Loyalty program

In marketing generally and in retailing more specifically, a loyalty card, rewards card, points card, or club card is a plastic or paper card, visually similar to a credit card or debit card, that identifies the card holder as a member in a commercial incentives programme. Loyalty cards are a system of the loyalty business model. In the United Kingdom it is typically called a loyalty card, in Canada a rewards card or a points card, and in the United States either a discount card, a club card or a rewards card. Cards typically have a barcode or magstripe that can be easily scanned, and some are even chip cards. Small keyring cards are often used for convenience.

A retail establishment or a retail group may issue a loyalty card to a consumer who can then use it as a form of identification when dealing with that retailer. By presenting the card, the purchaser is typically entitled to either a discount on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is the visible means of implementing a type of what economists call a two-part tariff.

The card issuer requests or requires customers seeking the issuance of a loyalty card to provide a usually minimal amount of identifying or demographic data, such as name and address. Application forms usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store — one might expect — uses aggregate data internally (and sometimes externally) as part of its marketing research.

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 of medical prescription preparations, or for other membership privileges (e.g., access to a club lounge in airports, using a frequent flyer card).

Critics see the lower prices and rewards as bribes to manipulate customer loyalty and purchasing decisions, or as a case of infrequent-spenders subsidising frequent-spenders. Others worry about the commercial use of the personal data collected as part of the programmes. It is also possible that consumer purchases are tracked and analyzed toward more efficient marketing and advertising (in fact the very raison d'etre of the loyalty card). There also remains the possibility that law enforcement agencies could be granted access to the stored information during an investigation of a customer's activities. For example, in 2004, a Winn-Dixie key-ring card was left behind at the scene of the crime, which led to the criminal.