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Can Loyalty Cards Live in a Digital World?

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By: Wise Marketer Staff |

Posted on May 14, 2018

Or are they headed for the dust-bin?  


Is the Loyalty Card dead in an eco-system now defined by digital experiences? While all indications are that the humble loyalty identification card of the past is about to go into retirement, there are still lingering issues at hand, especially for brick and mortar merchants.

 By Wise Marketer Staff

When the modern-day loyalty marketing program burst upon the scene with the Frequent Flyer onslaught of the early 1980’s, the identification of customers and their transactional behavior was a non-issue.  The airline and hotel customer identified themselves during the transaction process and left behind a trail of other data as part of the natural order management system. Name, address, contact info, transaction details, payment methods, etc. were a by-product of the actual reservation – whether in-person, telephone or eventually over the web.  Travel brands had systems integration challenges, but awarding points to the identifiable program member was not one of them. They issued loyalty cards for “prestige” reasons and to remind travelers they were part of something special.  Other direct-to-consumer (DTC) transactional environments – credit cards, telecom, even B2B – jumped on the loyalty marketing bandwagon.

Retailers took notice. They also wanted to reward and recognize best customers but often lacked a way to track the transaction down to the individual.  Some retail segments opted for Private Label Credit Card schemes, but this only reached a segment of their customer base and had many other issues. Most gravitated to the loyalty identification card -  show it to be tracked, tracking led to transactional information which led to benefits.

While some have argued for several years now that the card is obsolete, they are forgetting a basic premise that enables all loyalty marketing programs – member identification.  In a digital commerce world, like any of the old DTC environments, identification is not an issue.  But for retail, especially a merchant who desires to track both on-line and off-line behaviors, an identification device is still required.

The mobile advocates say the phone is the answer. Always on, always with us, portability means the identification number stays with me for life.  We agree, except for one potential problem.  Not all retail POS footprints can accept a phone identifier – whether scanned, data entered or waived in mid-air – and attach it to the transactional details stored in the POS systems themselves.

The digital advocates say a universal identifier is in order – on-line and off the same identification protocol exists and is stored. Perhaps a Google, Apple, Android or Facebook account, or an e-mail address, or a mobile wallet app, or a branded loyalty app. While it sounds great, and will continue to grow, the issues of POS footprint acceptance remain and not everyone wants to use the same universal identification feature.

A recent piece from Geoff Galat, CMO at Clicktale, caught our attention.  Geoff presents a well-rounded look at the potential demise of the loyalty ID card.  While he favors branded loyalty apps, we do not. Do we want to replace those oft-maligned 15 loyalty cards in our wallets and purses with 15 different, single function, branded mobile apps? We don’t think so.

But Geoff’s commentary goes on to highlight the on-line/offline combination dilemma; the growing importance of customer experience in the entire loyalty paradigm and the rapidly changing expectations of consumers.  Maybe we not only need new non-card identification, maybe we don’t even need loyalty marketing programs? Perhaps most significant, Geoff makes us think that the motivations and psychology behind the transaction cannot be enabled by a simple loyalty card.

The staff at The Wise Marketer welcomes commentary such as this.  Even if Geoff is thinking out loud, he is thinking, and he offers some solid insights based on his professional experience. We don’t always agree and remind those pundits (especially mobile and technophiles) that the POS footprint is more likely the hang-up than the loyalty strategy.  But we welcome a card-less future.