A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program. Today, such programs cover most types of commerce, each having varying features and rewards schemes, including in banking, entertainment, hospitality, retailing and travel.
A loyalty program typically involves the operator of a particular program setting up an account for a customer of a business associated with the scheme, and then issuing to the customer a loyalty card (variously called rewards card, points card, advantage card, club card, or some other name) which may be a plastic or paper card, visually similar to a credit card, that identifies the card holder as a participant in the program. Cards may have a barcode or magstripe to more easily allow for scanning, although some are chip cards or proximity cards.
By presenting a card, customers typically receive either a discount on the current purchase, or an allotment of points that they can use for future purchases. Hence, the card is the visible means of implementing a type of what economists call a two-part tariff. Application forms for cards usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store uses aggregate data internally (and sometimes externally) as part of its marketing research. Over time the data can reveal, for example, a given customer's favorite brand of beer, or whether they are a vegetarian. Where a customer has provided sufficient identifying information, the loyalty card may also be used to access such information to expedite verification during receipt of cheques or dispensing medical prescription preparations, or for other membership privileges such as access to an airport lounge using a frequent-flyer card. In recent years, businesses now offer these loyalty cards in the form of a loyalty app, which means users are less likely to lose their card. Almost all major casino chains also have loyalty cards, which offer members tier credits, reward credits, comps, and other perks based on card members' "theo" from gambling, various demographic data, and spend patterns on various purchases at the casino, within the casino network, and with the casino's partners. Examples of such programs include Caesars Rewards (formerly called Total Rewards) and MGM Resorts International's Mlife.
By continent and countryEdit
- Mainland China: The Social Credit System is a loyalty program operated by the state and private businesses. Individuals with high social credit scores can get faster internet, use high speed trains, and take mainland flights.
- Hong Kong: Octopus Rewards, MTR Corporation. Different chain stores under common ownership often share the same loyalty program, such as A.S. Watson Group's MoneyBack, which can be used at Parknshop, Watsons, and Fortress stores, as well as the corporation's retail partners. HKT's The Club also offers a similar loyalty program. Flag airline carrier Cathay Pacific operates Asia Miles, a loyalty and frequent-flyer program.
- India: PAYBACK India is India's largest coalition loyalty program. German loyalty program operator Loyalty Partner took a controlling interest in i-mint in June 2010 and renamed the program PAYBACK India in July 2011. BPCL's PetroBonus fuel card program has 2 million members. Indian Oil's fleet card program XTRAPOWER and retail program XTRAREWARDS claim a combined customer base of 3 million.
- Iran: The first Iranian loyalty program launched in 1996. East Credit Card Group Kish launched its loyalty program in 2005.
- Malaysia: Genting Highlands Resort loyalty card, WorldCard, is valid in three countries: Malaysia, Singapore and Hong Kong.
- Philippines: SM Supermalls and BDO Unibank offer rewards cards which are accepted by The SM Store, SM Supermarket, SM Hypermarket, ACE Hardware and Watsons Pharmacy. Robinsons Malls is another program. Others are Jollibee, (HappyPlus card), and Mercury Drug's Suki Card.
- Singapore: Loyalty programs in Singapore include GrabRewards by Grab, SAFRA and Plus! from NTUC.
- Austria: The two largest loyalty programs in Austria are Payback and mo. JÖ was fully launched in 2019.
- Finland: The two major retail coalitions with loyalty programs are the S-Group with their S-Etukortti card[dead link]) and Kesko with K-Plussa (67%).
- Georgia: Georgia's biggest loyalty card program has been run by Universal Card Corporation since 2010 via UNICARD.
- Germany: The largest loyalty program is Payback, launched in 2000. HappyDigits and the Shell ClubSmart program are next in size. DeutschlandCard was launched by Arvato in 2008. HappyDigits was disbanded by 2010.
- Hungary: SuperShop and Multipoint are their main loyalty programs.
- Italy: After the exit of Nectar from the market in 2015, Payback is the most popular loyalty program. Supermarkets Esselunga, Coop and Il Gigante also have loyalty programs.
- Latvia: One of the largest loyalty programs in Latvia which is working as operator for many merchants is Pins. Another is Walmoo
- Norway: The largest Norwegian loyalty program is Trumf. Trumf is a «brick and mortar» loyalty program owned by NorgesGruppen, a grocery wholesaling group in Norway. KickBack.no is one of the largest online loyalty program and cashback site in Norway. KickBack.no is owned by Schibsted Media Group.
