The concept of loyalty cards was to encourage the allegiance of customers to a brand or outlet. Unique offers or discounts were sufficient to keep this relationship in place. The retailer could track visiting and spending habits while also tailoring personal offers to increase customer value.
The customer was aware of the process and most were prepared to present the store-card for the added benefits.
In the UK today, adults carry an average of 13 loyalty cards, but in most cases, they only actually participate in half. Purses bulge with these cards, causing frustration whilst searching for the relevant one. This friction point greatly reduces the likelihood of its production. Don’t most of us hate enduring this experience?
The system is now being interrupted by semi-automated loyalty schemes which once registered, will automatically present the loyalty membership details whenever the specified credit or debit card is used for payment, saving the need for fumbling for two cards when one will suffice.
Aimed at increasing convenience for shoppers, users are less focussed on the “loyalty card” system and more on the membership of a data collecting process with benefits.
Retail analysts still receive the same data, but on a higher percentage of transactions, albeit to the potential loss of the dwindling cash sales data caused by loyalty cards not needing to be carried.
Luke Ibbetson, Director of XCM says “We experience different tactics with our clients when it comes to loyalty initiatives. Many retailers are still to crack this completely and are therefore still searching for golden nuggets that best stimulates their customers and new prospects”
Luke added “It very much depends on the industry sector a retailer operates in and how their different product ranges complement each other. For example, the Boots loyalty scheme works well but it services customers with a range of products they need to buy repeatedly“
He explained “It is much harder for fashion-only retailers to inspire their customers to buy into this process. Especially ones with niche ranges or products that you only need to invest in once a year or maybe even longer! These retailers need to really invest in the buying experience and ensure they understand their consumers as much as possible. This is where XCM come in to improve those customer touch points and insights to get our client’s proposition right every time”
So, no it is not the end of the loyalty card, far from it, but it is likely that we see the demise of the card itself as the process is tweaked and tuned to remove the sticking points.