Retailers really use loyalty programs to gather your data, not increase sales.
We hate to love our customer loyalty cards, knowing that we coughed up personal data to get them. This much is clear. What's not so obvious is the implication for retailers.
If we're using our loyalty cards begrudgingly, then are we really so loyal after all? If we're splitting our shopping among umpteen different stores, some of which are competitors, how can this possibly reflect loyalty to any one retailer? Does the ubiquity of availability and use diminish a retailer's chance of differentiating itself based on its loyalty card program? Does our "loyalty," as demonstrated through program involvement, lead to increased sales?
You'd think questions like these would be significant to retailers, and answering them a top priority. But that's not necessarily so. Loyalty card use -- loyalty itself -- doesn't really matter to many retailers. Sales be damned, in other words.
What retailers are really after is -- you guessed it -- the 411 on you. Customer information is the real cha-ching, even if many retailers don't quite know how to use it yet.
As I mentioned in yesterday's post (We Know Better, But Still We Love Loyalty Cards), SAS (this site's sponsor) and Conlumino, a retail research agency and consulting firm, recently surveyed 2,109 consumers and 100 U.K. retailers about loyalty card programs. The "Retail Loyalty and the Consumer" study, which is considered to be reflective of global retail trends, showed that a high percentage of retailers -- 72% -- feel they must have some sort of loyalty program in place. Such programs, retailers indicated, are most effective at dishing up consumer information and least effective at driving sales, as seen below.
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