Loyalty program
18624
224676961
2008-07-09T22:44:57Z
Murtoa
1860987
Incomplete removal of Save-on-foods (Canada) - was going to restore but needs substantitation - the program isn't even mentioned in Save-on-food's article.
{{refimprove|date=November 2006}}
'''Loyalty programs''' are structured marketing efforts that reward, and therefore encourage, loyal buying behaviour — behaviour which is potentially of benefit to the firm.<ref>Sharp, Byron and Anne Sharp (1997), "Loyalty Programs and Their Impact on Repeat-Purchase Loyalty Patterns," International Journal of Research in Marketing, 14 (5), 473-86.</ref>
In [[marketing]] generally and in [[retailing]] more specifically, a '''loyalty card, rewards card, points card''', or '''club card''' is a plastic or paper card, visually similar to a credit card or debit card, that identifies the card holder as a member in a loyalty program. Loyalty cards are a system of the [[loyalty business model]]. In the [[United Kingdom]] it is typically called a loyalty card, in Canada a rewards card or a points card, and in the [[United States]] either a discount card, a club card or a rewards card. Cards typically have a [[barcode]] or [[magstripe]] that can be easily [[scan]]ned, and some are even [[chip card]]s. Small [[keyring]] cards (also known as keytags) which serve as [[key fobs]] are often used for convenience in carrying and ease of access.
A retail establishment or a retail group may issue a loyalty card to a [[consumer]] who can then use it as a form of identification when dealing with that retailer. By presenting the card, the purchaser is typically entitled to either a [[discounts and allowances|discount]] on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is the visible means of implementing a type of what economists call a [[two-part tariff]].
The card issuer requests or requires customers seeking the issuance of a loyalty card to provide a usually minimal amount of identifying or [[demographics|demographic]] [[data]], such as name and address. Application forms usually entail agreements by the store concerning customer [[privacy]], typically non-disclosure (by the store) of non-[[aggregate data]] about customers. The store — one might expect — uses aggregate data internally (and sometimes externally) as part of its [[marketing research]].
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 of [[medical prescription]] preparations, or for other membership privileges (e.g., access to a club lounge in airports, using a [[frequent flyer program|frequent flyer]] card).
==By country and continent==
===United States===
In the U.S., several major [[supermarket]] chains and at least one major [[pharmacy]] require the cards in order for customers to receive the advertised loyalty price. These include [[Kroger]] and [[Safeway Inc.|Safeway]] (each through both their own name and many of their regional chain names), [[Albertsons]], [[Winn-Dixie (supermarket)|Winn-Dixie]], [[Harris Teeter]], [[Ingles]], [[Giant Eagle]], [[Tops Friendly Markets|Tops]], and [[CVS/pharmacy]]. Cards from other, even competing chains will generally work at other stores to receive the advertised loyalty price, because only a few companies make the cards, but stores generally will not allow this since it will not allow a customer to be tracked, though a customer can make it work if they use a self-checkout. Even though this will work to receive the advertised loyalty price, any points and/or future discounts someone may be trying to earn from using the card at another store will not be added since a different chain would use a tracking system with a database independent of the other chain. However, some stores may also allow a customer to use the store's card if a customer does not have theirs on hand (Kroger does ''not'' allow this although customers can enter their phone number to bring their card up if they forget it, or have another customer's phone number entered) or if the customer is new and agrees to sign up right away. Many of the stores allow accumulation of fuel discounts. Some have tie-ins with airline [[frequent flyer program]]s, and some agree to donate a percentage of sales to a designated [[Charitable trust|charity]]. Most notably, [[Wal-Mart]] does ''not'' have a loyalty card plan (though someone who purchases a gift card can generally get a 3 cent discount per gallon of gas at the fuel stations located on Wal-Mart premises).
The practice is also common among book and music retailers, from large chains to independent retailers. In some instances, the customer purchases the card and receives a percentage discount on all purchases for a period of time (often one year), while in other instances, a customer receives a one-time percentage discount upon reaching a specified purchase level. (For example, a bookseller's loyalty card program might provide a customer with a 10% off coupon once the customer has spent $200.00 at the bookseller.) [[Best Buy]]'s loyalty program similarly offers points redeemable for dollar-amount discounts after accumulating a set number of points along with other discounts from time to time, though the card is not required to receive their advertised price in most cases.
