As the Nectar loyalty scheme is launched amid much hype and Tesco boosts its Clubcard offer through a tie-in with the TV show Who Wants to be a Millionnaire, IGD quizzed 840 Leading Edge members on their views of loyalty cards (Reader Panel, page 26).
Among the questions were whether they thought the cards were a waste of time, if retailers used the data they collected effectively and whether they thought cards were here to stay.
Eighty five per cent of respondents dismissed the notion that loyalty cards were a waste of time because they believed they created a relationship between the store and customers on an emotional level. Customers like to think they are getting something for shopping regularly at a store, be it money off, special offers or discounts elsewhere.
Respondents also pointed out that loyalty cards could lead to an uplift in sales without the need for a price reduction by attracting impulse buyers to purchases offered with extra loyalty card points.
The cards were also considered a tool for giving retailers the chance to identify their customers' habits, such as how often they shopped, what they bought, and when. Cards also demonstrated the effect of special offers, showing how likely customers were to buy that product again after a trial purchase, or whether it was a product they bought anyway.
Effective use by Tesco
However, 13% thought the cards were a waste of time. Some thought information was not always shared to the best effect with customers and suppliers. Some also believed that the cards failed to offer true "rewards" because customers had to spend money before they received anything. Retailers could better invest the money, such as in new product development, lower prices or improved services.
Nearly two thirds of those surveyed (61%) thought retailers failed to use the data to the best effect but of those retailers who did, a big majority believed Tesco was way ahead of the competition.
The survey threw up complaints by Leading Edge members that they were bombarded with offers they were not interested in.
Fourteen per cent considered the data was used well and enjoyed the money-off vouchers sent to them.
Surprisingly, 58% of those surveyed thought loyalty cards influenced where customers shopped, although most agreed that many customers had cards for each retailer.
Some considered Boots the only retailer whose card promoted loyalty, possibly because its direct competitors did not have loyalty schemes. Other factors, such as location, were seen as a bigger influence on choice of store. Many of those questioned said shoppers had a store they favoured because it was local and the layout was familiar. Respondents did not think a loyalty card would make customers go out of their way.
When asked if loyalty cards would be here in five years' time, 79% thought they would, but most likely in a different format. For example loyalty schemes could be linked to bank cards or credit/debit cards could take over and allow all retailers access to information about shopping habits.
Evolution will be needed
It was thought Tesco and Sainsbury had too much to lose by abandoning their schemes but many of those questioned said a degree of evolution would be necessary. The future may be with mobile phones and blue tooth technology, allowing shoppers to be targeted as they approached each store.
Just over half thought the market had enough retailer loyalty cards. Safeway dropped its ABC card and Asda, Waitrose and Morrisons had never had one. Only market research that could be gathered would justify such a move and, on the whole, it would be too costly for the price-oriented positioning of these supermarkets.
However, 37% of those surveyed thought there was room for other retailers to introduce a loyalty scheme, but stipulated it would have to be very different from anything available now.
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Among the questions were whether they thought the cards were a waste of time, if retailers used the data they collected effectively and whether they thought cards were here to stay.
Eighty five per cent of respondents dismissed the notion that loyalty cards were a waste of time because they believed they created a relationship between the store and customers on an emotional level. Customers like to think they are getting something for shopping regularly at a store, be it money off, special offers or discounts elsewhere.
Respondents also pointed out that loyalty cards could lead to an uplift in sales without the need for a price reduction by attracting impulse buyers to purchases offered with extra loyalty card points.
The cards were also considered a tool for giving retailers the chance to identify their customers' habits, such as how often they shopped, what they bought, and when. Cards also demonstrated the effect of special offers, showing how likely customers were to buy that product again after a trial purchase, or whether it was a product they bought anyway.
Effective use by Tesco
However, 13% thought the cards were a waste of time. Some thought information was not always shared to the best effect with customers and suppliers. Some also believed that the cards failed to offer true "rewards" because customers had to spend money before they received anything. Retailers could better invest the money, such as in new product development, lower prices or improved services.
Nearly two thirds of those surveyed (61%) thought retailers failed to use the data to the best effect but of those retailers who did, a big majority believed Tesco was way ahead of the competition.
The survey threw up complaints by Leading Edge members that they were bombarded with offers they were not interested in.
Fourteen per cent considered the data was used well and enjoyed the money-off vouchers sent to them.
Surprisingly, 58% of those surveyed thought loyalty cards influenced where customers shopped, although most agreed that many customers had cards for each retailer.
Some considered Boots the only retailer whose card promoted loyalty, possibly because its direct competitors did not have loyalty schemes. Other factors, such as location, were seen as a bigger influence on choice of store. Many of those questioned said shoppers had a store they favoured because it was local and the layout was familiar. Respondents did not think a loyalty card would make customers go out of their way.
When asked if loyalty cards would be here in five years' time, 79% thought they would, but most likely in a different format. For example loyalty schemes could be linked to bank cards or credit/debit cards could take over and allow all retailers access to information about shopping habits.
Evolution will be needed
It was thought Tesco and Sainsbury had too much to lose by abandoning their schemes but many of those questioned said a degree of evolution would be necessary. The future may be with mobile phones and blue tooth technology, allowing shoppers to be targeted as they approached each store.
Just over half thought the market had enough retailer loyalty cards. Safeway dropped its ABC card and Asda, Waitrose and Morrisons had never had one. Only market research that could be gathered would justify such a move and, on the whole, it would be too costly for the price-oriented positioning of these supermarkets.
However, 37% of those surveyed thought there was room for other retailers to introduce a loyalty scheme, but stipulated it would have to be very different from anything available now.
{{JOBS & CAREERS }}
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