Loyalty program
A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program.[1] Today, such programs cover most types of commerce, each having varying features and rewards schemes, including in banking, entertainment, hospitality, retailing and travel.
Various loyalty cards
A loyalty program typically involves the operator of a particular program setting up an account for a customer of a business associated with the scheme, and then issuing to the customer a loyalty card (variously called rewards card, points card, advantage card, club card, or some other name) which may be a plastic or paper card, visually similar to a credit card, that identifies the card holder as a participant in the program.[2] Cards may have a barcode or magstripe to more easily allow for scanning, although some are chip cards or proximity cards.[3]
By presenting a card, customers typically receive either a discount on the current purchase, or an allotment of points that they can use for future purchases. Hence, the card is the visible means of implementing a type of what economists call a two-part tariff. Application forms for cards usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store uses aggregate data internally (and sometimes externally) as part of its marketing research. Over time the data can reveal, for example, a given customer's favorite brand of beer, or whether they are a vegetarian. 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 cheques or dispensing medical prescription preparations, or for other membership privileges such as access to an airport lounge using a frequent-flyer card. In recent years, businesses now offer these loyalty cards in the form of a loyalty app, which means users are less likely to lose their card. Almost all major casino chains also have loyalty cards, which offer members tier credits, reward credits, comps, and other perks based on card members' "theo" from gambling, various demographic data, and spend patterns on various purchases at the casino, within the casino network, and with the casino's partners.[4][5] Examples of such programs include Caesars Rewards[6] (formerly called Total Rewards[7]) and MGM Resorts International's Mlife.[8]
Loyalty programs have been described as a form of centralized virtual currency, one with unidirectional cash flow, since reward points can be exchanged into a good or service but not into cash.[9]
For more information on historical loyalty programs, see Loyalty marketing#History
Betty Crocker's loyalty points program, introduced 1929, ended in 2006, one of the longest running loyalty programs.[10]
By continent and country
United Kingdom: Passcard (later renamed Passkey) was in the early 1980s.[39]Sainsbury's Homebase Spend and Save Card was another early 1980s loyalty card.[40] A later program, Tesco's ClubCard, was criticized for not offering value for money.[41] The Economist suggested that the real benefit of loyalty cards to UK outlets is the massive marketing research database potential they offer.[42]Morrisons is another program.[43] Many stores have kiosks that, with the cards, print vouchers that can be used at the till.
Safeway's ABC Card was discontinued in 2000.[44] Maximiles[45] is an online coalition program.[46]
Formerly operated by British Airways, Airmiles was the most popular flight-related loyalty program in the UK[47] A re-brand of the program in 2011 from Airmiles to Avios caused controversy as members were now required to pay taxes and fees on flights they used for redemption.[48]
Co-operative Membership: the Co-op Group offers a 2% (previously 5%) refund to members on Co-op branded products with 2% also going to the cardholder's nominated charity. This is only available in Co-op Group stores. It replaced the dividend benefit previously used.
North America
Flybuys is the largest loyalty program in both Australia[62][63][64] and New Zealand.[65]
Mobile loyalty programs
Mobile online loyalty programs
There has been a move away from traditional magnetic card, stamp, or punchcard based schemes to online and mobile online loyalty programs. While these schemes vary, the common element is a push toward eradication of a traditional card, in favour of an electronic equivalent. The choice of medium is often a QR code. Some prominent examples are Austrian based mobile-pocket established in 2009,[68] the US-based Punchd (discontinued from June 2013,[69]), which became part of Google in 2011.[70] and an Australian-based loyalty card application called Stamp Me[71] which incorporates iBeacon technology. Others, like Loopy Loyalty (HK), Loyalli (UK), Perka (US), and Whisqr Loyalty (CA), have offered similar programs.[72] Passbook by Apple is the first attempt to standardize the format of mobile loyalty cards.
Mobile off-line loyalty programs
With the introduction of host card emulation (HCE) and near field communication (NFC) technology for mobile applications, traditional contactless smart cards for prepaid and loyalty programs are emulated in a smartphone. Google Wallet adopted these technologies for mobile off-line payment application.
The major advantage of off-line over the on-line system is that the user's smartphone does not have to be online, and the transaction is fast. In addition, multiple emulated cards can be stored in a smartphone to support multi-merchant loyalty programs. Consequently, the user does not need to carry many physical cards anymore.
The term also is used regarding linking rewards for online and offline purchases.[73][74]
Disloyalty cards
In three cities, some independent coffee shops have set up experimental 'disloyalty card' programs, which reward customers for visiting a variety of coffee shops.[75][76]
Some companies complain that loyalty programs discount goods to people who are buying goods anyway.[citation needed] Moreover, the expense of participating in these programs rarely generates a good return on investment. The Forte Consultancy Group regards loyalty programs as bribes.[77] In the case of infrequent spenders, loyalty fees provide a means of subsidizing discounts.