Independent hardware stores such as [[Ace Hardware]] and [[True Value]] added customer loyalty programs in order to compete more effectively against larger chains as well as gather customer data. In addition, [[office supply]] retailers [[Staples, Inc.]] and [[Office Depot]] started issuing club cards in 2005. {{Fact|date=May 2008}}
Almost all of the major [[hotel]] chains ([[Best Western]], [[Choice Hotels]], [[Holiday Inn]], [[Marriott]], [[Super 8 Motels]], etc.) have similar cards that allow guests to earn either points (redeemable for discounts, future stays or other prizes) or airline miles ([[Hilton Hotels Corporation|Hilton]]'s [[Hilton HHonors|HHonors]] program allows guests to earn both points ''and'' miles on the same stay, the only program to date that does so). All major US [[Airlines]] also offer rewards credit cards. Other travel related reward programs include SeaMiles, with points that can be redeemed for cruises. See [http://www.expertcredit.com/expertcredit/category.asp?catid=50 list of travel reward cards.]
For now, most American retailers have not implemented club cards. In a few cases (e.g., [[Federated Department Stores]], [[Kohl's]]) this is because the retailer already issues its own [[credit card]]s, and thus already has a direct relationship with the consumers most likely to shop at its stores. Also, many retailers are simply not large enough to justify the cost of creating, promoting, and operating a club card program.
Some [[supermarket]] customer loyalty cards inadvertently work at the scanners of other non-affiliated stores. For example, a Kroger card has been successfully recognized as a respective loyal club member at stores in the Food Lion, Pathmark and Winn-Dixie chains. {{Fact|date=February 2007}} An example of a so-called consumer-centric card (without cost, registration, or information-tracking) is the MyJoeCard operating in Kansas City.
A few states have begun regulating club cards. For example, [[supermarket]]s in the [[U.S. state]] of [[California]] are subject to the Supermarket Club Card Disclosure Act of 1999 <ref>{{cite web|publisher=FindLaw|title=Supermarket Club Card Disclosure Act of 1999|accessdate=2007-07-25|url=http://caselaw.lp.findlaw.com/cacodes/civ/1749.60-1749.66.html}}</ref>. Some grocery chains have dropped their loyalty card programs. [[Rainbow Foods]] in Minnesota ended its loyalty card program after being acquired by [[Roundy's]], leaving Minnesota with no major grocers that use such cards.
There are a few online loyalty programs that offer rewards for being a loyal shopper. The largest of these are [[Memolink]], Mypoints, and Ebates. Some online loyalty programs focus on "other-directed" consumers, these include [[uPromise]], Schoolpop, and iGive.com.
===Canada===
The oldest loyalty program in [[Canada]] is probably [[Canadian Tire money]], in which the [[Canadian Tire]] company gives out coupons.<ref>{{cite web|url=http://www.canadaloyalty.com/Programs/canadian_tire_money.html |title=Canadian Tire Money loyalty program |publisher=CanadaLoyalty.com|accessdate=2007-11-23}}</ref> The [[Air Miles]] reward program is Canada's largest loyalty program - Air Miles can be earned at more than 100 different sponsors and there are almost a thousand different rewards to redeem for. The [[Bank of Montreal]] offers an Air Miles-sponsored program and [[CIBC]] offers an [[Aeroplan]] program to customers who are enrolled in certain credit card programs or accounts. Another large Canadian loyalty program that has been around for a long time is the [[HBC Rewards|HBC Rewards/Club Z]] program first started by [[Zellers]]. [[Loblaws]] offers the [[President's Choice Financial]] program where users of the service get [[PC Points]] towards free groceries. Some retailers run their own rewards programs, such as [[Shoppers Drug Mart]]'s Shoppers Optimum Card and [[Staples Business Depot]]'s Dividends Card. The irewards program is Canada's largest loyalty program for booklovers, offering everyday discounts and special coupons at [[Chapters]], [[Indigo Books and Music]], [[Coles (bookstore)|Coles]], SmithBooks, the World's Biggest Bookstore and chapters.indigo.ca.
Almost every gas station in Canada offers some sort of program such as Esso Extra at the [[Esso]] gas stations, Petro Points at [[Petro-Canada]], [[Save-On-More]] at some [[Chevron Corporation|Chevron]] stations in BC, Canadian Tire money at Canadian Tire gas stations, or a coupon that grants the customer 3.5 cents off per litre of fuel purchased at Sobeys Fast Fuel locations that can be used at a [[Sobeys]] banner store. [[Loblaws]], [[Atlantic Superstore]], and [[Real Canadian Superstore]] also grant a 3.5 cent a litre coupon that can be used at their stores. [[Suncor Energy|Sunoco]]'s [[Canadian Automobile Association|CAA]] reward offering ends at the end of 2007, to be replaced with Sunoco's own Performance Points reward program.
