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Loyalty cards: It’s time for something new

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By Juergen Kneifel
Herald Columnist
Consumers enjoy saving money. So it's reasonable that lower prices and savings are levers that retailers can pull to generate loyalty and repeat business.
But when the loyalty cards and programs were introduced in retail over a decade ago, they brought more headaches for consumers. If anything, these programs proved the opposite: consumers are for the most part disloyal.
I conduct a non-scientific study in my Everett Community College Service Essentials classes quarterly as part of a discussion about the importance of building a business by attending to the customer relationship. The relationship is far less connected with a card or savings pass than it is with the quality of human interaction and genuine attention to customer needs.
To prove my point, I ask students to grab their purses, wallets and key chains to identify how many loyalty programs they belong to. I ask them to include all grocery stores, drug stores, coffee shop punch cards, pet stores, hardware and the like. The results are very predictable.
The vast majority of students have multiple cards for grocery stores and drug stores. But most don't actually carry these cards, myself included. They're disappointed that the winner of the "prize" must produce the pile of evidence.
With each class participating in the study, the winning student carries well over 20 loyalty cards. And the stack of cards includes multiple competitors within the major retail categories. Students are also asked to share their experiences with using the cards.
Students report that they arm themselves with the cards to take advantage of the savings. But that doesn't necessarily establish an exclusive relationship with a particular store. Store location combined with featured items they are seeking on sale seem to be the real drivers.
Retailers needed to address the problem for those who've signed up for a card but fail to carry it, so they keyed in on phone numbers. This solution is cumbersome and awkward. I've been conditioned to punch in my phone number on keypads at the checkout line to take advantage of my promised savings.
But people move. They change phone numbers. Some don't want to release their phone number to a cashier with a line of impatient shoppers behind them. Or perhaps this has happened when you are in line: A customer can't remember if their card is tied to a land line, cell phone or spouse's number.
I appreciate the idea behind the loyalty cards. For stores, this tool represents tracking sales data by household. It also provided cashiers the opportunity to thank you by name for your business. However there is a big difference between knowing your customer by name and reading it from the printed receipt.
Apparently retailers who dove in to loyalty cards with both feet hoped that this advantage would draw customers much like the famed Cheers Bar in Boston, where everyone knows your name.
Thankfully the industry made some changes, and as a club member, your name is no longer printed on receipts with most -- if not all -- loyalty programs.
Besides the phone challenge, names are not easy around here. I know, because I have an uncommon name. I remember when I signed up for my first club card, the person responsible for data entry must have struggled with it. And I didn't even use the umlaut! I wound up in the store's database with misspelled first and last name.
The clerks were struggling to thank me by name. Some learned to ask how I pronounce it; others just read what was printed on the receipt since the computers don't make mistakes!
When on vacation in California or Hawaii, we have run into loyalty card challenges. One large national chain claims your card will work so long as you enter your phone number with area code. Not really. So as we check out in this grocery store a clerk uses a "terminal card" to apply the savings since the line behind us was growing.
The cards have also added layers of complication with bonus point sales and pump points on Tuesdays. It has become frenzy as one chain tries to add value and outdo their competition. I am all for keeping things simple.
It's time for something different. Maybe the cards served a purpose for due season. Albertsons has now abandoned their loyalty card program. It was known as the Preferred Savings card. And at the time when other grocery stores were rushing to be first to market with the loyalty card programs, Albertsons originally didn't want any part of it.
Perhaps this time around Albertsons is the retailer setting the trend.
Juergen Kneifel is a senior associate faculty member in the Everett Community College business program. Please send your comments to
Story tags » Small businessRetail



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