Loyalty program
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Loyalty programs are structured marketing strategies designed by merchants to encourage customers to continue to shop at or use the services of businesses associated with each program.[1] These programs exist covering most types of commerce, each one having varying features and rewards-schemes.
In marketing generally and in retailing more specifically, a loyalty card, rewards card, points card, advantage card, or club card is a plastic or paper card, visually similar to a credit card, debit card, or digital card that identifies the card holder as a participant in a loyalty program.[2] Loyalty cards (both physical and digital) relate to the loyalty business-model.
Cards typically have a barcode or magstripe that can be easily scanned, although some are chip cards or proximity cards.[3]
By presenting such a card, purchasers typically receive either a discount on the current purchase, or to an allotment of points that they can use for future purchases. Hence the card is the visible means of implementing a type of what economists call a two-part tariff. Application forms for cards usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store uses aggregate data internally (and sometimes externally) as part of its marketing research. Over time the data can reveal, for example, a given customer's favorite brand of beer, or whether he or she is a vegetarian. 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 medical prescription preparations, or for other membership privileges such as access to an airport lounge using a frequent-flyer card.
Loyalty programs have been described as a form of centralized virtual currency, one with unidirectional cash flow, since reward points can be exchanged into a good or service but not into cash.[4]
History
- For information on historical loyalty programs, see Loyalty marketing history.
By continent and country
Asia
Hong Kong
Hong Kong offers many loyalty programs. They include Octopus Rewards, operated by Octopus Cards Limited, which allows Octopus card users to earn points in certain shops, including McDonald's fast food outlets and Wellcome supermarkets.[5] The MTR Corporation also operates MTR Club for regular customers of its transport network.[6] In terms of shopping or purchasing groceries, different chain stores under common ownership often share the same loyalty program, such as A.S. Watson Group's Money Back, which can be used at Parknshop, Watsons, and Fortress stores, as well as the corporation's retail partners.[7]
India
PAYBACK India is India's largest coalition loyalty program, with over 50 million members,[8] over 50 partners and 3000 network partner outlets.[9] German loyalty program operator Loyalty Partner took a controlling interest in i-mint in June 2010[9] and renamed the program PAYBACK India in July 2011.[8] BPCL's PetroBonus fuel card program has 2 million members.[10] Indian Oil's fleet card program XTRAPOWER and retail program XTRAREWARDS claim a combined customer base of 3 million.[11]
Iran
The first Iranian loyalty program launched in 1996 by Iran Credit Card Group Zarrin Card.[12] East Credit Card Group Kish launched its loyalty program in 2005.[13]
Malaysia
Genting Highlands Resort has a loyalty card, WorldCard, that is primarily used to gain points in Genting Highlands' Resorts and Attractions. However, it can also be used for Starbucks, Coffee Bean and Häagen-Dazs and it is valid in three countries: Malaysia, Singapore and Hong Kong.[citation needed]
Philippines
In the Philippines, several brands of establishments and stores offer membership cards that the card owner can use to earn points and redeem rewards.[14]
The gigantic shopping mall chain, SM Supermalls offers the SM Advantage Card or SMAC that can be used as a loyalty card that earns points as you shop and its partner bank, BDO Unibank also offers BDO Rewards Card that functions the same as the SM Advantage Card. Retailers accepting the card include: The SM Store, SM Supermarket, SM Hypermarket, ACE Hardware and Watsons Pharmacy.[15][16]
Another mall chain, Robinsons Malls has a program named Robinsons Rewards. It can also be used when shopping in Robinsons Department Stores, Robinsons Supermarkets, and Toys "R" Us branches in the Philippines.[17]
Jollibee, the fast food giant and its subsidiaries (Chowking, Greenwich Pizza, and Red Ribbon launched the HappyPlus card, in which the cardholder can use the card to earn happy points and use the points to get a free food. It is also planned to be used in Mang Inasal, the most recent member of the Jollibee Foods Corporation.[18]
The country's largest drug store, Mercury Drug also introduced the Suki Card in which the membership is free but the applicant will need to purchase at least PhP 1000 worth of single or cumulative purchases.[19]
Singapore
In Singapore, the three largest loyalty programs are Plus!, WorldCard and SAFRA Card. The Plus! LinkPoints Programme has more than 1 million members and over 600 participating merchant outlets.[citation needed]
Europe
Finland
Loyalty programs are very popular in Finland. 80% of people are in at least one loyalty program and over 50% are member of at least two programs. Two major coalitions with loyaly programs operating in multiple business sectors. These are S-Group with S-Etukortti (70% of population, 2014[20]) and Kesko with K-Plussa (67%). These cards can be equipped with Visa or MasterCard Debit / Credit payment features. Both loyalty programs are being aggressively pushed to consumers. New major player in Finnish and Baltic markets is Pins (19%).