- Republic of Ireland: Superquinn introduced its SuperClub loyalty card in 1993, the prototype for Europe. However, loyalty cards did not expand until 1997, when Tesco Ireland introduced its Clubcard scheme, shortly after its purchase of Power Supermarkets. SuperValu introduced their own loyalty club called Real Rewards. Others were:
- Russia: MALINA, "the largest multicorporate customer loyalty program in Russia," was launched in 2006 by Loyalty Partners Vostok. Another is Mnogo.ru.
- Switzerland: Loyalty programs are popular in Switzerland, with the two main supermarket chains, Migros and Coop prominent. The M-Cumulus card can be used at the Migros supermarkets, Ex Libris, SportXX, and other retailers. The Coop Supercard earns points on purchases at Coop and a variety of other associated stores. Other stores such as Interio, a furniture retailer, are also joining the market with loyalty cards and store-based incentivised credit cards. The only coalition loyalty scheme in Switzerland is Bonus Card with a network of over 300 independent retail partners. In recent years, online loyalty programs have also started to target the Swiss. First to make an offering in Switzerland was German-based Webmiles. Claiming to be Switzerland's first online bonus program, Bonuspoints was launched in early 2008 and offers incentives for shopping at 70 different online stores.
- Turkey: Pegasus Airlines has a loyalty program called Pegasus Plus which gives rewards for every flight. Passengers can spend reward points as a discount without waiting to cover a full flight. Turkish Airlines has a loyalty program called Miles&Smiles.
- United Kingdom: Passcard (later renamed Passkey) was in the early 1980s. Sainsbury's Homebase Spend and Save Card was another early 1980s loyalty card. A later program, Tesco's ClubCard, was criticized for not offering value for money. The Economist suggested that the real benefit of loyalty cards to UK outlets is the massive marketing research database potential they offer. Morrisons is another program. Many stores have kiosks that, with the cards, print vouchers that can be used at the till.
Safeway's ABC Card was discontinued in 2000. Maximiles is an online coalition program.
Formerly operated by British Airways, Airmiles was the most popular flight-related loyalty program in the UK A re-brand of the program in 2011 from Airmiles to Avios caused controversy as members were now required to pay taxes and fees on flights they used for redemption.
- Canada: Canadian Tire's Canadian Tire money is the oldest loyalty program in Canada Air Miles is Canada's largest loyalty program. The food and beverage industry also has several companies with rewards programs.
- United States: In the US, loyalty cards have a long history. Some are only online. Some partner with classic credit cards. Frequent-flyer programs and, less commonly SeaMiles co-exist with programs that donate a percentage of sales to a designated charity. Some American retailers either have not implemented these cards, or eliminated them, in favor of discounts for all shoppers. Few states regulate club cards. As an example, supermarkets in California are subject to the Supermarket Club Card Disclosure Act of 1999.
- Mexico: Bonvoy is a hotel-oriented loyalty program.
- Australia: Contenders include Woolworths, Myer's MYER one program, the Priceline Club Card, Amcal Club, Millers Retail Club, and the BB Retail Capital Pulse Rewards program.
- New Zealand: Other programs include the New Zealand Automobile Association AA Smartfuel programme and Countdown supermarket's Onecard. Kachingo was a short-lived "card free" programme.
Mobile loyalty programsEdit
Mobile online loyalty programsEdit
There has been a move away from traditional magnetic card, stamp, or punchcard based schemes to online and mobile online loyalty programs. While these schemes vary, the common element is a push toward eradication of a traditional card, in favour of an electronic equivalent. The choice of medium is often a QR code. Some prominent examples are Austrian based mobile-pocket established in 2009, the US-based Punchd (discontinued from June 2013,), which became part of Google in 2011. and an Australian-based loyalty card application called Stamp Me which incorporates iBeacon technology. Others, like Loopy Loyalty (HK), Loyalli (UK), Perka (US), and Whisqr Loyalty (CA), have offered similar programs. Passbook by Apple is the first attempt to standardize the format of mobile loyalty cards.
