Research Shows There’s No Loyalty for Loyalty Programs
According to a new research study done in the UK, loyalty cards do not loyal customers make. The research conducted by NOP (and released by Asda, a division of Wal-Mart) found that:
- Shoppers suspect that loyalty cards push up prices.
- Ninety-three percent of UK respondents would prefer lower prices to a loyalty card.
Consumers also reported that loyalty cards had little to no influence over where they shopped. “Customers aren’t fooled by marketing gimmicks,” said Richard Baker, deputy chief operating officer, Asda. “Shoppers’ real loyalty only comes from offering the lowest prices on the right range of products.”
Asda did away with its loyalty card program in 1999. It is the fastest-growing retailer in Britain with sales up by 11 percent over last year according to UK industry sales figures.
Moderator’s Comment: Do loyalty cards help retailers
acquire and keep customers?
We’re not sure how much loyalty, loyalty cards inspire.
We do know that consumers that shop in a store are likely to use a card if it
is available. Of course, Wal-Mart doesn’t have a card and that hasn’t seemed
to hurt business.
The problem with loyalty/reward programs is that they’re all designed to benefit the retail store or chain that provides the service. Just about every store exploits their customers’ privacy to other businesses that can bombard you with products and services that are of no interest to the consumer. What needs to occur is a program that protects the customers’ privacy from other businesses and provides a means for understanding their behavior so that a relationship can be formed based on by “protecting”, “knowing”, “acknowledging” and “rewarding” customers when shopping with your business.
If a customer has two or more competing cards in their wallet, then it means there is no loyalty established and the card is just a token for obtaining discounts. If retail stores and chains want to succeed, then their existing model must build confidence in the brand of product or service, and form a bond with the customer.
These programs must be reengineered to keep consumers wanting to come back to your stores. Allowing consumers to use other people’s cards to obtain discounts is a “black flag” and should be prohibited as it is truly impersonal and fails at understanding their needs and habits.