A 2015 study found that most supermarket loyalty-cards in the United States do not offer any real value to their customers.[78] Furthermore, commercial use of customers' personal data – collected as part of loyalty programs – has the potential for abuse; it is highly likely that consumer purchases are tracked and used for marketing research to increase the efficiency of marketing and advertising, which is one of the purposes of offering the loyalty card. For some customers, participating in a loyalty program (even with a fake or anonymous card) funds activities that violate privacy.[79] Consumers have also expressed concern about the integration of RFID technology into loyalty-card systems.[80]
Metro – the fifth-largest retailer in the world – is the latest high-profile retailer to bow to pressure from privacy advocates over the use of RFID chips. Last year,[timeframe?] a group of high-profile retailers – including Wal-Mart Stores Inc. and the Benetton Group SpA – were forced[by whom?] to tweak their ID-tag strategies following complaints by activists, including the highly vocal Consumers Against Supermarket Privacy Invasion and Numbering (Caspian)[81] in the U.S.
Caspian and several other privacy- and civil-liberties- advocacy groups, such as FoeBud e.V. and FITUG e.V., worry that RFID could lead to an Orwellian world where sales clerks or law-enforcement officials could read a handbag's contents by simply waving an RFID chip reading device's wand.[citation needed]
One may view loyalty and credit-card reward-plans as modern-day examples of kickbacks.[82] Employees who need to buy something (such as an airline flight or a hotel room) for a business trip, but who have discretion to decide which airline or hotel chain to use, have an incentive to choose the payment method that provides the most cash-back​,​[83]​credit-card rewards or loyalty points instead of minimizing costs for their employer.[citation needed]
See also
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  3. ^ "Customer's loyalty system and point cards". kimaldi.com.
  4. ^ Dow, Natasha (26 January 2012). "Issue 2 Crowds and Clouds » THE TOUCH-POINT COLLECTIVE: CROWD CONTOURING ON THE CASINO FLOOR". Limn.
  5. ^ Long, Emily (6 December 2018). "How Casinos Use Rewards Programs to Track Everything You Do". Lifehacker.
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  7. ^ "Total Rewards Card". Las Vegas How To.
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  9. ^ European Central Bank (October 2012). "1"(PDF). Virtual Currency Schemes. Frankfurt am Main: European Central Bank. p. 5. ISBN 978-92-899-0862-7. Retrieved 5 March 2014.
  10. ^ Fred Reichheld (1996) The Loyalty Effect, Harvard Business School Press, Boston, 1996.
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  12. ^ MTR Club for regular customers of transport network "MTR Club". MTR Corporation. Retrieved 13 March 2018.
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  49. ^ the company gives out coupons which look like currency "Canadian Tire Money loyalty program". CanadaLoyalty.com. Retrieved 23 November 2007.
  50. ^ Tims Rewards: https://www.timhortons.ca/timsrewards
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  72. ^ Collinson, Patrick; Lunn, Emma (12 April 2013). "10 Best Money Saving Apps". The Guardian. London.
  73. ^ "Plink".
  74. ^ "Similar companies".
  75. ^ Annear, Steve (15 December 2011). "Local coffee shops start 'Disloyalty Card' campaign". Metro. Boston. Archived from the original on 14 January 2012.
  76. ^ Jennifer Bain (12 April 2010). "Disloyalty has its privileges". The Star. Toronto.
  77. ^ "Designing Best-in-Class Loyalty Programs – Getting the Benefits Right". White Paper. Forte Consultancy. Retrieved 28 April 2019. Loyalty program benefits are, in their essence, a bribe. In exchange for a set of benefits, a consumer allows the company giving those benefits to track his or her purchasing behavior.
  78. ^ "Discover the Best and Worst Loyalty Programs with Our New Infographic". Weekly Ads and Circulars. Retrieved 3 September 2015. The reality is, not all loyalty rewards programs actually add value. Some programs only exist to draw you in and tempt you away from competitors that could actually offer you a better deal. The worst? It turns out that just about any supermarket chain will offer you nothing but bad deals.
  79. ^ Albrecht, Katherine. "Why getting a shopper card under a fake name is not the answer". Consumers Against Supermarket Privacy Invasion And Numbering. Archived from the original on 19 October 2007. Retrieved 23 November 2007.
  80. ^ Blau, John (1 March 2004). "Metro Store bows to pressure from anti-RFID activists". InfoWorld. Archived from the original on 12 March 2004. Retrieved 23 November 2007. Ahead of a planned demonstration on Saturday, Metro AG decided to drop the use of RFID tags in customer loyalty cards used at its Extra Future Store supermarket in Rheinberg, Germany, where the retail group is testing several new IT retail technologies, Metro company spokesman Albrecht von Truchsess said Monday.
  81. ^ CASPIAN website
  82. ^ Compare: Gup, Benton E. (1990). Bank Fraud: Exposing the Hidden Threat to Financial Institutions. Rolling Meadows, Illinois: Bankers Publishing Company. p. 85. ISBN 9781555201678. Retrieved 10 January 2021. [...] kickback and credit card schemes that are relatively small by themselves, but collectively qualify as major frauds.
  83. ^ Kowalik, Frank (1991). IRS Humbug: IRS Weapons of Enslavement. Oakland Park, Florida: Universalistic Publishers. p. 46. ISBN 9780962655203. Retrieved 10 January 2021. Among other terms used for kickbacks are sales incentive, cash back, coupon sales, commissions, and discounts.
Last edited on 28 April 2021, at 13:28
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