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Disloyalty cards

I seem to be carrying a lot of loyalty cards at the moment. Given my complete lack of loyalty to any particular brand, is there some way to lose most of the cards and still get the benefits?

Most large stores have loyalty cards these days: swipe them at the till and receive some small but non-zero reward at a later date. There are all sorts of variations: Tesco UK has a very generous rewards programme; Starbucks’ card is also a debit card that you can load-up with cash to pay for coffee; Costa has a more traditional “buy ten, get one free” approach; Waterstone’s collects points to put towards later book purchases.. (You can already see where a lot of my disposable income goes…)

What the store gets from this, of course, is market intelligence at the level of the individual and group. Tesco (to use one example) can use my loyalty card to match purchases to me, in a way that’s otherwise impossible. Using this information they can tailor offers they make to me: give me cash vouchers to spend on anything, but also targeted vouchers for individual products that I don’t normally buy, but which my purchasing history says I might, if offered. The supermarket can also group the purchases of people in a particular neighbourhood and use it to stock local stores in ways that appeal to the actual shoppers who frequent the place: if you doubt this, go to a downtown Tesco and then a suburban one, and compare the variation in stock.

The fact that loyalty cards are so common tells you how valuable stores find this kind of market intelligence, and it’s purchased from customers for a very small price. We reveal an enormous amount about our lifestyles and activities from our everyday purchases. Once you have a really huge amount of data, you can extract information from it in ways that are by no means obvious. You can also be more speculative in how you process the data, since the penalties for being wrong are so low. A traditional pervasive computing system is real-time and has a high penalty for inaccuracy; a loyalty card operates on a slower timescale and only has opportunity costs for incorrect recommendations. Thought about from this perspective, I could even see ways of testing hypotheses you formed about individuals, and using this to refine the situation recognition algorithms: if their habits suggest they have a baby, offer them a really good deal for baby products and use their future actions to confirm or refute the hypothesis.

These approaches work both in the real world and online, of course. Amazon gets all your profile information without offering a loyalty card, simply by the way e-commerce works. Tesco online links e-shopping to real-world shopping, and so can compare your long-term trend purchases against your “impulse” (or just forgetfulness) buys in the local shop, and correlate this against your home address.

None of this is necessarily bad, of course. I like Amazon profiling me: they introduce me to books I might not otherwise read, and that’s an unmitigated good thing (for me). But it’s important to realise that these things are happening, their good and bad effects.

If you care about your privacy, don’t carry a loyalty card. On the other hand, if you value personalised service, carry a load of them and help them classify you.

It’s also important to realise where the breaks in the coverage are. If Tesco knew I frequented Starbucks, for example, they might offer me a different kind of coffee to someone who doesn’t. (Don’t offer a coffee snob a deal on cheap instant.) There are lots of correlations between different areas of people’s lives that could be exploited — “exploited” in a nice way, at least in principle, but also profitably for the companies involved. What’s needed is a way to tie together more aspects of individuals’ lives, either as individuals or in bulk.

One way to do this might be to get rid of per-store loyalty cards and replace them with a single profiling card: a “disloyalty” card. The disloyalty card acts as a hub for collecting details of what an individual buys where. The individual stores signing-up to the card offer points according to their normal practices, but the points can be spent at any store that participates in the disloyalty card scheme. For the consumer, this means that they collect points faster and can therefore spend them on more valuable goods and services.

What’s in it for the stores. More market intelligence, across an individual’s entire purchasing profile. One could do this individually, to allow stores to see what customers buy in other stores and cross-sell to them. Alternatively one could anonymise the data at an individual level but allow correlations across groups: everyone who lives in Morningside, or everyone who buys coffee early in the morning on a week-day at Haymarket station. If the disloyalty card operator acted as a trusted third party, individual stores could even cross-sell to individuals without ever knowing to whom they were making the offer: that way the stores still “own” their own customers, but can access more data about them en masse, online and offline, across a range of businesses.

I’m not necessarily suggesting this would be a good thing for the individual or indeed for the operation of the retail market as a whole — it provides enormous opportunities for profiling and severely and increasingly disenfranchises people who choose to sit outside the scheme — but it’s a commercial possibility that should be considered both by commercial interests and by regulators.

Like many ideas, there’s precedent. Back in the 1970’s we all used to collect Green Shield stamps, which were given out by a range of shops and could be redeemed collectively at special stores. (My grandfather, who was particularly methodical and assiduous in all he did, was amazingly effective at collecting his way to what he wanted in the Green Shield stores.) This scheme has the group-collecting aspect of disloyalty cards without the market intelligence aspect, which brings the whole scheme into the 21st century and gives is a measurable monetary value for all concerned.

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