Coles FlyBuys scheme is a rip-off

Posted: May 13, 2009 in society

flybuysFrequent flyer schemes are dubious at the best of times and every year I’m thinking about dropping out of my Frequent Flyer program with Qantas. Coles FlyBuys loyalty program though must be the worst of the lot.

As it currently stands, the scheme has 8 million members; it is jointly owned by Cole’s parent, Wesfarmers, and the National Australia Bank, and run by a Melbourne joint venture, Loyalty Pacific.

The program has been criticised for the length of time it takes to accumulate enough points to redeem them for something worthwhile. Shoppers need to spend $5 to receive just one point, and a lot of points are needed to redeem them for anything worthwhile. This combination means that it takes about 3 years on average before people can start using their points. Another catch though is: points only have a lifetime of three years from collection date and expire if not used up!

To look at an example: the Sydney Morning Herald calculated that to get 3 bottles of Banrock Station White Shiraz 2006, retailing for about $27 at Coles’ Liquorland (and at $24 or lower if bought over the Internet), FlyBuys cardholders would have to spend $300/week for about 2 1/2 years – that is $39,000 worth of shopping to get a a product at a Coles retail price of $27!  Another example: to accumulate the 22,500 points for a Sydney-Brisbane flight, a person would have to spend $112,476 over 3 years! The fact that these figures can be lowered slightly if customers use a National Australia Bank credit card or a Coles Source Card is neither here nor there.

Let’s also not forget that the small amounts returned to customers through point redemption are not even a discount or cashback. And where people use the money to buy Coles goods, all the company loses is the amount that can’t be written off its tax bill. And as for redeeming points for flights: customers pay a hefty price for them, especially at current ticket prices where you can get a Sydney to Brisbane flight for $80 incl taxes (and that’s not even looking at super specials).

But Coles is not only rewarding its customers’ loyalty in a pathetic way; it also manipulates them in the process. The reason why shop assistants are always asking you at the cash register whether you’ve got a FlyBuys card is not because the company wants to make sure you collect your meagre points. Apart from pretending to do that and therefore making (probably too many) customers feel that their loyalty is acknowledged, swiping the card gives the company detailed information on what individual shoppers have bought – right down to stock-keeping unit levels such as brand name and size. One way for example to use this information will be micro-marketing: tailoring offers to individual customers. Woolworths already has been doing this now for 12 months by sending an estimated 1 million emails each week to its customers who have registered their personal details with that company’s Everyday Rewards card scheme.

One can of course always make the point that collecting 3 bottles of cheap wine after 2 1/2 years and helping Coles in the process to market their products in smarter ways to me (meaning getting even more money from me) is worth the effort. Well, I guess there are such people … 😀 .

  1. Point junkie says:

    The points earning examples you’ve quoted are not only mathematically wrong, they’re misleading. So with the example of the wine reward, if I shopped only at Coles Supermarkets and spent $300/week, the six (not three) bottles at 7,500 points would require 62.5 weeks, not two and a half years. However, this totally ignores that FlyBuys is a coalition loyalty program, not just for supermarkets. I would argue there is not one FlyBuys member in Australia spending $300/week on groceries who would take 62.5 weeks to gain this reward. Even aside from linked credit cards and bonus points, guess what? People who buy groceries also buy petrol, liquor and visit department stores. So they get points concurrently from Coles Express, Target, Kmart, Liquorland and so on.

    If the program was such a rip-off, it wouldn’t have been going for 15 years. People aren’t forced to join by the government – the last time I looked it was free.

    • fred says:

      oh man, you must be a five year old with half a fucking brain. flybuys is the biggest rip off ever, if you walked into a store and it sed “sale 1% off everthing” you would say what a rip off, but people dont relize that 1% is 100’s times better the the flybuys deal, fly buys is a rip off, people just dont know much about it yet they use it, if you cant see the rip off in fly buys, you are an idiot or you work for them.

  2. Sue says:

    Loyalty programs that collect shopping behaviour data and make small (often negligible) rewards have been around for decades. I don’t understand the concern of privacy. If you don’t want to be tracked, don’t register with the program. The rewards may be low, but if you are a loyal shopper of one retailer you may as well use their loyalty card because you get something back. The data they capture helps them target offers to you so you don’t get irrelevant offers. Quite simple really. The consumer gets to choose if they get involved in the trade off.

  3. mc says:

    @Point Junkie, the scheme is only free in the sense that FTA TV is free. Everyone pays for it, yet only people that use it benefit.

    So why not join up and get some money back? One reason is that only through the mass boycotting such schemes will they die, and the money spent on them will go into something else (like cheaper prices).

    The same would work with FTA TV.

    Personally, I would prefer a tiny discount on every purchase rather than extend my time at the checkout (and hand over personal info) to receive company script (ie gift vouchers), but I don’t have that option…

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