Struggling retailer Woolworths has struck a new frequent flyer deal with Qantas


Woolworths has reversed a decision to stop giving Qantas frequent flyer points to loyal shoppers.

The struggling supermarket giant announced in October that it was ditching frequent flyer points for supermarket discounts, arguing customers preferred them to air miles.

The change appears to contradict the views of Ingrid Maes, director, loyalty and customer data at Woolworths, who, writing for Business Insider last month, said:

We asked our customers what they wanted from a loyalty program, and designed it around their needs. We consciously abandoned the opportunity to create a loyalty business with a revenue goal, trusting that if we gave customers what they wanted, more would choose to be loyal to their local Woolworths supermarket.

Our research was definitive: For a clear majority of customers – 68% – money off their normal supermarket shopping is the preferred option versus only 9% who prefer a points-based scheme.

Around half of all Everyday Rewards members were linked to the Qantas frequent flyer program and of those about 32% had not redeemed points for flights or other goods over the past six years of the deal. However, about 9.4 million flights were redeemed using points earned at the supermarket.

The program costs Woolworths an estimated $60 million to $80 million a year, but the supermarket appears to have underestimated the popularity of frequent flyer points with shoppers as it continues to lose ground to traditional rival Coles and newcomer Aldi.

Today’s announcement of a new 3-year deal comes just a fortnight before the old loyalty program with Qantas was due to expire.

David Flynn, Australian Business Traveller editor, broke the news that Woolworths was locked in talks with Qantas to save the program, which involves around 8 million Everyday Rewards members.

The new agreement gives customers the choice to convert their Woolworths Dollars, earned through buying orange ticket products, into Qantas Points at a conversion rate of 870 Qantas Points for every 10 Woolworths Dollars.

But the last-minute deal means the new scheme won’t be in place until later in the first half of 2016.

From January 1 until the launch, those who previously earned Qantas Points via Woolworths Rewards will receive regular bonus Qantas Points offers.

Woolworths’ food group managing director Brad Banducci said the deal delivers two options.

“Those who prefer cash back can continue to use Woolworths Dollars to get money off their shopping, while avid points collectors will have the option to convert their Woolworths Dollars into Qantas Points at a very attractive rate and with no minimum spend,” he says.

Here’s how the retailer explains the new program.

  • Minimum $30 spend to earn Qantas Points removed.
  • Customers earn Woolworths Dollars as a default option of the Woolworths Rewards (rather than Qantas Points).
  • Customers selecting the Qantas Points option will nominate to automatically convert their Woolworths Dollars into Qantas Points at a rate of 870 points for every 10 Woolworths Dollars.
  • Applies to Woolworths Dollars earnt at Woolworths Supermarkets and BWS stores.
  • As previously announced, Woolworths customers will continue to automatically earn Qantas Points until 31 December 2015, when current agreement expires.
  • New scheme will take effect during the first half of 2016, with more information provided to members before it goes live.
  • Between January 1 and the new scheme taking effect, customers who previously earned Qantas Points via Woolworths Rewards will receive bonus earn offers, so they can continue to grow their points balance when shopping at Woolworths.

Last month, new Woolworths chair Gordon Cairns apologised to shareholders for the company’s poor performance and share price saying the results for 2015 were unacceptable.

“We have made some mistakes, acknowledged those mistakes, publicly learned from them, and now are going about fixing them,” he told the company’s AGM.

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