Georgia
In Georgia the biggest loyalty card program is run by Universal Card Corporation since 2010. Universal scheme unifies more than 250 companies where customers collect bonus points on UNICARD while purchasing food, goods, garments/clothing, fuel, travel packages, tickets, pharmacy, GYM passes or other services. UNICARD holders can redeem their bonus points on any products presented within the particular partner's stores where redemption is available or into desirable gifts presented within UNICARD's online catalogue.
Germany
The largest loyalty program in Germany is Payback, which was launched in 2000.[21] According to a study in August 2007 by GfK,[22] 61% of German households have a Payback card. It listed the HappyDigits program as having a 42% share, with the Shell ClubSmart program as third most popular with 13%. In March 2008, the coalition program DeutschlandCard was launched by Arvato. As at March 2009 it had more than 4.5 million active cardholders. HappyDigits was disbanded at the latest of the year 2009/2010.
Hungary
Two coalition loyalty programs in Hungary are SuperShop and Multipoint. SuperShop, established in April 2000, is backed by partners SuperShop Spar, OBI, OMV, Photo hall, Burger King.
Italy
After the exit of Nectar from the market in 2015, Payback is the most popular coalition loyalty program with more than 10 million card holders and relevant anchor partners such as Carrefour, Esso, H3G (Tre), Mediaset Premium, BNL BNP Paribas and more than 60 online partners.[citation needed]
Supermarket chains Esselunga, Coop and Il Gigante also have well established loyalty programs. Other stores such as Interio, a furniture retailer, are also joining the market with loyalty cards and store-based incentivised credit cards.
Loyalty programs are also widely spread in the consumer goods Industry, where companies use this powerful tool to establish long-lasting brand-consumer relationships. The very first example of a loyalty program in the food industry has been the 2008 Lavazza Carmencita digital collection followed by many other brands such as Barilla, Casa Modena-Giravolte and Tena Lady of the Multinational Sca Hygiene Products.
Latvia
One of the largest loyalty programs in Latvia which is working as operator for many merchants is Pins.[citation needed]
Walmoo is a loyalty platform that was launched in 2013 that allows their users to create their own loyalty program.
Norway
The largest Norwegian loyalty program is Trumf. Trumf is a «brick and mortar» loyalty program owned by NorgesGruppen, a grocery wholesaling group in Norway. KickBack.no is the largest online loyalty program and cashback site in Norway. KickBack.no is owned by Schibsted Media Group.
Republic of Ireland
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 an expansion of the UK scheme—cards for this are identical to those used by Tesco in the UK and can be used in both countries. Dunnes Stores responded with the introduction of their own ValueClub scheme in June 1997. Today these are three main schemes operating in Ireland, although ValueClub has been withdrawn from Dunnes' Northern Ireland stores. SuperValu has introduced their own loyalty club called Real Rewards.
All five major petrol station chains in the country operated a scheme during the late 1990s—Esso had Tiger Miles (with Tesco ClubCard points offered as an alternative), Maxol had Points Plus, both of which operated on the principle of getting items from a gift catalogue, with Shell using Dunnes' scheme, Texaco using the SuperQuinn system, and Statoil operating a cash-back system, Premium Club. Due to increasing oil prices and tightening of margins, these schemes ended by the end of 2005. Tesco Ireland's petrol stations still, however, give Clubcard points.
Game, a major computer game and hardware retailer also operate a cashback card scheme, which was merged with Electronics Boutique's programme following the separation of their northern European stores into the hands of Game. The scheme returns one-fortieth of the spend, more than twice as generous as Tesco.
Rewards From Us To You is a hotel loyalty program for independent hotels in Belgium, Holland, Ireland & the United Kingdom. It was founded in November 2011 by parent hotel management company PREM Group, who is based in Dublin, Ireland. This program does not issue loyalty cards but does everything electronically through email. This company has over 33 participating hotels and serviced apartments. Guests earn points every time they stay with any hotel in the club. Guests can later redeem free night stays or gift cards. In addition to this all members receive exclusive perks for signing up and staying at the hotel.
