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Home » Marketing Articles » Loyalty Cards Systems Beware Some Should Be Avoided

Loyalty Cards Systems – Beware, Some Should Be Avoided

Recently, I discussed a loyalty card system with a vendor who was selling quite a number of his systems to restaurants. I was shocked to discover the lack of detailed information that this vendor catered for, and the opportunities the system he provided squandered.

The way their scheme works is that whenever a restaurant customer is presented with a bill, they provide their loyalty card to the waiter, who swipes it at the till. If the customer has accumulated sufficient points from previously purchased meals, he/she is awarded a rebate on the price of the meal.

This is simple price discounting based on repeat purchases. No other marketing activities are carried out - either by the loyalty card company, or by the restaurant - to proactively influence the number of times the card holder frequents the restaurant - they rely solely on the meal discount to attract customers back for more meals.

This is a system that is woefully underexploited.

I asked about the level of detail that was transmitted to the card site - and was once again disappointed - only the total meal cost was transmitted. The customer profile that was being created was extremely superficial. My view was further confirmed when I asked whether the 'significant other', or other family members' details were collected. Once again, no.

The key things wrong with this service offering:

* Lack of transaction details. These days, with broadband communication and high volume data disks, there is really no excuse not to collect data at transaction level.

* The simple act of recording the bill at individual meal item level opens up a wealth of information:

- Number of main meals - if there are children in the family unit (provided during signup), analysis of the bill will provide a clear indication of whether the whole family always eats out, or if on occaision the parents treat themselves to a quiet night on their own - possibly anniversaries, or birthdays, or just a regular night away from the kids.

- Types of meals - red meat, fish, vegetarian - which could be used for special promotions

- Beer, cheap wine, or expensive wine drinker

If you had the above information at your finger tips, who would you rather focus your marketing efforts on to get to come back to your restaurant - the family of six that buys budget meals, and drinks beer and soda, or 3 couples ordering starters, high-priced meals, drinking quality wine, and finishing off with expensive liqueurs?

* Even recording the value of the tip could be useful. A usually-generous tipper who awards a low tip (possibly to a new waiter) is giving a clear indication of a bad experience. This information could be used by the restaurant owner to contact the customer within a few days to establish what was wrong with the meal or service, and to invite the customer back with an offer of a generous discount for the next meal.

* Not getting the details of the 'significant other' and details of any children prevents marketing to special days. Its pretty pointless merely getting the birthday of the cardholder - it's not that compelling to get an SMS or postcard suggesting that you treat yourself to a special night out. It's far more effective to receive a prompt to take your significant other out for that special meal. Children's birthdays are another opportunity to encourage the family to come out to the restaurant for a slap-up meal -but this is only possible if you take the trouble to collect the data...

Hopefully the above points have provided some ideas as to how basic transaction data can be used effectively by an information analyst or direct marketer.

If you are approached by a vendor to implement a loyalty scheme, or you are thinking about calling for proposals from scheme suppliers, make sure that you investigate the level of data detail that each supplier collects.

If data is recorded at line item level - i.e. product ID, quantity, and price - then you will have a wealth of sales data that you can start using for a variety of campaigns. If they only provide you with a bill total per meal, then I suggest you look elsewhere for a more effective loyalty card scheme.

© 2005 Intellinova (Pty) Ltd. - All Rights Reserved

This article may be reprinted, provided it is published in its entirety, includes the author bio information, and all links remain active.

And here is another random article you might be interested in...

Use Your Credit Card To Have A Merry Christmas

We are getting to this time of year again, when your credit card is used a lot more than at any other time of the year. So much so that if it is not the credit card that is screaming for mercy then you will be when that first credit card statement after the festivities, falls on the doormat.

So what are the things that we can do to make this time of year be such a pleasure, that we are not dreading the Christmas period next year?

Make repayments cover the interest...

Here is a few suggestions that you should follow to make your Christmas remain white and not for it to cause you to go in to the red. Firstly, learn to know when you are over spending and you can see that you are accumulating debt that you cannot sustain. The first signs of this will be when the repayments that you making to your monthly statements, are only covering the cost of the interest charges. Check this out, for example if you are paying £200 towards your bill each month, look to see how much of this cash is actually going towards clearing the balance and how much is going on interest payments.

Stay away from minimum payments...

Secondly, do not stick to the minimum payments set by the credit card company, this will only see you slide further into debt at a much quicker rate. The credit card issuers have in recent years lowered the minimum payment; it now stands at 2% or a minimum of £5 of the total bill, this has dropped from the 5% that used to be the norm with repayments. The credit card issuers have looked to maximise profits by giving their customers they lower minimum repayments, meaning that they could spend more. This though is a false economy to the customer, as it only means that the less they pay back the more that the credit card companies make in interest charges.

This will lead to you struggling to actually reduce your debt, with the minimum payment being all that you can afford, if this is the case, STOP using the credit card immediately and look for ways in which you can reduce the debt as quickly and pain free as possible.

Use a 0% balance transfer card...

One way to do that is with a 0% Balance Transfer. Most credit cards are offering this facility at the moment and would be a good option to give you a little breathing space as with regards to the interest your bill will accumulate each month.

You will get credit card companies giving you 0% on a Balance Transfer from anything from 6 months to a year, which will stop you racking up any more interest on an already heavy burden. However, there is one thing that you should refrain from doing and that is using the credit card to make any more purchases, by doing so everything that you are striving to do to get your finances back to somewhere near normal, will only see you fall through a debt trapdoor that will slam shut, with no way out.

If you succeed in reducing your debt, learn from what went before and curb the level of spending on credit cards and work within a limit that you feel you are comfortable and manageable and in doing so you will be able to use your credit card to your advantage and not filling the already bulging coffers of the credit card companies.

Follow these simple steps and have a wonderful Christmas

1) Regulate your spending

2) Ensure your repayments at least cover the interest accrued

3) Do not stick to minimum payments! (Very important)

4) Look at some of the 0% balance transfer deals