Thanks to loyalty programs, spending hard-earned dollars on everyday purchases has never been more rewarding. But what’s the best way to get bang for your buck?
Loyalty programs aren’t new. For decades, Australians have been cramming loyalty cards of businesses, big and small, into their wallets and purses.
Back in 2013, the annual ‘For Love or Money’ research on consumers’ relationships with loyalty programs found that 88 per cent of Australians over the age of 16 owned at least one loyalty card, while close to 11 per cent of us have 10 loyalty cards tucked away.
Yet as the report’s co-author, Adam Posner, Founder and CEO of Directivity, uncovered in his ‘For Love or Money’ study of 2015, people are getting smarter about loyalty programs.
“The research showed loyalty card membership dropped slightly, so people are choosing to be members of fewer programs,” Posner points out. “But they were more active within the programs they stayed with. It suggests people are getting smarter about which programs they join, because they’re keen to get the most value from them.”
Are loyalty programs worth it?
From the big flybuys or Qantas programs to small cafés offering every 10th coffee free for repeat customers, there are plenty of loyalty programs for you to choose from.
But as Posner explains, the trick to making rewards programs worth your while is by sticking with the ones that best suit your spending habits.
“You get value from points only when all things are equal,” says Posner. “For example, if you’re switching between the two big supermarkets every week to get the best of their specials, you probably won’t benefit from a [supermarket] loyalty program as you’re already making savings from the price specials. What you spend won’t translate into enough points.”
However, if you’re more interested in things like travel points instead of supermarket specials, the best way to earn big is to consolidate your spend. Shopping at one supermarket only and smartly using (so paying off straight away) credit cards that support them can be a good start. Also, make sure you spend enough for the rewards to add up to something of value.
“You need to recognise that you might need to spend a lot to get those rewards,” said Posner. ”A lot of people think they spend a lot but they don’t.”
“Take a family that might spend $400 a week at the supermarket. If they choose just one supermarket to shop at, they could be getting $10 back on a shop very quickly,” explains Posner.
“However, if you’re young and single and eat out a lot and don’t spend much at the supermarket, you could spend $100 over two weeks and only get $1 back. So is that kind of loyalty program worth it for that person? Probably not.
“But if you eat out a lot and use an online booking service such as Dimmi or OpenTable, other loyalty programs will give you points towards restaurant vouchers every time you book and eat at a restaurant,” says Posner. “Soon, you might find yourself quickly racking up rewards for what you do anyway.”
Discounts over points
Posner said with loyalty programs that give discounts instead of points, it’s even easier to work out whether they’re worth your time and money.
“Say you join a program that gives you 40 per cent off movie tickets. If there are two of you that go to the movies twelve times a year, and it costs around $22 a ticket, then you can work back to see that a 40 per cent discount will save you $8.80 each ticket. Two tickets, 12 times a year and that’s a saving of $211.20.
“So if that saving comes through a program you join because you have to have electricity or a mobile contract, then that’s worth it, as you would have gone to the movies anyway,” he said.
There can also be more to joining a program than just financial rewards. ”Many programs are looking at new ways of rewarding and recognising their members with exclusive offers and experience, like pre-sale events, that being part of their program provides.”
But at the end of the day, figuring out what you like and what you’ll splurge your money on will give you the answer for what programs to take part in.
“If you know that, then you can work out how you can make the most of your spend and be rewarded,” said Posner.