Fly Buys to cover small business

Alistair Hutchens

Fly Buys is expanding its successful loyalty scheme to small business.

But it is likely to be the business owner, not the balance sheet, that benefits.

Alastair Hutchens, chief executive of Loyalty New Zealand, which runs the Fly Buys programme, said the company would be introducing new rewards suitable for points collected by companies, such as for office equipment. The boss was less likely to redeem points for stationary than to take a free holiday, however.

"Our research shows people say, 'I might be collecting more points because of the business - but the points will be used for me'," said Hutchens.

It has taken eight years for the scheme to branch out, despite its success with individual consumers. More than $10.3 billion of retail business already attracts Fly Buys points. Loyalty New Zealand now has its eye on the $25 billion it estimated is the value of goods and services sold to small-to-medium enterprises.

Hutchens said more than 90 per cent of all business was done by SMEs, most of it by companies with fewer than 10 employees. Loyalty New Zealand had been looking at that market for the past 18 months and found the same factors that influenced business owners in their shopping behaviour as individuals also influenced their buying for their businesses. That was the critical factor in the expansion.

"They behave like private consumers. It's almost personal," said Hutchens

Existing participants in the Fly Buys scheme already attracted about 10 per cent of SME spending.

"If we could make even a small two or three point change in those revenues for them, we're talking about a lot of money."

Fly Buys is not the first loyalty scheme to broaden its focus from consumers to businesses. When the Canada-based Airmiles programme made the leap, it issued special cards for business members. But ordinary members became angry when they could not obtain points in shops with Airmiles, where the miles were being offered only to business customers.

Hutchens said Fly Buys had learned from those mistakes. The scheme would steer clear of big business and there would not be a special business class of member.

"The Fly Buys programme was never designed to be operating in that space - the behaviour of the business market is quite different to the consumer market. We're talking about the blurred part in between, the SME market," he said.

Fly Buys' expansion would see participants offer points on products targeting small businesses at the same rates as the consumer market, usually one point for every $20 spent.

It would be up to the business owner to ensure their individual Fly Buys card was used when purchasing for the business.

State Insurance has become the first business to target SMEs with Fly Buys points, with its commercial insurance offering for small business. Hutchens said Telecom, Shell, BNZ, Contact and Mitre 10 were all looking at extending points to target small business.

Jason McCracken, head of direct business and marketing at State, said when small business customers were informed they could link their business accounts to Fly Buys, more than half of them requested the change - tens of thousands of customers.