We were asked and did provide a submission in response to the Australian Competition and Consumer Commission’s (ACCC) customer loyalty schemes draft report
The final report is available here.
Unfortunately, the final report we feel tends to concentrate in our view on the large loyalty programs and ignore the problems that small and medium-sized businesses (SMB) have here.
Our concerns were several. The first one is that the demands for a privacy statement constitute a significant problem for SMB. These documents can be huge; for example, the Velocity Frequent Flyer Terms and Conditions is about 28,000 words while the Qantas Frequent Flyer Terms is over 20,000 words. Both documents would take over an hour just to read. The cost of producing such a document to an SMB is high, so we were happy that the commission did explicitly accept our solution that a standard privacy statement by appropriate industry organisations should be looked into.
On the other problems, we brought up that SMB would find it challenging to manage a loyalty program over many years the ACCC was silent, and we are disappointed with that. Let say, for example, an SMB business changes its computer system. Now we do not lockout our former customers but many of our competitors do lockout their former customers, I have seen them do it frequently. Many charge hefty fees to run reports on old data files.
A client of ours, asked a compititor of ours to run some reports from his old data. He was quoted $450/hour as he was an unsupported user. When he asked how long it would take, he was told it was unclear but as a punt about 5 hours but it could take longer.
Now if there has been a change of ownership, this may involve an exchange of legal letters first, which costs a lot before the SMB business owner can get access to the information required, and this takes time. So if there is a dispute other this with either the customer and/or the former owner, it may be impossible to get the required information. The prospect and reality of fraud here are huge.
One tip, I do feel is that if you are buying an SMB that uses a point-based loyalty program that you clear up this problem before taking over.