Woolworths reviewing partnership with Qantas Frequent Flyer.

[codash1099]

As an aside, I wonder whether the gloss may have gone off qantas points from WW's point of view as a result of feedback on the devaluation of points, lack of flight availability and "simpler and "fairer".

 

[oz_mark]

Why do you think people are going to rush to Coles because of the Etihad partnership?

Airline partners....http://www.etihadguest.com/en/spend-miles/airline-partners/
Some reasonable Redemption rates on Virgin (and some not so flash) http://www.etihadguest.com/Document...0020_Virgin Australia_Redemption Table_V2.pdf

 

[Cool Cat Phil]

Why do you think people are going to rush to Coles because of the Etihad partnership?

Yep I can just see the stampede now....

So when Woolies and Qantas joined forces back in 2009, The membership base of QFF literally exploded in the 12 month period after the launch of EDR.
Woolies had the ability to leverage of its own customer base and provide Millions of new members to the Qantas Frequent scheme.
This period gave Qantas its fastest growth on membership numbers in terms of bolstering its numbers to its own loyalty program.

Etihad joining forces with Coles will give Flyby's more clout in terms of a stronger loyalty partner ( particularly the case if Woolies pull's the pin) and Etihad no doubt will enjoy a surge of new Australian based members of its loyalty program as a result of the tie up with Coles.

Etihad will enjoy enormous brand equity as a result of its tie-up with Coles ( this could be a problem for VA, but I won't digress any further)

I for one will follow with keen interest how the Brand recognition of Etihad ( which is behind QF, VA , CX , SQ & EK in Australia, although certainly growing) will play out in the months ahead.

 

[Mattg]

I guess you could look at it from another perspective - less people collecting Qantas points means more award seats for everyone else.

 

[prozac]

I guess you could look at it from another perspective - less people collecting Qantas points means more award seats for everyone else.

Maybe there are less WOW shoppers redeeming EDR points for seats than you think. It is after all a peculiarity of people such as us, perhaps a small group. For everyone else it is robotic carpet sweepers and Xbox purchases.
For Qantas it is a cheap data-base build.

 

[Mattg]

Hmm, just got the email from Qantas Frequent Flyer. It is utterly pointless and says nothing...

 

[trippin_the_rift]

Coles showed their trump card yesterday and Woolies will have a very inferior Loyalty Program in Comparison to Coles without Qantas and Woolworths remaining together IMHO.

Etihad is the *only* redeeming factor for flybuys IMO.

Woolies will hopefully be smart to copy the same set up as Coles/Etihad, but the ability to redeem woolies virtual currency into dollars is straight up boring. Turns it into a discount program and this is not something that will drive loyalty. In this sense - QFF is a much better driver of loyalty.

 

[Cool Cat Phil]

Hmm, just got the email from Qantas Frequent Flyer. It is utterly pointless and says nothing...

The momentum in the media that this story has received In The last 24 hours has forced someone to speak up ( although not much can be read into the contents of that email) .

The suspense waiting for Woolies to announce their hand is a bit like all the speculation mid last year on the financial results of both major airlines.

 

[Dr Ralph]

I guess you could look at it from another perspective - less people collecting Qantas points means more award seats for everyone else.

Unless Qantas decides to partner with a new organisation.

 

[Cool Cat Phil]

Etihad is the *only* redeeming factor for flybuys IMO.

Woolies will hopefully be smart to copy the same set up as Coles/Etihad, but the ability to redeem woolies virtual currency into dollars is straight up boring. Turns it into a discount program and this is not something that will drive loyalty. In this sense - QFF is a much better driver of loyalty.

Overall I agree with your comments.

Although I would add that Coles use the data analytics of their loyalty program so much better than Woolies have utilised their data over the last year or so .

Coles have been hugely successful in winning new customers over from Woolies and some of this success has been attributed with their Targeted promotions, utilising their loyalty program more smartly than what Woolies have done in the last 12 months ( very little marketing activity of EDR in a broad sense )

 

[JohnK]

Etihad joining forces with Coles will give Flyby's more clout in terms of a stronger loyalty partner ( particularly the case if Woolies pull's the pin) and Etihad no doubt will enjoy a surge of new Australian based members of its loyalty program as a result of the tie up with Coles.

Flybuys is a very simple program with very poor value.

One observation I have had over the years with both Everyday Rewards and Flybuys is the number of people scanning their cards. It is not that high.

I don't see people leaving Woolworths to head over to Coles because Flybuys now have Etihad as a partner. In fact a lot of people are saying Coles is more expensive than Woolworths for their weekly shop. Not sure why they are perservering with Flybuys?

And then again I could be totally wrong and this partnership the next best thing since sliced cheese. Or is that sliced bread?

 

[kevrosmith]

Unless Qantas decides to partner with a new organisation.

Aldi.....?

 

[Cool Cat Phil]

Flybuys is a very simple program with very poor value.

One observation I have had over the years with both Everyday Rewards and Flybuys is the number of people scanning their cards. It is not that high.

I don't see people leaving Woolworths to head over to Coles because Flybuys now have Etihad as a partner. In fact a lot of people are saying Coles is more expensive than Woolworths for their weekly shop. Not sure why they are perservering with Flybuys?

And then again I could be totally wrong and this partnership the next best thing since sliced cheese. Or is that sliced bread?

As the current EDR earn rate stands, any transaction under $60 at Woolies earns less 0.5c in value in the dollar, due to the $30 minimum spend that earns no points with EDR.

Flybys is only worth 0.5c in value for every $ spent, although at least for those small transactions you do actually earn something, while under the current earn rate at Woolies you earn next to nothing.

