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Loyalty cards and data collection.

If your wallet is anything like mine, it is probably bursting with loyalty cards. They are a fact of life these days particularly in the retail supermarket environment where they are standard practice for most major chains. From the consumer point of view, a loyalty card is an attractive proposition because it brings with it rebates, offers and other benefits. From the supermarkets point of view, it is invaluable for data collection.

Although the loyalty card may not be the best data gathering method for some vital retail information such as spending patterns. (Which are most likely to be best gathered at the till point.) They provide something that the supermarkets cannot otherwise gather, they provide information on the shoppers themselves.

With a nod of recognition to a few notable attempts here and there it is probably safe to say the first genuine linked up loyalty card in the UK was Sainsburys/Homebase spend and save. In fact, the loyalty program as we know it could probably be said to be at least partially a product of the advent of computerised wide area retail systems. After all, there is little point in something like a Clubcard if it is not linked to user data and retail opportunities. The concept of a loyalty card whether a multi-return scheme such as Nectar or a more focused approach such as Clubcard has become endemic in our collective buying process.

From a marketing point of view, the loyalty card has probably now become a war of attrition with each supermarket battling it out in the high street to stop the competition succeeding. There is probably a debate to be had about if the card does generate loyalty in the consumer. There would seem to be some support for this perspective when you place the loyalty scheme in the context of the lack of one from international retail giant Wal-Mart (Asda in the UK); Or the continuing campaigns for BOGOF and Price matching.

For the supermarkets that employ a loyalty scheme, the real melting chocolate middle in the pudding is the data gathered by the card. Underneath the offers and the hype, is a real opportunity to do something often denied to larger corporate stores - the continual and casual gathering of specific consumer data. 

For the data analytics market, the data gathered by loyalty cards is a perfect opportunity to develop a clearer picture of the consumer. With the implementation of good data analysis the ‘who, what and when’ of consumption is taken from a generalisation at the checkout to potentially far more specific applications. Gathering and correct processing of loyalty card data allows the retailer to target promotions specifically, down to individual shopper level. For a retail organisation, the ability to specifically tailor offers and merchandise information to an individual is an astounding use of the data the card provides. If you want to see this in action, take a look at your next statement. When it arrives, notice the individual offers or the ‘usual items’ listing on the online shop that also features your recent retail purchases.

So while the marketing of the card may very well be subject to the ebb and flow of current consumer trends, one thing is for certain.  To the data analysis industry and the professionals within it, loyalty cards are not only an excellent data source, but also one that has clear, practical applications.