Customers Claiming Their Rewards
You have to speculate to accumulate, so the theory goes. But if speculating means spending, and spending increases your ability to accumulate rewards which can be redeemed faster, then perhaps Tesco's new policy of giving two points instead of one for each £1 spent will actually increase loyalty.
Guardian journalist, Rebecca Smithers, says that she rarely has enough points from anywhere to get anything because she isn't loyal and shops around. But, by doing that, she and other consumers may be getting a much better deal from retailers who prefer a formula based on low prices and promotions. That way they save money and can spend what they save anywhere on anything rather than being tied in to whatever is on offer for the points accrued.
Tesco's data mining arm, dunnhumby, is renowned (or notorious, take your pick) for knowing what will get customers to respond. Nearly 1.5 million shoppers reportedly responded to Tesco's recent offer to "Double Up" their points for selected categories including clothes and entertainment. But analysts and the media focused on shoppers not tempted, hinting that the new move showed desperation because the retailer has not been growing as vigorously as its non-points-awarding competitors.
Marcus Leroux, in The Times, interprets Baruch College research to conclude that consumers prefer discounts that they feel they have earned although Asda boasts its "intelligent offers" help customers use spare cash for paying down debt.
Impatience with what could be seen as investing in retailers has led to more people waiting a shorter time to get their payback. Sainsbury's Credit Cards researchers claim that "54 percent of credit cardholders with a reward scheme have claimed all or some of the rewards they have earned in the past year" compared to "just 23 percent of those polled who said they had claimed some of their rewards a year ago."
In a June 8 discussion here on RetailWire (The Loyalty Card Conundrum), George Anderson and most participants endorsed simplicity. Shoppers' behavior in cashing in, or rejecting points in favor of low prices, would seem to support such views. Staying loyal to a single retailer, and accumulating maximum points, can be rewarding. But saving money rather than accumulating points can provide greater choice. Which leads to the question - are shoppers more concerned now than ever before with cashing in?
Discussion questions: What are the pros and cons of Tesco doubling the payback on its rewards programs? Do rewards for loyalty motivate shoppers more or less now that the economy is so tight? Would shoppers rather have a choice of rewards or everyday low prices?
- Tesco 'propping up' trading with £200m Clubcard promotion - Telegraph
- Sainsbury's Credit Cards: Credit card holders are 'starting to benefit from their reward schemes'- Cardsmart
- How loyalty cards for supermarkets such as Tesco encourage spending - The Times
- Asda continues to defy downturn - Guardian
- Tesco to give shoppers double points on Clubcard - Guardian
- Store cards from clubcard schemes - Guardian