Thursday, 2 June 2011

Are Flybuys actually worth it?

by Rob d'Apice
How many times have you been asked whether you have a Flybuys card? "Too many times, dear friend!" is what I'm imagining you saying, if you were somehow reading this as-yet-unpublished blog post. So today, we put pen to paper to help you demystify the truth behind the value of the FlyBuys Scheme.

The Math

To calculate the value of FlyBuys, there are three things we need to know:
Actual value to you
= [A. Your spend] x [B. Reward point earn rate] x [C. Value of a point].
A. Your spend
Flybuys points can be accrued at major Coles brands: Coles, Kmart, Target, BiLo and Liquorland. The amount of spend obviously varies for each person, but (at the risk of exposing the author's alcoholism or penchant for expensive deli goods) the author of this post has calculated his total spend at Coles and Liquorland for the previous 12 months as $978, so let's use $1,000 as a plausible annual spend.

B. Reward point earn rate
It's 2 points for every $5 - or 0.4 points per dollar.

C. Value of a point
Again, this depends on what you redeem with your points. Ironically, Flybuys' travel rewards are pretty average - domestic travel is available with Qantas or Virgin Blue, but international travel is very limited.  All Qantas travel still incurs taxes, etc.  We've calculated that redeeming points for a return trip to Brisbane equates to a point value of about $10 per 1000 points* (or $0.01 per point). FYI: Redemption for vouchers and other rewards is also possible, but equates to a point value of about $6-8 per 1000 points - a few dollars less than flight redemption.

*For you data-geeks out there: return flights to Brisbane is 22,500 Flybuys points PLUS taxes with Qantas.  The same flight through the Qantas website is $225.05 PLUS taxes.  Therefore 22,500 points = $225.05, which can be reduced to roughly 1 point = $0.01.

So, returning to our formula above:
Actual value to you
= [A. Your spend] x [B. Reward point earn rate] x [C. Value of a point]
= $1000 x 0.4 x 0.01
= $4.00

The Horrible Truth

Yes, you read that correctly.

In our example, Flybuys will return about $4 worth of rewards per annum.


The Lesson

Don't be generous with your trust. When an offer is confusing enough that you give up doing the math in your head, consider it a red flag.

Our goal is Prosple is to help cut through the crap.  That's why we have this blog, and that's why we are working furiously building a tool that can help you make decisions like these 24/7. For credit cards, for example, we put all available cards on a level playing field and produces a simple $ amount that each card will ultimately mean to you given your situation. You don't need to think through reward points, annual fees, interest rates, signup bonuses, etc. We're really excited about it because there's nothing like this in Australia (but more on that later!).

Got a Question?

This post came about in response to a reader's question.  Have you got a question that you're quietly sitting on?  Hit us with it!  We'd love to know what information you all need to dominate your financial life in this complex (and often manipulative) commercial world.

Until next time!

4 comments:

  1. It's probably important to note that Woolworths Everyday Rewards and FlyBuys aren't grocery programs. Both of them are now coalition programs and as such you can't compare them as simply as you have done here. If you're looking for a discount on groceries only, sure, it's not that valuable and there are better options out there.

    If you're looking for a program that will give you rewards across everywhere you shop then FlyBuys and Everyday Rewards don't look so bad anymore. Besides, the real value from both of these programs comes from their bonus point offers, which are extremely hard to estimate and include in calculations. Really, you won't know how valuable the program is to you until you join. Quite tricky.

    Cheers,
    Graham
    Perkler.com

    ReplyDelete
  2. Hi Graham,

    Sorry, but I still can't see any value in Flybuys. Here are some of the Flybuys promotions I didn't mention (I've grabbed these from Perkler - great site, btw!):

    1. The NAB Flybuys card. This returns 4 points per $5 spent (on top of the normal 2 points), which would triple my annual return from $4 to $12. This may be worth it for people who spend more at coles, BUT this earn rate only lasts until September 31 - then you get nothing extra. Otherwise, you get 1 point per $5 spent at all retailers, which is *atrocious* value compared to other reward schemes (dapCards - coming soon - will prove it for you!)

    2. 1,000 points per $1,000 spent at JetSet or Travelworld. This is $10 worth of points per $1,000 spent, which is a very medicore return (my creditcard gives me more value for spending $1,000 ANYWHERE, let along paying JetSet's hefty travel price markups…)

    3. 2,500 points (or $25 worth of points) for buying car insurance with KMart. This could be a small benefit, but you would need to do the research to ensure you aren't paying an extra $25 on your insurance compared to a low cost provide (which I suspect you probably are).

    Am I missing something? Can you point me to some Flybuys offers that are genuinely valuable? I'm keen to be disproven here.

    We're generally not in the game of convincing people to join reward programs that require a large amount of active involvement. Creditcard rewards are easy: just spend as you normally would and get free $. Flybuys are easy too: just swipe the card at the checkout - unfortunately it turns out they are next-to-worthless. Having to constantly check promotions and assess whether they are good value and whether you can go out of your way to take advantage of them doesn't seem to add up: a lot of work vs little return.

    One last thing: I haven't said anything about Woolworths Everyday Rewards. By my maths, the return is more than double that of Flybuys when shoppping at Woolworths. Plus, you get Qantas points, which you can accrue through many good credit cards schemes (and through flying) and are worth more than Flybuys points.

    (BTW, well done with Perkler - I'm going to check it out in detail now.)

    ReplyDelete
  3. Although there are these ongoing bonus points offers that are listed on the site, what isn't listed are exclusive offers that members receive in their email.

    These offers aren't visible online as they are only for members that fit certain criteria.

    I have a good example offer from one of our guys' emails. The offer is from December but it illustrates the point about how value can't be calculated based on the standard earn rates: http://bit.ly/lPSTiA

    I'm not necessarily saying that the program is valuable to everyone, just that the value of the program literally depends on the member and which offers they qualify for.

    Cheers for the feedback on Perkler ;)

    -Me

    ReplyDelete
  4. Honestly, just shop at Aldi and pocket the change as your reward

    ReplyDelete