Friday, 18 June 2010

Can you buy loyalty?

Before I was able to drive I remember my Dad getting given glassware from petrol stations. Drinking glasses and glass bowls were carefully brought home after paying for a tankful of petrol. We had quite a collection – I suspect many people did. I can’t remember who gave away the glasses – was it Esso? Perhaps. Would my Dad have filled up there anyway? Probably. I guess the petrol station was on his way home.

So did the glassware buy loyalty? If it did, it wasn’t much.

Before glassware there were Green Shield Stamps: little machines spewing out yards of green stamps that were pasted into books and exchanged for a variety of “gifts”. Green Shield Stamps were popular, and a type of currency in its heyday – but expensive for retailers to administer. They purchased stamps, gave them away, but did they get loyalty in return? That was the idea, but as retailer after retailer stopped the scheme, I’m guessing they concluded it was a cost to their business, rather than an asset.

Today we have loyalty cards such as Tesco’s Clubcard and the Nectar card. At least with these schemes the retailer gets something in exchange – data about what you have purchased. But do they get loyalty? Look into many people’s wallets and they probably have “loyalty” cards for as many supermarkets as they regularly shop in. Would they change where they shop because of their loyalty cards? I doubt it, and from the small survey I’ve done, others agree: they shop where is most convenient. All retailers have good food, good prices, and reasonable customer service.

Loyalty schemes are expensive to administer, but according to Tesco at least – well worth the effort in terms of additional sales. I guess if the schemes were to be renamed “cards to encourage you to buy things you wouldn’t otherwise buy” they would be viewed differently by customers. But that’s exactly what they are: ways of incentivising customers to part with their personal details in exchange for money off promotions targeted to their profile.

What makes these schemes successful is the company’s ability to analyse and make sense of the data – understanding what customers like and what they don’t like. Without that the supermarkets may as well be giving away wine glasses.

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