Loyalty card

From Academic Kids

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In marketing generally and in retailing more specificly, a loyalty card, rewards card, points card, or club card is a plastic card, visually similar to a credit card or debit card, that identifies the card holder as a member in a commercial incentives programme. In the United Kingdom it is typically called a loyalty card, in Canada a rewards card or a points card, and in the US either a discount card, a club card or a rewards card. Cards typically have a barcode or magstripe that can be easily scanned, and some are even chip cards. Small keyring cards are often used as well.

A retail establishment or a retail group may issue a loyalty card to a consumer who can then use it as a form of identification when dealing with that retailer. By presenting the card, the purchaser is typically entitled to either a discount on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is the visible means of implementing a type of what economists call a two-part tariff.

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Air Miles Card.

The card issuer requests or requires customers seeking the issuance of a loyalty card to provide a usually minimal amount of identifying or demographic data, such as name and address. Application forms usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store - one might expect - uses aggregate data internally (and sometimes externally) as part of its marketing research.

Critics see the lower prices as bribes to manipulate customer loyalty and purchasing decisions, or as a case of infrequent-spenders subsidising frequent-spenders. Others worry about the commercial use of the personal data collected as part of the programmes. It is also possible that consumer purchases are tracked and analyzed toward more efficient marketing and advertising.

Contents

Loyalty cards in the UK

Many UK retailers have adopted a loyalty card system. The trend towards adoption, however, received a setback in the UK in 2001 when the chain supermarket Safeway (UK) abandoned its ABC loyalty card, stating that it preferred the ability to offer lower prices as a customer incentive rather than a points-based cash rebate. Sainsburys, a rival supermarket, have abandoned their Reward points system in favour of a new card, the Nectar loyalty card, which they issue in conjunction with a number of partners including the petrol suppliers BP, the department store chain Debenhams, and Barclaycard.

Boots, the chain of high street chemists, has a loyalty card which stores the points on a microchip. This has considerable advantages to the retailer from the point of view of data processing, since calculation and allocation of points becomes decentralised to the point of sale (the points-accounting processes can impose extreme demands on centralised computing resources).

Points cards in Canada

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HBC Rewards Card.

A similar system in Canada has the retailer providing a points card to the consumer. Each purchase at the establishment provides a point total to their account, which can later be redeemed for special rewards or store merchandise. Prominent examples include HBC Rewards from the Hudson's Bay Company, and Optimum from Shoppers Drug Mart, and Air Miles from the Loyalty Group which is used by many companies including the Hudson's Bay Company. The Loblaws grocery chains have PC Points available to those who use the Loblaws financial services (President's Choice Financial) for in-store purchases. See also Canadian Tire Money.

Cards in the United States

In the U.S., several major grocery store chains and at least one major drugstore require the cards in order for customers to receive the advertised price. These include Kroger, Safeway, Albertsons, Winn Dixie, Ingles, Randalls and CVS/pharmacy. Some will use the store's card if a customer does not have theirs. Others will force the customer to pay more for not carrying one, though this may end up driving the customer to a competing store instead.

The practice is also common among book and music retailers, from large chains to independent retailers. In some instances, the customer purchases the card and receives a percentage discount on all purchases for a period of time (often one year), while in other instances, a customer receives a one-time percentage discount upon reaching a speficied purchase level. (For example, a bookseller's loyalty card program might provide a customer with a 10% off coupon once the customer has spent $200.00 at the bookseller.)

In addition, office supply retailers Staples, Inc. and Office Depot started issuing club cards in 2005.

For now, the majority of American retailers have not implemented club cards. In a few cases (e.g., Federated Department Stores) this is because the retailer already issues its own credit cards, and thus already has a direct relationship with the consumers most likely to shop at its stores.

Loyalty Programs in Australia

By far the largest loyalty program in Australia is the FlyBuys card backed by Coles Myer, Australia's largest retailer, the National Australia Bank and Shell. Rival retailer Woolworths has a program tied to its Ezy Banking product, offered in partnership with the Commonwealth Bank, where points are earned on spending in some Woolworths stores using an Ezy Banking Card. Many specialist retailers also offer a variety of loyalty programs.

See also

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