Woolworths said:
We asked members what they really want from a rewards program, and the answer was clear — money off their shopping. So, we changed points for Woolworths Dollars.
I call BS.... but here's my thinking:
1) If shoppers prefer discounts over QFF points why was there even a tie-up in the first place (didn't woolworths do their homework before entering into a $100m+ deal?)
2) When you ask people point blank what they want in a product, 99% of the population can't accurately articulate and analyse their own thought process. If Apple had asked people what they want in a phone back in 2005, the answer would be 'more memory, more menu options'. It takes a visionary to read between the lines and you can't get this from asking straight up questions like Woolworths is implying, which means they didn't do their homework.
3) Assuming homework has been completed - Woolworths new program would need to have a lower cost base than the QFF alternate, which means there will be less rewarding compared to what QFF points would have cost (factoring in breakage etc..) This means it will be less rewarding for consumers.
4) The beauty of QFF points was that it's an aspirational, subjective reward. Those 25,000 points could mean a $200 voucher or a $2000 flight upgrade depending how you viewed it. The new Woolies program is nothing more than a discount program. No aspirations, no subjective value. No gamification and therefore no long term loyalty/stickiness.
5) Why call it Woolworths Dollars? I'll get over the unimaginative name for a second which any primary school kid could dream up. Using the word dollars instantly locks down the value and creates no room to grow the program into anything more later on. People will link $1 AUD to $1 WWD and means devaluing the currency at any point in the future will make the conversion difficult for many.
6) There will be a portion% of people who don't shop at Woolworths any longer and another % that will change spending patterns to be under $30 (thus messing with average basket size and a bunch of other metrics)
7) The move may attract more low value customers to the brand who are seeking discounts rather than points (Aldi strategy?)
8) Keeping a QFF option to satisfy that market segment seems logical. Terminating entirely suggests some type of commercial conflict or some new thinking none of us can fathom
9) Not delaying the changes after the Flybuys/Etihad deal to re-evaluate..? Or was it? Hard to tell.
10) I doubt we'll see any major (20%+) shift in numbers, but if we did - this would directly affect product placement revenue for Woolies.
11) With more affluent customers who fly and driven by miles shifting to Coles - this adds value to flybuys program, thus hurting other Woolies owned businesses in the process.
12) Potentially now shines more light on Etihad... double loss to QF.
..Lots more... too tired to list it all out.
So either Woolworths has totally failed to have understanding of the loyalty business (which will cost them big bucks, market share, wasted resources, overhead of running the program, additional manpower for customer service etc..) - or the statement about customers wanting this all lies.
AND/OR
QFF didn't bring out the big guns to prove how moving away from QFF as an inducement/data partnerships/knowledge sharing would ultimately cost woolworths even more. Fortunately there is available data for QFF to gauge the impact and re-engage WOW.
AND/OR
QFF wanted better terms, higher point cost or some type of commercial conflict
Either way it's a mess. I don't see much positive coming from this change in the near future.
