. And so the benefits and rewards that they get from those loyalty programs means that they can keep up with the consumerism that is, you know, very much part of that generation.
And so if a loyalty program can provide excellent rewards and make the process seamless, and be active within social media, within email, which is surprisingly high on their list of, of engagement as many as possible. Then that seems to be something that they’re very, that they’re very grateful to, to have. So in fact, the baby boomers are the least engaged in the programs. And our generation Gen X is second.
Paula: Indeed. Yeah. So Gen Z, yes, I think you’re absolutely right. It’s often considered that they are quite skeptical about loyalty. So, I think that is impressive. And, you know, I suppose when we think that this is, of course, retail specific it probably makes it more understandable as to why they did come through as they believe most in the, in the value.
So sometimes I think it’s because airlines may be, they’re perhaps not traveling as much in premium classes as perhaps other generations. So yeah, in a retail context, they’re definitely engaged, as you said, and they absolutely seem to be getting the value and seeing the value. So a great opportunity. Yeah.
Sarah: Yeah. Well, when you look at the report that will come out in October, you’ll see that if you’re looking at airlines or banking or hotels then that changes.
Paula: Totally different story.
Sarah: They’re obviously, they’re not using them as much, but they’re also not the primary payer. If you like.
Paula: Yes, of course. The commercial motivation is not necessarily there for the brands. So, so this absolutely reflects that. Yes. I think economically active is the word that I’ve heard in other research reports. So that is an important.
Sarah: I was using the layman’s term, having two, two children within that generation, I’m very well aware of that.
Paula: Of course you do. And I love the jargon, Sarah. So we have to have both. Huh? Cool.
Sarah: Absolutely.
Paula: Great. So, that was your top insight and main lesson that you, you came through that you said. So tell us what was next on your list of what you learned.
Sarah: Yeah. The one, the one that I thought was extremely interesting was some additional work that Power Retail did. They have all the NPS scores for brands. And so they compared the NPS score for the brand compared to the loyalty program. And in all cases, the brand’s NPS was higher than the loyalty program, but there was a real correlation between the two and Power Retail, who will be presenting at the conference have got some fabulous graphs to show that.
And so it’s, you know, does the brand mean that the NPS is higher for the loyalty program or is a great loyalty program, in fact, encouraging a higher NPS, but the correlation is definitely there. So it was a really interesting piece of work that I haven’t seen before.
Paula: Yeah. Yeah.
Sarah: That I was really surprised at was there is a real crisis in Australia in terms of the cost of living for certain demographics in Australia. And so I was expecting to see the rewards as being of much higher importance. But in fact, what we’re seeing is that consumers are increasingly concerned with the experience of the loyalty program and that, and that doesn’t mean there has been a little bit of misunderstanding in terms of people thinking from the report that that means that it’s about consumers wanting experiences.
They don’t want experiences as rewards, or whether they do or don’t is not what the report’s trying to say. It’s trying to say that from the time that you join the program to earning rewards, to redeeming throughout that process, that that process needs to be seamless. And that is more important than the rewards themselves now, which is just an amazing fact to notice both of them are higher, but the experience is much higher in terms of the demands of consumers now and the technology that’s available. It’s probably driving that. So it’s kind of, it’s a chicken and egg because the better the, the better the technology, the better the experience and the higher the expectation that the consumer of the experience that they need to get.
Paula: And you know what’s striking me, Sarah, I’d love your thoughts on this, but just as you said that, that very clever piece of research that was done and comparison between NPS score at a brand level and NPS score at a loyalty program level, I’m starting to think about, you know, CX as a, as a broader discipline than loyalty, you know, the whole measurement of customer experience and so many brands starting to invest in that at very senior levels.
So it almost strikes me as it’s perhaps being done again in probably more pro progressive brands where there might be a CX professional looking at how the customer’s experience is across the whole business. But perhaps it’s an opportunity for CX professionals really, as you said, to apply their expertise in this critical part of the marketing toolkit and really evaluate the CX of a loyalty program in order to get that experience. As you said, it’s not experiential wards, it’s the experience of being a member.
Sarah: Yeah. Absolutely. And I’m seeing that come through in the presentations that I’m working on with the presenters for the conference, that CX is significantly more important just in case us loyalty professionals needed something else to worry about as well as everything else we have to worry about.
Paula: Honestly, Sarah, the job is never done, which is probably what keeps us excited. Indeed. Yeah.
Sarah: The worst thing about loyalty. It totally is. It totally is. But I do think it’s an important point. And again, like, I suppose, just as a slight aside to the report, just when we’ve been chatting, I suppose, in general, and including other loyalty professionals in Australia, there are different things that do seem to be working in Australia, such as QR codes.
I think you mentioned to me once whereas other technologies like card linking don’t yet seem to have mass adoption. But to me, once all of those technologies do find their way in and consumers understand them, then that really is what underpins for me, a great loyalty program experience. And certainly in terms of obviously onboarding and the earning journey.
And of course, as we know, it goes way beyond that, but I do think there’s a lot of work again to be done, you know, just to make sure that those technologies are in place as consumers are ready for them.
Sarah: Yeah, absolutely. And bringing in the psychological drivers to ensure that we are nudging our consumers for good, not for bad, in the direction that we want them to, the technology is now allowing that as well, which is increasing the experience of the loyalty program.
