Brand loyalty always encounters its toughest test when prices rise. A recent AFR column described Australian shoppers as a “notoriously promiscuous bunch, shopping across multiple retailers for the best price, range and convenience.” With recent data showing that Australian shoppers continue to spend less at supermarkets in response to persistent inflation and high cost of living, some have questioned whether loyalty initiatives are even worth the investment to brands and retailers in the current environment.

The answer is yes, they are absolutely worth it. At a time of rising cost-consciousness, the importance of offers, coupons and loyalty program rewards has never been greater to the consumer. And at a time of heightened brand-shifting and store-to-store comparison shopping, cultivating and rewarding loyal customers has never been more crucial for retailers.

Instead of questioning the efficacy of loyalty strategies, forward-thinking retailers are – and should be – looking for ways to transform their loyalty operations and embrace real-time marketing with their customers. As consumers’ appetite for savings remains strong, those brands and retailers are improving their ability to deliver the right offer to the right customer at the right time.

Those efforts are, of course, designed to support lagging sales. But new loyalty approaches are also improving the capacity for personalisation and direct, timely engagement with shoppers and creating deeper, more sustainable relationships between retail and consumer brands and their most important customers.

Offer-oriented personalisation

Retail loyalty programs have more potential to make direct customer engagement possible than ever due in part to technological advancements and the more comprehensive integration of data into loyalty systems. At Eagle Eye, we help brands and retailers optimise this customer engagement process, often within the framework of loyalty programs, so we have a unique, up-front perspective on how the Australian retail loyalty landscape is evolving. 

The most striking development we’ve seen is that there’s now a confluence of factors that enable brands to deliver valuable (and welcome!) digital offers in highly targeted, personalised ways that also use contextual information to truly optimise the offer’s mode of delivery and timing. There’s no technical limitation on the number of offers a retailer or brand can deliver and no barrier to the depth of personalisation each offer can feature.

That means retailers can deliver offers (and marketing communications and other engagement tactics) in real time that customers will find relevant and valuable. This is a critical capability during an extended period of inflated prices, as shoppers are primed for promotions and eager to reward companies that help them save on items they need and value as they shop. Case in point: A recent study we conducted revealed that 43% of Australian shoppers said retailers could help them save money by sending them relevant offers and promotions while they were shopping.

Investing in the loyalty experience

Of course, offers and discounts aren’t the only benefits consumers appreciate from their loyalty programs. According to a recent McKinsey report, most Australians rank being able to accrue points and redeem them for large or small rewards as the most crucial feature of the loyalty programs they belong to. The same report finds that gamification, or incorporating challenges, bonuses and multipliers into traditional earning and redemption structures, also resonates with Australian (and global) loyalty program members. 

That’s why brands and retailers are making significant efforts to improve the totality of the retail loyalty experience. During an earnings call in late 2022, Woolworth’s CEO Brad Banducci talked about the years-long investment the retailer has made in re-platforming its loyalty program to offer real-time rewards and promotions, using Eagle Eye’s platform to help take them from “a legacy system that had a number of constraints in what we could do for our members, to a system that is real-time.

It can be instantaneous. It can reconcile full history. And it’s not constrained in terms of the offers we can provide or how we can repurpose it.” That includes more timely, contextual offer delivery and “point booster” multipliers within the Woolworth Everyday Rewards program and more seamless member interactions across the loyalty app and the in-store experience.

A challenging macroeconomic environment for Australian consumers doesn’t mean loyalty initiatives are irrelevant. On the contrary, they’ve never had more potential for delivering much-needed value and demonstrating how brands and retailers can connect with their customers.

But to achieve that potential, retail loyalty programs in this country must evolve and embrace the technology that can make personalised, relevant and real-time loyalty experiences a reality. The retailers that take this approach will reap the most coveted rewards of all: faithful customers and higher sales.

Jonathan Reeve is vice president for Asia Pacific at Eagle Eye.