Loyalty schemes are poor reward

I refer to your article on the formation of loyalty pacts “Trade unions” (MW November 1) . There has been much hype and a subsequent struggle for companies to launch loyalty schemes, which has been followed by an alarming scramble to form loyalty scheme clubs or consortia.

I would like to take a more cynical, consumerist approach to the whole loyalty scheme debate. Are retailers really rewarding customers for their loyalty? I think not.

All customers pay for the loyalty schemes in operation. Despite the fact that retailers may say otherwise, they have an obligation to their boards, the city and their shareholders to maintain those already wafer-thin margins. Somewhat subversively, each scheme will be paid for through incremental, though unnoticeable price increases. What about offering lower prices or a discount at the till to non-members.

The result is the failure of the marketing concept. Customers no longer have the ability or will to change retailers exercising their fickleness because of an obsessive scramble for points. How many of these customers are remaining loyal because they want to be? Perhaps “bribery scheme” would a more suitable name.

The end result is a “stalemate” because in a universe where demand for packaged goods is both measured and fixed, retailers have effectively consolidated their market share but thrown away any chance of wooing a diminishing number of footloose and fancy free customers.

And just when you thought it was safe to go shopping, the food retailers have now been joined by just about every other type of retailer, further restricting your freedom by ensuring you purchase your new jumper in Next and not Marks & Spencer.

Robin Davies

Marketing executive



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