Misguided Myer Marketing

Two major Australian newspapers ‘The Australian” and ‘The Age’ have reported that the department store chain Myer is to launch another loyalty card, they already have Fly Buys and a credit card.

Called ‘Myer One’ this loyalty program is to be aimed at Myer’s high value customers. According to chief executive Dawn Robertson “Myer One is for our most loyal customers”.

This is so fashionable, and so misguided.

Given the things Ms Robertson has said, this marketing initiative appears to have been planned in ignorance of the serious R&D into the effects of retail loyalty programs, not to mention fundamental patterns of buyer behaviour and brand performance.

And the logic is faulty.

Think about which customers a loyalty program might attract, and who are desirable to attract (from the perspective of making money):

1) Occasional buyers of the category – these customers are unlikely to be attracted to a loyalty program (they realise they won’t earn many points), indeed they aren’t even likely to hear about it let alone give it much thought.

2) Frequent buyers of the category but occasional Myer shoppers – these would be very attractive to gain, and they might be attracted to the program, after all they could earn a lot of points if they shift their buying towards Myer. Unfortunately all of our research shows that loyalty programs do very little to attract non and light customers of the loyalty program brand.

3) Frequent Myer buyers – these are the customers that Myer One is targeting. But these are the least desirable group. These customers represent the greatest subsidy cost of a loyalty program, ie giving people rewards for doing what they were doing anyway. They are of course the most likely group to join – they will see the program’s promotional activity (remember they shop at Myer regularly) AND they will realise what a good deal it is…something for nothing !

In short the Myer One will probably be a good deal for a few customers, and a poor marketing investment.

And it won’t lead to growth, real growth comes from winning more customers…and that’s mainly occasional customers. No brand ever got big by simply trying to get more out of its most loyal customers.

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