In marketing generally and in retailing more specifically, 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 for convenience.
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.
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.Where a customer has provided sufficient identifying information, the
loyalty card may also be used to access such information to expedite
verification during receipt of cheques or dispensing of medical prescription
preparations, or for other membership privileges (e.g., access to a club lounge
in airports, using a frequent flyer card).
Critics see the lower prices and rewards 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. There also remains the possibility that law enforcement agencies
could be granted access to the stored information during an investigation of a
customer's activities. For example, in 2004, a Winn-Dixie key-ring card was left
behind at the scene of the crime, which led to the criminal.
The loyalty card market in the UK is one of the most significant in the world, with most major chains operating some form of reward system.
However, of the major supermarkets (Tesco, Asda, Sainsbury's, and Morrison's),
only Tesco and Sainsbury's offer a card-scheme to customers. Tesco's Clubcard
scheme has been operating since 1995, with Sainsbury's Reward Card opening one
year later in 1996. Sainsbury's more recently ended their Reward Card system,
replacing it with Nectar card. The Nectar card is a collaboration between
Sainsbury's, BP, Debenhams, and numerous other outlets, so customers can
obtain points on their card in various shops and redeem
Both Sainsbury's Nectar and Tesco's Clubcard scheme have been criticised for
not offering 'value for money'. Newspaper reports frequently focus on the fact
that many hundreds of pounds must be spent on the cards before even a theme
park visit can be bought ([1])
A recent report in Britain's The Economist newspaper suggested that the real
benefit of loyalty cards to UK outlets is the massive database potential they
offer. ([2])
The Nectar card scheme has recently had a number of high-profile losses, in
the form of companies withdrawing from its operations. Barclaycard and
Vodafone have said they are leaving the scheme to concentrate on other areas.
In the U.S., several major supermarket chains and at least one major pharmacy require the cards in order for customers to receive the advertised loyalty price. These include Kroger, Safeway (through its own name and many of its regional chain names), Albertsons, Winn Dixie, Harris Teeter, Ingles, and CVS/pharmacy. However, stores also allow a customer to use the store's card if a customer does not have theirs on hand or if the customer is new and agrees to sign up right away. Many of the stores allow accumulation of fuel discounts. Some have tie-ins with airline frequent flier programs, and some agree to donate a percentage of sales to a designated charity.
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 specified 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.
Almost all of the major hotel chains (Best Western, Choice Hotels, Holiday
Inn, Marriott, Super 8 Motels, etc.) have similar cards that allow guests to
earn either points (redeemable for discounts, future stays or other prizes) or
airline miles (Hilton's program allows guests to earn both on the same stay,
the only program to date that does so). All major US Airlines also offer
rewards credit cards. See US quick comparison table
Two major petrol distributors have adopted the Exxon-Mobil Speedpass which is
not only a loyalty token, but also contains a mechanism for authorizing
electronic payment, used by over seven million customers worldwide (in 2004).
For now, most 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. Also, many retailers are
simply not large enough to justify the cost of creating, promoting, and
operating a club card program.
Some supermarket customer loyalty cards inadvertently work at the scanners of
other non-affiliated stores. For example, a Kroger card has been successfully
recognized as a respective loyal club member at stores in the Food Lion,
Pathmark and Winn-Dixie chains.
A few states have begun regulating club cards. For example, supermarkets in
the U.S. state of California are subject to the Supermarket Club Card
Disclosure Act of 1999 [3]. Some grocery chains have dropped their loyalty
card programs. Rainbow Foods in Minnesota ended their loyalty card program
after being acquired by Roundy's, leaving Minnesota with no major grocers that
use such cards.
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.
Most Australian Banks offer a range of credit card rewards programs which
feature bonus partner agreements with various retailers.
Australia also boasts many online loyalty programs. Some of these programs
include Rewards Online,Emailcash and Dynamic Rewards.
Australia also has a cash rewards card OneCard. The OneCard loyalty programme
rewards OneCard cardholders when they use their card at any participating
OneCard merchant, with cash rewards of 4% for each and every transaction.
Unlike many other complicated points systems or vouchers there is no lengthy
wait to redeem points for flights or toasters - just good old fashioned cash.
Loyalty programs in Canada
The oldest and largest loyalty program in Canada is Canadian Tire money and
Canadian Tire gives out coupons each time someone shops at their store. The
second oldest program is the HBC Rewards/Club Z program first started by
Zellers. Canada also has the Air Miles program, and Loblaws offers President's
Choice Financial where users of the service get PC Points towards free
groceries. Staples Business Depot also offers a rewards program in Canada.
Almost every gas station in Canada offers some sort of program such as Esso
Extra at the Esso gas stations or Petro points at Petro Canada, or Canadian
tire money at Canadian Tire gas stations, or a coupon that grants the customer
cents per litre of fuel purchased at at Sobey's Fast Fuel location that can be
user at a Sobey's banner store.
Many hotel chains also offer some sort of loyalty program. Canada is also home
to Air Canada's Aeroplan.
In the Republic of Ireland loyalty cards have been in operation since 1993, when Superquinn introduced its SuperClub loyalty card scheme. This is regarded as having been the prototype for such schemes in Europe. However loyalty cards did not expand until 1997, when Tesco Ireland introduced its Clubcard scheme, shortly after its purchase of Power Supermarkets. This was essentially a simple expansion of the UK scheme (see above) - cards for this are physically identical to those used by Tesco in the UK and they can be used in both countries. Dunnes Stores responded with the introduction of their own ValueClub scheme. Today these are three main schemes operating in Ireland. although ValueClub has been withdrawn from Dunnes' Northern Ireland stores.
Mass surveillance
Sales promotion
British national identity card
Scrip (or "gift cards" and "gift certificates")
Frequent flyer program
Consumer cooperative
Warehouse club
Consumers Against Supermarket Privacy and Numbering (External link) Opposition
group opposing “Loyalty Cards.”
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