Changing Habits with Loyalty Cards

July 09, 2010

Loyalty cards have tremendous potential for affecting consumer purchasing decisions.

Loyalty cards have tremendous potential for affecting consumer purchasing decisions. The Lempert Report has said for years this underutilized source of information has the potential to guide not only consumer loyalty but shopping patterns. 

Two recent updates to loyalty cards spotlight the potential. The first is CVS new ExtraCare Advantage for Diabetes program, which gives members exclusive savings, 'double bucks' on specific items, special promotions and rewards, as well as an ExtraCare Advantage for Diabetes e-newsletter. The second is a movement in the abroad to prohibit loyalty points from the purchase of alcohol sales. The British Medical Association in Scotland announced last week that big grocery retail chains should not "reward" customers who take advantage of cut-price offers and bulk-buy alcohol.

The grocery industry can learn from both of these examples to assist in another epidemic - obesity. 

A recent report co-authored by the Trust for America's Health and the Robert Wood Johnson Foundation points out that despite media attention and governmental prompting, Americans are continuing to get fat. The report states that obesity rates continued to move upwards in 28 states over the past year. Mississippi weighed in for the sixth year in a row as the fattest state, with 33.8 percent of its adults obese, while Alabama and Tennessee tied for second (31.6 percent). The other top 10, also concentrated in the south, were West Virginia, Louisiana, Oklahoma, Kentucky, Arkansas, South Carolina and Michigan tying with North Carolina for 10th place (29.4 percent). 

Income is a major driver of the obesity epidemic, according to the report. More than 35 percent of adults bringing in less than $15,000 a year were obese, vs. only 24.5 percent in the over-$50,000 income bracket. By introducing cost-saving incentives to healthy choices, supermarkets could become motivational driver for better nutrition.

Rewarding healthy choices through loyalty card points or discounts could help shape the way consumers shop. Instead of rewarding customers for dollars spent, reward them for dollars spent toward healthy food options. In other words, a healthy reward program would allow earnings for a bag of fresh produce and but nothing for a package of cookies. For each $10 of healthy purchases, shoppers can earn $1 in "in-kind" rebate Additionally, supermarkets could highlight the cumulative amount of money spent on product that do not earn rewards on every receipt may serve as a wake-up call to consumers or a simple reminder to those working to stay healthy. Supermarkets can also target these consumers with 'Healthy Reward' newsletters and coupon opportunities.

Once grocers identify the highest-value customers, they can put in place a reward system that influences their behavior to grow sales. Also, grocers can identify the "top-customers-in-waiting" and offer them rewards aimed at driving trip frequency or altering purchasing decisions. Loyalty cards have become commonplace in supermarkets across the country. Now there is a new frontier for these programs - changing the way America eats.