Do Loyalty Cards Have a Place In Our Lives?

When they were first introduced, loyalty cards were an innovative way of gaining valuable market intelligence on customers’ shopping habits. The rewards that they created were seen by many consumers to outweigh any privacy issues. They were instantly popular due to the perceived value of them providing something for nothing. 
In recent years, however, they have fallen out of favour to an extent with consumers. With each store or brand offering their own version of a loyalty scheme, saturation in the market has occurred. Consumers have been unable and unwilling to manage membership of a multitude of different schemes, tending to concentrate only on those that they will get the most benefit from. 
The introduction of Nectar changed the way the loyalty scheme market operated. Here was a scheme that, instead of relating to a specific retailer or card issuer, allowed customers to gain points and rewards from a number of scheme participants. Because of this the Nectar scheme continues to flourish. 
Where to next? 
The changing face of commerce means that loyalty schemes need to continue to adapt to meet changes in buying habits and in order to maintain an important part of the retail experience. 
Do Loyalty Cards Have a Place In Our Lives?
The growth of chip & pin technology has resulted in an increase in opportunities for loyalty card operators. By using existing infrastructure it is possible to deliver points and rewards at the point of sale, giving customers instant gratification for their spend. 
The next step is surely a hybrid card that can be topped up with funds and then used to pay for goods in the same way as a regular debit or credit card whilst earning and spending loyalty points at the same time. By including contact less technology, such as that used for the Oyster card, new markets can also be opened up where transaction speed is of the essence. This could easily include businesses in the service industry such as hotels, restaurants and pubs. 
Loyalty schemes are also coming under increasing pressure, as more and more consumers look online for recommendations and deals. With the growth of social media, such as Facebook and Twitter, many retailers are now looking to engage their customers via these sites and are also developing mobile and iPhone apps that allow customers to access deals regardless of location. Whilst no one has yet tried to link their marketing via social media with their loyalty programmes, it seems that it is only a matter of time before this happens. 
Whatever the future it appears that the bespoke loyalty cards in their traditional form may well have had their day. Bespoke programmes are not necessarily relevant to a wide pool of consumers and have a number of infrastructure and maintenance costs associated with them. Loyalty programmes will need to embrace the changes in the way that consumers shop and use the technology available to them if they are to survive.
The future is bright 
There are many ways that loyalty programmes can continue to adapt. Whether it is by creating new points currencies, such as one point being the equivalent of one text message or mobile phone minute, credit cards that allow you to use rewards at the point of sale or the possibility of consumers exchanging points between themselves, there are countless ways in which the market can develop. The future of loyalty cards lies in understanding and embracing this changing commercial landscape.

Denny Jones

Hi, I'm Denny Jones, a seasoned financial advisor and writer passionate about helping others conquer debt and achieve financial stability. With over a decade in the industry, I've guided countless individuals toward smarter financial decisions through practical advice and insightful writing. Join me as we navigate the path to financial freedom together.

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