Where do your loyalties lie?
Shops, banks and supermarkets are all keen to keep our custom. Loyalty cards help keep customers coming back, but what are the differences between one type and another?
There isn’t a person alive who doesn’t like getting something for free. Even famous stars – who are wealthy enough to buy whatever they want – are known to host award ceremonies just for the freebie goody bags they get. However, it is usually the avid shopper who falls prey to the lure of the word “free”, sometimes oblivious to what the “free” item actually costs them. And avid shoppers are one of the main targets behind the increasingly widespread concept of loyalty cards. Call them what you will – bonus schemes, valued customer, or even translated from Greek into English literally “gift-cards” (doro-cartes) – they are all the same: a means for an establishment to entice you to purchase their product.
Loyalty card programmes seem harmless enough: if you’re going to spend your money at an establishment anyway, why not use their card and collect points at the same time? Why not, indeed? However, how often have you found yourself short of your target by just 20, 50 or 100 points? In an effort to reach your goal faster, you may find yourself shopping there more often or purchasing a few extra items that you wouldn’t normally get.
But there’s not just one loyalty scheme out there… there are lots and lots and lots and seasoned shoppers will carry at least three different cards, with many carrying up to ten! So how can you tell which schemes will benefit you as a shopper and which ones are just luring you in? Here’s a breakdown to help you out.
FREE DISCOUNT CARDS
What you get
These cards don’t get you extra products, but they will make your pound that little bit further and they’re free of charge. Though they generally don’t work during sale periods, it’s nice to be privy to a discount all-year round.
What they get
In return for the discount, you provide the establishment with valuable demographic information about your family and home, as well as your return business. You are much more likely to purchase additional items from that establishment than one without a discount card, even though the prices may be slightly higher than counterpart stores.
How it works
Present the card (during non-sale periods) and receive a discount on the total amount due.
Examples
Mothercare – 15 per cent discount for pregnant women and new mothers during their first year and 10 per cent during the following year.
Prenatale – 15 per cent discount for cardholders. No time limit.
CXC Toys – 10 per cent discount for cardholders. No time limit.
PAID DISCOUNT CARDS
What you get
If you’re a fan of a particular shop’s products, then sometimes paying for their loyalty card can be a benefit as in the long-run you will recoup the money paid out in the first place via subsequent discounts, which can range from 10 to 30 per cent.
What they get
Firstly, your application fee. Secondly, you provide contact information such as an email address, which more than likely will be added to a database and used to promote products to you in the future. Thirdly, having paid for the card, you are more likely to return to the shop to regain the money you initially paid out. And fourth, people often get caught up in the moment, and never regain their application fee in discount value, so the establishment gets “money for nothing”.
How it works
Present the card (during non-sale periods) and receive a discount on the total amount due.
Examples
Zone – 25 per cent discount to cardholders at a cost of £30 for the year.
BONUS SCHEMES/GIFT CARDS
What you get
Ideally, an item you want, absolutely free! Providing that the ‘gifts’ are items that you want or need (for example, electrical), this scheme is wonderful.
What they get
Your undying loyalty until you attain the gift you want, which in some cases – such as a stereo or TV – could take years! Subtle price increases go unnoticed or ignored as cardholders vie for their ‘prize’, resulting in boosted sales and profits, which far outweigh the cost of giving away the prize itself. Slow-moving or excess products can also be promoted (or “pushed”) to customers by offering extra points for their purchase.
How it works
Present the card at checkout and receive a certain number of points for every pound paid. Points accrue and have no time limit. Upon reaching the required amount of points for the desired gift, fill out an application form and take it away for free.
Examples
Carrefour – gifts include childrens’ items, electrical, cookware, clothing, stationery, toys and more
Alpha-Mega – gifts as for Carrefour
There is an exception to this sector: in some establishments, points are earned towards a discount on items – no item is completely free of charge. Of course if you specifically need an item, then a discount of up to 50 per cent can be quite significant.
Examples
Orphanides – discounts available on electrical, kitchenware, clothing, DIY, toys, bookstore and more. In addition, all cardholders with four or more children are issued a five per cent discount coupon once a month valid for both food and non-food items.
POUNDS FOR POINTS
This is possibly the best scheme available as it offers you unlimited choice of the establishment’s products to buy as and when you need.
What you get
Vouchers equivalent to cash to use on any product at any time you wish. Some vouchers have expiry dates (usually by the end of the calendar year).
What they get
Your regular custom, despite prices possibly being higher than counterpart stores. It is easy when using vouchers to spend more than the value of the voucher and so be compelled to pay the additional amount. In this way, sales (and profits) are increased.
How it works
Present the card at checkout and receive a certain number of points for every pound paid. Points accrue and have no time limit. Upon reaching the required amount of points for the voucher, go to customer services to apply and receive the vouchers. The beauty of this scheme is that you can use the voucher for any product storewide!
Examples
Ermes – every 1,000 points earns you £10 voucher
M&S – every 100 points earns you £2 voucher
Beautyline – 100 points earns you £2 voucher, 150 points a £5 voucher, after which every 50 points earns you an additional £5 voucher (so it pays to save and wait!)
Ellinas DIY – every 200 points earns you £2 discount on any item in store
Alpha-Mega – vouchers are available for a range of different stores, services and products. Amounts vary depending on the store
E&S – vouchers are available for a range of different stores, services and products in addition to those stocked within E&S group stores. Amounts vary depending on the store
BANKS
Named incentive schemes, the banks have begun to clamber onto the bandwagon with loyalty schemes connected to their credit cards.
What they get
Firstly, by your using a credit card instead of cash for payments, the establishment where you are shopping is charged a fee of around three to five per cent of the transaction. The banks gain this money. Secondly, unless you pay the entire amount owed on the credit card each month, you will incur additional interest, currently around ten to eleven per cent per annum. The banks will also get this money.
What you get
Paying by credit card is easy, flexible and a lot less painful than paying by cash. Chances to participate in incentive schemes accrue very quickly if you use a card for most daily purchases.
How it works
Due to heavy competition, the banks have spiralled a little out of control with their incentive schemes, each one trying to outdo the next in
order to win your valuable patronage, and are detailed below:
Bank of Cyprus: for every five transactions (of any value) you are entered into a monthly draw, during which time each day one of the following prizes is given: a car, a trip within Cyprus, a trip abroad, a home theatre, a diamond, a 14th salary, petrol for one year.
Popular Bank of Cyprus: for every transaction (of any value) you are entered in a daily draw for £1,000 and for an annual draw of £100,000, though for the annual draw you must complete a minimum of four monthly transactions.
Hellenic Bank: for every pound spent a point is earned which can be redeemed without the issuing of vouchers at any participating establishment in the “GoSmart” programme. In addition, every transaction within a monthly period is entered in a draw for a car. All transactions are entered in one annual draw for £50,005 and two annual draws of £100,001.
Alpha Bank: for every transaction at any petrol station island-wide, you will receive cash back to the value of two per cent of the amount, which will be deposited into your account automatically.
Co-op: for every £10 spent you get 1 point. When you reach 500 points, you get £35 back in cash.
Emboriki: for every pound spent you earn 1 point. For every 1,000 points you receive a £10 voucher to use at selected establishments (a detailed list is available from the bank) including shops, travel, and hotels.
Universal: again, a point per pound, with vouchers available once you reach 2,000 points (£20). The longer you wait, the better value the points become as a £50 voucher only costs 4,500 points instead of 5,000. If you are short on points, you can purchase them for £1.50 each!
