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The Future of Loyalty Cards

By: Garry Crystal - Updated: 26 Sep 2012 | comments*Discuss
Loyalty Cards Future Schemes Online

Approximately 17% of consumers choose to shop only at retailers that offer loyalty schemes. With the majority of customers now choosing lower prices over loyalty the retailers are looking at new ways to inspire customer loyalty.

UK Retailers and Loyalty Card Schemes

Since their introduction in the mid nineties loyalty cards have been a major part of UK retailer’s marketing plan. The UK is one of the world leaders in loyalty schemes but customer enthusiasm been dwindling. Recent media reports state that almost £5.2 billion worth of loyalty points are sitting unclaimed in the UK. With so much competition for customer loyalty the customer is becoming unconcerned about the schemes and searching out value for money instead. Retailers are looking at ways to win back the customer by diversifying the options available with loyalty cards.

Future Developments with UK Loyalty Cards

The core value of loyalty schemes is to give something back to the customers, a way of saying thank you. Many retailers are looking to instil a more personalised approach to loyalty cards with schemes individually tailored to the customer. Some US retailers have started to apply price reductions only for customers that carry their loyalty cards. Special fobs carried by the loyalty card holders will highlight the price reductions that apply only to them. Although this hasn’t been introduced in the UK yet it is being touted as the way forward to attain customer loyalty.

Pay to Join Retailer Loyalty Schemes

One future development that is being touted by marketing experts is to pay to join loyalty schemes. Loyalty cards that come with a fee would act similar to premium bank accounts. Although customers would have to pay for membership it is thought that the rewards available will be greater than at present. There would also be more scope where the rewards can be redeemed with online options through numerous third party retailers. But as 50% of UK shoppers do not think collecting points is worthwhile it is doubtful whether a fee charging loyalty scheme would prove a winner.

Loyalty Cards and Third Party Retailers

Many loyalty schemes now offer consumer discounts and money off through third parties. This means customers no longer have to spend their rewards with the retailer that runs the loyalty scheme. With more customers turning to online retailers it makes sense for loyalty card providers to diversify the amount of places rewards can be spent. In the future, shoppers will have a greater amount of choice over where to spend their rewards. Retailers who are part of the Nectar loyalty card scheme are already part of a multi partnership of retailers. This trend looks set to continue as more shopping outlets are added to single loyalty card providers in the future.

Technology and Customer Communication

Data collection is an important part of loyalty card schemes. The data that is collected can include personal shopping habits that in turn tailor the rewards to the individual customer. With applications being introduced such as shopping by iphone, retailers will soon be able to target consumers individually wherever they are. This will give a more personalised shopping experience. Consumers will be able to view personal messages regarding special in-store and online offers that will provide points and rewards. This will simply be a more efficient way for retailers to keep customers informed in a real time capacity.

Giving More Back to Increase Loyalty

Retailers are aware that customer loyalty has been dwindling and have taken action. Many of the big retailers have actually doubled the amount of points that can be obtained when shopping. Some supermarkets such as Asda do not offer loyalty cards claiming they would rather offer low prices to customers. But marketing experts claim Asda is missing out on a valuable function of the loyalty cards, customer data that can improve individual targeting. It is likely that increasing the amount of rewards given, individual targeting and an increase in third party redemption points will make a difference in customer loyalty.

Retailers and marketing experts are taking notice of the present lack of consumer enthusiasm in loyalty schemes. Technological advancements do mean that retailers are able to give a more tailored shopping experience. It is thought that by 2016 scanners will be in place to identify and communicate with shoppers when they enter stores. Whether this will improve the shopping experience and inspire loyalty in the future remains to be seen.

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