Do customer loyalty cards work or do you work for them?

10 Feb

In my purse I have around 10 different loyalty cards. Some I use frequently and some I use on the odd occasion that I ever shop at the store. I have been wondering if the cards are rewarding me for my shopping or am I working for them by trying to buy to meet the reward threshold.

At University one of the first lessons we learnt was that Loyalty Cards do not build loyalty and are a waste of time marketing and budget wise for companies. That facinated and stunned my 18 year old brain because my Mum is literally addicted to Fly Buys points, even her credit card is linked to get her bonus points. How could loyalty cards not help boost sales? Everyone likes getting free stuff!

The questions posed to us students were “what happens if the loyalty program gets discontinued” and “what are the long term effects while it is running”. Now of course, these questions only concern the company… not the shopper who is out to get the benefits.

It is interesting to consider I think.

  1. Look at the loyalty cards in your wallet.
  2. How many of those loyalty cards do you have for the same type of business (eg Coffee shops, clothing retailers)?
  3. How many of those cards do you use regularly?
  4. How many of those cards have made you very loyal to the brand?

Yep. looks like a lot of those stores have joined the loyalty band wagon because all of their competitors have and if they didnt offer a program, they would be worse off. So, in sectors where all of the major brands have loyalty cards, the impact of the cards is generally nullified because customers would either A) Have all the other competitors loyalty cards or B) just not even care about loyalty cards.

Something useful for companies with loyalty programs is that they can track individual customer spending, preferences and send them newsletters about up and coming offers and deals. I personally really enjoy recieving emails from the stores, looking at their new stock and being invited to their special customer evenings. It keeps their brand fresh in my share of mind and I feel more valued and friendly with them.

I have been wanting to get a Country Road loyalty card for a while but since I am such a good and thrifty bargain hunter, I have not been able to spend the $100 in one transaction as required to obtain the card (weird isn’t it for Country Road’s prices!). However, I did so last week and I’m excited to now get their special offers and have my purchases counted for points.

Now to think of things as a value grabbing shopper:

I know I have a stack of different coffee shop cards. If im at a food hall and there is a shop there that I have a card for, I will go there and use my card rather than go to a generic store that has no card or no other outlets. So, Loyalty cards impact me personally

I also have a bunch of clothing store cards. Some I have hardly used but I signed up for them because they were free and I figured that if I ever did need to buy stuff from that store, then I may as well get some points/freebies out of it if I could.

Let’s go through my cards shop by shop and my thought process:

  • Myers (Department Store): If I see something that I need in clothing or shoes I will generally look at Myers first. I then go to all other stores in the mall and compare and contrast styles and prices. If the same item is in a different store and they have a 20% off sale, then I am better to go to the other store to buy the item rather than Myers because 20% discount is better than the 4% or whatever it is that I MAY receive back from my loyalty card if I even meet the reward threshold by the date.
  • Cibo, Hudsons, Gloria Jeans (coffee shops): These are must have cards for a little bonus. Easy buy 9 get one free (although im not sure about Hudsons), no time limit to use points.
  • The Yoghurt Shop: I never go to this store! I have only ever bought smoothies from there twice and only because my friends did too and it was convenient. I keep the card handy just in case. Again, Easy buy 9 get 1 free.
  • Boost Juice: Show this card and get some percentage off the price. Pretty much everyone in Adelaide has this card so they may as well just make the price cheaper and ditch the loyalty program.
  • David Lawrence (clothes): I rarely shop there but I do like to look. If I buy something I will buy it from their store inside Myer and use my more powerful and more rewarding Myer One card.
  • Portmans (clothes): Again, I rarely shop here but if I do I use the card. I don’t know what it gets me in the end but I have it.
  • Priceline (cosmetics): I use this A LOT! There is a Priceline store very close to me and if i need any form of cosmetics or personal care item I will shop there. When you spend about $160 I think you get a 3% discount voucher. Not a lot, but it helps and I do give more loyalty to this store because of the card.
  • Acoustic Stomach (accessories): I rarely shop here but I have bought the occasional item.
  • Fly Buys (covers many stores owned by the Coles group. Petrol, liquor, stationery, supermarkets): This is the original loyalty card in Australia I like to think. You have to spend a heck of a lot to get a reward from it. It began by giving away flights but now you can trade your points for gifts like cameras and kids toys. Most people don’t even bother collecting points these days because the amount of money you need to spend in the time frame to get a reward is crazy. I think Flybuys needs to be scrapped and a new program introduced for the Coles stores… if they even need one at all.

Isn’t it fun to self analyse?

The thing that has really hit me recently is how much am I gaining from carrying around all these cards? How much free stuff and rewards and I getting? Not a heck of a lot. I discovered that each loyalty card delivers approximately 3-4% back to you once you have spent the allotted amount of money. Thats not much! The stores get you in and you spend your $1600 and receive a $20 gift card in the mail and think WOW HOW AMAZING. Now stop and calculate that return. hmmmmmmm think of it as a sale. If there was an 8% off sale would you bother? Not really but it all helps doesn’t it.

Lets count coffee points. In general it’s buy 9 coffees get one free. so 3.80 x 9 = $32.4 so thats about a 11% freebie. Not too bad! But if all major coffee shops stopped having loyalty points, would it effect my coffee consumption? Nope. If I wanted a coffee I’d still buy one. But what if only one major coffee chain had a card and the others didn’t. Yes, that would make me buy from the store that had the loyalty card…. so in the end, loyalty cards are redundant in the companies view. But once you start you can’t stop.

In America, Payless supermarkets have a really cool loyalty program where you have a card and it takes note of the items you purchase the most of. When you go throught the checkout the register prints you some coupons to use next time you shop at Payless and guess what, those arn’t just any old random item coupons, those are coupons for the items that you buy most of! Useful isn’t it! BUT… you need to ask, what is the point of giving discount to the people who will already buy your product? They are already loyal to it so why loose profit by giving a coupon for it? Ponder that.

I have figured that the only way for loyalty cards to work well,  from a customers point of view,  is if you buy things on sale and you buy a lot of things from that one shop to get you to the reward threshold. Buying things on sale obviously saves money, and if it is things that you really need well then you may as well collect points for it.

So in the end, Loyalty cards may help stores if customers are value seekers or live near the outlets because then they would visit the store more often and make more purchases to keep their card going. For customers, loyalty cards are a great way to try and get a little extra bonus for your money. Not a heck of a lot in general, but a nice little extra!

Note to self: buy and even bigger purse to put more and more loyalty cards in. Yeah, i’m a value seeker shopper!

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3 Responses to “Do customer loyalty cards work or do you work for them?”

Trackbacks/Pingbacks

  1. Prices are down, and are reduced, and are unoriginal. « Marketing Nabbed! - October 13, 2010

    […] of them offering lower shelf prices in the first place. This can link back to my argument in the Loyalty card post I made a few months ago. If every coffee shop offers a loyalty card, the one who doesn’t have […]

  2. “And we’ll never be loyals…” | Alana's Digital Marketing Blog - September 23, 2013

    […] https://marketingnabbed.wordpress.com/2010/02/10/do-customer-loyalty-cards-work-or-do-you-work-for-th… […]

  3. Loyalty Schemes and Chicken - Nando's Gets it Right | Blog - December 20, 2013

    […] of the problem is that most loyalty cards schemes do not tend to result in someone going to a company any more regularly than anywhere else. […]

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