Russia
MALINA is a Russian coalition program.[citation needed] MALINA was launched in 2006 by Loyalty Partners Vostok. MALINA is a loyalty card scheme comprising partner companies including BP, Rosinter Restaurants, Beeline, 36,6, and Raiffeisenbank.
Another Russian loyalty program is Mnogo.ru. This project is fully independent. Members of the club who own clubcards can gain points in exchange for daily purchases made both online and offline at partners' shops. A customer receives points while answering the quiz, playing games and getting special offers. Cumulative points can be exchanged for prizes from the company's partners.
Spain
Voilà Hotel Rewards was launched in June 2008 with Husa Plus, a co-branded loyalty program for Husa Hoteles.[23] The Husa Plus program is offered at approximately 145 Husa Hotels, primarily located in Spain. Barcelona-based online travel agency Budgetplaces launched its loyalty programme in early 2011. My budgetplaces lets clients earn credit every time they make a reservation.[24]
Switzerland
Loyalty programs are popular in Switzerland, with the two main supermarket chains, Migros and Coop prominent. The M-Cumulus card can be used at the Migros supermarkets, Ex Libris, SportXX, and other retailers. The Coop Supercard earns points on purchases at Coop and a variety of other associated stores. Other stores such as Interio, a furniture retailer, are also joining the market with loyalty cards and store-based incentivised credit cards. The only coalition loyalty scheme in Switzerland is Bonus Card with a network of over 300 independent retail partners.[25] In recent years, online loyalty programs have also started to target the Swiss. First to make an offering in Switzerland was German-based Webmiles. Claiming to be Switzerland's first online bonus program, Bonuspoints was launched in early 2008 and offers incentives for shopping at 70 different online stores.
Turkey
Pegasus Airlines has a loyalty program called Pegasus Plus which gives rewards for every flight. Passengers can spend reward points as a discount without waiting to cover a full flight. Turkish Airlines has a loyalty program called Miles&Smiles.
United Kingdom
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. Passcard has been claimed to be the first reward scheme or discount card, created around by Gary Wilson in 1981[citation needed] and later known as Passkey.[26] One of the first loyalty cards backed by a major chain is believed to be the Sainsbury's Homebase Spend and Save Card in 1982.[27]
Of the "big four" supermarkets, Sainsburys and Tesco and Morrisons operate loyalty cards for general supermarket shopping.Tesco's Clubcard scheme have been criticised for not offering value for money.[28] When Clubcard or Nectar points are used for money off supermarket shopping, they roughly equate to a 0.5% discount, although offers can increase this discount by as much as four times for certain rewards. Some retailers with banking operations also award points for every pound spent on their credit cards, and bonus points for purchasing financial services. A report in The Economist suggested that the real benefit of loyalty cards to UK outlets is the massive marketing research database potential they offer.[29] Since 2015 Morrisons operates a "More" reward scheme which replaces the "Morrisons Miles" fuel purchases reward scheme.[30] Unusually, customers' personal details are not collected so purchases appear not to be tracked. Vouchers are delivered at point of sale.
After trials in 1994, Tesco launched its Clubcard program, the UK's first nationwide supermarket-only loyalty card scheme, in 1995 with dunnhumby. Sainsbury's launched its Reward Card in 1996. This was replaced by the Nectar card in 2002, which was launched in partnership with other major brands.
Boots UK began planning a loyalty card in November 1993, but building a CRM-focussed loyalty program. With an investment in excess of GB£30 million, the Boots Advantage Card, launched in 1997, is the largest smart card retail loyalty card scheme in the world, and the third-largest retail loyalty scheme in the UK in terms of cards issued.[citation needed] The Advantage scheme has 16.4 million cardholders using the card online and in store and at 3rd party retailers. The scheme gives a cardholder four points for every pound spent in a Boots store under normal shopping circumstances. Most stores have kiosks which can be used in conjunction with the cards for "exclusive offers" which are printed on vouchers and can be used at the till. These vouchers enable money off specific purchases, extra points for specific purchases, or money off or extra points when spending has reached an amount specified on the voucher, or other offers such as double points on either everything of specific products. For example, a customer may get a voucher which provides 250 extra points when they have spent £50 in one transaction. Points equal pence in store, and can be spent at any time and on anything in store, providing the card has enough points to cover the entire cost of the merchandise. The kiosk system was replaced with the Boots App in 2014, where customers can automatically load offers on to their Advantage Card straight from their smartphone.
