Loyalty schemes rely on shoppers forgetting to cash in their points

Belinda Nash prefers loyalty cards that offer instant rewards rather than clocking up points over time. Photo / Janna Dixon

Shoppers may be missing out on millions of dollars of savings through unclaimed rewards every year, say experts.

From Fly Buys to buy-one-get-one-free vouchers, Kiwi consumers rack up more than $100 million in loyalty points and vouchers.

But about 10 per cent of that goes unclaimed, researchers say. Auckland University marketing lecturer Rick Starr says people often forget to redeem their points. And companies count on customers doing so because full redemption would "cut their profits".

Card companies deny that, and say they go to great lengths to ensure shoppers put their rewards and points to good use.

Chris Lamers, head of marketing and product development at Fly Buys, said they were "extraordinarily motivated" to get their customers to redeem their points because the company does not gain revenue until they do so.

There are about 2.5 million individual Fly Buys cardholders in New Zealand, one of the highest rates in the world for loyalty card programmes.

About $70m worth of points are redeemed every year but Lamers would not say how much goes unclaimed.

Consumer New Zealander researcher Jessica Wilson says the loyalty card system only pays off for shoppers who splash the cash.

She says: "Generally the payback is pretty poor, it pays off if you're a big spender."

Consumer magazine research from 2007 found the average discount for having a loyalty card was 1 per cent for $10,000 worth of spending.

Forsyth Barr head of research Rob Mercer estimates 10 per cent of points and offers are left unused. And he believed 10,000 Fly Buys customers a day redeem their points.

"The benefits Fly Buys has is you're collecting points across a lot of general day-to-day spending."

The Warehouse, which introduced the Rewards MasterCard last November, has around 40,000 users. The company's financial services general manager Phil Devlin said about 90 per cent of the card's customers had redeemed their vouchers.

AUT senior marketing and advertising lecturer Dr Mark Glynn says the value is to motivate people to make purchases without going to another retailer.

Cards that pay without delay win wallets

Belinda Nash has a wallet full of store loyalty cards - from clothes chains to the local vet, she owns at least 10.

But, like many cardholders, she doesn't always remember to use them, and says sometimes the rewards are so small it's hardly worth bothering.

The 39-year-old communications manager from Ponsonby, Auckland has had a Fly Buys card for several years, but has earned only enough points for a computer memory stick.

"I have to spend $3300 to get a value gift of $20. It's simply not value for money."

Nash says she prefers loyalty card systems that offer instant rewards in the form of vouchers and credits, rather than clocking up points over time.

She is a big fan of her AA card, because she collects points every time she uses it and it reduces her membership fee.

The Onecard she uses at Foodtown and Countdown also gives her "instant gratification at the till".

Nash uses her ASB MasterCard True Rewards points to get movie tickets and book vouchers.

anna.rushworth@hos.co.nz