Woolworths and Wesfarmers know more than ever about their customers

The latest research from Roy Morgan has found that nearly 10 million Australians now have a flybuys or Everyday Rewards card. The renewed and re-launched flybuys card is a loyalty program that can be used across a number of Wesfarmers’ (ASX: WES) owned stores, including Coles, Target, Kmart and Liquorland. Flybuys is also partnered with other large retailers including Telstra (ASX: TLS) and Webjet (ASX: WEB).

The Everyday Rewards loyalty program is exclusive to Woolworths’ (ASX: WOW) owned stores however its partnership with the popular Qantas (ASX: QAN)-linked frequent flier program adds another level of appeal to the card.

According to Roy Morgan, the number of consumers with a Coles flybuys card trails the number of consumers with a Woolies’ Everyday Rewards card at 33% of total consumers (aged 14 years and over) and 36% respectively. It’s an exceptional result for Woolworths, given that its loyalty card was only launched in 2007, compared with flybuys, which has been marketed for well over a decade.

As marketing tools the loyalty cards have arguably significantly more value today to retailers than in the past. Whereas a decade ago the cards were primarily seen as about “loyalty” – generally by providing some small incentive offer in return for customer loyalty – today, thanks to data profiling technology and analytics software, the cards are very much about marketing and gaining a deeper understanding of customers. It was this desire for a deeper understanding of customer buying habits that led Woolworths to purchase earlier in the year a 50% share of data analytics company Quantium for $20 million.

Foolish takeaway

Due to the non-discretionary nature of many supermarket items, Wesfarmers and Woolworths gain regular contact with their customers. As they increasingly look for cross-selling opportunities to keep their growth rates up, customer data will become all the more important for finding ways to market items such as insurance, telecom, utilities and also their other retail brands such as home improvement to those customers.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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