Many hotel chains also offer some sort of loyalty program. Canada is also home to [[Air Canada]]'s [[Aeroplan]].
===Australia===
The largest loyalty program in [[Australia]] is [[FlyBuys (Australia)|FlyBuys]], established in 1994 and backed by [[Wesfarmers]] (formerly [[Coles Group]]) and [[National Australia Bank]]. About 2.7 million Australian households are active members of FlyBuys using about six million cards<ref>{{cite web|publisher=Courier Mail, Brisbane|title=Reward deals miss the point|date=16 Dec 2006|accessdate=2007-07-25|url=http://www.news.com.au/couriermail/story/0,23739,20933046-5003417,00.html}}</ref>. Rival retailer [[Woolworths Limited|Woolworths]] offers an Ezy Banking card in partnership with the [[Commonwealth Bank]].
Among other Australian retailers, the largest programs are [[Myer|Myer’s]] MYER one program (department store), the Priceline Club Card (health, beauty, home), [[Amcal]] Club (pharmacy), Millers Retail Club(apparel), and Brazin’s Pulse program ([[Virgin Megastore|Virgin]], [[HMV Group plc|HMV]], Sanity, dusk, Bras n Things). Pulse has more than one million members.<ref>{{cite web|accessdate=2007-07-25|title=Brazin's Pulse goes over the 1 million mark|publisher=The Wise Marketer|date=25 Sep 2006|url=http://www.thewisemarketer.com/briefs/archive.asp?action=read&bid=1989}}</ref>
All major [[Australia]]n banks offer credit cards with reward programs. Many offer points conversion with the [[Qantas]] [[frequent flyer]] program. Rival airline [[Virgin Blue]] offers the Velocity Rewards card partnered with [[National Australia Bank]].
The largest online rewards program is [[EmailCash]].
===Europe===
====United Kingdom====
The loyalty card market in the UK is one of the most significant in the world, with most major chains operating some form of ''reward'' system.
Of the "big four" supermarkets, only Sainsbury's and Tesco operate loyalty cards. Both Nectar and Tesco's Clubcard scheme have been criticised for not offering value for money. <ref>{{cite web|publisher = The Independent|date=14 Aug 2005|title=A trip to Alton Towers? That'll be £2,000, please|url=http://money.independent.co.uk/personal_finance/loans_credit/article305643.ece|accessdate=2007-07-25}}</ref> When Clubcard or Nectar points are used for money off supermarket shopping, they roughly equate to a 1% discount, although offers can increase this discount by as much as 4 times for certain rewards. Some retailers with banking operations also award points for every pound spent on their credit cards, as well as bonus points for purchasing financial services. A report in ''[[The Economist]]'' suggested that the real benefit of loyalty cards to UK outlets is the massive database potential they offer. <ref>{{cite web|title=How Tesco is changing Britain|publisher=The Economist|date=4 Aug 2005|accessdate=2007-07-25|url=http://www.economist.com/world/europe/displayStory.cfm?story_id=4247169}}</ref>
After trials in 1994, [[Tesco]] launched its [[Tesco Clubcard|Clubcard]] program, the UK's first nationwide supermarket-only loyalty card scheme, in 1995 with Dunnhumby. Sainsbury's launched its Reward Card in 1996. This was replaced by the [[Nectar card]] in 2002, which was launched in partnership with other major brands.
The patronage [[dividend]] rewarded the loyalty of the owner members of Britain's retail [[consumer co-operative]]s since the [[Rochdale Pioneers]] of the 1840s. Paper record-keeping transformed in the 1960s into a [[trading stamp]] scheme managed by the [[Co-operative Wholesale Society]] (CWS), which was gradually withdrawn as margins declined. The loyalty card concept was used by some co-operatives to restore [[dividend]] payments at the turn of the 21st century, notably by the CWS's “Dividend” card, which was replaced by [[The_Co-operative_Group#Dividend|The Co-operative Membership]] card program, adopted by several larger co-operatives.
[[Safeway plc|Safeway's]] ABC Card was discontinued in [[2000]]. <ref>{{cite web|title=Safeway scraps loyalty card|date=5 May 2000|publisher=BBC News|accessdate=2007-07-25|url=http://news.bbc.co.uk/1/hi/business/735835.stm}}</ref> Airlines, Hotels and other loyalty schemes also offer cards. [[Marks and Spencer]] and the [[John Lewis Partnership]] have credit cards which give vouchers in return for spending, and do not issue separate loyalty cards. [[GAME (retailer)|GAME]] has a reward card scheme for which every pound spent a customer is rewarded 10 points; for every 1000 points that one collects, one gets £2.50 to redeem in the store, or online. Preorders earn a customer 20 points per pound.
