Loyalty Cards: Are You Better Off?

A retailer’s motivation for offering a loyalty card is to create a mechanism to link the customer’s identity to the content of the market basket. Every customer purchase is stored in a database which, which the retailer can mine to understand the individual customer’s purchase preferences and behaviours. Do they prefer specific brand names or do they seek only sale items? How frequently do they shop? On which days? At what times? What’s the typical spend? Do they use coupons? Redeem their loyalty points?

Armed with this information, the company can look at sales per individual to see who's profitable and who isn't – and devise marketing programs to engender loyalty and encourage increased/more profitable spending.
The company’s benefits are clear. But are the customers better off? In today’s modern world, the answer is a resounding “Yes!” While the local retailer of yesteryear might have known each customer individually, anticipated their needs, and made tailored suggestions, the loyalty card is the only way in which customer intimacy can be achieved on a massive scale.

Instead of the flyer advertising a limited number of weekly specials, retailers can now craft emails (or print offers on the back of the till) specially customized to a customer’s buying habits – that magically arrives the day before the weekly shop. Are you a coupon user? Here’s a coupon for two of your most common purchases. Prefer brand-name goods? Here’s a two for one offer on the store-branded (higher margin) equivalent. Typically buy pasta weekly, but haven’t done so in three weeks? Here’s a tie-in for one of our prepared sauces.

Done well, the customer will perceive these highly relevant, well-timed, personalized marketing messages not as an annoyance, but as a value-added service. When a store anticipates your needs – transforming the weekly chore of shopping into a pleasurable experience – you’ll return time and time again. Shopping elsewhere to save a few quid no longer seems worth the effort.