How Loyalty Card Users Go Crazy When They Get Rewards

Earlier today, we noted that loyalty programs often result in consumer spending rather than saving. Here's some concrete local proof: customers who get sent gift card rewards by Myer typically end up spending more than triple the value when they use the card.

Picture by Timothy H

That interesting factoid emerged in a discussion of Myer's marketing plans in the weekend Australian Financial Review:

The Myer One program comes at a cost: the retailer rewarded customers with $51 million in gift cards last financial year. But it also delivers returns: Myer One customers spend on average 3.3 times the value of the gift card on redemption.

The lesson? If you're being disciplined, only buying stuff you actually need at Myer and then only spending the gift cards you get sent, you're using the system efficiently -- but you're also a statistical anomaly. (Myer has 3.7 million customers on its database, and more than two-thirds of its sales are to members of the Myer One program.)

WATCH MORE: Tech & Finance News

Comments

    Be extremely careful how you interpret the "3.3 times the value" claim. There is no way Myer would claim the all of the implied "uplift" as incremental sales.

    1. The recipient of a Myer One gift card is by definition a regular Myer shopper so this increases the chance that their gift card will be used as part of their "normal" Myer shopping, in which case the sale isn't incremental to Myer at all.

    2. With Myer's goods being a mixture of TV's and other high-end electrical, designer apparel etc alongside some lower-priced goods, I'd reckon the average transaction is likely to be at least at the $60-$70 mark anyway. It's hard to imagine a typical Myer shopper deliberately targeting low-value items simply for the purpose of redeeming their $20 gift card.

      Exactly right. I work for myer, and i can tell you from experiance, it's usually an afterthought when a customer opens their wallet or purse. Quite often they had forgotten about it, and it's just an added bonus - it makes a purchase better value, and mor myer one points :p

      Also, i know it's a bit off topic, but currently we (the staff) are being pushed to offer and sign people up for myer visa cards. We usually dont like it either, so when the staff member at the register offers it, just say no thatnks, dont rant at us. Please? :)

Join the discussion!

Trending Stories Right Now