Consumer Watchdog: Points for loyalty pay off

Fly Buys beats other schemes in rewards for big grocery spenders.

Are Fly Buys points a reward or a rip-off? Two researchers say they have worked out that one Fly Buys point is worth about 17c, making the programme one of the most rewarding loyalty schemes around.

The soon-to-be-published study, written by the University of Auckland's Dr Laszlo Sajtos and Professor Peter Danaher of Melbourne's Monash University, concluded that big spenders - such as people who did their regular grocery shop at New World - were well rewarded by Fly Buys, so long as they saved their points for big-ticket items.

"Hold on to your points and spend them on items such as a TV set or flights. The higher the retail price, the better off you are," Sajtos said.

Although the average value of a point was 17c, points were worth upwards of 30c each when spent on more expensive items in the Fly Buys catalogue - such as the Le Creuset cookware range and luxury leather bags.

A New World customer who spent $200 each week over three years, and picked up a couple of hundred bonus points along the way, would have enough to get a Phillips vacuum cleaner ($380 in shops) or a Breville mixer ($400 in shops).

But consumers who swiped their card occasionally would get only minor benefits, because eligible rewards like DVDs and beauty products were not good value when bought from points, Sajtos said. "You would be better off paying cash in the open market."

The study, which did not receive commercial funding, found most rewards schemes around the world were worth much less than Fly Buys.

A Qantas point was worth about .07c, he said.

But Sajtos criticised Fly Buys for its complexity. Countdown's Onecard scheme was more transparent because it rewarded consumers with cash vouchers to spend at the store, he said. A $25 spend translated into about 19c cash back, compared with a Fly Buys point worth about 17c for every $25 spent.

Consumer NZ chief executive Sue Chetwin said it did not matter which loyalty programme you were with - shopping around for the best value was her advice. "For the past 11 years, Pak'n Save has come out as the cheapest supermarket. You should shop according to price if you want value."