In a world of credit cards, what’s the point of retailers’ savings cards anymore?

When talking about retailers’ savings / discount cards, the first thing the analytics industry used to point out was the benefit for customer identification. The card helped tie transactions to known customers or households and facilitated the range of well known customer analytics such as:

  1. Market basket analysis across transactions
  2. Shopping preferences segmented by any demographic information that was supplied when signing up for the card
  3. Loyalty analysis in terms of RFM and latency
  4. Response analysis to preceding marketing contacts
  5. Marketing targeting analysis based on past purchases

And so Wikipedia still says: “The store — one might expect — uses aggregate data internally (and sometimes externally) as part of its marketing research. These cards can be used to determine, for example, a given customer’s favorite brand of beer, or whether she is a vegetarian.”

So we should add a point #6 to the list above, i.e. turn the customer data into a revenue generating product that the store can sell to others.

But why a savings card when credit cards help identify you anyway?

Do you recall the last time you paid cash for the weekly basket at the supermarket? Or for any clothing item or really any item above $20 at a retailer?

So, given that the use of credit cards is pervasive and the card reveals name and credit card ID of shoppers, what is the point of needing a loyalty card anymore? (Never mind whether it is an actual plastic card or a virtual card on your Smartphone that is scanned into the register).

Doesn’t the credit card identify you sufficiently anyway?

Granted, there is a law against reverse credit card append, i.e. matching your credit card number against a database with addresses and contact information. But using just the name from your card + your zip code (that you sometimes get asked at the cash register) retailers can match your data against 3d party databases to satisfactory degrees without violating the reverse append rules (see e.g.  Address Capture).

The point needs to be marketing (while analytics are only a supporting act)

The difference that remains to credit cards is that savings cards can establish permission to market. This may include:

  1. Permission to contact you, if you opt-in
  2. Permission to sell your data, if you opt-in

So the point is about being able to establish marketers’ ability to contact the individual with marketing messages. Then the analytics and the additional demographic data come in with the aim of making those marketing message more relevant.

Retailers can use the data directly or sell it to other markters that have essentially the same goals.

While frequent buyer cards (e.g. airline miles) enlist the customer in a rewards scheme and attitude, savings cards are just a key to getting the advertised discount in a store. So that is another reason why the burden is on marketers to use the savings card “relationship” for something useful.

How well is it working?

If the point is better marketing then how well is it being done today by marketers?

Do you feel you are getting relevant information in your inbox or mail box by the merchants where you are using savings cards?

2 Comments on “In a world of credit cards, what’s the point of retailers’ savings cards anymore?

  1. This question is something I’ve been wondering for several years. I am one of those who’s digging for the right discount cards for so many seconds that I’m sure it would be much more profitable to integrate them all. I’ll be so happy when someone creates a common platform for all of those cards and I’ll have just one card for all of the shopping and sales. 🙂

  2. I think the point about gaining permission throught he use of the card is a very good one, particularly as it relates directly to the communication and if the permission is worded correctly then it allows scope to cross into different channels.

    Howver we should be wary of only thinking about the execution stage, data that is captured can also be useful early on in the process for the selection and understanding of strategy and observations about where and how effort is going to be focused. It is a shame when these stages in the development are missed

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