Christophe Malgorn, HID Global regional secure issuance sales manager, says growing numbers of organisations are turning to smartcard loyalty schemes in an effort to attract and retain customers

Christophe Malgorn, HID Global regional secure issuance sales manager, says growing numbers of organisations are turning to smartcard loyalty schemes in an effort to attract and retain customers

With the recession adding fuel to the flames of an already competitive marketplace, a number of organisations are looking to loyalty cards to attract and retain customers, according to Malgorn.

“For the retailer, the benefits go beyond brand awareness,” he continued. “They lie in the transactional data generated by loyalty cards, allowing retailers to record and analyse the purchasing behaviour of shoppers. This insight is a direct route to higher profitability, giving retailers the information they need to target specific groups. These ‘behaviour analytics’ have high commercial value to organisations that want to sell us their products and services.

“Most loyalty cards in issuance in Europe are ‘non-technology’ cards, which use a chip, magnetic stripe or bar code to link to a database, rather than storing data on the card. However, loyalty cards using smartcard technology, which contains a read-write memory chip or radio frequency identification (RFID) based contactless technology, with the ability to store data on the card, are growing in prominence. Ultimately, many retailers are gravitating towards these smartcard loyalty schemes, which offer a faster route to ROI [return on investment], as well as greater speed, security and convenience.

“For customers, the loyalty card can be a quick and convenient way to collect points and rewards for future purchases. It can also give them access to special advantages like upgrades, discounts and promotions. Paying for goods and services becomes a far more streamlined process, with no need to carry change or even remove the card from their wallet. Furthermore, contactless loyalty cards significantly speed up transaction times, with Amex estimating that contactless payments can be up to 28% faster than cash and 42% faster than payment cards.”

Sitting on a loyalty goldmine

“Yet despite advantages, statistics suggest that many of us are failing to get the most out of loyalty cards,” he added. “Recent research commissioned by the Subway chain shows that the UK is sitting on £5.2 billion of unused loyalty cards points. The average adult in the UK has at least three loyalty cards, but little idea about how schemes work or how to redeem their points. Furthermore, the average person owns at least one loyalty card that has never been used.

“Instant instore card issuance has emerged as a compelling way for retailers to boost loyalty card usage among customers. Wal-Mart has some 5,000 printers installed across its US store network, which can print gift cards that are personalised for a particular recipient. A win-win opportunity for both retailers and customers, instant issuance hinges on providing issuers with a convincing ROI, boosting revenue, profitability, and cardholder loyalty.

“The immediacy of instant issuance gives retailers an early chance to incentivise customers to start collecting points, spending money with them immediately. Statistics show that cards received immediately are used sooner, increasing interchange revenue.”

Malgorn concluded: “As consumers are constantly faced with alternatives to spend their money and earn rewards, retailers need to ensure their loyalty card schemes stay ahead of the game. Their schemes need to stay relevant, up-to-date and convenient. When it comes to loyalty cards, increasingly tech-savvy customers are rightly demanding higher security and convenience. Smartcard schemes are well placed to help retailers keep their existing customers satisfied and engaged, as well as optimising their marketing strategies to attract the next wave.