NewsMaking Supermarket Loyalty Programs Work For You

Making Supermarket Loyalty Programs Work For You

When the Flybuys reward program launched onto the scene in 1994 it was hugely popular. More than a million Aussie households joined up in the first 6 weeks. Mind you, at the time airfares were a lot more expensive than they are now so the idea of getting free travel was very appealing. 

It didn’t take long for most of us to work out that you would need to spend thousands to redeem a flight worth a few hundred… or something like that. The savings for redeeming points on groceries these days are equally as disappointing.

Currently, you can redeem 2,000 Flybuy points for $10 off your shop at Coles, Liquorland or Kmart Tyre and Auto Services. So, while you’ll have to spend $2,000 Coles (or other Flybuys partners) to earn 2,000 Flybuy points, this only equates to a $10 discount. So, in this instance, your 2,000 points are worth $0.005 each.

The new-look Woolworths Everyday Rewards program, launched in 2016, enables customers to earn one point per dollar spent. Once a customer has accumulated 2,000 points, they automatically receive $10 off next time they shop at Woolies. This equates to a return of 0.5% on your spend. Sound familiar?

It's worth remembering that the retail giants collect huge volumes of data on everything you buy and use this data to try and sell you more stuff. This is called data-mining.

The key is to outsmart the algorithm Woolworths and Coles use for their respective reward programs. This is surprisingly easy to do once you understand how these algorithms work and what their ultimate purpose is, according to Michael Ginsburg (pictured), founder of Spending Hacker

We spoke to Michael on the Daily Drive show and he shared some of the following tips gleaned from a combination of his own experience and those of his members:

Be Disloyal Rather Than Loyal

The outcome both Coles and Woolworths are trying to achieve is pretty simple and straightforward: They want to encourage you to spend more money in their (rather than their competitors’) stores and do that more often. If you are a regular shopper, they want you to increase your average basket size with them.

This all makes perfect sense from the supermarket’s perspective but the thing is that the two majors both didn’t do the best job designing their reward programs and as a result, they are often achieving the exact opposite outcome of what they are after.

FACT: If you diligently shop at Woolworths or Coles each week and swipe your reward card, it is extremely unlikely you will get any lucrative BONUS OFFERS.

These Bonus Offers are the ‘secret sauce’ and how consumers can really ‘hack’ those programs and make them work for their benefit (and not just the retailer’s).

How to get more Bonus Points Offers

The premise is pretty simple: instead of the normal earn rate of 1 point per $1 spent, you get a certain amount of bonus points if you spend over a certain amount in a set period of time.

Say you are getting 500 FlyBuy bonus points for spending $50 in-store. This means that now you only need to spend a total of $1,550 ($50 for 500 points + 1,500 points at the normal earn rate) to reach 2000 FlyBuy points which you can then redeem for $10 in store credit.

Your effective cashback rate has just increased from 0.5% to 0.65%. This is the power of bonus points!

However, 0.65% effective cashback is still nothing to write home about, right? Well, you can do much much (much!) better than this if you ‘play the system’.

The way you do that is you signal by your behaviour to the FlyBuys or Woolworths Rewards computer that you will not shop with them unless they entice you with lucrative offers for bonus points.

You can do this in one of the following two ways:

  1. Don’t shop with the particular retailer until they start sending you bonus points offers that are attractive enough; or

  2. Shop but do not swipe your reward card at the checkout so that the rewards program computer isn’t aware you spent money with them. Sure, you will lose some base points this way but you will also significantly increase the likelihood of getting attractive bonus points offers.

When you do either #1 or #2 above at Coles or Woolworths, the respective rewards program computer will determine that you are a customer who is ‘slipping away’ and they need to do something quickly to make you come back and continue spending money.

These offers usually come in the form of “Spend a minimum X amount per week over a set period of weeks (usually 3 or 4) and get a Y amount of bonus points”. The amount of minimum spend will be determined based on your previous average basket size and will aim to slightly increase it as the whole point of the rewards program is to get you to spend more money, and do that on a more regular basis.

If you want to get lower minimum spend requirements, don’t take up the offers that require you to spend above what you are currently spending and even try to ‘hide’ some of your current spend from the rewards program computer by not swiping your card on the full transaction.

Hiding extra spend above a certain amount is very easy. Here’s how you do that:

  • Get the checkout operator to start scanning your items (or do it yourself if you are using a self-serve checkout).

  • Once the transaction value reaches around $10-$15 below the minimum purchase amount you are aiming for, scan your reward card, finalise the transaction and pay.

  • Continue scanning the rest of your items and then pay but this time without scanning your rewards card.

Soon enough, you will start getting bonus points offers that may be worth your while. For example: Spend a minimum of $50 a week over 4 weeks and get $50 store credit. This is effectively 25% reward (50/200). Spend a minimum of $100 a week over 3 weeks and get $100 store credit. This is effectively 33.33% reward (100/300).

