Loyalty programs are structured marketing strategies designed[by whom?] to encourage customers to continue to shop at or use the services of businesses associated with each program. Many[quantify] such programs exist covering most types of business, 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 member in a loyalty program. Loyalty cards relate to the loyalty business model. In the United Kingdom such a card is typically called a "loyalty card", in Canada a "rewards card" or a "points card", and in the United States either a "discount card", a "club card" or a "rewards card". Cards typically have a barcode or magstripe that can be easily scanned, some are chip cards or proximity cards. Small keyring cards (also known as keytags) which serve as key fobs are often used[by whom?] for convenience in carrying and ease of access.
By presenting such a card, purchasers typically earn the right either to 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 (e.g., access to a club lounge in airports, using a frequent-flyer card).
B2B (Business-to-business) loyalty programs reward businesses for their purchase of goods and services from suppliers.
- 1 History
- 2 By continent and country
- 2.1 North America
- 2.2 Oceania
- 2.3 Europe
- 2.4 Asia
- 3 Program management
- 4 On-line and mobile loyalty programs
- 5 Disloyalty cards
- 6 Criticism
- 7 See also
- 8 References
- For information on historical loyalty programs, see Loyalty marketing history.
By continent and country
In the U.S., several major supermarket and fish market chains, and the three major pharmacy chains, require the cards in order for customers to receive the advertised loyalty price. They include Smith's, Kroger, and Safeway (each through both its own name and its related regional chains), Menard's, Winn-Dixie, Harris Teeter, Ingles, Giant Eagle, Tops, Price Chopper, ShopRite, A&P and its related chains Pathmark, SuperFresh and Waldbaums, Wegmans, Stop & Shop and sister chains Giant-Carlisle and Giant-Landover, 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, Wal-Mart 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 Wal-Mart premises.
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 $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. 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 on the same stay, the only program to date that does so). 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.
Some American retailers have not implemented club cards, including grocery stores Whole Foods, Publix, and ALDI. Between 2007 and 2013, Albertson's, Shaw's, Acme Markets, and Jewel-Osco (all owned by Albertsons LLC) eliminated their loyalty cards in favor of discounts for all shoppers.
Max & Erma's has a loyalty program called Good Neighbor Rewards. Customers are rewarded based on their number of visits by either 5%, 10%, or 15% and are periodically given additional rewards by way of free items added to their loyalty card electronically.
Truck stop chain Pilot Travel Centers' program Driver Payback Points rewards truck drivers for fueling up by giving them points that can be used for purchase inside the store. Although it can be used for general merchandise, the program is specifically targeted to be redeemed at the restaurant chain located inside each location.
Prominent online loyalty programs include MonaBar, Memolink, Mypoints, FatWallet, Perka, Belly, and Swagbucks. Some online loyalty programs focus on "other-directed" consumers including Upromise, Schoolpop, The BSP Rewards Network and iGive.com.
Foursquare, Cardmobili, and Shopkick focus on using smartphones such as the Android and iPhone. Foursquare has partnered with American Express to provide Foursquare points when using an American Express card, and 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.
The oldest loyalty program in Canada is Canadian Tire money, in which the Canadian Tire company gives out coupons which look like currency. Air Miles is Canada's largest loyalty program – Air Miles can be earned at more than 100 different sponsors 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. (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 Points 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 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.
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, Esso Extra at Esso, Petro Points at Petro-Canada, More Rewards at all Chevron locations in 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. Loblaws grants a 1.5¢/L coupon similar to Atlantic Superstore, and Real Canadian Superstore that grants a 7¢/L (10.5¢/L in Manitoba) coupon that can be used at their stores. Sunoco has a Performance Points reward program.
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. It has more than 10 million cardholders in over 5.5 million Australian households. A consumer study of Australian loyalty programs in 2013 showed flybuys as easily the most popular program in Australia. 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.
Among other Australian retailers, the largest programs are Myer's MYER one program (department store), the Priceline Club Card (health, beauty, home), Amcal Club (pharmacy), Millers Retail Club (apparel), and the BB Retail Capital (formerly Brazin Limited) Pulse Rewards program (Virgin, HMV, Sanity, dusk, Bras n Things, and SX sunglasses). Pulse has more than a million members.