Safeway's ABC Card was discontinued in 2000.[31] Airlines, Hotels and other loyalty schemes also offer cards. Marks and Spencer and the John Lewis Partnership have credit cards which give vouchers in return for spending, and do issue separate loyalty cards such as the myJohnLewis card, myWaitrose card in the John Lewis Partnership and the Sparks Card in by Marks and Spencer. Game has a reward card scheme for which every pound spent a customer is rewarded 10 points; for every 1000 points that one collects, one gets £2.50 to redeem in the store, or online. Preorders earn a customer 20 points per pound. HMV has a reward card called purehmv which allows the customer to claim a variety of rewards, including in-store discounts.
The UK's largest retail bookmaker Ladbrokes launched the Odds ON! loyalty programme in late 2007, the first retail betting loyalty scheme in Europe.[citation needed] Customers earn points on each bet which can be redeemed for bonus jokers and free bets. Ladbrokes Poker operates a loyalty program for its online poker players where players are able to exchange their poker points for gift & prizes.
Maximiles[32] is an online coalition program claiming 1.6 million members in the UK.[33] Maximiles also operates online programs in France, Spain and Italy.[33]
The opening of the first Best Buy store in the UK—at Thurrock, Essex, in 2010—was accompanied by the launch of a customer engagement program called My Best Buy. This was described as "a tiered, digital loyalty and customer engagement program that is designed to build a lifelong relationship with the customer by providing a personalized experience through which they can manage their digital and technology needs." However, this business ceased trading in 2012: the 11 stores were closed in January, and My Best Buy closed on February 29.
The Ice Organisation launched MyIce.com in 2010, a scheme which rewards consumers for shopping in a more sustainable way. Ice's mission is to promote greener goods and services to mitigate climate change, and works with national and local retailers to encourage more local, sustainable consumerism.
The Co-operative Food, the brand adopted by many of the larger members of the UK co-operative movement does not operate a traditional loyalty card scheme. Instead, as consumer co-operatives, they operate a profit sharing scheme whereby an annual dividend is paid to all member-owners which is proportional to the total spend with the businesses during the previous year. Such dividend schemes have existed since the Rochdale Pioneers of the 1840s. Paper record-keeping transformed in the 1960s into a trading stamp scheme managed by the Co-operative Wholesale Society (CWS), which was gradually withdrawn as margins declined. The loyalty card concept was used by some co-operatives to restore dividend payments at the turn of the 21st century, notably by the CWS's "Dividend" card, which was replaced by The Co-operative Membership card program. The current members' dividend scheme is provided using the national co-operative brand and allows members of The Co-operative Group and many of the larger regional co-operative societies to earn their 'share of the profits' based upon their spend at many of the outlets which use The Co-operative brand rather than just at their own co-operative society (e.g. The Co-operative Group or the Midcounties Co-operative).
Formerly operated by British Airways, Airmiles was the most popular flight-related loyalty program in the UK, with 2.2. million members in 2011.[34] Members could collect Airmiles each time they flew with British Airways or affiliated airlines, both within the International Airlines Group and the Oneworld Alliance; points could then be redeemed for flights, and was popular with both commercial and business customers. Airmiles-based programs frequently allow members to also collect points by spending on affiliated cards, such as British Airways Premium Plus credit card.[35] A re-brand of the program in 2011 from Airmiles to Avios caused controversy as members were now required to pay taxes and fees on flights they used for redemption.[36] The scheme became more flexible and included redemption opportunities such as car hire and days out, broadening the ways in which members can spend their points.[35]
North America
Canada
The oldest loyalty program in Canada is Canadian Tire money, in which the Canadian Tire company gives out coupons which look like currency.[37] Air Miles is Canada's largest loyalty program – Air Miles[citation needed] can be earned at more than 100 different sponsors [citation needed] and almost a thousand different rewards. More Rewards founded in 1992 operates mostly in the Western Canadian provinces with close relations to its grocery partnerships with the Overwaitea Food Group and its small coalition of other retailers. Aeroplan began in 1984 as Air Canada's frequent flier program, but since 2008 has been owned by Aimia Inc.[38] (previously Groupe Aeroplan Inc.).
