The Loyalty Card Store-Account Swipe (and why the data collection implications are keeping me up at night)

"So many coffee loyalty cards" - by Nick Webb on Flickr

Over the Labor Day weekend I went to a retail store with my daughter for some supplemental back-to-school shopping. I have a loyalty card with this retailer, and had received an email from them the week before, promoting the fact that members would get great discounts on the Sunday of Labor Day weekend, and those discounts would extend to the general public on Monday. We went on Sunday, the store was much busier than usual, we found some good stuff, and at checkout, once the cashier had scanned all our items, I offered my membership card. "It's okay, I already scanned you on the store card," he said. And indeed, my total reflected the promised discounts.

It was a quick and easy transaction and I got the discounts I was looking for when I came to the store. So why did it bother me so much?   (Especially since I take the store-card swipe for granted at nearly every grocery store I visit - I stopped signing up for grocery memberships years ago because cashiers will scan their card if you don't have yours nearly 100% of the time.  These days they do it without even asking whether or not you even have your own.)

I think this one stood out because they'd sent me an email promising a different experience for members vs. non-members, and I actually paid attention to it. They got me into the store with targeted digital marketing, and they made a sale. But they'll never be able to know they were successful! Here's why that stress-free transaction has been keeping me up at night ever since (OK, not actually keeping me up at night. Well, maybe just a little):

1. They lost the opportunity to offer to onboard every non-card-holding shopper into the loyalty program. "Did you know that members get a big discount today?"  It's not a risk like a store credit card; it's just a no-fee loyalty program - how many people would have signed up that day if they had understood the discount, and had been asked to? (I realize the store probably considered it too busy to add an extra step to checkout; but wouldn't an email address suffice, as it does for online signups?) I had noticed that the member discount wasn't advertised anywhere in the store - another missed opportunity to interest shoppers in the membership.
2. They LOST ALL THE DATA ABOUT THAT SALE. If the whole point of a loyalty card program is to know customers in depth so that you can tailor your marketing strategy, how could you not even ask to swipe my card? Or swipe it once I'm offering it to you? Doesn't that cashier know how expensive loyalty card programs are?  Did the local store management decide that the high volume that day meant a better experience would result from just swiping the store card for everyone?  Did this happen nationwide? (It is killing me to think of the team responsible for the email campaign receiving the data from that day with store accounts associated to all or most of the transactions.)
3. Least important, but still a factor: Psychologically, that store-card swipe said to me, you are no different than the hordes of deal-crazy shoppers in here today.  Everyone will be treated equally, member or not. (Lizard-brain translation: YOU ARE NOT SPECIAL. Lizard-brain reaction: So why do I even have this card?)

Driving away from the store, I discussed these concerns with my daughter. I wanted her to understand the big implications to the store's data collection strategy, not just today but going forward. She played Candy Crush on my phone while half-listening to me. This is why a blog is a good thing.

Readers, do you have tales of loyalty card data-collection fails? Or store policies that directly oppose the goals of the loyalty program? I would love to hear them!

Additional reading:

Forbes: The Hidden Cost Of Rewards Programs And How Walmart May Beat The System

Boston Consulting Group: Leveraging the Loyalty Margin: Rewards Programs That Work

Fast Company: When Loyalty Programs Are A Waste Of Money

Comments

[Julie Turner]

From a marketing perspective this is terrible. I would venture that possibly the store clerks are just doing it on their own without authorization but maybe not.

On the flip side I read this article in the HBR (https://hbr.org/2016/08/the-unintended-consequence-of-customer-data-collection) and although I knew it, I didn't think of the implication to employees. I turn off Bluetooth and wireless when I'm not at home or in the car. But it's a pain.

[Sympmarc]

Having worked in retail many moons ago, I can guarantee you the sequence of events you went through was not what the merchandisers at headquarters had planned. Unfortunately, retail breaks at its weakest links. There are many of those weak spots, but the POS folks are one of the most obvious. What do they care about the loyalty program when they are paid minimum wage? It's just more work for them to engage you in the ways you suggest and usually they really don't care.

M.

[sadalit]

@Julie Turner - that HBR article is excellent and opened my eyes on a few topics. In a state like MA, where retailers are no longer allowed to ask customers for their ZIP code, how can cell phone tracking possibly be legal?

[sadalit]

Sympmarc - we both know, that's where incentives come in. Plenty of retailers play the "employee who signs up the most new loyalty members today gets $50" game... I haven't heard of tying incentives back to loyalty member data collection but it seems completely do-able if cashiers sign in under a unique ID. Bonuses could be calculated on quantity of data collected - especially for those who don't make commission.

[Sympmarc]

I think it comes down to expense and enforcement. Usually the incentives - something like a free Mexican lunch (I saw this one at Home Depot a few weeks back!) - aren't compelling enough. The general apathy of the wage slave comes in here no matter what, along with the lack of understanding why these programs even matter. Bonuses? Doubtful at the hourly level.

M.

[Jonathan Ralton]

I once made the 'mistake' of purchasing some diabetic supplies for my grandmother on an errand to CVS. I was being a helpful grandson, of course, and this was the first and only occurrence. Naturally I had the store clerk scan my CVS ExtraCare card. Little did I know that I was immediately flagged in a giant corporate database somewhere as having diabetes. Routinely, for years now, I receive coupons at the bottom of my receipt for similar supplies and receive mailings at my house from CVS advertising new products for diabetics and offering me advice on how to manage my condition!

[sadalit]

Jonathan - excellent point about the downside of customer targeting based on purchases. If you're buying items for someone else, whether as a favor or as a gift, you may not want offers based on that. I briefly imagined a utopian future where legislation is passed that lets consumers access and fine-tune their corporate marketing profiles... but would anyone take the time to do it?