License article

Test drive: The points of difference

What is it? Coles has relaunched its rewards program, flybuys. Coles claims it has 5 million active flybuys users but concedes that the loyalty scheme was ''not as exciting as it could be''. Two common complaints, which Coles has addressed in the revamp, were that the ''earn rate'' (how many points earned on each dollar spent) was too low and the expiry date on points was unfair.

How it works Unlike a rewards program that is part of a credit card, flybuys does not offer points on all spending.

Points are earned whenever you shop in any of the Coles Group stores - Coles supermarkets, Target, Coles Express service stations, Kmart, Kmart Tyre and Auto and Liquorland.

Coles has expanded the program and its partners now include Telstra, energy company AGL and travel agency Webjet. Anything you buy from those companies will also earn points. Flybuys users can ''supercharge'' their points. They get bonus points if they have Coles car or home insurance and they can earn even more points if they buy products using a Coles MasterCard.

A new feature of the program is ''my5 at Coles'', which allows people to nominate five items in their Coles shopping trolley on which they can get a regular 10 per cent discount.

Pros The new program has some significant improvements over the old one. Points do not expire. Customers earn one point for each dollar they spend, compared with two points for every $5 under the old scheme.


Points convert to cash vouchers at the rate of 0.5¢ a point. In other words, you would need to spend $20,000 to earn a $100 voucher (without any bonus points). The Reserve Bank says a shopper using a credit card rewards program needs to spend an average $18,400 to earn a $100 voucher. Flybuys is not generous but it is in the right direction and Coles offers more opportunities to add bonus points. The program has no joining fee and no annual fee.

Coles has made it easier to collect rewards. Instead of requesting a gift card and waiting for it to be delivered, customers can go online and convert their points to ''flybuys dollars'', which can be redeemed at store checkouts.

The redemption threshold has been lowered from $20 to $10.

Cons The my5 part of the new program is only short term; it ends in October. The general manager of flybuys, Roger Sniezek, says Coles will review the my5 part of the package in October to see how it has worked. It might be renewed or offered in a modified form.

A spokeswoman for consumer watchdog Choice, Ingrid Just, says a loyalty program such as flybuys works if you do the bulk of your weekly shopping at Coles Group stores. Coles has estimated that an average family using flybuys and my5 will save $200 a year.

Just says you need to consider whether you would save more by shopping around for better prices, rather than committing to do all your shopping at Coles, Kmart and Liquorland.