There’s so much more gamification that’s coming through now within the app, within web that it’s really exciting to, to see that. And we hope one day that we live in a world where loyalty programs are something that people are excited to engage in and that they’re not dreading. Oh God, you know, I’ve forgotten my password or why is it my rewards are not there, or why is it that I’m spending all this money and the rewards aren’t good enough? So all of those various aspects. So the loyalty programs are being ironed out bit by bit. It’s a very exciting time to be in this industry.
Paula: It totally is. I’m going to give a shout out actually to Sephora because my colleague Pooja was in store there this week with them. And they literally reminded her that she had a birthday reward that she totally forgotten about. So that moment of seamlessness, a beautiful experience, surprise and delight really came through. So again, it doesn’t have to be complicated. It’s just like to make sure that as you’ve said, it’s particularly those frontline staff who have the opportunity to create the ultimate loyalty by making sure the members getting the experience certainly on the retail side. So I think more and more brands are doing it well, but I think we’re saying a lot of work still to be done.
Sarah: Yeah, I don’t think that’s ever going to change.
Paula: So any final insights? There’s one that I wanted to pick up on Sarah, which is more around program mechanics. But before I do that, is there any other kind of big insights that you think the audience should be aware of that you that you discovered?
Sarah: No I’d, I’d say obviously as I would go to the website and download the report. It is free. We, we really very proud to make it free to the audience and come to the conference and see it being presented.
Paula: Totally. Yes, so if anybody doesn’t know, although I’m sure most people do, it’s australianloyaltyassociation.com. And of course we’ll make sure it’s in as we said, the show notes for this episode of Loyalty TV, of course as well.
So my closing comment for you, Sarah, then is just as I said about the mechanics. The preference for mechanics for very much earning points front and center which I’m pleased to see actually, I think sometimes points get a bad rap because they can be seen, you know, as very traditional, perhaps not evolving quickly enough discounts in seven place second place, pardon me, and then card linking and at a relatively low level, both subscription and tiered benefits coming in at 5% only for each of those. As we’ve talked about subscription is an amazing model, certainly from a commercial perspective for all of us. We surprised to see that it was coming in quite low in terms of what actual program members are looking for.
Sarah: Yeah, I think, I think it’s an interesting one because it is a question that isn’t either or and so it’s always going to score less high because you’re not, you’re asking about rewards but then you’re asking about tiering.
So I think tiering in itself is not something that a consumer would shout out as being something of importance. It’s the rewards that come from being in that tier and something that they’re not as aware of as they could be, which is around the status of being in that tier. And I mean, that comes through when you do choice modeling research, it comes through really, really clearly that status is incredibly important to humans and definitely something that can come through very strongly for a brand in their loyalty program.
We had an incredible case with one of the clients that I worked with where the most important thing to the clients was the gold card. And when, in fact, they got rid of the card and it went on the app, the gold members were significantly less happy with the program because it wasn’t being sheltered out of the till and the people around them. And see that the card was being presented. So I thought that was an incredible insight in terms of how important it is that people see that you’re a gold member. Yeah.
Paula: Totally. Yeah. And it takes me back to my days of British Airways, actually Sarah. Many years ago, more than 20 dare I say it. Absolutely. And again, I know it’s a different sector than we’re talking about here today, but certainly for frequent flyers, the tiny piece of gold plastic that is attached to, whether it’s a briefcase or, or a wheelie bag or wherever it’s, it’s on show. There was an element of pride and certainly for me as a self confessed status chaser there’s definitely value in that.
So we might get more insights, I guess, coming through in your big report in October, because again it may be less important in retail and maybe not, we’ll have to wait and see.
Sarah: Yeah. Well, it’s, it’s harder to bring to life in retail. But the thing I love most is when you see people with their backpacks with the bag tags, the gold bag tags on the backpack that they’re never going to put through as luggage, but it’s like, yeah. So, and that’s perfectly fine. It’s completely harmless. So yeah.
Paula: Totally. Yeah. Guilty as charged. There you go. Brilliant stuff, Sarah. Well, listen, that is all of the questions I had for you today. As I said, I wanted to make sure that the audience knows first and foremost that I’m coming to your conference for the first time. I’m incredibly excited to hear the lineup is amazing. As we’ve talked about, I’m doing Let’s Talk Loyalty Live with Adairs. And so that’s on the second morning, which is the 8th of August. We’ll be sitting together to chat about all things subscription and everything else I guess is available on your website.
I do want to say thank you to Power Retail, of course, for supporting you guys so, so closely. And unfortunately they couldn’t join us here today, but as you said, they’re going to be there in person at the conference. So everybody, certainly the Australian market has a great opportunity to hear this research presented at firsthand. So, anything else you wanted to say Sarah, before we wrap up today?
Sarah: No, thank you very much for your time, Paula. And we’re really looking forward to seeing you and several other international speakers speaking on stage in Australia. We feel so privileged.
Paula: Amazing stuff. So Sarah Richardson, Advisory Board Chair of the Australian Loyalty Association. Thank you so much from Let’s Talk Loyalty and Loyalty TV.
Sarah: Thanks, Paula.
Paula: This show is sponsored by Wise Marketer Group, publisher of the Wise Marketer. Digital Customer Loyalty Marketing Resource for industry relevant news, insights and research. Wise Marketer Group also offers loyalty education and training globally through its Loyalty Academy which has certified nearly 900 marketers and executives in 49 countries as certified loyalty marketing professionals.
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