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.
The largest loyalty program in New Zealand is Fly Buys. Other significant programs include the New Zealand Automobile Association AA Smartfuel programme and Countdown supermarket's Onecard.
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 and later known as Passkey. 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.
Of the "big four" supermarkets, Sainsburys and Tesco and Morrisons operate loyalty cards for general supermarket shopping. Nectar and Tesco's Clubcard scheme have been criticised for not offering value for money. 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. Since 2015 Morrisons operates a "Match & More" reward scheme which replaces the "Morrisons Miles" fuel purchases reward scheme. 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 30 million GBP, 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. 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. 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 not issue separate loyalty cards. 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. 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.
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. 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. 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. 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.
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 (see above) – 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. Supervalue 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 Ireland, England & Belgium. 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 26 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.
The largest loyalty program in Germany is Payback, which was launched in 2000. According to a study in August 2007 by GfK, 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.
MALINA is a Russian coalition program. MALINA was launded in 2006 by Loyalty Partners Vostok. MALINA is a loyalty card scheme comprising partner companies including BP, Rosinter Restaurants, Beeline, 36,6, and Raiffeisenbank. MALINA program operates in Moscow and St. Petersburg bring together over 25 well-known brands. Over 6 million collectors earn MALINA point when buying petrol, visiting restaurants, making phone calls. Malina card is accepted at more than 1000 Partner’s POS. 6,096,051 Malina cards were issued from 2006 to 2012. Turnover on Malina card amounted to $1.5 billion in 2012. Over 2000 goods and services are available for points in Malina catalog (or Points could be redeemed for ordering over 2000 goods and services from Malina catalog).
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 (from products to home appliances). 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.
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 (books, DVD's), 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. 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. PointsPay, the world’s first mobile wallet for exchanging loyalty points or miles into cash, provides liquidity and flexibility to loyalty program members: They can redeem their points or miles at the POS or for online shopping.
Loyalty programs are popular in Latvia, with the two main supermarket chains, Rimi Baltic and Maxima supermarket, leading the field with their offerings. One of the largest loyalty programs in Latvia which is working as operator for many merchants is Pins.
Wqlmoo is a loyalty platform that was launched in 2013 that allows anyone to create their own loyalty program. It has been used in more than 10 pilot-stores in last year and will be available in six largest ski resorts in Vidzeme region. System is NFC/QR based and can be used with mobile application Walmoo Wallet, NFC tag or QR code generated in web.
Loyalty programs are popular in Italy, with the two main supermarket chains, Esselunga and Il Gigante, leading the field with their offerings.
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.
Voilà Hotel Rewards was launched in June 2008 with "Husa Plus," a co-branded loyalty program for Husa Hoteles. 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.
Airline companies offer loyalty cards for passengers to provide discount. 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 and Smiles.
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) 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%).
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.
Hong Kong offers many loyalty programs which include Octopus Rewards, which started as a chip based smartcard for transport and now, the Octopus cards can be used to earn points in certain shops, including McDonald's and Wellcome supermarket. Another loyalty program is for travelling on the heavily patronaged (3.65 million/day) MTR railway system in Hong Kong, known as the MTR Club. In terms of shopping or purchasing groceries, one can use the MoneyBack card at Parknshop supermarkets.
The first Iranian loyalty program launched in 1996 by Iran Credit Card Group "Zarrin Card"(or Advantage Card)., "East Credit Card Group Kish" launched loyalty cards since 2005 in Iran. These companies manage many brands in the same platform, such as Iran Zoggs and Novin Leather. The Maadiran Group has a loyalty programme.
Centro Friends card is a loyalty card for Shoppers of Centro Department Stores. The Love Your Body card is the loyalty card for the Body Shop stores in Indonesia. Other notable programs in Asia include KrisFlyer, the Singapore Airlines rewards program.
