Understanding how members spend their rewards

Our data gives us insights into what our members need and want from their Co-op and it shows us where we need to improve our products and services.

When members swipe their Co-op Membership cards, they earn 5% back on what they spent on Co-op branded products and services. They can redeem that 5% at any point against any transaction. But at the moment, members aren’t spending their rewards as much as we might expect and we have £22 million of redemption funds waiting to be spent.

A million members have over £5 in their accounts, and 500,000 members have over £10. 50% of all rewards spent to date have been redeemed by just a third of our members. This means lots of people are losing out on savings at the checkout.

We wanted to find out why this is happening. First, we looked at the data we already have on how often people spend their rewards, then we did some user research to get a better understanding of the underlying reasons.

When do people redeem?

This chart shows when people redeem their reward balance. The horizontal axis shows the amount of money accrued in pounds, and the vertical axis represents the number of members redeeming.

The chart shows when people redeem their reward balance. The chart shows that every time spend rewards reach a whole number, there is a clear spike in redemptions; and this is most pronounced between £1 and £5.

As we might have expected, significantly more people cash in smaller amounts than larger amounts. Considering how long it can take to build up a £10 reward when shopping for food and how often people use the Co-op for regular top-up buys, this is not a surprising find.

However the graph shows something else too. Every time spend rewards reach a whole number, there is a clear spike in redemptions. This is most pronounced between £1 and £5.

It’s difficult to say exactly why this is happening. We had thought perhaps people were building up their rewards before using them. But actually it doesn’t seem to be a conscious decision. When customers are at self-service tills, for example, they are more likely to redeem when they see a whole number in front of them than if it is, say 77p. There’s definitely interesting psychology at work.  

We also noticed that there are spikes in redemption at Christmas and Easter. So where customers may not redeem as part of their usual shopping habits, they may see holidays as more of a time for treats, and so choose to cash in their rewards then instead.

Speaking about redemption habits with members

Our data is compelling, but it can only tell us so much. To find out more about redemptions, and the thought process behind them, our product team visited 5 stores in Manchester to do some mystery shopping and to interview customers.

We went into this research with 4 aims. We wanted to know:

  1. Why people aren’t redeeming as much as we would expect.
  2. Whether members are being prompted to redeem when they’re in store.
  3. How members approach redemption in general.
  4. How members redeem for the first time.

What we discovered was a set of remarkably mixed results.

From those we spoke to, we found that members often aren’t aware of how to redeem unless they had been shown how by another person (and once they had been shown, they would redeem again and again). Those most knowledgeable about Co-op Membership in general will mostly have spoken to Co-op colleagues to get the information they wanted.

We also saw that redemption can, more often than not, be a spur of the moment decision. If a member sees a prompt on one of the self-service tills, they can decide there and then that they want to use their rewards. All they need is the reminder.

Perhaps most interesting though was the different patterns we observed. We saw some members using their rewards regularly, no matter what amount had been accrued, some waiting until they had a whole number, and others using their rewards to make up the shortfall when they were low on cash.

What this means for the future of redemptions

Our data and research have given us fantastic insights into store behaviour and the reasons members do, or don’t, cash in their rewards. But there is much more to learn, and we will be testing the lessons learnt from our research, as well as carrying out more surveys of our members.

We know we haven’t worked together as multidisciplinary teams as much as we should have in the past as well. This work on redemptions has shown how much can be done when different parts of the Co-op, from data science to product owners to user researchers come together. We will definitely be looking to build on that.

Ultimately we also want to see how the Co-op can increase redemptions. We see these rewards as good for us, and good for our members because they show what the Co-op is all about: giving back. Every time members trade with the Co-op they get 5% back for themselves and 1% back for social causes. This is something we all want to see grow.

Alex Waters, data scientist
Charlotte King, product lead
Tom Norgate, customer offer manager
Simon Hurst, user researcher

Gail Lyon: events at Federation and £50 million in member rewards

(Transcript) Gail Lyon: Hello and welcome to this week’s Co-op Digital weekly update. As you can see, I’m definitely not Mike. I’m Gail Lyon and I’m responsible for digital engagement at Co-op Digital.

As is tradition with all our updates, I’ll start with a big number. £50 million has been earned by our Co-op members since the new membership scheme was launched on the 21st of September last year.

If you’re a Co-op member it’s really easy to see how much that you’ve earned. You can do it online or you can do it by simply checking your till receipt the next time you shop at one of our food stores. And you can spend it anytime as well, you can even spend it at Co-op Electrical.

We welcomed 2 events at Federation House this week. On Monday, Hacks Hackers has their first Manchester meet up, and on Wednesday, DotEveryone joined us to talk about how we can make digital fair for everyone. It’s an important question and only the start of this conversation. Thanks to Ian and Emer from the team for presenting.

And a big thanks to Steve Murrells, our CEO, for dropping in to take a look at our recently opened co-working floor in Federation House and adding to the signatures and the positive messages on the picnic benches.

And finally, subscribe to the blog for regular updates on what the team’s been working on. We really want to hear from you and if you’ve got any questions you can comment on the blog or please send us a tweet.

Thanks, and that’s it for this week.

Gail Lyon
Digital Engagement