Mobile off-line loyalty programsEdit
With the introduction of host card emulation (HCE) and near field communication (NFC) technology for mobile applications, traditional contactless smart cards for prepaid and loyalty programs are emulated in a smartphone. Google Wallet adopted these technologies for mobile off-line payment application.
The major advantage of off-line over the on-line system is that the user's smartphone does not have to be online, and the transaction is fast. In addition, multiple emulated cards can be stored in a smartphone to support multi-merchant loyalty programs. Consequently, the user does not need to carry many physical cards anymore.
Some companies complain that loyalty programs discount goods to people who are buying goods anyway. Moreover, the expense of participating in these programs rarely generates a good return on investment. The Forte Consultancy Group regards loyalty programs as bribes. In the case of infrequent spenders, loyalty fees provide a means of subsidizing discounts.
A 2015 study found that most supermarket loyalty-cards in the United States do not offer any real value to their customers. Furthermore, commercial use of customers' personal data - collected as part of loyalty programs - has the potential for abuse; it is highly likely that consumer purchases are tracked and used for marketing research to increase the efficiency of marketing and advertising, which is one of the purposes of offering the loyalty card. For some customers, participating in a loyalty program (even with a fake or anonymous card) funds activities that violate privacy. Consumers have also expressed concern about the integration of RFID technology into loyalty-card systems.
Metro – the fifth-largest retailer in the world – is the latest high-profile retailer to bow to pressure from privacy advocates over the use of RFID chips. Last year,[timeframe?] a group of high-profile retailers - including Wal-Mart Stores Inc. and the Benetton Group SpA - were forced[by whom?] to tweak their ID-tag strategies following complaints by activists, including the highly vocal Consumers Against Supermarket Privacy Invasion and Numbering (Caspian) in the U.S.
Caspian and several other privacy- and civil-liberties- advocacy groups, such as FoeBud e.V. and FITUG e.V., worry that RFID could lead to an Orwellian world where sales clerks or law-enforcement officials could read a handbag's contents by simply waving an RFID chip reading device's wand.
One may view loyalty and credit-card reward-plans as modern-day examples of kickbacks. Employees who need to buy something (such as an airline flight or a hotel room) for a business trip, but who have discretion to decide which airline or hotel chain to use, have an incentive to choose the payment method that provides the most cash-back,credit-card rewards or loyalty points instead of minimizing costs for their employer.
- Sharp, Byron; Sharp, Anne (1997), "Loyalty programs and their impact on repeat-purchase loyalty patterns", International Journal of Research in Marketing, 14 (5): 473–486, doi:10.1016/S0167-8116(97)00022-0
- "Glossary L, Loyalty Program". Electronic Merchant Systems. Retrieved 18 August 2011.
Loyalty Card: A plastic card that identifies participants in a loyalty program. Loyalty programs reward cardholders with benefits as they buy more merchandise.
- "Customer's loyalty system and point cards". kimaldi.com.
- Dow, Natasha (26 January 2012). "Issue 2 Crowds and Clouds » THE TOUCH-POINT COLLECTIVE: CROWD CONTOURING ON THE CASINO FLOOR". Limn.
- Long, Emily (6 December 2018). "How Casinos Use Rewards Programs to Track Everything You Do". Lifehacker.
- "Caesars Rewards". Caesars.com.
- "Total Rewards Card". Las Vegas How To.
- "Mlife". MGM Resorts.
- European Central Bank (October 2012). "1" (PDF). Virtual Currency Schemes. Frankfurt am Main: European Central Bank. p. 5. ISBN 978-92-899-0862-7. Retrieved 5 March 2014.
- Fred Reichheld (1996) The Loyalty Effect, Harvard Business School Press, Boston, 1996.
- "About Octopus Rewards". Octopus Cards Limited. Retrieved 13 March 2018.
- MTR Club for regular customers of transport network "MTR Club". MTR Corporation. Retrieved 13 March 2018.
- "MoneyBack Celebrates its 10th Anniversary – A.S. Watson Group | A member of CK Hutchison Holdings". A.S. Watson Group. 27 June 2017. Retrieved 13 March 2018.
- "The Club rewards HKT Premier customers for their loyalty". South China Morning Post. 22 January 2015. Retrieved 3 February 2020.
- "Even More Rewarding Experience for Asia Miles Members". www.asiamiles.com. Retrieved 3 February 2020.