Understand Targets

Targets are the amount you need to spend before you can claim your store credit.

As explained previously, your goal is to get a low minimum weekly spend requirement with a high reward rate (in percentage terms).

If you spend less per shop, the supermarkets will try and entice you with low targets to encourage you to spend more. For example, if you get a targeted offer for $50, don’t spend any more than this (and least as far as the reward program computer is aware).

If you need more groceries, ‘hide’ any additional spend by splitting a single transaction into two and don’t scan your reward card with the second one.

Some quick tips to finish off with:

  • Shop between Thursday and Sunday.  This is because it’s the time most people do their weekly shop and therefore this is when both FlyBuys and Woolworths Everyday Rewards send out their best bonus points offers

  • Both Coles and Woolworths offer home and car insurance policies that offer points for signing up. The trick here is to check first whether you are getting a better deal on your insurances than you would be with your current provider and read the fine print to make sure you’re covered for what you need.

  • Redeem your points as quickly as possible. Do NOT stockpile them or you risk them being devalued by the provider when they move the goalposts. This can happen at any time and usually with little to no advance warning (case in point: Qantas).

  • Supermarkets value your feedback and they are prepared to reward you for it. If you complete a Tell Coles survey online you can get 500 points per month.  If you spend over $100 on a regular basis at Coles you can opt for a $5 voucher for doing the survey.  By having 2 Flybuy accounts that equals $10 a month in return for a few minutes of your time.

Have you managed to work the supermarket loyalty system? Let us know below

Click here to see the Fiftyup Club's Car Insurance offer with Woolworths Insurance 
Click here to see the Fiftyup Club's Home Insurance offer with Woolworths Insurance
Click here to listen to the interview with Michael Ginsburg from Spending Hacker

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Anonymous from VIC commented:

One of the articles used for research for the above article was originally written in 2014. At the time Coles offered 1000 points or $5 off for these surveys. They now only offer 50 points for the survey and you have to be invited into the survey. PatMc 

Anonymous from QLD commented:

To Ellie - the checkout list is the list of your purchases given to you at the check-out after you have paid for your groceries. On the bottom are different vouchers - a fuel discount, a First Choice voucher and a Triple Points voucher. 

Ellie from NSW commented:

We usually give the bulk of supermarket purchases to Aldi. Coles is only a small store and Woolworths is too expensive. Bob 

Michael from QLD commented:

I am Michael the Founder of Spending Hacker. Happy to answer any questions or provide any further clarifications on the strategy discussed (or anything else). Cheers 

Col from NSW commented:

Thank you Colleen 

Dinah from NSW commented:

I don't know who "Dinah" is but it is not me ..... however the advice is coming to my email address .... can someone please fix this .... but re Coles - we live in a rural part of NSW and the quality of Coles produce we get is very poor !!! 

Peter from VIC commented:

I have stopped doing the Coles online surveys post a shop as time consuming and not worth the effort for 50 reward points. 

Anonymous from NSW replied to Peter:

I stopped half way through my first survey and 'never again'. I just delete their constant emails as the four supermarket that deliver weekly 'cattle dogs' provide me with all the specials I need. In fact I joined only a month ago and am finding them so intrusive I am wondering if I wish to remain a member of this legends in their own mind, group 

Robert from NSW commented:

I have a CBA Diamond Mastercard and use it for all my expenses. Linked to it is an American Express Mastercard used only at Wesfarmers ( Coles etc ) which adds double points to my CBA awards points. I accumulate these for use in purchasing airfares through Flight Centre which is linked to the CBA credit card and includes free international travel insurance. I accumulate Flybuys points from Wesfarmers throughout the year and use the Coles bonus and special offers where appropriate. I allocate these at the end of the year to my Christmas grocery shopping - usually hundreds of dollars. I win on both counts. 

Dinah from NSW replied to Robert:

Hi Robert! this is a great tip, I'd love to post it in this week's newsletter but with a pic of you if that's ok? What do you think? Kayley 

Robert from NSW replied to Dinah:

Hi, Please feel free to use my comment, but unfortunately no pic available. 

Dinah from NSW replied to Robert:

No worries thank you! 

Raymond from NSW commented:

Hi Kayley, You have made an error. When you complete the Coles survey you receive 50 points, not 500 has been this way for a very long time now. Regards Kerry from NSW 

Anonymous from NSW replied to Raymond:

Thanks Raymond! I think it must have been a typo. Kayley 

Anonymous from QLD commented:

I use the Bonus vouchers sent out by Coles. Every second week it is a "Triple Points on your shop". There is also a tear-off voucher on the bottom of the check out list with a "Triple Points" offer. I scan both on a big shop and get 6 times the points as both vouchers have a different bar code. Pays to read all the fine print. 

Ellie from NSW commented:

What’s the check out list please 

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