Loyalty cards: worth it?

“Discount programs help to increase loyalty of permanent customers and attract new customers”.
And based on that, distributing loyalty cards seems to be the most effective way to concretize a loyalty approach. But who should get it? On which bases? Should it be for free or not? Does it really bring benefit to Russian customers? And is it enough to retain clients?


Regular surveys indicated that these programs are more and more popular and especially since the beginning of the crisis. As recently published by Romir Holding, “Russians pay more attention to special programs and offers: over a quarter (27%) of Russians confessed to have started to pay more attention to discounts and special offers of retail outlets and chains within the last 3 months”.* And today in quite all Russian stores you can assume there's a "discount rewards" program in place. Who has never heard this question when standing in the checkout line: “do you have our “membership card”, “discount card”, “VIP card”… “? And who has not at least one of these cards in his bag? But the main question is: do you always see the benefit?

You can find different types of cards with different types of rewarding programs. Some are for free some are not as for Seventh Continent VIP card 2010 which costs 3000 rubles but should give you immediately 10% discount on your bill for all the goods in all stores (except in Kaliningrad). If you are a loyal client, you will very quickly cover these 3000 rubles with discounts. This is announced, I used this program but realized that I never concretely saw any benefit: paid what should be paid by everybody, these 10% discount never appeared on the bill: mistake, dysfunction, oversight…? Whatever it is, I do not see concretely benefit and will be difficult to be a loyal customer.


Some others seems to be for free as you do not pay “cash” for it but you get it only for a minimum purchases amount. Club l’Etoile “offers” the first 5% discount card for a 399 rubles and more check, and to get 10%, 15%.., till 25% discount card you need to buy products for minimum 10000, 20000…till 150000 rubles in the l’Etoile stores.


Sometimes the loyalty card is given to everybody for free but you need to be a compulsive shopper to make the best of this card. If you visit the store just once a year or just for comparison or do not buy that many products, these cards may not have much to offer. This is the case when cards are linked with the amount of products bought and a really low rewarding program.


Kid Stores Detski Mir are offering a really nice loyalty program. Everybody (>18 years old) can get the card for free and this card is working on quite all assortment. Every 50 rubles you receive 1 bonus on your card and this is visible immediately on your bill. Any time you can use your bonuses in Detski Mir stores with following rule: 1 bonus=1 ruble. If you have 100 bonuses you can choose in the store a 100 rubles gift. And it works!


To increase interest of its customers sport chain Decathlon put a cap to this process: loyal customers should wait to have 400 points on the card to receive a check for 200 rubles and spend it in Decathlon stores.


Do retail chains really think that these programs are sufficient to retain or attract customers? Or should we not consider that yes, these programs are working, but only if customers are happy as well with the global offer of the store (products offer, environment, services,…)? That means that they do not come only because of/thanks to the program.


From this conclusion, let’s go further on. Loyalty programs should not be developed only for attraction purposes. This would be a misunderstanding of the marketing process. Loyalty programs should be used behind the scenes by chains: collect personal data and use it to build aggregate "profiles” of individual consumers, target buyers with "special" offers and advertisements from their partners… And then it is worth and for chains, and for customers. A delighted loyal customer, cardholder, can make free advertising: more than 2/3 of cardholders recommend the brand/store around them.


*www.romir.ru