Ipoints<ref>{{cite web|title=Maximiles acquires ipoints to create Europe's no. 1 online coalition loyalty company|date=19 July 2006|publisher=E-consultancy|accessdate=2006-07-19|url=http://www.e-consultancy.com/news-blog/361397/maximiles-acquires-ipoints-to-create-europe-s-no-1-online-coalition-loyalty-company.html?keywords=loyalty}}</ref> is a coalition program featuring online retail partners. Rewards are redeemable from 200 ipoints.
UK Websaver is a loyalty card designed to encourage communities to use local businesses.
====Republic of Ireland====
In the [[Republic of Ireland]] loyalty cards have been in operation since 1993, when [[Superquinn]] introduced its SuperClub loyalty card scheme. This is regarded as having been the prototype for such schemes in Europe. However, loyalty cards did not expand until 1997, when [[Tesco Ireland]] introduced its Clubcard scheme, shortly after its purchase of Power Supermarkets. This was essentially a simple expansion of the UK scheme (see above) - cards for this are physically identical to those used by Tesco in the UK and they can be used in both countries. [[Dunnes Stores]] responded with the introduction of their own ValueClub scheme in June 1997. Today these are three main schemes operating in Ireland, although ValueClub has been withdrawn from Dunnes' [[Northern Ireland]] stores.
All five major [[petrol station]] chains in the country operated a scheme during the late 1990s - [[Esso]] had "Tiger Miles" (with Tesco ClubCard points offered as an alternative), [[Maxol]] had "Points Plus", both of which operated on the principle of getting items from a gift catalogue, with [[Royal Dutch Shell|Shell]] using Dunnes' scheme, [[Texaco]] using the SuperQuinn system, and [[Statoil]] operating a cash-back system, "Premium Club". Due to increasing oil prices and tightening of margins, all of these schemes ended by the end of 2005. Tesco Ireland's petrol stations still, however, give Clubcard points.
[[GAME]], a major computer game and hardware retailer also operate a cashback card scheme, which was merged with [[Electronics Boutique]]'s programme following the separation of their northern European stores into the hands of GAME. The scheme returns one-fortieth of the spend, more than twice as generous as Tesco.
====Germany====
The largest loyalty program in Germany is Payback, which was launched in 2000. According to a study in August 2007 by GfK<ref>{{cite web|publisher=Loyalty Partner|title=Studien|url=http://www.loyaltypartner.com/presse/studien/#c390|accessdate=2008-05-15}}</ref>, 61% of German households have a Payback card. It listed the Happy Points program as having a 42% share, with the Shell ClubSmart program as third most popular with 13%.
====Switzerland====
Loyalty programs are popular in Switzerland, with the two main supermarket chains, '''Migros''' and '''Coop''', leading the field with their offerings. The [[Migros]] card can be used at the Migros supermarkets, Ex Libris (books, DVD's), SportXX, and more. The [[Coop]] Supercard earns points on purchases at Coop and a variety of other associated stores.
Other stores such as Interio, a furniture retailer, are also joining the market with loyalty cards and store-based incentivised credit cards.
In recent years, online loyalty programs have also started to target the Swiss. First to make an offering in Switzerland was German-based Webmiles. Claiming to be Switzerland's first online bonus program, Bonuspoints was launched in early 2008 and offers incentives for shopping at 70 different online stores.
====Hungary====
Two coalition loyalty programs loyalty programs in [[Hungary]] are SuperShop and Multipont. SuperShop was established in April 2000 and is backed by premium partners [http://hu.wikipedia.org/wiki/SuperShop] Kaiser’s Supermarket, K&H Bank, OBI, OMV, Photo hall and PLUS Supermarket.
===Asia===
====Malaysia====
In Malaysia, the BonusLink program was introduced in a joint venture between Shell, Parkson, Maxis and MBF. The BonusLink program is coalition with earning and redemption partners allowing members to earn points at a number of Malaysian retailers. Another card is Real Rewards where holders who spend at their merchants get to exchange points for free gifts.
[[Genting Highlands]] Resort has its own loyalty card, [[WorldCard]] (same as mentioned below) that is primarily used to gain points in Genting Highlands' Resorts and Attractions. However, it can also be used for [[Starbucks]], [[The Coffee Bean & Tea Leaf|Coffee Bean]] and [[Haagen Dazs]] and it is valid in three countries, namely Malaysia (where Genting Group is based), Singapore and Hong Kong. [[Jusco]] also has its own loyalty card, known as [[J Card]].
