Customer Loyalty cards

Year 1998: Our company was selling merchandise directly to the end customer. The customer were small corner shops who were buying worth £ 100 worth products in mix and match. Our finance director insisted that when recording the sales in the computer system, the sale should be recorded customer wise instead of lumping it under miscellaneous customer.

The volume of sales was small in comparison to overall sales, but our finance director insisted on getting customer on the database.

Year 2008: Now when I go to any supermarket or a petrol pump, I have got loyalty cards for each of them. I prefer to go to a particular supermarket, since I get loyalty points and rebate coupon. Buying from a particular pump, I earn "free air miles". Each time you checkout, you offer your loyalty card be swiped.
  • Has the shopping experience changed in last 10 years ?
  • Has the data gathering techniques about the customer preferences changed ?

According to article "The card up their sleeve" published in the Guardian, UK

Enter the loyalty scheme, beginning with the Tesco Clubcard introduced in 1995. One year later, Clubcard holders were spending 28% more at Tesco and 16% less in arch-rival Sainsbury's. The latter soon followed suit with its Reward card, launched the same year and with a membership of 10m by 1998. Safeway introduced its version, the ABC card, in 1995 - although this was ditched in 2000 - and Boots rolled out the Advantage card in 1997. Scores of other operators - Barclaycard, BP, Shell, WHSmith - developed similar schemes and then, in September 2002, Air Miles founder Keith Mills introduced the consortium concept that is the Nectar card. With heavyweight companies such as Sainsbury's, BP, Debenhams and Barclaycard among its members, the Nectar scheme was thrust upon us with the biggest advertising campaign since the National Lottery, costing a reported £50m. By February this year, Nectar had signed up 11m UK households (out of a total of 22m). Today, the Tesco Clubcard has 10m active households, while the Boots Advantage scheme, current favourite in the card-pack, claims 15m members.

Consider the detailed information that every loyalty card user volunteers to the store. Each swipe of the card sends your spend - what you bought, where and how you paid for it - into a databank profile of your purchase history, along with the personal information you gave when you signed up for the card.

Loyalty Cards: Reward or Threat? By Martin H. Bosworth makes an interesting point
Details of loyalty points and the point-gaining transactions are being captured by a stand-alone card terminal and transferred to a PC or a back-end server for further analysis. The loyalty software maintains a complete database of all customer rewards and reward suppliers.
And, just as data brokers like ChoicePoint collect personal data and use it to build an aggregate "profile" of individual consumers, supermarket chains use their stored data to target buyers with "special" offers and "preferred" advertisements from their marketing partners.

The problem that we faced as business for collecting data has been quite easily solved by technology - the loyalty cards program. So business not only gets the data about the customer but also gets information about the customer profile so that they can target the any business segment.

Companies analyze the data by data warehousing solutions and convert it to information. Slice and dice sales with product / product group / customer / customer group or region or any geography.

With the added information, the business can manage their supply chain better. The business that has information is the king.

Do you have loyalty cards ? What do think about it from a customer point of view ?


Santosh Puthran

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