Merchant Loyalty Cards Are So Yesterday

by Raymond Pucci 0

Merchant Shopping

One more card punch-hole and you get a free coffee—yes, that brings back memories from merchant card loyalty programs of the past. As the following article from The Wise Marketer describes, loyalty programs are changing in the digital age.

When the modern-day loyalty marketing program burst upon the scene with the Frequent Flyer onslaught of the early 1980’s, the identification of customers and their transactional behavior was a non-issue.  The airline and hotel customer identified themselves during the transaction process and left behind a trail of other data as part of the natural order management system. Name, address, contact info, transaction details, payment methods, etc. were a by-product of the actual reservation – whether in-person, telephone or eventually over the web.

Retailers took notice. They also wanted to reward and recognize best customers but often lacked a way to track the transaction down to the individual.  Some retail segments opted for Private Label Credit Card schemes, but this only reached a segment of their customer base and had many other issues. Most gravitated to the loyalty identification card – show it to be tracked, tracking led to transactional information which led to benefits.

While some have argued for several years now that the card is obsolete, they are forgetting a basic premise that enables all loyalty marketing programs – member identification.  In a digital commerce world, like any of the old DTC environments, identification is not an issue.  But for retail, especially a merchant who desires to track both on-line and off-line behaviors, an identification device is still required.

Make 9 visits and you get a free item on the 10th visit. That was a typical value proposition of loyalty card programs from years gone by. Of course if you forgot or misplaced your card, then you were out of luck, and maybe even had to go back to square one. While there are some brick and mortar merchants that do not have anything close to digital systems, smartphone loyalty apps have gained widespread adoption from both merchants and customers alike. Even for smaller stores and cafes, there are vendors that can easily provide a white label app that can bring them into the 21st century.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group