How many loyalty cards do you carry? What motivates you to sign up for these programs? According to a 2004 poll conducted by Boston University’s College of Communication, 86 percent of American shoppers use some form of store card or discount card. Grocers and retailers offer cash back, rewards points, special offers and other bonuses. However, what’s the cost? Someone pays for these perks, and it’s not just the non-card holders.
The concept is simple: reward customers who regularly patronize your business. Buy groceries and get a discount on gasoline. Save up points and use them for freebies later. Track your purchases for targeted coupons and marketing promotions: no more dog food coupons for those who don’t have pets and no Hamburger Helper coupons for regular purchasers of meat-free frozen meals. Regular customers get bonuses and companies maintain a loyal customer base. It’s a win-win, right? Not so fast.
In some circumstances, these programs do work exactly as intended. You buy your usual grocery staples and earn benefits gradually that you would not have had otherwise. Using a store credit card may mean special sales and savings that really can help a savvy shopper get more for less. It seems like letting someone know that you prefer name-brand coffee over store brand and never buy nondairy creamer is a small price to pay in exchange for such deals. However, the flaws in the system become apparent on closer inspection.
Annual expenses to maintain loyalty programs run about $5-10 million. So how do companies afford it? Beyond the revenue ensured by regular customers, non-sale prices often run higher at stores with card programs. The organization Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN) has formed to protest the deceptive pricing practices and the collection of personal information along with it. A member of the organization conducted his own informal study on price differences among four stores, two with savings cards and two without, and found that the sales savings with cards often don’t balance out the higher prices on other items. Members consider these programs an invasion of privacy that lures customers in by promising savings and playing deceptive number games. Fear of fraud or misuse of information is not just paranoia, particularly if a third-party handling the program administration lacks adequate security measures. Furthermore, customer segmentation is a double-edged sword. “Loyal” customers are generally defined as those who bring the most revenue to the store. When a store caters to the highest spenders, it risks adversely affecting lower-income and minority populations.
Rewards cards are a bit like credit cards: they can be a great advantage if you know your terms of use and avoid buying just to rack up points. If you aren’t comfortable with the way your personal information is used, switch to a different store program or shop at non-card businesses. The choice is yours; make sure you know what you’re really getting.
{ 18 comments… read them below or add one }
Loyalty or reward card is beneficial if you know how to use it–I own 2. As you stated, members tend to overspend to earn points, and that’s what I am avoiding. I save points from my usual spendings, and just wait for the time I could trade them.
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Loyalty cards are a great thing. I have the loyalty cards of two of my favorite and frequently shopped brands. Through such cards one receives a plethora of benefits in the form of priority billing, additional discount of nearly 5 % on the regular discount, parking preference and alerts about the upcoming sales and fresh stocks. Thanks.
Hi Aayana,
Yes!!! Loyalty cards are a great thing.I love them too and I use them wisely, when I need them.
I am not only receiving discounts but lots of benefits too along cash back from all my purchases!
I have money putted aside directly in to my account, after I buy something from a Loyal Merchant, and I am ready for another shopping adventure!
What a wonderful thought it is when soon while I will be doing school shopping I will be getting cash back from all purchases. After that I will be ready for Christmas Shopping!!!!
Vasiliki Karakatsanidis recently posted..Best Cash Rewards Cards
Loyalty cards have historically proved to maintain ensure an increased brand loyalty and more than just positive results on the business.
I actually have a rewards or loyalty card from the local supermarket, although I really don’t know what the perks and rewards are about. After I read your article, I’m looking forward on reviewing the terms and conditions that the rewards card have. It pays to know a little more about the things that you pay for.
Hi
Loyalty cards are like any other marketing ploy they are there to get you through the door and spend your money. I have one for every store and use them whenever I use the store. But never let them influence where I shop.
Great post thanks lee
Lee recently posted..Budget Home Insurance
I’m really a big fan of Loyalty cards that I have various kinds from different grocery stores and clothing shops. They provide you with cool discounts and freebies. It’s definitely a plus when you think of it.
Now this is news. I love getting rewards and loyalty cards from grocery stores and I never thought a little hidden agenda could hurt a lot. Thank you very much for being a whistleblower. I’ll be sharing this article to my friends who are nuts for rewards and coupons as well.
Actually, I don\’t have a single perks or rewards card that has my name on it. Because I have doubts regarding these cards. I mean, what\’s in it for me? And usually, the perks that they offer are not that good enough. For me of course, because all I got was a free glittering shopping bag for a minimum purchase of like a hundred bucks once; it\’s not worth the shot so I cancelled my loyalty card. . I don\’t know about anyone else though.
Thanks for the heads up. I’m not really a big fan of loyalty cards and I always turn down a generous offer from supermarkets because I really don’t know what’s in it for me. Maybe as a grocer, you really need to be wise on the money you spend. Just because rewards cards cost cheap, it doesn’t mean that you have to have it.
This situation is almost applicable to the saying that you should never judge a book by its cover. Some which appear more attractive just look good but they may not help you in any other way. That\’s why in marketing, the more you make something look good, the more people are drawn to it.
I’ve always availed of this loyalty cards since I thought I could get a better deal out of my money before. I never thought that this was still almost the same as not having a card. Thanks for that in-depth article.
Not all that glitters is gold. Honestly, I have long been curious if those loyalty cards were really an advantage. Thanks for the very informative article.
The article is fine with me. I don\’t really understand the value of loyalty cards. If they would give me discounts everytime I buy something, that\’s the only time I\’ll get a loyalty card to go with my grocery shopping.
Loyalty cards are used as marketing tools, we have to remember that. It’s a good thing to have but we should not be pressured to get the rewards and compromise our own budget. Just remember to use them every time you shop or avail of certain services — then wait until you have accumulated points enough to claim something that really interests you. That’s what I do. Thanks for this share.
Loyalty programmes are great – as long as you don’t overspend or buy unnecessary items just to earn more points. I also like the loyalty cards that give you immediate $ discount, rather than accumulate points that can be spent later. Instant gratification!
Hi,
I absolutely agree with you on the loyalty programs and how great they are BUT don’t buy
unnecessary items just to earn more points.I personally use the ones that not only give me
immediate discount but I get cash back too from my purchases from loyal merchants.
I use BestCashRewardsCards , ONLY when I need it, and I am ahead!
Vasiliki Karakatsanidis recently posted..Best Cash Rewards Cards
I think almost all types of shopping stores are now using Loyalty cards or membership cards to attract customers. It has become the new trend now and why not. Everybody likes to save their hard earned money.
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