- "PAYBACK India's bet". Business Standard. 20 July 2011. Retrieved 28 July 2011.
- "i-mint and PAYBACK team up in India". Colloquy. 17 June 2010. Archived from the original on 13 August 2010. Retrieved 18 June 2010.
- "BPCL celebrates PetroBonus 10th anniversary". The Hindu. Chennai, India. 15 October 2009. Retrieved 9 March 2010.
- "Indian Oil does a hat-trick at the 3rd loyalty summit". XTRAPOWER. Archived from the original on 2 August 2009. Retrieved 9 March 2010.
- "Home – گروه کارتهای اعتباری ایران". Retrieved 22 November 2016.
- "گروه کارتهای اعتباری ایران". Retrieved 22 November 2016.
- "Programme Partners". Resort World Genting. Genting Malaysia Berhad. Retrieved 3 December 2019.
- "List of Discount and Reward Cards in the Philippines". Primer.
- "FAQs". SM Advantage. Archived from the original on 27 November 2015.
- "FAQS: Rewards". BDO.
- "Robinsons Rewards Card FAQs". Robinsons Department Store.
- "FAQs". HappyPlus.
- "FAQs". Mercury Drug.
- "GrabRewards - Grab Loyalty Programme". Grab SG. Retrieved 1 January 2021.
- "SAFRA home page". SAFRA. Retrieved 1 January 2021.
- "Plus! home page". plus.com.sg. Retrieved 1 January 2021.
- "Etukortit Suomessa". Helsingin Sanomat. 25 September 2014. Retrieved 26 September 2014.
- "PAYBACK: Facts & Figures". Archived from the original on 4 November 2016. Retrieved 2 November 2016.
- "Studien". Loyalty Partner. Archived from the original on 14 February 2008. Retrieved 15 May 2008.
- "MALINA program increases customer loyalty with Oracle". Archived from the original on 26 September 2020. Retrieved 30 August 2020.
- "The loyalty program "MALINA"".
- "Raiffeisenbank launches Malina loyalty credit card". 23 October 2006.
- Finaccord List of Global Loyalty Programs. Archived 22 November 2018 at the Wayback Machine Retrieved 1 March 2016
- "Reward for young Scots businessman". The Herald. 29 August 1989. Retrieved 19 July 2020.
- Smithers, Rebecca (26 July 2012). "How loyal to your reward cards are you?". Retrieved 22 November 2016 – via The Guardian.
- "A trip to Alton Towers? That'll be £2,000, please". The Independent. 13 August 2005.
- "How Tesco is changing Britain". The Economist. 4 August 2005. Retrieved 25 July 2007.
- "Morrisons Miles - Morrisons". Archived from the original on 13 December 2012.
- "Safeway scraps loyalty card". BBC News. 5 May 2000. Retrieved 25 July 2007.
- "Maximiles acquires ipoints to create Europe's no. 1 online coalition loyalty company". E-consultancy. 19 July 2006. Archived from the original on 20 October 2006. Retrieved 19 July 2006.
- "Brochure" (PDF). Maximiles Group. Archived from the original (PDF) on 15 February 2010. Retrieved 17 August 2010.
- "Who offers the best air miles scheme?". Choose. Retrieved 10 December 2015.
- O'Reilly, Lara. "Avios rebrand causes backlash for AirMiles company". Marketing Week. Retrieved 10 December 2015.
- the company gives out coupons which look like currency "Canadian Tire Money loyalty program". CanadaLoyalty.com. Retrieved 23 November 2007.
- Tims Rewards: https://www.timhortons.ca/timsrewards
- "Stop & Shop Card Holders Can Save $10 on Seasonal Immunization". Stop and Shop. 10 September 2009. Archived from the original on 18 March 2012. Retrieved 2 September 2011.
- "101 Free Money Making Apps". FrugalForLess.com. Retrieved 7 November 2017.
- "FiveStars gets-50m-to-help-small-retailers-run-loyalty-programs-like-their-bigger-rivals". Techcrunch. Archived from the original on 23 January 2016. Retrieved 22 January 2016.
- Geron, Tomio (14 December 2011). "Belly Targets Paper Punch Card With iPad-Based Loyalty Service". Forbes.
- "Foursquare And Amex Launching Big Partnership Next Week at SXSW". Business Insider. Retrieved 22 November 2016.
