Credit Card 101: Remember when we used to have as many as twenty credit cards in our wallets? Or more? Especially gas and department store plastic? Made guys sit on lumpy wallets and boosted the chiropractic industry. Those days are gone. Today, we rely on a single credit/debit card for most of our purchases because they work anywhere. Retailers with loyalty/FSPs (Frequent Shopper Programs) need to learn from this. Why make shoppers carry an extra card when they can program their software to see customers’ credit/debit cards as loyalty/FSP cards? It’s all in the software, and can be protected for privacy. Tactically, that’s one way retailers can differentiate their loyalty/FSPs. Strategically, we’ve got quite a discussion going on. Lots of touchy-feely “experiential/relationship” comments. COME ON! It’s all about saving money. If we have to lick stamps (ugh!) and stick ’em in a book, we’ll do it. We’ve proven that. Flush the esoteric definitions and data-rights hoo-haw and get down to brass tacks. Shoppers seek a bargain. If they have to drive a few more miles… Read more »

Loyalty cards, in most cases, are precisely what they’ve been identified by other contributors as: one-way reward programs which act as essentially promotional discounts. However, some programs DO reward loyalty. Book chains, for example, are in fact rewarding loyalty. Books are for the most part commodities. The choice of where to purchase is a loyalty decision. The question one has to ask is who determined that a free book, or a net discount, or some other form of price reward is what that particular consumer is really responsive to? We have PHD’s on this panel….let me ask you guys: isn’t there data which determines the length of impact and relative value of different kinds of reward structures? And aren’t those answers different for different test groups based on age, gender, etc? My undergrad psych degree was a really long time ago! Grocery store loyalty programs are a joke. The check out clerks regularly swipe their own keys or are supplied a key so that even if the customer doesn’t have the card, they still get… Read more »

Big transatlantic differences here, folks. There was a piece on television last week about British attitudes towards loyalty cards and basically there ain’t no card ever seems to have bought a single customer’s loyalty. That isn’t the way to go. I don’t think it’s resistance to being tracked and having stores know what people buy so much as a feeling that the cards’ offers are worthless. Either give everyone discounts or cut prices – there was widespread recognition that prices could be lower if only retailers weren’t spending so much trying to buy loyalty. No one was interested in spending enough to gather enough points to get any of the tacky gifts available. Tempting they were not. Loyalty is inspired by quality products, quality service, value for money and, maybe, convenient shopping (or, heaven help us, at the very least a successful and pleasant shopping experience). I don’t know what the precise statistics are on redemption but I know that many people who have had loyalty cards foisted upon them often don’t even bother to… Read more »

My grocer has a wealth of knowledge on me… And I gave it to them for free. But beyond getting a discount here and there (that I would have gotten anyway from the cashier swiping her card), I have little relevant return on my “loyalty.” Instead, what I have gotten is stack of coupons for products that I don’t buy. For example, I am a loyal purchaser of International Delight’s French Vanilla coffee creamer; when I check out, my local grocer spits out a coupon for Carnation’s competing product. I don’t WANT another product and, if my grocer paid attention to my purchase patterns that I so freely give them, they would understand this. Much like I am loyal to them, I am loyal to International Delight. What would be of real VALUE to me would be to know when this particular product is on sale the next time I return to the store or that a product I “usually” buy has a new variant available. Grocery loyalty cards need to take the next big… Read more »

Ian is absolutely correct. Retailers have been misled into believing that a card based program can create loyalty. What it actually represents is a one way street relationship between the retailer and the consumer. Basically, it says, shop this way or we’d prefer you didn’t at all. Or, if you don’t you’ll be penalized. You, see Mr. or Ms. Consumer, it’s your data we want and there’s really nothing in it for you that we might have given you otherwise. You see Mr. or Ms. Consumer, we can’t really do anything with your data, but it seems like the thing to do to gather it. Someone told us we should. After all, we invested millions in consultants, computer systems and software, and imagine what it cost us to give you this card. You see Mr. and Ms. Consumer, it’s the thing to do. After all, everyone else is doing it. As Ian points out, by definition it’s a “feeling or attitude of devoted attachment and affection.” I would argue that no card or its benefits… Read more »

