Friday, February 10, 2012

Rewarded for what?

Rewards Cards.  Loyalty Cards.  Membership Cards.  The cards that get scanned or stamped with every purchase for a discount, or the tenth purchase free, or a voucher at the end of the quarter.    Love them, or hate them? 

The benefits of rewards or loyalty cards is getting something for nothing.  Earn points for buying groceries at Coles and convert them to a gift card later.  Five loaves of bread, get one free at Brumby’s.  5% of my purchase loaded onto my card at Robin’s Kitchen for me to take off my next purchase.  Member’s specials at Spotlight.  10% off at Prouds.  Free stuff. Just for shopping.  

But is it really free?  These businesses don’t offer loyalty bonuses and rewards out of generosity.  The cost of the reward is built into the overall cost of items in the store, or something else, such as customer service or shop atmosphere, is reduced to cover the cost.  

You are technically being paid for market research.  Coles can keep track of what sort of things you buy and when, then market to you accordingly.  They can also determine what products they should have on their shelves and where, and what sort of promotions to have in store.  

Plus, it’s a clever advertising trick. The cards make us loyal to a particular store.  As much as I hate it, I know that I’m more likely to buy from Robin’s Kitchen than from another store because I have a rewards card.  Gloria Jeans not only has free babycinos for the kidlets, cheap raisin toast, but every tenth coffee is free, so I choose them over another cafe.  There’s a psychological pull: we have to shop at those places because the more we buy the more we are rewarded. Words like ‘membership’, ‘club’ and ‘VIP’ make us feel that we are special and are more valued by these stores than others.  The ‘exclusivity’ of membership means that the great deal feels even better because it’s not available to ‘regular shoppers’.

More than that, it’s a clever advertising trick to encourage us to buy more.  We might not hesitate to buy that extra little thing so much because in the back of our minds we know that the more we spend, the more free stuff we get.  Or we know that we have to spend over a certain amount for these points to count anyway, so we just buy that extra little thing that we ‘would have bought anyway’.  And the towel set that we didn’t really need but bought it because it was 30% off for members only.  Without membership you might not have even seen the deal.    

For the 23 cards I carry around with me, I don’t think I have received much more than $100 value in the last year, and half I haven’t even used.   I’m considering getting rid of most of them, but the enticement of FREE! and BONUS! is still very strong.  I might start by letting go of cards for shops I haven’t bought from in several years. 

What about you?  Do you use or shun reward and loyalty cards?


  1. Apologies if this posted twice... it didn't post the comment first time.

    I got a loyalty card for Robin's Kitchen & Spotlight because they were the only kitchen/craft shops I shopped at anyway. I don't care if they send me emails about their specials. I don't think I've ever bought anything from one of their emails. I also got an everyday rewards card for Woolies because I do most of my groceries there anyway. I found they were usually so similar in price to Coles that I may as well just shop there and get the points. I still shop at IGA sometimes though, depending on when I'm going shopping. I don't buy any more than I would just to get points, that just cancels itself out in my mind. And personally I think it's excellent if the supermarket uses us as market research and stocks more of the popular items and puts them on sale more often.

    If people let their rewards or membership cards control where they buy to their financial detriment, I say that's their problem. I use mine to my advantage :) I haven't got much benefit from them yet (except the Spotlight one, I get a discount nearly every time I shop there) but I haven't had them long. But I certainly don't lose out in any way by using them either.

  2. Spotlight is probably the one card I would definitely keep because that is the one I get the most benefit from!

    I don't necessarily think it's bad that the cards are used for market research, just that we should be aware that it is a major part of their purpose.