Membership has its rewards.. but for whom?

A while ago I saw an editorial on TV which actually made me think- and it was by Andy Rooney, no less. In his usual whiny-old-man fashion, he was going through the contents of his wallet and complaining about all of the useless cards he had. He especially begrudged the "frequent customer" punch cards that accumulated from various coffee shops, video stores and other businesses that promised a free product after a given number of purchases.

In the marketing game, these are called loyalty programs. They have been around for a long time, since the age of green stamps at your grocery store in the 1950s and probably earlier than that. They are obviously intended to encourage customers to keep shopping at the same store (or chain of stores) as opposed to other stores which do not have the reward program; all other things being equal, customers will usually pick the store which promises something extra over the one that does not.

On the surface, loyalty programs generally seem to be a win/win situation. The business will almost certainly experience an increase in transactions, coming closer to that retailer's paradise of maximizing the spending of a customer. The customer will eventually get something for nothing, or next to nothing, without feeling as if they have changed their spending habits.

I have nothing against getting stuff for free. In fact, I can be downright cheap when it comes to some types of purchases. But I do resent loyalty programs that require more of me than simply showing up and spending my money. I am not interested in filling out questionnaires or surveys, and I am certainly not about to pay for the privelege of being in a loyalty program.

Unfortunately, it seems that many of my fellow consumers are doing just that without considering the implications. Two of Canada's largest retail chains- a book seller and a video renter- offer loyalty programs where the consumer has to pay at least ten dollars to join. Their logic is that for that up-front expense, you will get some discounts or freebies in return. All you have to do is register by telling them your name, address, and other vital information.

Think about that for a moment. You are providing a retailer with your personal data- which they will use from now on to track your behaviour as a consumer. They will keep a file containing who you are, what you tend to buy, how much you usually spend in one transaction (and in a year), and other nuggets which they would ordinarily have to pay a consumer surveyor to find out. Since the information will be obtained straight from the cash register or computer terminal, it will be far more accurate and complete than depending on random telemarketing or surveys.

The end result is a marketing department's dream. Retailers may very well turn around and share this information with their partner companies, subsidiaries, or anyone who wants to pay them for their customer database- and a good customer database, my friends, can be sold for millions of dollars. True, retailers have to invest in the creation and maintenance of a loyalty program; but those costs can be easily offset by the innate value of the information they receive, which they can use to target future marketing efforts more effectively.

And you are actually paying them to do this. Not exactly a punch card at the coffee shop, is it?

In this information age, your personal data- including your behaviour as a consumer- is one of the most valuable things you have. If you want to share it with a retailer that you like, knock yourself out; but don't just give it away. They should be paying you.