Loyalty Paying Off For Shoppers Discount Cards Change Face Of Retailing

Coffee bars, dry cleaners, sandwich shops, airlines and other vendors where you shop desperately want you to come back - again and again.

So they’re enticing you with fistfuls of cardboard and plastic cards that give you something free when you buy enough other stuff to qualify.

It’s changed the face of retailing.

“It definitely is a trend,” said Arun Sharma, of the University of Miami’s Academy of Marketing Science in Florida.

Not all businesses with such reward programs advertise them widely, Sharma said. And sometimes managers of individual stores in chains don’t work the programs as effectively as they might.

But if you’re a consumer, shopping for any good or service that someone else can provide just as easily, it doesn’t hurt to ask, Sharma said. That’s where the rewards programs work best, he said.

Rewarding loyal customers is a notion that is as old as selling, of course. But marketing experts say sophisticated reward programs also provide gold mines of information about our buying habits that companies can’t economically find any other way.

“No one knows how many of these programs are out there, but there are a ton of them,” says Douglas E. Raymond, president of the International Retail Advertising and Marketing Association.

But the programs are becoming so widespread and growing so quickly that the 2,100-member trade association plans next February to devote its four-day annual national convention in Chicago to sorting out the changes that are occurring, Raymond said.

“Activity has been picking up in every market you can think of, everything from cars to pantyhose,” said Bruce Van Kleeck, member services director of the National Retail Federation in Washington, D.C.

He predicts the plans will become even more widespread as more providers of goods and services look for ways to use new technologies that are becoming available.

“It’s the competitive nature of the business,” Van Kleeck said.

As broad rules of thumb, marketing executives calculate that winning a new customer is five times more costly than keeping an old one and that the most loyal 20 percent of a firm’s customers will produce 80 percent of its profits, said Sharma of the University of Miami.

In addition to being cheaper, rewarding loyalty tends to create stronger bonds between sellers and customers than using coupons, which are the chief alternative, he said.

“Plus, we now have the technology to make these programs work better,” he said.

“Large computer databases are becoming so sophisticated that almost any large organization can find out a lot about you and develop some very specific sales plans,” Sharma said.

Subway Soups and Salad stores have offered a simple stamped-paper rewards program for more than two decades.

“The cards are a great reminder for people to come to Subway stores instead of making another choice,” said Brian Marino, special projects supervisor for Doctors Associates Inc., the Milford, Conn., company that licenses the nearly 12,900 Subway stores around the world.

“And they are a lot cheaper than trying to get new people to come through the door,” he said.