Payback India (formerly i-mint) is India's largest coalition loyalty program, with 12 million members, over 30 partners and 3000 network partner outlets, with 120 billion INR of sales generated through i-mint-cards in 2009. German loyalty program operator Loyalty Partner took a controlling interest in i-mint in June 2010 and renamed the program Payback India in July 2011. Hero's GoodLife program claims over 10 million members. BPCL's PetroBonus fuel card program has 2 million members. Indian Oil's fleet card program XTRAPOWER and retail program XTRAREWARDS claim a combined customer base of 3 million. The Maruti Suzuki AutoCard, launched in association with Citibank and Indian Oil had 370,000 cardholders in October 2008.Kingfisher Airlines FFP King Club had 2 million members in October 2010. Shopper's Stop has been offering a loyalty programme called First Citizen for regular customers. Other retailers like Lifestyle (the Inner Circle Loyalty Programme) and Reliance Retail have loyalty programs.
Debit card loyalty programs include State Bank Group's "State Bank Rewardz" is perhaps the largest in the world with over 110 million customers enrolled. The program is operated by Loylty Rewardz. Pinpoint operates programs HSBC and Standard Chartered Bank. The potential and size of the consumer base in India has already attracted players like Groupe Aeroplan and Loyalty One into the country.
In Malaysia, the BonusLink program was introduced in a joint venture between Shell, Parkson, Maxis and MBF. The BonusLink program is coalition with earning and redemption partners allowing members to earn points at a number of Malaysian retailers. Mesra Card is for Petronas and is used for fuels and at the Mesra shop.
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, namely Malaysia (where Genting Group is based), Singapore and Hong Kong. Jusco has a loyalty card, known as Aeon Card.
In early 2008, ValueClub Marketing and Services Sdn. Bhd. launched it V-Kad at North Malaysia especially in Penang state. V-Kad has actively joint by various industries such as F&B, fashion, saloon and optics. It provides V-Kad members to collect V-Points to redeem gift and exchange services with the participating merchants.
In Singapore, the three largest loyalty programs are Plus, WorldCard (aggregate program of Genting Resorts, Suntec City Mall, Star Cruises & Indigoz) and SAFRA Card. The LinkPoints Programme has more than 1 million members and over 600 participating merchant outlets.Poket is also a Singapore based new emergent in this market.
The French retailer, Carrefour has introduced a new loyalty scheme whereby customers can earn and redeem points for purchases made in the store, and also earn additional points for all purchases made using a Carrefour branded credit card. The largest online rewards program in Taiwan is RewardsCentral (formerly known as EmailCash).
The Smartclub program allows all Shanghai residents to earn SmartPoints free, each time they take the subway, bus, or taxi. Those SmartPoints can be combined with points earned at McDonald's, eLong, Sport100, cinemas, bookstores, and other SmartClub partner retailers.
Across the globe loyalty programs are increasingly finding the need to outsource strategic and operational aspects of their programs, given the size and complexity a loyalty program entails. Program managers are typically agencies with specialist skilled in loyalty consulting, creativity, communication, data analytics, loyalty software, and back end operations. The advent of Web 2.0 and SaaS online-based services has provided lower-cost options for small businesses to offer and manage their own loyalty programs. Moreover, many free and open source alternatives are available to manage user awards and incentives.
The state of loyalty in the United States is changing rapidly. Brands are trying to engage a direct relationship with their customers.
On-line and mobile loyalty programs
There has been a move away from traditional magnetic card, stamp or punchcard based schemes to online and mobile 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, the US-based Punchd (discontinued from June 2013), which became part of Google in 2011. and also an Australian-based loyalty card application called Stamp Me Others, like Perka (US), Loyalli (UK), Maze (Aus) and Loopy Loyalty (HK) have offered similar programs. Passbook by Apple is the first attempt to standardize the format of mobile loyalty cards.
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Companies complain that these loyalty programs discount goods to people that are buying their goods anyway, and that the expense of doing these programs rarely show a good return on the investment. Other critics see the lower prices and rewards as bribes to manipulate customer loyalty and purchasing decisions, or in the case of infrequent-spenders, a means of subsidizing frequent-spenders.
On the other hand, a 2015 study claimed that most supermarket loyalty cards in the USA do not offer any real value to their customers.
Commercial use of the personal data collected as part of the 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; in fact, this can be one of the purposes of the loyalty card. To some, participating in a loyalty program (even with a fake or anonymous card) funds activities that violate privacy.
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 or loyalty points, instead of minimizing cost for the organization.
- Identity management
- Incentive program
- Loyalty marketing
- S&H Green Stamps
- Trading stamp
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