Do loyalty card programs work? - FOX13 News, WHBQ FOX 13

Do loyalty card programs work?

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MEMPHIS, Tenn. (FOX13) -

Stores are trying now, more than ever, to win over your business. They're offering cheaper prices, deals on gas and big coupons. But to earn the savings, you have to give up some of your privacy.

Whether or not your wallet is full of cash, chances are it's full of rewards cards from loyalty programs. From CVS Pharmacy, to Petco and even gas stations like MAPCO, it seems almost every business is asking you to sign up for something.  

Dr. Marla Royne Stafford says, "They've been around for a long time but they've become even more popular lately." Dr. Stafford, chair of the Department of Marketing & Supply Chain Management at the University of Memphis says rewards programs are simply smart business. "Customers like to be considered valuable to the business and if they keep coming back to that business where they have some type of rewards program, then, they're going to get benefits along the way."

Those benefits include anything from cheaper gas to cheaper prices in the store, but do loyalty programs provide enough incentive to let stores know what you're buying?    

Dr. Stafford says, "When you check out at the grocery store and you scan your rewards card, the store is getting a lot of information about you. But that's not necessarily a bad thing because they can use that information to contact you if they need for a recall or something along those lines and they can better target their products to you. That's why you'll get coupons when you check out at the register."

At places like Kroger, which is the nation's largest grocery chain, certain items are offered at a much cheaper price by using your loyalty card. For example we found the following in the cereal aisle: $3.75 a box without your Kroger card and $2.99 with it. That's a savings of $.76 and enough to encourage most shoppers to use their cards.

Joe Bell, with Kroger Company, says stores are simply using the information they get from rewards cards to provide a more tailor-made shopping experience. "As we start to see patterns in stores, it helps us to design what types of shops go into a store, what type of facility we need to build for the clientele that shops that area, because maybe they don't buy at all out of the nutrition shop but they do buy out of the bakery, in the deli."

Bell says they also use the information to help organize the layout of a store.   He says while companies are getting better at giving customers what they want, it's tough to achieve perfection.

Based on the number of stores jumping on the bandwagon, the loyalty program seems to be working well for companies and with the difference in prices and incentives, it's working for most customers too.

But, with all the cards people have to keep up with, it's maybe not working so well for the weight of your wallet.

A small price to pay to save.

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