Loyalty cards

The larger stores offer customers loyalty cards. When the customer shops at the store they're awarded a set number of points depending on how much they spend. The loyalty card stores their points. One point is commonly worth 1p with a point awarded for each pound spent.

Points can be converted into vouchers that provide discounts on products or services.

Each customers' loyalty card has a unique card number linked to a databasedatabase: a structured collection of records or data stored in a computer system which stores information about them (provided by the customer when they signed up) and their purchases.

How do they work?

Swiping a loyalty card is an example of data capture. Every time the customer visits the shop the card is swiped, reading the unique number. This identifies the customer whose points total, stored in the database, is then updated. The tills use barcodes to identify each item bought.

Targetting customers

When a customer signs up they provide basic details such as their name and address.

Loyalty cards provide companies with information about customer spending habits. This information can be used to target customers generally or specifically.

Product placement

If customers frequently buy bread and milk together, these items may be put nearby each other for customer convenience or, farther apart forcing the customer to walk through the entire store (in the hope they buy additional items along their way).

Vouchers

If a customer frequently buys beans, vouchers offering money off beans will be sent to them (further increasing their loyalty), rather than for products they rarely buy.

Mailing lists

Can be used to send out tailored advertisements. For example, someone who regularly buys garden magazines might be sent special offers on garden products.

New stores

When customers sign-up they provide their address. This information can be used to see where the customers come from and identify opportunities for new stores.

The Data Protection Act

The Data Protection ActData Protection Act 1998 (DPA): legislation passed by parliament that governs the protection of personal data in the UK applies to the personal datadata: information without context, eg a list of students with numbers beside their names is data, when it's made clear that those numbers represent their placing in a 100 metre race, the data becomes information gathered by the schemes. The mailing lists which supermarkets gather from loyalty cardsloyalty cards: Given to customers by the larger stores, often supermarkets. Points are added to the card with each purchase that result in discounts at a later date. can also be sold to other advertisers as long as Data Protection law is followed. Find out more about the Data Protection Act in the legal framework section.