Loyalty card programs are structured
marketing efforts that reward, and therefore encourage, loyal buying
behavior — behavior which is potentially of benefit to the firm.
In the UK it 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 magnetic stripe that can be easily scanned, and some are even
chip cards.
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 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 checks or dispensing of
medical prescription preparations, or for other membership
privileges.
Loyalty card programs can be "self-directed", where the benefit accrues
to the consumer, or "other-directed", where the benefit accrues to
somebody / something else. In the latter case, this is generally a
charity, cause, or NGO (non-governmental organization.)
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 and Safeway,
Albertsons, Winn Dixie, Harris Teeter, Ingles, Giant Eagle, Tops,
and CVS/pharmacy. However, some stores may also allow a customer to
use the store's card if a customer does not have theirs on hand
(Kroger does not allow this although the customer can enter their
phone number to bring their card up if they forget it) 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 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 if one purchases
a gift card s/he can generally earn a 3 cent discount per gallon of
gas at the fuel stations located on Wal-Mart premises).