At the end of the day, EDR in collaboration with Qantas has the potential to be an outstanding loyalty program.
The issue has been Woolies long held obsession with the $30 minimum spend threshold and the company not effectively utilising the program more effectively, profiling its membership base would be a start to being more effective with points campaigns.

 

[Dr Ralph]

Aldi.....?

Can't see it. More likely a large organisation which wasn't in groceries.

 

[Jousams]

Can't see it. More likely a large organisation which wasn't in groceries.

I was going to say maybe a telco.

But...

 

[drron]

Are Woollies trying to get QFF to discount the price paid for points?
Would QFF ever discount points?
Interesting times.
But for someone that spends a lot of time in Tassie Coles still wins.

 

[wandering_fred]

As the current EDR earn rate stands, any transaction under $60 at Woolies earns less 0.5c in value in the dollar, due to the $30 minimum spend that earns no points with EDR.
...

Us regional shoppers have a slightly different perspective. The $0.04 per liter discount is more likely the driving force in the sign up success to the EDR cards. There are quite a few who swipe the card but earn no QFF points. And I have (though not recently) made multiple purchases to ensure that the fuel discount is "on the card". But that is more a product of only doing the "shopping" once (or twice) a month. And more than 100 km round trip (with some friends at 200km round trip).

Oh yes, we have a couple of local agreements with a few of the IGA stores and some local petrol stations for fuel discounts. We'll never see an Aldi within 300 km.

Happy wandering

Fred

 

[trippin_the_rift]

The issue has been Woolies long held obsession with the $30 minimum spend threshold and the company not effectively utilising the program more effectively, profiling its membership base would be a start to being more effective with points campaigns.

The $30 minimum is what makes it a great loyalty program which drives new business and higher revenues per customer. It's a great strategy.

Woolies has likely seen great success through the EDR program and now the contract with QFF is due to expire at the end of the year - like any good business they're looking for ways to make shopping more engaging and to extract more revenue from customers through loyalty marketing. Part of this strategy would be revisiting the QFF agreement and running various models, looking at data sets and BI to better position the EDR unit for maximum success. The easy solution is copy Tesco - who did great without any frequent flyer inducements.

Ultimately Woolies would never question any agreement if it was bringing new business to the company. Perhaps unit economics aren't there to support the outgoings to QFF - who knows. It's of my opinion Optus dropped off the radar because QFF were not able to fundamentally prove the partnership was bringing more business, increasing ARPU or CLTV. On the flip side of the coin - QFF likely hasn't done the legwork to prove Optus has lost market share from dropping QFF; something I would have invested in if I were QFF to have defense against other companies shying away and as leverage with other telcos and/or Optus in the future.

QFF - if you want to learn how to use big data to your advantage and prove businesses are losing customers/$$ without you on their side - I'm speaking at every major international frequent flyer/loyalty conference between now and March 2016 on this exact topic. Come say hi!

 

[Himeno]

Re: Woolworths rethinking Qantas - or a slow news day

Well this explains that odd email I got from QF a few hours ago that said almost nothing.

If people only shop at woowlroths because of the WOW/QF EDR link up, then go to the contact form on woolworths.com.au and tell them.

I always scan my card if the spend is an even $5 or more to get my 5% staff discount (which should really kick in at $4.98...)
I never liked the $30 min spend. They gave the option to use the fuel discount as 4c/lt or QF points, but either option still required needing gas. They should have also had an option where a fuel voucher wasn't required. Select that option and once the $30 spend was reached, give 30 points instead of the fuel offer.

Currently on holidays, so I have no idea what's going on at work. From what I can access here, there is some sort of announcement planned for Sunday. It appears there is a major and total overhaul of the EDR program coming.... :/


I was looking at changing to Optus from Vodafone, then decided not to because of the end of the Optus/QFFF relationship.



hmmm... reading these documents I can see on storenet leads me to think that many people here should be getting ready to call 1300 101 234 and complain...

 

[dfcatch]

I'm not sure it is a great strategy. And I'm even less sure that it makes it a great loyalty program.

1/ It does mean that WW doesn't have any obligation for petty purchases which effectively reduces its obligation.

Given X % of all transactions are less than $30, this means that its financial obligation to QF is reduced by X (well X x $0.01 or whatever its points purchase fee is).

It's a great financial strategy- not necessarily a good loyalty strategy.

2/ Arguably the smartest people try to consolidate their shopping into one or two large ships, rather than separate little purchases in order to minimize the effect of the $30 threshold.

The smartest people are here on AFF etc.

Most people outside of AFF can't be a$$ed and will shop whenever convenient - this includes all the employed people shopping everyday during work hours for their can of Coke, their coffee, their lunch, their Chobani yoghurt and organic soy fair trade prepaid topups etc.


3/ Even for many savvy AFF-type frequent flyers, with the existence of the $30 threshold- I'm not going to buy $31 worth of candy bars, when all I want is one single Mars bar.

So I do two things - firstly, shop at the most convenient store - which is probably not Woolworths, and secondly, even if I do - I don't bother scanning my card, which means WW don't get the data on me.


Again - the $30 threshold is a smart financial strategy, it's not a smart loyalty strategy.

The behavioral assumptions in the model are flawed.

Ultimately you want :

1/ People to swipe for EVERY transaction - which means giving them something. Ideally points, but also the "discount with card" practice works brilliantly. WW have only been dipping their toe on this strategy- but Ralphs do it brilliantly.

2/ By giving them points on ALL transactions - it's the golden handcuffs. Yes the QFF bill is a large line item on the P&L but imagine the cost of marketing as a line item if you didn't have QF doing it for you.


You want data and handcuffs- things for which the $30 threshold does neither.