I thought I'd do a little post tonight about FlyBuys.
It's a bit out of our normal vein, but it's an application of math, so it comes under our 'Maths in Real Life' posts.
My mum is ok with maths. Not great at it, but she knows how to do bits and pieces and stuff.
Now, tonight, she asked me about FlyBuys discounts. She was confused, this new system has come in, and people aren't exactly informed about it. The advertisements say 'big big savings!', but don't actually give any proof of that (compared to the old system).
For all our international readers, FlyBuys is a store loyalty card. A lot of places do them, especially overseas, and it's not unique.
However, it's very interesting, when you start to delve into the mathematics behind a loyalty card. I'm going to use FlyBuys as my example tonight. This will briefly talk about what a loyalty card is... then get to the point that everyone wants - how much money am I going to save?
If you want to just read about FlyBuys, skip to page 2.
So, what's a loyalty card?
A loyalty card is a card that customers sign up for, when they go into a store or supermarket. Remember the days where your favourite coffee shop gave you a free coffee once in a while?
Well, now, companies are using this to encourage their customers to come back. Marketing is hard, so offering a free card with rewards is often a good way to get them to come back. Again and again and again.
Speaking of which, here's an example of a loyalty card. This is one of my own (although, you can see I've only used it twice).
As you can see, on every fifth visit, I'm rewarded with something. Whether is may be a Coke and cookies, or a footlong sub, depends on how long I've been there.
You can see that the rewards offered encourage customers to come back.
For example, buying five subs at this subway will earn me a free Coke (worth $3), or two cookies (worth $2.50).
You have to keep in mind, that these things do come at a cost. Even if I were to spend the minimum amount on a purchase to get a mark on the card (in this case, I'd need to spend $4.90 on a six-inch sub minimum), I'd be looking at spending $24.50 to get my $2.50 saving.
Now, it's all the more likely that I'll be buying footlong subs, instead of six-inch subs.
Does that get me rewards faster? No. I'd instead be spending $35.00 for my $2.50 saving.
That doesn't include adding drinks, cookies to the meal. Potentially, I could be spending upwards of $150+ to get my free footlong sub. Now, does that seem like a saving to you?
Actually, when you compare it to the big retailers, it's a considerable saving.
Let's do a quick case study.
Let's assume that I buy Subway once a week, and spend $11.50 per meal.
Taking the costs of a 6-inch sub ($4.90), a footlong sub ($7.00) and a Coke ($3.00), it would take me 15 weeks to get to a total saving of $14.90.
The percentage of this compared to the amount that I've spent? 8.64% (this is assuming that I get the rewards as a part of my purchases).
Now, that seems pretty small, right?
Actually, not so much.
Let's take a look at FlyBuys, and the changes that they have brought in.
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