Topics: Loyalty program, Marketing, Customer relationship management Pages: 8 (2643 words) Published: April 17, 2013
Discuss the relationship(s) between loyalty card and marketing information system (database marketing)? Loyalty card refers to a plastic card which is given to a customer by a business and which is used to record information about what the customer buys and to reward them for buying goods or services from the business. A loyalty card is an incentive plan that allows a retail business to gather data about its customers. Customers are offered product discounts, coupons, points toward merchandise or some other reward in exchange for their voluntary participation in the program. A secondary goal of a loyalty card is to build repeat business by offering participating customers something that is not available to non-participating customers. Typically a loyalty card has a barcode or magnetic stripe that is scanned at the point of sale (POS). The card identifies the customer and sends information about what the customer bought to a database. The information in the database is used to help the retailer understand and influence his customers' buying habits. According to research carried out by Boston University's College of Communication, 80% of American shoppers are listed in a loyalty database; a majority of survey respondents said receiving the card was worth giving up some measure of privacy. The larger stores offer customers loyalty cards. When the customer shops at the store they are awarded a set number of points depending on how much they spend. The loyalty card stores their points. One point is commonly worth 1p with a point awarded for each pound spent. This point can be converted into vouchers that provide discounts on products or services. Each customer’s loyalty card has a unique card number linked to a database which stores information about them (provided by the customer when they signed up) and their purchases. Besides, swiping a loyalty card is an example of data capture. Every time the customer visits the shop the card is swiped, reading the unique number. This identifies the customer whose points total, stored in the database, is then updated. The tills use barcodes to identify each item bought. Companies are able to gather some very useful information about their consumers and they benefit from this accumulated knowledge as they develop marketing strategies on the marketing database. By doing so, companies are able to segment their markets more effectively, serve their target markets more successfully. When a customer signs up they provide basic details such as their name and address. Loyalty cards provide companies with information about customer spending habits. This information can be used to target customers generally or specifically. For example, if customers frequently buy bread and milk together, these items may be put nearby each other for customer convenience. Other example, if a customer frequently buys beans, vouchers offering money off beans will be sent to them (further increasing their loyalty), rather than for products they rarely buy. Loyalty cards are very efficient method of gathering information about the customers. With regards to the type of card a member holds (and its features of informational storage), a retailer may receive insights concerning such as purchases, types of products, basket sizes, amounts spent, redemptions and customer preferences towards certain types of rewards as well as demographic, psychographic and behavioural aspects which can be provided by the customer himself upon issuance of the card or during surveys. Information can later be used for the evaluation of the CRM program, marketing insights or sending promotional materials via email, mail, mobile phone etc. For example, when customers sign-up they provide their address. This information can be used to see where the customers come from and identify opportunities for new stores. Loyalty card programs may also lead to a better perception towards the companies in comparison to that related to other competitors,...
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