Loyalty cards. Are they worth it?

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If you live in a big city, you probably have a lot of loyalty cards from retail chains and branded stores. Today, almost every store offers customers plastic cards that give them some kind of privilege. A loyalty card allows to establish a trusting relationship between the seller and the customer. However, the vast number of discount and bonus cards has become a problem for consumers. Digital loyalty cards have emerged as a solution, but there have also become so many of them that the problem of an overabundance of cards persists.

 

How to deal with loyalty cards? How do you know if you need a store loyalty card? After all, when you get a card you always leave your personal data, and installing an application on your smartphone overloads memory resources. Let's consider all the questions one by one.

What does a loyalty card do?

A loyalty program cards are a system for rewarding loyal customers: customers receive discounts and rewards for their loyalty to the company. It increases attractiveness of the retail chains or branded stores and helps stand out from competitors. The problem is that today every  retail chain or brand offers some kind of loyalty program. A whole consumer culture has developed that relies on such loyalty.

Participation in the loyalty card program is always free; but not almost free. By agreeing to leave personal information, the customer pays for all future product discounts, coupons, points or other rewards.  This is effective incentive plan, which allows retail businesses to collect data about their customers. This data is subsequently used to shape the optimal mix of offers, products and services. On the other hand, the layer of offers creates a sustainable image of the customer who can't imagine shopping without discounts and rewards. This is a culture of loyal shoppers, or the loyalty culture.

What are the types of loyalty?

There are 4 main types of loyal customer:

  • Active Loyals (43% of the adult population) Stay loyal to brands for both routine and special purchases.
  • Habitual Loyals (23%) Stay loyal for routine buys but shop around for special purchases.
  • Situational Loyals (9%) Make purchases from time to time, giving preference to the brand.
  • Active Disloyals (27%)

There are also several other types of loyal customers that have emerged within the loyalty culture. For example, the butterfly customer. As defined by O'Dell and Pajunen, "butterfly customer" are people who move from one store or supplier to another, constantly looking for a lower price or different shopping experience. They have no loyalty to any particular store and are always on the lookout for a better deal or new promotion. Or the barnacle shopper. They, like barnacles, hang on to whales and tide pools, but they don't do anything. They stick around (they are loyal) but rarely shop. More often than not, they just steal freebies.

What are the different types of loyalty cards?

There are 7 types of Loyalty Programs:

  • Points Programs.
  • Cash Back Loyalty Programs.
  • Punch Card Programs.
  • Tiered Loyalty Programs.
  • Coalition Loyalty Programs.
  • Premium Loyalty Programs (Fee-Based Loyalty Programs)
  • Hybrid Loyalty Programs.

Which is the best Clubcard?

Best customer loyalty program examples

Why Tesco Clubcard the most famous?

Probably the most famous loyalty card is the Tesco Clubcard. A huge range of food and daily consumption goods ensures the popularity of Tesco, despite the fact that the loyalty program itself is paid. It's free for the first month and you get access to many exclusive Tesco offers, including Clubcard offers, personalized coupons and a redemption system to make better use of your accumulated points.You can read more about how to get and activate the Tesco Clubcard in our article.

As a matter of fact, the history of modern loyalty club cards should begin with Tesco. In 1993 Terry Leahy (CEO of Tesco) asked the Tesco marketing team to explore the potential of loyalty cards.  It is believed that the first successful program, which was designed for the mass consumer, was launched in 1981 by American Airlines. Its peculiarity was that customers received bonuses and the company received information about customers. Tesco used Green Shield Stamps as an advertising tool that rewarded people for visits and expenses but did not receive any information about customers. The key change since Green Shield Stamps was the ability to cost-effectively track individual customer behavior with magnetic stripe cards. The system proved to be incredibly efficient and collected customer data with great accuracy.

Are loyalty cards worth it?

In today's market it is more profitable to follow the rules that the loyalty culture offers. It is worth having a loyalty card to make purchases quickly, because otherwise you are just overpaying for extra money. Of course, it is worth getting a loyalty card only if you want to save money and don't mind sharing your personal data with companies. 

Remember, a loyalty card should not be a reason to shop. Often customers make unnecessary purchases in pursuit of rewards. For example, Coca-Cola was the first manufacturer to come up with a program that increased brand loyalty. It was with her light hand that everyone started looking for codes under the lids that could be redeemed for prizes. Finally it has led to overconsumption and health problems for an entire generation.

To avoid the slavery of the loyalty program, plan your purchases in advance and calculate your budget.

It is not worth pursuing cheapness. The mass market offers products at very low prices for loyal customers, but we should not forget that behind this "loyal reward" is the slave labor of workers from third-world countries and environmental pollution.

The rapid pace of production and assortment renewal in mass-market stores is one of the causes of modern slavery. According to the Global Slavery Index, 58% of the wage labor employed in the fashion industry are people from China, India, Pakistan and Bangladesh, who are forced to work without days off for minimum wage, without sick pay and other social guarantees. According to statistics cited by The Guardian, only 2% of employees in garment factories are paid decently.

Today, more than 60% of all materials used in the production of fashion collections are synthetic, so when buried, such waste remains in the soil forever. According to The New York Times, about 85% of textile waste in the U.S. is buried. The fashion industry is also responsible for 10% of all carbon dioxide emissions into the atmosphere.
According to a McKinsey and Company study, consumers will buy 70% more clothes in 2020 than they did in 2000. At the same time, the lifespan of things has halved. Because of the low cost, closet items lose their value faster, so often their wearing time comes to an end as soon as they go out of fashion.

There is no pleasure in using a cheap item because the manufacturer, in order to reduce the cost, has saved on everything he could. Since cheap things lose their appearance faster, the user tends to get rid of them as quickly as possible, by accidentally breaking, breaking, losing them - unconsciously we all want to get rid of what we do not like. To break the circle of meaningless consumption choose things and products slowly and wisely.

Georgetta F. Palsen

Georgetta F. Palsen

About the author

Georgetta F. Palsen spearheads the Loyalty Programs Project, aiming to unravel the global impact of loyalty programs. Leading a dedicated team, she adopts an interdisciplinary approach to explore these programs' influence on consumer behavior and capitalism, offering critical insights for academics and businesses navigating the complexities of today's societal dynamics. More info