- Wasserman, Todd. "Shopkick and Visa to Offer Retail Store Purchase Rewards". Mashable. Retrieved 22 November 2016.
- "Article". Los Angeles Times. 14 July 2008.
- "Shop Through iGive.com". animalalliancenyc.org. Retrieved 22 November 2016.
- "Disloyalty Movement". TIME. 11 July 2013.
- "Supermarket Club Card Disclosure Act of 1999". FindLaw. Retrieved 25 July 2007.
- Jane L. Levere (26 August 2020). "Hotels tout cleaning". The New York Times.
- "And the best loyalty program goes to... Coles". B & T. 20 May 2013. Archived from the original on 9 June 2013. Retrieved 20 May 2013.
- Flybuys (Australia) Speedy, Blair (17 February 2011). "Coles supermarket to overhaul FlyBuys scheme". The Australian. Retrieved 27 February 2011.
- "Australia: FlyBuys launches iPhone App". Colloquy. 29 June 2010. Archived from the original on 29 July 2010. Retrieved 17 August 2010.
- Flybuys (New Zealand) "NZ's biggest loyalty programme gets pumped with fuel discounts| Z". z.co.nz. Z Energy. Retrieved 9 January 2018.
- "Woolworths reports solid profits". Australian Food News. 26 August 2010. Retrieved 27 August 2010.
- "Brazin's Pulse goes over the 1 million mark". The Wise Marketer. 25 September 2006. Archived from the original on 3 March 2016. Retrieved 25 July 2007.
- "News". mobile-pocket.com.
- "Google Kills Punchd Mobile Loyalty Card App". fiercemobilecontent.com. 17 December 2012. Archived from the original on 31 December 2012.
- "Google's Punchd acquisition to push mobile wallet uptake". VentureBeat. 12 July 2011.
- "Stamp Me app replaces loyalty cards". qsrmedia.com.au. 26 November 2012.
- Collinson, Patrick; Lunn, Emma (12 April 2013). "10 Best Money Saving Apps". The Guardian. London.
- "Similar companies".
- Annear, Steve (15 December 2011). "Local coffee shops start 'Disloyalty Card' campaign". Metro. Boston. Archived from the original on 14 January 2012.
- Jennifer Bain (12 April 2010). "Disloyalty has its privileges". The Star. Toronto.
"Designing Best-in-Class Loyalty Programs – Getting the Benefits Right". White Paper. Forte Consultancy. Retrieved 28 April 2019.
Loyalty program benefits are, in their essence, a bribe. In exchange for a set of benefits, a consumer allows the company giving those benefits to track his or her purchasing behavior.
- "Discover the Best and Worst Loyalty Programs with Our New Infographic". Weekly Ads and Circulars. Retrieved 3 September 2015.
The reality is, not all loyalty rewards programs actually add value. Some programs only exist to draw you in and tempt you away from competitors that could actually offer you a better deal. The worst? It turns out that just about any supermarket chain will offer you nothing but bad deals.
- Albrecht, Katherine. "Why getting a shopper card under a fake name is not the answer". Consumers Against Supermarket Privacy Invasion And Numbering. Archived from the original on 19 October 2007. Retrieved 23 November 2007.
Blau, John (1 March 2004). "Metro Store bows to pressure from anti-RFID activists". InfoWorld. Archived from the original on 12 March 2004. Retrieved 23 November 2007.
Ahead of a planned demonstration on Saturday, Metro AG decided to drop the use of RFID tags in customer loyalty cards used at its Extra Future Store supermarket in Rheinberg, Germany, where the retail group is testing several new IT retail technologies, Metro company spokesman Albrecht von Truchsess said Monday.
- CASPIAN website
Gup, Benton E. (1990). Bank Fraud: Exposing the Hidden Threat to Financial Institutions. Rolling Meadows, Illinois: Bankers Publishing Company. p. 85. ISBN 9781555201678. Retrieved 10 January 2021.
[...] kickback and credit card schemes that are relatively small by themselves, but collectively qualify as major frauds.
Kowalik, Frank (1991). IRS Humbug: IRS Weapons of Enslavement. Oakland Park, Florida: Universalistic Publishers. p. 46. ISBN 9780962655203. Retrieved 10 January 2021.
Among other terms used for kickbacks are sales incentive, cash back, coupon sales, commissions, and discounts.