I’ve always been opposed to brand “loyalty” card schemes, like Nectar and Tesco’s Clubcard, and I’ve never signed up for any. We all know that they’re used to track customer shopping behaviour, and I don’t want to be tracked in that way. But it was only recently that I was struck by the fundamental dishonesty involved.
The story promoted by companies running the schemes is something like this: each time you shop with us, we’ll give you a tiny discount, but it’s only redeemable in discreet chunks, and we think this will give you an incentive to continue shopping with us instead of our competitors. In other words: we’ll trade you a non-binding increase in the probability that you’ll choose us for future shopping, which we think is worth two or three pence in every pound, in exchange for rewards equivalent to, say, one pence per pound.
The flaw in this story is that carrying a “loyalty” card doesn’t increase a customer’s chance of using the same shop on any future occasion. As far as I can tell, there are two types of people: those who don’t use any “loyalty” schemes (like me), and those who use every “loyalty” scheme going, and carry around a purse stuffed with cards so that they can get points and discounts wherever they happen to shop.
The trigger for my recent epiphany was being asked if I had a “loyalty” card when paying for petrol. Why, I thought, would anyone show loyalty to a petrol station? But of course, they don’t. If you’re an apathetic motorist, you simply fill up at the first petrol station you see when you’re running low. If you’re more savvy, you’ll be aware of the current prices and go to whichever station offers the best, ideally close to a route you’re taking anyway. Your membership of a “loyalty” scheme simply doesn’t enter into the equation. Plus, it’s easy to have the “loyalty” card for every petrol station which offers it: you can keep them in the car and don’t even need to carry them around in a wallet all day. We can only assume that petrol stations know all this, so their reason for offering the scheme can’t be what they pretend it is.
We know what it is, really. The data on our behaviour that they collect through the schemes is the real incentive. That’s worth much more to them than some questionable influence on our brand loyalty. People – at least, a few people who read tech blogs and are concerned about privacy and freedom issues – are starting to realise just how much that data is worth. The petrol stations, for example, could use it to build a picture of our daily movements around the country. That’s worth a significant amount of money to companies planning where to position new outlets. But it’s also worth a significant amount to us, in terms of our privacy and ability to travel freely without corporate surveillance knowing the details of our lives. At some point, long after we’ve given it away for a measly one pence in the pound, we’ll realise just how valuable it was to us, and regret that we sold it so cheap.
Here’s an analogy for the deceit the “loyalty” scheme brands are perpetrating on us. Imagine you’ve been clearing out your loft, and you’ve found an old trunk full of porcelain figurines. You take it to an antiques expert, and ask him to assess their value. As a matter of fact, the figurines are worthless junk, and the dealer, bound by the rules of professional conduct to answer you truthfully, tells you that. However, what the dealer has also spotted, and doesn’t tell you, since you haven’t asked, is that the battered old trunk is incredibly rare and valuable. Having given you the bad news about the figurines, he generously offers to take the whole lot off your hands for £50. You’re pleased to get anything for them (and relieved you don’t have to hump them back home again), so you take the money and leave the figurines with the dealer – in the trunk, as he was hoping.
The “loyalty” scheme brands have pulled off the same trick. They’ve told us, honestly, that a chance of influencing our likelihood of returning is worth some paltry, barely significant sum to them, so they’re willing to trade it with us for some equally paltry savings. Imagining that what we’re giving away is worthless, and thinking we might as well get something rather than nothing for it, we’ve accepted the deal. Meanwhile, what we assumed was just the vehicle for this exchange – the identity cards, the data collection and analysis – is in fact the asset, our asset, which the companies wanted all along. They’ve carefully avoided mentioning its true value, and we’ve never asked.
Suppose you discovered later how badly you’d been ripped off by the antiques dealer, when you heard he’d sold the trunk at auction for half a million pounds. How angry would you feel? How determined not to make the same mistake again? That’s how you should feel now about “loyalty” schemes.