Are Loyalty Cards Worth Keeping?
Photo by Nick J Webb
The trappings of consumerism have become evident as loyalty cards continue to invade our lives. More and more businesses use them as magnets to lure customers into their commercial trap through the reward system and discount offers, thus creating a sense of exclusivity among consumers.
Just like members of a special league, owners of loyalty cards feel valued and privileged and automatically develop a sense of attachment to the chain stores they have signed up with.
Grocery chain stores like Woolworths and Coles, retail giants like Myers and David Jones, pharmacies such as Priceline and clothes stores such as Witchery and Country Road are just some examples of stores that participate in the loyalty card programs from which consumers take advantage of in the hope of reaping rewards and making huge savings.
But are such cards really worth using? Let’s look at the following benefits and limitations to help you decide:
Money Savers
- Benefits
Undeniably, the biggest advantage is often the discounts that are entitled to a card member each time he or she shops. Alternatively, some stores offer rewards based on the points chalked up from every purchase made. For this aspect of the loyalty card to be become useful, consumers should shop at the same outlet regularly to reap the benefits.
For example, if you buy supplementary pills and toiletries on a regular basis from Priceline, it is an advantage to use the loyalty card in exchange for vouchers when the time is due. Hence, joining most loyalty programs can result in long-term savings.
- Limitations
Loyalty cards don’t necessarily encourage loyalty. They can, on the other hand, create a sense of guilt. For example, a shopper may feel guilty for not saving a few dollars or not earning their reward points when they don’t use their loyalty card. In this respect, loyalty cards can become an addiction. In order not to feel guilty, consumers keep on coming back to the store to accumulate more rewards and take advantage of discounts.
Consumer Rewards
- Benefits
Ranging from Frequent Flyer points to gift cards, the rewards offered by stores through their loyalty cards are endless. Every now and then, some stores will even give a certain amount of store credit for a minimum amount purchased, allowing customers to accumulate points more rapidly. If sufficient points are amassed, the consumer will be rewarded with a voucher or an air ticket.
- Limitations
On the other side of the coin, customers are often tempted to spend beyond their means or buy more than they need just to accumulate points or take advantage of discounts and rewards.
Consumers who have signed up for loyalty programs will often be swamped with countless flyers and catalogues offering discounted products with a time limit that aim to entice them into spending more.
In the meantime, prices in stores are adjusted accordingly so companies actually gain rather than lose. Research has shown that FlyBuys, offered through Coles and other retail outlets, is found to be the least rewarding, where a consumer is required to spend $15,700 on groceries to gain a $50 shopping voucher. On the other hand, the Woolworths’ Everyday Rewards program would require a customer to spend $10,969 to be rewarded with the same amount of shopping vouchers.
Better Service
- Benefits
In places like beauty parlours and restaurants, loyalty programs can benefit consumers through more efficient service. The store keeps track of the customer’s name, spending habits and preferences in order to attend to the consumers’ specific needs. Special treatment is also given to members in the form of priority booking, more discounts on related products or services and pampering service in the form of servings of hot invigorating ginger tea and a complimentary foot massage session or dessert.
- Limitation
Depending on which company you choose to sign up with, you may be bombarded with endless up-selling sessions in its efforts to secure long-term relationships.
In addition to this, market profiling that tracks purchases and shopping habits via loyalty program results in invasion of privacy. Customers who have signed up for such programs usually fall victim to spam emails, junk mail or telemarketing. Worst of all, some companies sell personal data to outsourced agents and make tremendous profit by doing so, all without your knowledge.
Convenient Shopping
- Benefits
Loyalty programs allow consumers to reap rewards and cash in on discounts just for signing up. Joining such programs provides an alternative option to coupon clipping as members can take advantage of discounts and deals with the convenience of a swipe card.
- Limitations
Many loyalty programs are accompanied with long paragraphs of print from which important points can be easily overlooked. In a case where the consumer may think that he or she has qualified to convert the points into a prize, a few sentences in the fine print may nullify or change the outcome.
Loyalty cards can be a great advantage when used effectively, resulting in huge savings in the long run. On the other hand, if such programs are misused, consumers may end up being addicted to shopping just to benefit from the reward system and discounts offered.
From the company’s point of view, loyalty programs bring in not only more profits from consumers but also provide the prospect of healthy long-term commercial connection, making the consumers feel highly-valued. From my point of view, consumers are better off shopping for specials in several different places and buying generic brands instead of committing themselves to a particular store chain. You will have to end up spending a fortune if your goal is simply to cash in on the voucher or a free air-ticket.
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Category: Frugal Living