Example of companies that run their own programs include HBC Rewards, which began at Zellers in 1986 as Club Z; the PC Plus program for free groceries (from Loblaws), The Body Shop's Love Your Body Card, Shoppers Drug Mart's Shoppers Optimum Card, Staples Business Depot's easyRewards Savings Card (formerly Dividends) and Sobeys' Club Sobeys card. The plum rewards program is Canada's largest loyalty program[citation needed] for reading enthusiasts, offering everyday discounts and special coupons at Chapters, Indigo Books and Music, Coles, SmithBooks, and chapters.indigo.ca. PetPerks is PetSmart's reward program where members get a pre-determined discount on any item in the store that displays a PetPerks tag under the regular price tag. Vicinity is loyalty platform for small business retailers that was launched in May 2013 by Rogers Communications Inc.[39]
Almost every gas station chain in Canada offers some sort of loyalty program itself or in partnership. For example, Air Miles at Shell gas stations, PC Plus at Esso and Mobil, Petro Points and More Rewards at Petro-Canada, Canadian Tire money at Canadian Tire gas stations, or a coupon that grants the customer 3.5 cents off per litre of fuel purchased at Sobeys Fast Fuel locations that can be used at a Sobeys banner store.
United States
In the US, several major supermarket and fish market chains, and the three major pharmacy chains,[40] require the cards in order for customers to receive the advertised loyalty price. They include Kroger and Safeway (both of which each through both its own name and its related regional chains), Target, Best Buy, Sears (also used by Kmart), County Market, Hallmark, Office Max, Kohl's, Toys "R" Us (also used by Babies "R" Us), JCPenney, IKEA, Menards, Winn-Dixie, Hy-Vee, Ingles, Giant Eagle, Tops, Price Chopper, ShopRite, Wegmans, Stop & Shop and sister chains Giant-Carlisle and Giant-Landover, Regal Entertainment Group, AMC Theatres, Circle K, Rite Aid, Walgreens, and CVS/pharmacy. Many retailers allow accumulation of fuel discounts. Some have tie-ins with airline frequent-flyer programs, and some agree to donate a percentage of sales to a designated charity. Most notably, Walmart does not have a loyalty card plan though anyone who purchases a gift card can generally get a 3 cent discount per gallon of gas at the fuel stations located on Walmart premises (only in the 23 states with those Walmart fuel stations).[citation needed]
The practice is 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 US$200 at the bookseller. Best Buy and Sears offer loyalty programs that offer points redeemable for dollar-amount discounts after accumulating a set number of points along with other discounts from time to time.
Independent hardware stores such as Ace Hardware and True Value added customer loyalty programs in order to compete more effectively against larger chains as well as gather customer data. Customers with an association with a particular brand feel benefits for being part of the program. Ace's program also offers customers a way at the time of purchase to get items at a price which would normally require completing a mail-in rebate. In addition, office supply retailers Staples and Office Depot started issuing club cards in 2005: they offer rewards in the form of credits towards future purchases on items purchased in the store or online (which items and how much credit changes periodically).
Almost all major hotel chains (Best Western, Choice Hotels, Holiday Inn, Marriott, Super 8 Motels, etc.) have cards that allow guests to earn either points (redeemable for discounts, future stays, or other prizes) or airline miles (Hilton's HHonors program allows guests to earn both points and miles (referenced as double-dipping) on the same stay, the only program to date that does so but will end April 1, 2018). All major U.S. airlines also offer rewards credit cards. Other travel related reward programs include SeaMiles, with points that can be redeemed for cruises.[41]
Some American retailers have not implemented club cards, including grocery stores Whole Foods, Publix, and ALDI. Between 2007 and 2013 (before their purchase of Safeway), Albertsons, Shaw's, Acme Markets, and Jewel-Osco (all owned by Albertsons LLC) eliminated their loyalty cards in favor of discounts for all shoppers.[42]
Few states regulate club cards. As an example, supermarkets in California are subject to the Supermarket Club Card Disclosure Act of 1999.[43]
Prominent online loyalty programs include MonaBar, Memolink, Mypoints, FatWallet, Fivestars, Perka, Belly, and Swagbucks.[44][45][46] Some online loyalty programs focus on "other-directed" consumers including Upromise, Schoolpop, The BSP Rewards Network and iGive.com.[47]
Foursquare, Cardmobili, and Shopkick focus on using smartphones such as the Android and iPhone. Since March 2011, Foursquare has partnered with American Express to provide Foursquare points when using an American Express card,[48] and since November 21, 2011, Shopkick has partnered with Visa to provide Shopkick points when using a Visa card at locations such as Best Buy, Toys "R" Us or Old Navy.[49]
