Are Loyalty Cards a Win-Win Situation?

Image courtesy of Tesco.com
I was reading in the Financial Times that Tesco reported an improvement in its performance relative to its main UK rivals after revamping its loyalty card scheme, Tesco Clubcard.

“After years of powerful growth, Tesco had been under an unusual amount of pressure in its home market, from which it still draws the lion’s share of its sales.

Its share of the UK grocery market fell from 31.1 per cent to 30.9 per cent over the 12 weeks to September 6, according to quarterly figures from TNS Worldpanel; Asda, J Sainsbury and Wm Morrison – its closest rivals – have all been gaining share.” FT

Tesco fought back against this pressure by doubling the Clubcard points in store and has reported a positive effect, so clearly their loyalty card scheme works well for them.

I wonder then if it is a win-win situation and if consumers benefit just as much as the companies through these types of loyalty card schemes?

I have a Clubcard and although I don’t shop regularly in Tesco, I do collect points when I do happen to buy from there. I am also able to collect points through my gas and electricity provider (E-on). I get approx £5-£10 quarterly, which doesn’t seem much - but if you cash these in for other partner deals – days out, etc this can quadruple and make it much better value.

I have had a ‘free’ trip to The Science Centre amongst other places, purely from trading in my Clubcard points at the end of each quarter. I know that Tesco and other companies obviously benefit from the vast amount of information they get about their customers from these types of schemes but I’m not concerned about the privacy of what I put in my shopping trolley or about how many units of gas and electricity I use each month, so I don’t see it as a downside.

The only bad press I have heard about Tesco’s scheme, strangely arose from The Society of Radiographers who criticised Tesco for offering CT scans through its Clubcard reward scheme.

Society Chief Executive Richard Evans said in a letter to Tesco he was concerned that self-referral for diagnostic imaging outside a nationally regulated screening programme is "inappropriate and unnecessary."

Apart from this, the only negatives that consumers reported when reviewing were that “spending money on things you don’t need intentionally to receive points is crazy and you end up out of pocket”, this may be true for some but I know that I don’t go out my way to spend at Tesco so I’m satisfied that I’m getting ‘money for nothing’ - nothing being no extra cost or inconvenience to me.

Anyway, to round it up, I think it’s a great scheme for earning ‘rewards’ for spending money on everyday buys (groceries, petrol, energy) and I’m not too bothered about the privacy aspect and the fact that Tesco can track my spending for market researcher purposes – as long as they are offering great deals in return.

I view it as a win-win situation, what are your views?