====Singapore====
The three largest loyalty programs are [[WorldCard]] (aggregate program of Genting Resorts, Suntec City Mall, Star Cruises & Indigoz), LinkPoints (NTUC Fairprice supermarket chain) and SAFRA Card.
====Indonesia====
Centro Friends card is a loyalty card for Shoppers of Centro Department Stores. The Body Shop People card is the loyalty card for The Body Shop stores in Indonesia.
Other notable programs in Asia include [[KrisFlyer]], the Singapore Airlines rewards program, and [[Asia Miles]], which was part of Cathay Pacific.
====India====
i-mint is India's largest coalition loyalty program, with approximately 5 million members.<ref>{{cite web|publisher=The Hindu Business Line|date=7 May 2008|accessdate=2008-05-08|title= Setting store by online talent referral|url=http://www.thehindubusinessline.com/2008/05/08/stories/2008050852571200.htm}}</ref> BPCL's PetroBonus is a pioneering program and also one of the largest in the country with about 2 million members for the fuel card program. It also has variants for fleets and convenience store customers. Likewise IOC's Fleet Card Program XTRAPOWER has recently crossed 1 million mark. IOC has launched a loyalty program XTRAREWARDS for Retail Customers.
====People's Republic of China====
The Smartclub program allows all Shanghai residents to earn SmartPoints free, each time they take the subway, bus, or taxi. Those SmartPoints can be combined with points earned at McDonald's, eLong, Sport100, cinemas, bookstores, and other SmartClub partner retailers.
====Hong Kong SAR====
Hong Kong also offers the Octopus Rewards program, which started as a chip based smartcard for transport and now, the octopus cards can be used to earn points in certain shops.
====Taiwan====
The French retailer, [[Carrefour]] has recently introduced a new loyalty scheme whereby customers can earn and redeem points for purchases made in the store, and also earn additional points for all purchases made using a Carrefour branded credit card.
==Program management==
Across the globe loyalty programs are increasingly finding the need to outsource strategic and operational aspects of their programs, given the size and complexity a loyalty program entails. Program managers are typically agencies with specialist skills in loyalty consulting, creative and communication, data analytics, loyalty software, and back end operations. Leading providers of such services globally include US-based Kobie Marketing, Inc., [[Carlson Marketing]] & ICLP. Regional players in this field include [[TMW]] in UK, Loyaltyworks or Maritz in the U.S., SurfGold and CTELoyalty in Asia, Loyalty Matrix in Malaysia, DIREM and NetCarrots in India{{Fact|date=April 2008}}
==Criticism==
{{refimprove|date=February 2007}}
Companies complain that these loyalty program discount goods to people that are buying their goods anyway, and that the expense of doing these programs rarely pays. Other critics see the lower prices and rewards as [[bribes]] to manipulate [[customer]] [[loyalty]] and purchasing decisions, or in the case of infrequent-spenders, a means of [[subsidy|subsidising]] frequent-spenders. Commercial use of the personal data collected as part of the programmes has the potential for abuse. It is highly likely that consumer purchases are tracked and analyzed towards more efficient marketing and advertising (in fact, this can be one of the purposes of the loyalty card.) To some, participating in a loyalty program (even with a fake or anonymous card) funds activities that violate privacy.<ref>{{cite web | last=Albrecht | first=Katherine | publisher=Consumers Against Supermarket Privacy Invasion And Numbering | url=http://www.nocards.org/essays/nofakes.shtml | title=Why getting a shopper card under a fake name is not the answer | accessdate=2007-11-23 }}</ref> There has also been concern expressed regarding [[RFID]] technology being introduced to loyalty cards. <ref>{{cite web | last=Blau | first=John | work=[[InfoWorld]] | url=http://www.infoworld.com/article/04/03/01/HNmetrostore_1.html | title=Metro Store bows to pressure from anti-RFID activists | date=[[2004-03-01]] | accessdate=2007-11-23 }}</ref>
Loyalty and credit card reward plans might be viewed as modern day examples of a [[Political corruption#Kickbacks|kickback]]. An employee who needs to buy something (such as a hotel room or an airline flight) for a business trip but who has discretion to decide which airline or hotel chain to use has a powerful incentive to choose the payment method that provides the most credit card rewards or loyalty points instead of minimizing cost for the organization.
==See also==
*[[Incentive Program]]
*[[Loyalty Marketing]]
*[[Incentive]]
==References==
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