How to maximize your benefits from the 3 most popular loyalty card programmes

28 April 2009

Blame it on the airline industry of the 1970s (and not the current one). Frequent flier mileage programs were the precursors to today’s shopping loyalty programs, and were designed to reap valuable data on the most popular airline routes. But there's a reason for wanting this data.

When loyalty programs work, companies are able to increase customer retention rates and profit levels per customer. With food retailers losing as many as 40% of their new customers within three months, they look to loyalty card programs to quantify those losses and help them create programs to try and get back some of those customers.

Loyalty programs such as the ubiquitous bonus cards have successfully transformed the whole retail marketplace. They are now common enough to be perceived by retailers as part of the cost of doing business. Stores also know that as a customer’s relationship with a retailer lengthens, profits from that customer rise.

If stores can cut customer defections by half, the average growth in profits doubles. Even small improvements in customer retention can increase profits by as much as 25%. This added “cost of doing business” provides valuable information to retailers.

What does this mean for you? It means that as a consumer, the time it takes you to fill out the forms for a loyalty card becomes part of your own personal “cost of doing business.” Loyalty card programs certainly aren’t going away any time soon, and if you are getting into the whole process of accumulating points and redeeming them for in-store discounts or items in deal brochures or catalogues, you might as well pick the best cards to go for.

So how can you maximize your benefit from the major loyalty programs? Here are a few mentioned from MSE and HUKD to look at:

http://img23.imageshack.us/img23/6948/loyaltycards.png

1. Tesco Clubcard

Redeeming vouchers in Tesco’s Clubcard Deals Brochure gives you better point value than you would get from taking the points in the form of in-store discounts. If items in the brochures or catalogues catch your fancy (often they are items like subscriptions, tickets to Legoland or the London Eye, etc.), then the effort is worth your time.

With the Tesco Clubcard, search out for promotions that offer extra Clubcard points on things you buy anyway, and take advantage of them. Normally, Clubcard points accrue at the rate of 1 point per pound spent, but if you find a promotion offering extra Clubcard points for certain purchases, you can get yourself a nice discount, particularly if you redeem those extra points on items you would have bought anyway.

2. Nectar Card

With your Nectar card, you get points by spending at Sainsbury and BP. You might consider applying for the Amex Nectar credit card, which will get you 5,000 extra points if you spend £200 within the first 90 days. If you spend the £200 on things you would have bought anyway, it’s like getting £25 free and clear. As with any credit card, you reap the benefits in full only if you pay your entire balance each month. Otherwise, interest charges will rapidly counteract your bonus points.

3. Boots Advantage Card

A Boots Advantage Card earns 4 points for every pound spent, with each point worth 1p. This is effectively a 4% discount. There are ATM-like machines at many Boots stores into which you can insert your card and receive printed discount vouchers. If you keep up with Boots’ double or treble points days – which are not that rare – you can turn your effective 4% discount into an 8% or 12% discount. Again, when you use it on things you buy anyway, you benefit most.

With loyalty cards, spreading your shopping out over more stores depending on promotions and specials is the best way to use loyalty cards to your advantage. Many retailers have accepted that in order to compete, they have to offer loyalty programs that provide actual perks to customers rather than just gathering their shopping data in exchange for a few pence off here and there. So, somewhat ironically, loyalty card programs often have the effect of distributing your shopping between competing chains, but hey, that’s the way competition works, right?

10 comments

  • Will
    PROTIP: turn off the squiggly underlines before you do screenshots of your tables. Right click on each squiggly word and click Ignore on all of them, or turn it off for good by going to Tools>Options>Spelling & Grammar>"Check spelling as you type" - untick.
  • Mike H.
    Will - Will this work with the Mrs? I'll try right clicking her and selecting ignore.
  • Robin
    Worth pointing out that although you get 2 Nectar points per £1 spent, they are only worth ½p each when redeemed in Sainsburys and equivalent to about ½p when redeemed against purchases on Nectar Online (a £10 CD will cost 2000 points for example). Nectar don't really do 'Deals' where you get 4x the value of points in gift vouchers for example, like in Tescos. Nectar does have the advantage over Tescos points that they do not expire and you can use them at any time with your card rather than carrying round paper vouchers.
  • Honky S.
    The vast majority of this years short breaks have been based around clubcard vouchers. I reckon I have save over £500 in the last 12 months.
  • me
    nectar waste of time ,,, doing 20,000 per annum business mileage probably about £5000 last year on diesel and not enough points to buy a dvd......
  • This d.
    Quick question? Why do you feel the need to post this information which is freely available in the public domain? You really are a bunch of mindless fucktards!
  • battered w.
    This is even worse than your 'delivering big things' piece.
  • Vince W.
    @robin @me @honkytonk thanks for the tips. if you got more info esp on the actual substantial savings that you guys have made using your points, please share them with us @willy glad to hear, that's exactly what i was going for
  • Jack
    Didnt remove red underlining, how un professional.
  • best i.
    Great post, very informative. I wonder why the other experts of this sector don't notice this. You must proceed your writing. I am confident, you've a great readers' base already!|What's Going down i'm new to this, I stumbled upon this I've found It absolutely helpful and it has aided me out loads. I hope to contribute & help different customers like its helped me. Good job.

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