Pioneer reward card claims icon status

By IRENE CHAPPLE

It is a metaphorical free lunch and consumers are tucking in.

Rewards programmes are now standard issue for many retailers and credit cards.

We have become a card-carrying culture and pioneer Fly Buys, which began in 1996, is enjoying the fruits of such change.

The patriarch of New Zealand's retail rewards scene has outlived many of its competitors, and some now consider it an iconic local brand.

Last month Fly Buys reached 1.5 million rewards and totted up more than $200 million in giveaways.

Fly Buys cards are snuggled in the wallets or homes of 80 per cent of New Zealand's 1.4 million households. About 70 per cent of the card-holding households use it regularly.

Some love it; others scoff at rewards they consider minimal considering the spending required.

Asked his opinion on Fly Buys, one man wrinkles his nose and complains that the reward for spending $10,000 a year on groceries has been a few crates of alcohol: "Big deal. It's hardly going to encourage me to shop at a particular place or buy a particular product."

Another consumer starts reciting a list of products she has bought through Fly Buys, including angora rugs selected as a wedding gift.

She seeks out retailers who offer Fly Buys points, and has used her card at outlets such as New World, Michael Hill International, Mitsubishi and Ezibuy.

Although the attitudes of these consumers differ, their reason for using Fly Buys is the same.

"It's money for nothing," says one. "Why not?" shrugs the other.

Retailers join the programme because it gives them access to a database maintained by Fly Buys.

It has also proved to increase customers: Shell, for example, has shown steady growth on the back of its Fly Buys membership.

The retailers cannot access Fly Buys members' names or addresses - these are held by Fly Buys' operating company, Loyalty New Zealand.

General manager Alastair Hutchens said the information was used by Fly Buys on behalf of its retailers to contact identifiable groups of consumers.

Flyers are sent out to more than 900,000 consumers a few times a year, but not so many that they might feel bombarded.

"The whole process is managed very carefully," says Hutchens.

ACNielsen researcher Janette Brocklesby has followed the card's progress since its inception in 1996.

She believes it encapsulates New Zealand values and can claim icon status beside such brands as Weetbix and Public Trust.

Consumers were making choices about where they shopped based on the availability of Fly Buys and that showed an emotional connection with the brand, Brocklesby said.

"Fly Buys is absolutely an icon to New Zealand," she said. "[Because] Fly Buys invented the market and is now moving towards having an emotional connection ... "

Its inclusiveness and ease of use were attractive to a society that celebrated its egalitarian roots.

Its status as the first to market rewards in New Zealand stamps it a pioneer and that, Brocklesby believes, also appeals to consumers.

Fly Buys has outlived the Kachingo! and Mobil Max rewards programmes, both of which were disbanded in 2003 after only a few years.

Kachingo! appeared to be too difficult for consumers who, to collect their reward, had to check receipts on a website.

Kachingo! closed its NZ operation after two years, with $1.4 million in prize money unclaimed.

Mobil is now affiliated with other schemes such as the Farmers and Warehouse rewards cards.

Indeed, reward schemes have become rampant in New Zealand retail, most credit cards offering incentives and supermarket operator Progressive Enterprises producing its Onecard last year.

Onecard is specific to the Foodtown and Woolworths supermarkets and offers instant discounts.

Progressive Enterprises general manager of marketing, Juanita Neville-Te Rito, said consumer uptake of the card was higher than expected, and it now has more than a million card holders.

"It has exceeded our expectations," she said.

"We would have been happy with half that."

Te Rito believes New Zealand is a "card-carrying culture", without the pessimism - what she calls the "big brother syndrome" - found in other markets.

Consumers spoken to by the Business Herald were unfazed by the thought that their information would be used for marketing purposes.

Commentators say that attitude exists because there has been little bad publicity in New Zealand over how the information is used.

As one consumer remarked: "Fly Buys have never given me a reason not to trust them."

Hutchens said the database was fiercely protected and database information would "never, ever" be sold or revealed to another party.

"We get asked regularly 'can we buy the list?' ... one offer was in excess of $5 million."

Auckland University senior lecturer in marketing, Tom Agee, said no reward scheme came close to Fly Buys in New Zealand in terms of brand recognition.

Agee was a sceptic when the scheme started, but he is now convinced of its worth.

Agee said having big retail players like Shell, New World and Noel Leeming gave Fly Buys a "critical mass".

He said it was valued because it was easy to use and understand, and points could be gained at places where people already shopped.

Hutchens said the uptake of rewards was now increasing exponentially.

About 1200 rewards were being issued each day, and Fly Buys expected to have handed out 2 million rewards within the year.

The programme works, said Hutchens, because "it keep its promises."