Oceania
Australia
Many loyalty programs operate in Australia, ranging from retail chains, individual stores, hotels, car hire businesses, credit card schemes, besides others. The largest loyalty program is flybuys, established in 1994 and owned by Coles.[50] It has more than 10 million cardholders in over 5.5 million Australian households.[51] A consumer study of Australian loyalty programs in 2013 showed flybuys as easily the most popular program in Australia.[52] Rival retailer Woolworths launched its Everyday Rewards fuel discount card nationally in 2009 and by August 2010 had 5.1 million cardholders, with 2.7 million linked to the Qantas Frequent Flyer program.[53]
Among other Australian retailers, the largest programs are Myer's MYER one program, the Priceline Club Card, Amcal Club, Millers Retail Club, and the BB Retail Capital Pulse Rewards program. Pulse has more than a million members.[54]
All major Australian banks offer credit cards with reward programs. Many are linked directly to airline rewards programs such as the Qantas Frequent Flyer program or Virgin Australia's Velocity Frequent Flyer program. Alternatively, some banks and credit card companies have their own programs, with points being either redeemable or transferable to various airline rewards programs.
New Zealand
The largest loyalty program in New Zealand is Fly Buys.[55] Other programs include the New Zealand Automobile Association AA Smartfuel programme and Countdown supermarket's Onecard.
Mobile online loyalty programs
There has been a move away from traditional magnetic card, stamp, or punchcard based schemes to online and mobile online loyalty programs. While these schemes vary, the common element is a push toward eradication of a traditional card, in favour of an electronic equivalent. The choice of medium is often a QR code. Some prominent examples are Austrian based mobile-pocket est 2009,[56] the US-based Punchd (discontinued from June 2013[57]), which became part of Google in 2011.[58] and an Australian-based loyalty card application called Stamp Me[59] which incorporates iBeacon technology. Others, like Perka (US), Loyalli (UK), Whisqr Loyalty (CA), and Loopy Loyalty (HK) have offered similar programs.[60] Passbook by Apple is the first attempt to standardize the format of mobile loyalty cards.
Mobile off-line loyalty programs
With the introduction of host card emulation (HCE) and near field communication (NFC) technology for mobile applications, traditional contactless smart cards for prepaid and loyalty programs are emulated in a smartphone. Google Wallet adopted these technologies for mobile off-line payment application.
The major advantage of off-line over the on-line system is that the user's smartphone does not have to be online, and the transaction is fast. In addition, multiple emulated cards can be stored in a smartphone to support multi-merchant loyalty programs. The user does not need to carry many physical cards anymore.
Disloyalty cards
In three cities, some independent coffee shops have set up experimental 'disloyalty card' programs, which reward customers for visiting a variety of coffee shops.[61][62]
Criticism
This article needs additional citations for verification. (February 2007) |
Some companies complain that loyalty programs discount goods to people who are buying their goods anyway, and the expense of participating in these programs rarely generates a good return on the investment. Some other critics consider the discounted prices and rewards bribes to manipulate customer loyalty and purchasing decisions, or in the case of infrequent spenders, a means of subsidizing them.
However, a 2015 study claimed that most supermarket loyalty cards in the United States do not offer any real value to their customers.[63] In fact, commercial use of customers' personal data collected as part of loyalty programmes has the potential for abuse; it is highly likely that consumer purchases are tracked and used for marketing research to increase the efficiency of marketing and advertising, which oftentimes is one of the purposes of the loyalty card. For some customers, participating in a loyalty program (even with a fake or anonymous card) funds activities that violate privacy.[64] There has also been concern expressed regarding RFID technology being introduced to loyalty cards.[65]
Loyalty and credit-card reward plans may be viewable as modern-day examples of a kickback. An employee who needs to buy something (such as a hotel room or an airline flight) for a business trip, but who has discretion to decide which airline or hotel chain to use, has an incentive to choose the payment method that provides the most credit card rewards, loyalty points, or cash back instead of minimizing cost for the organization.[citation needed]
See also
- Identity management
- Incentive
- Incentive program
- Loyalty marketing
- Premiums
- S&H Green Stamps
- Trading stamp
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