Wow! Did Ian Percy ever spike this one. I’d never quite thought of it in exactly that way before, and he’s totally on target. I’ve come to see loyalty cards, as they are used (for the most part) as mere green stamps. (When I was a kid working the front end at a First National store, I hated it when nuns came. The store manager was very, very Catholic, and he’d have me spinning that little dial for 20 minutes straight to give the nuns what must have been 100 yards of green stamps every time they came through the door. We used to joke that if a cardinal or bishop ever came, S&H would go bankrupt.) I think CVS has a fabulous loyalty card program. They very obviously track my purchases, and give me offers that are meaningful about every time. They always have a short-term deadline for use, and often they are for significant amounts (recently $6 off whatever I wanted in the store). I normally pitch offerings because they are not targeted… Read more »

The work that we did in a joint ACNielsen/FMI Study on “Winning Strategies for Your Most Important Shoppers” illustrated the tremendous opportunity that Grocery retailers have in leveraging the wealth of information in their frequent shopper databases. Top shoppers (i.e., the big spenders per year) in the various Grocery channel formats (hi/lo, edlp, specialty, Supercenters) are so important because of the number of trips they make and the amount that they spend per trip. We also know that top shoppers have different demographics and different attitudes about shopping. Top traditional “hi/lo” Grocery shoppers do find benefit from frequent shopper card programs. Unfortunately, most programs today do nothing more than allow all types of shoppers to receive the same benefit simply by showing their card at check-out. Grocery retailers need to start using the wealth of information at their disposal via targeted communications and/or promotions against shoppers who exhibit different behaviors in their stores. The key message is that Grocery retailers need to reward their top shoppers differently. I receive e-mails from Wal-Mart, Target, Parisian and… Read more »

As the technology gets better and retailers get smarter about what shopping data means, they should be able to offer increasingly targeted promotions. If you combine that with better customer service in-store, and even personalized customer service for top shoppers, retailers may really be on to something.

What a strange definition of “loyalty” there seems to be in the retail world. Is someone “loyal” because they take advantage of a discount or reward afforded by a customer card? The origin of the word speaks to a “legal obligation.” Clearly that’s not what we have here. The dictionary says it’s a “feeling or attitude of devoted attachment and affection.” That’s not what we have either. Stories where customers have devoted attachment and affection are rare.

I suggest these cards are about nothing more than ‘opportunism.’ When the shopping experience is so positive that we’d shop there, discount or not – then we’re onto real loyalty.

The issue, as I see it, is that retailers are not using the aggregate of information obtained from the cards. I may get a Pepsi coupon when I buy Coke, but the register (and, consequently, the store) aren’t registering, for example, that I never bought soda before and respond accordingly.

Amazon pays attention, in the loosest way, to the genres of books I buy, but not much in the way of specifics. They do not apparently combine information from the variety of stores that fall under the Amazon brand.

The single most important thing retailers can do is pay attention to patterns of buying behavior, rather than in-the-moment behavior.

“But the reality is that I choose my store based on location convenience, assortment fit with my market basket and, to some degree, on perishables quality. But that’s just me. The price discounts I get don’t keep me coming back or send me away.”

Ah … but if you get a surly clerk that insists that you have to have their little card in your fat little fist to get $6 or more dollars off the $16 paper towels, it creates a negative shopper experience. When she cattily responds that she will swipe her card for you just this one time but you have to get your own … it tends to make one not want to return.

I would say, therefore, that the card has created a negative shopping experience and if I can buy my paper towels elsewhere, I will! And I am not even that price sensitive about it!

Regrettably, most retail grocers got into the me-too syndrome when loyalty cards first started. The problem is they are not able to use the mountains of data they have. They really have not employed the right IT people with any marketing savvy to say “here’s an idea”. They can tell you 1,000 ways to parse the data but not how to increase rings at the register. I like the so-called pump perks: you use the card on specific items and get ¢-off on you gasoline bill at the pumps. I recently saved 62¢ per gallon on up to 15 gallons. The savings were 2-6¢ per item I bought, including Kraft cheeses. So they are not relegated to the Clabber Girl Baking Powders, but high velocity items. If you got to the store, you probably drove and that means you use gas. I can savor the tank of gas all week and have a nice feeling about my grocer. So I look forward to shopping to see “what I can save money on this week.”

It would seem that these comments on the value of supermarket card programs reflect their observations on some or most, but would not apply to all card programs.

I have heard others estimate that about one-third of retailers have effective CRM programs that effectively target and deliver meaningful value to the customer. Perhaps these commentators live and shop in markets served by the other two-thirds.