Store Loyalty Cards

Birth and Meaning of Loyalty Cards

The birth of loyalty cards can be traced back to the early 1990s, when the largest grocery retailers in the United States and in Europe began to test a new card-based loyalty program. Loyalty programs had been around for more than one hundred years, but, since they had always been paper based, they had not been considered a tool to create customer knowledge or to manage customer relationship. A real innovation was the plastic card tied to the loyalty program: instead of the old system of collecting paper points, gluing the paper points one by one on a promotional form, and then giving back the completed paper form to the store to get the desired reward, now customers could subscribe to their store's card by completing an application form. From that moment, they became cardholders, and each time they used their card, their purchases were registered on the card and, at the same time, the promotional rights related to the same purchases were credited to the card.

If loyalty cards are intended to be used as a tool for acquiring customer knowledge and for strengthening store loyalty, it is important, according to Chiari Mauri, that holders keep using the card, that is, that they become card-loyal. The inducement for consumers to keep using the card appears to be the promotional reward: the discounts, points, bonuses, and prizes tied to specific behaviors. Consumers who want to receive the rewards not only have to use the card but also have to follow the retailer's suggestions about spending a certain amount, buying specific product types, choosing certain brands, and visiting the store with a certain frequency, sometimes at specific hours of specific days. The higher the cardholder's compliance is with the retailer's demands, the higher are his or her rewards.

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