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... Organizations use loyalty schemes as a means of generating loyalty.
Although loyalty schemes have been around for some time –green stamp, frequent flyer programs, rolling programme of coupons in supermarkets, etc-, during the 1990s people saw a proliferation of loyalty schemes due to the opportunities presented by the development of technology in the information systems area, which made them highly sophisticated.
Grocery retailing in the UK is a classic example of loyalty schemes through its renowned loyalty cards. ... It lasted until the beginning of the new millennium when some major grocery chains discontinued their loyalty cards in favour of lower prices. ...
The present report undertakes an examination of the current state of the loyalty card market and critically evaluates the future of loyalty schemes. ... - From Tesco Clubcard to Nectar
As it was said before, the battle in the UK of the loyalty cards started in 1995 with Tesco Clubcard from Tesco and ABC card from Safeway. ... However, it was during this period when some operators from the grocery sector began to examine with doubts the benefits coming from loyalty cards. ... Loyalty Management UK, the company which runs Nectar said that eleven million users meant eight million households, which was more than sixty per cent of its target for the first year (Voyle, 2002). ... In the beginning of 2003 Somerfield launched its own loyalty card, Somerfield Saver. Also, Mark & Spencer “promised a national roll-out for its new combined credit and loyalty card” (Voyle, 2003) for this Autumn as a replacement for the group’s store card that was very successful for many years.
Nowadays, having a loyalty card in the wallet is seen as normal. “According to market researchers TNS, around 85% of UK households have at least one loyalty card” (TheGuardian, 2003). ... - What are loyalty cards good for?
To understand the importance of loyalty cards in the competitive market of grocery chains, it is necessary to study the advantages and disadvantages of running these sorts of reward schemes. ...
“Tesco issues vouchers worth two hundred million each year, spends eleven pence on each physical card and sends loyalty letters to ten million ClubCard homes four times a year, with no subsidies from Royal Mail” (TheGuardian, 2003). ... So, to justify the high costs of loyalty cards, they should have a real benefit –at least, a benefit to be considered.
The clearest benefit –on the surface- coming from loyalty cards is that they make customers to increase or consolidate their spending in one store. “Most retailers who have launched a loyalty scheme experience a one to four per cent increase in sales. ... However, there is not clear whether the scheme is building a loyalty to the brand or building a loyalty to the scheme. “Take away the promotions and there will be little or no ongoing loyalty either to purchase or do business with the firm” (Schulz, 1998).
Approximate Word count = 2330
Approximate Pages = 9.3
(250 words per page double spaced)
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