Orange tickets be gone? Woolworths appears set to relaunch its rewards program and scrap the “Woolworths Dollars” feature that has confused and frustrated shoppers for the past 10 months.
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Woolworths hopes Qantas deal will pacify customers
Woolworths expands its rewards program in a new deal with Qantas, following customer backlash over its cash back scheme.
A leaked, confidential document sent to Woolworths store managers around the country and seen by Fairfax Media, indicates customers will no longer have to buy hard-to-find, orange-ticketed products to earn “Woolworths Dollars”.
From Wednesday, August 31, customers will be able to earn one point for every $1 spent at Woolworths supermarkets as well as Caltex petrol stations and BWS liquor stores, it says.
There’s more news in the document for Qantas frequent flyer point collectors, who successfully fought for Woolworths to reverse its decision to cut ties with the airline.
Under the yet-to-be-launched scheme, members can convert 2000 points into $10 Woolworths Rewards dollars, which can be traded in for 870 Qantas frequent flyer points.
They can also use $10 Woolworths Rewards dollars to instantly shave $10 off their grocery bill at the checkout.
“We’ve been listening closely to customer feedback about how we can improve Woolworths Rewards,” the confidential “support guide” document reads.
“We’re making significant improvements to the program and with your help, we know we can win the hearts and minds of our loyal customers!”
David Flynn, editor of Australian Business Traveller which broke the story, said the new scheme isn’t all good news.
“Unfortunately, under the new scheme it’ll cost almost twice as much to earn the same number of Qantas Points compared to the long-running program which Woolworths axed in December 2015,” he said.
“You’ll need to spend around $2000 to earn 870 Qantas Points, and you’ll need 16,000 points for a return economy ticket between Sydney and Melbourne. So if you want to spend almost $40,000 on groceries to get a free flight, go right ahead.”
The current Woolworths Rewards program was launched in October 2015. The general response has been lacklustre, with thousands of customers hitting the phones to complain it was too hard to earn Woolworths dollars, which amount to deductions on future shops.
One influential supplier said the cost of the present scheme did not stack up next to the cost of regular promotions, and as a result he did not participate.
Adam Posner, chief executive of strategic loyalty consultancy Directivity, said Woolworths’ initial decision to remove Qantas frequent flyer points was a “big error”.
“Also, the program was too complicated with different stickers for different specials and orange stickers for the program and products that rewards were being allocated to were far too few and so many members were spending a lot for little or no rewards,” he said.
“The power of social media also knocked them about, as once members felt they were not getting any rewards for their spend, the noise became very loud.”
His latest research found changes in program structures, such as Woolworths’ one, was the second biggest reason for defection after not earning rewards fast enough.
The research shows Coles’ flybuys program retained first place in the top 10 unprompted most mentioned programs as “doing a very good job”, at 36 per cent, increasing its lead over the Woolworths scheme, at 9 per cent.
Qantas Frequent Flyer remained in third place since the first study in 2013.
A survey of 2300 supermarket shoppers by research firm Canstar in June found the average spend per visit was $133.
“This was consistent across each state. Based on a spend of $133, Woolworths’ original Everyday Rewards program would have returned 103 frequent Flyer points. Under the new system, a $133 spend would return 58 Frequent Flyer points,” said Canstar’s Justine Davies.
“It’s hard to say without having seen all the detail yet, but it seems that this will be a more generous and certainly easier-to-understand rewards program for shoppers.”
The leaked document says Woolworths intends to kickstart the new scheme with a series of “double point” offers between the launch date and December, starting with fresh fruit and vegetables, fresh meat and behind-the-counter deli and seafood.
Customers will earn points in Caltex Woolworths service stations, but not at Star Mart and Star Shop, it says.
“This is on top of the 4 cents per litre fuel discount they receive when they spend $30 or more in a supermarket,” the document reads.
“There is no action or negative impact for members – all Woolworths Dollars will be automatically transferred to points on the 31st August 2016.”
A Woolworths spokeswoman wouldn’t confirm or deny the details in the leaked document.
“We won’t comment on speculation but we have said for some time that we would make improvements to the program and include a partnership with Qantas,” she said.
“We look forward to unveiling the details soon.”