loyalty card program

A loyalty card program is an incentive plan that allows a retail business to gather data about its customers. Customers are offered product discounts, coupons, points toward merchandise or some other reward in exchange for their voluntary participation in the program. A secondary goal of a loyalty card program is to build repeat business by offering participating customers something that isn't available to non-participating customers.

Loyalty cards often resemble plastic credit cards but they can also be keychain fobs or stickers. Typically a loyalty card has a barcode or magnetic stripe that's scanned at the point of sale (POS). The card identifies the customer and sends information about what the customer bought to a database. The information in the database is used to help the retailer understand and influence his customers' buying habits. According to research carried out by Boston University's College of Communication, eighty-six percent of American shoppers are listed in a loyalty database; a majority of survey respondents said receiving the card was worth giving up some measure of privacy.

See also: loyalty punch card

Learn more:

The W.P. Carey School of Business provides an overview of loyalty card programs in 'Loyalty programs: Mining for gold in a mountain of data'.

Learn more about customer loyalty programs with this guide.

Get the top customer loyalty terms and definitions.

Learn the key steps to running a successful loyalty program.