New Zealand Herald: Shell puts loyalty to the test: “"Fly Buys helped Shell move from No 3 in the market to No 1…": "There's no question about its importance to Shell's marketing strategy during the past eight years." If some customers did become "brassed off" because of the change and bought elsewhere then that was the price to be paid for limiting the scheme." (ShellNews.net) 24 Feb 05

KAREN CHAN

Feb 24, 2005

Aaron Smale has visited a Shell petrol station twice in the past few weeks and both times he was refused Fly Buys reward points for his fuel purchase. He doesn't plan to go back.

"If they're going to stuff up their loyalty programme, then see you later. Loyalty is a pretty tenuous thing," said Smale, who travels the countryside in his job with NZ Rural Press.

A Shell spokesman confirmed the company had changed its long-standing policy of offering Fly Buys points on fleet cards.

Smale could not get reward points because he used a card provided by his employer to pay for petrol.

Auckland University senior marketing lecturer Rick Starr said Smale's reaction demonstrated one of the dangers companies considering joining rewards schemes had to think about.

"It's a long-term decision. Once you pick it up, you remove it at your own risk," he said.

In Shell's case, only a sub-group of customers were affected. Up until January, fleet card customers had been allowed to double dip - gaining once through discounted fuel and again through Fly Buys.

While some can switch to cards that offer Fly Buys points rather than discounts, the extra benefits of the loyalty scheme are no longer available to those with fleet cards.

One fleet manager at a major courier company who no longer gets points said he was not upset, because he valued his discount more.

He had originally been concerned about his couriers' reactions, before realising that as self-employed contractors with individual cards they were not affected.

Starr said expectations were the key. If a customer did not expect much, and didn't get much, they would be happy.

"But if you set expectations then violate them - 'wait a minute, you're not giving me Fly Buys points?' - then it may not be that Fly Buys points are particularly valuable, the fact that they've been taken away is going to upset people," he said. "It's a classic prescription for dissatisfaction." Despite that, Starr believed Shell had made a "smart decision". It had left the majority of customers alone and removed Fly Buys points only from those it was least vulnerable to losing, people with fleet cards.

For their case, the buying decision was likely to rest with an employer, who was likely to be unaffected by the loss of points and to favour discounts above rewards. A spokeswoman for Telecom, for instance, confirmed her company had not changed its fleet card as a result of the loss of points and still used Shell.

AC Nielsen market researcher Janette Brocklesby has tracked loyalty schemes since the launch of Fly Buys in 1996.

She believed the change could potentially ultimately impact on either Shell or the Fly Buys scheme itself - but whether it would depended on how customer relations were handled from here.

In previous instances where rewards had been cut back, her research showed a big dip in satisfaction, with companies sometimes never recovering the satisfaction levels their customers had felt in the past. But it had found no change in actual buying behaviour.

That meant while the change in attitude might affect buying behaviour in the long term, companies had time to redeem their relationship with customers.

"What is really interesting about New Zealand is that the strength of rewards programmes is strong.

"They are now part of everyday life for New Zealanders. The expectation is that there will be some kind of payback," she said.

Alastair Hutchens, chief executive of Fly Buys' parent Loyalty New Zealand, believed the impact of Shell's move on his scheme would be modest.

Along with New World, Shell was one of the two largest issuers of Fly Buys points. While Hutchens expected some reduction in the number of points it issued, there was a trade-off because Shell had also recently extended the scheme to cover LPG purchases.

Figures he has seen showed the card holders were still buying at Shell. "People have not rushed off in droves elsewhere," he said.

"We don't want to see anyone losing the opportunity [to collect Fly Buys points] but every customer has to make their own call on that and some will say Shell is still the most convenient." Hutchens said Shell remained a significant player in Fly Buys - it was a founding member and one of four shareholders.

"Fly Buys helped Shell move from No 3 in the market to No 1," he said.

"There's no question about its importance to Shell's marketing strategy during the past eight years." If some customers did become "brassed off" because of the change and bought elsewhere then that was the price to be paid for limiting the scheme.