INFO-DRIVEN MARKETING;FOR CONSUMERS, LOYALTY IS IN THE CARDS

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The U.K. is about five years behind the U.S. in the use of scanning technology for marketing purposes. But a growing number of retailers are using scanning technology to help them market more effectively.

Marks & Spencer, an upscale specialty grocer and clothing chain, takes advantage of scanning technology with an old-fashion device-the good old retailer-specific revolving-credit charge card.

M&S, which doesn't accept any credit cards but its own, has 4 million card holders. In the fiscal year ended March 31, 1995, spending on the card totaled $2.5 billion annually, or 23% of total sales.

Each card holder fills out a form telling M&S their income, the income of a partner and which M&S store they frequent. Card holders also list their age, sex, occupation, marital status and if they have children.

M&S, which operates the charge card in-house, uses the monthly statements for promotional mailings to all card holders.

As a result, the retailer buys very little media advertising.

In December, M&S card holders are invited to their local stores for card holder-only nights.

Occasionally, M&S will do targeted mailings. Customers who buy a lot of wine, for example, are sent mailings about wine specials.

But much of the information collected is not used out of concern for customers' privacy.

Another problem with revolving credit cards is that they are expensive to set up and administer. "Providing the finance scheme itself is very costly for the retailer," said Caroline Bate, an analyst at Datamonitor, a London research company.

"People like Marks & Spencer have tried to lessen those costs by internalizing the financing operation," she said. "Other retailers outsource the finance of these store cards."

Retailer-specific, revolving credit cards have been in decline for years in the U.K., and that trend is expected to continue, as these old department store-style cards give way to "loyalty" cards that allow shoppers to get discounts as they rack up points through usage.

"Store cards are anticipated to fall in terms of numbers issued toward the end of the century," Ms. Bate said. "I think we may see the introduction of more low-cost cards like Tesco is using. With the loyalty card, you can use the point scheme for discounts against products, so it encourages customers to return to that store. And they are much cheaper and much easier to administer than revolving credit cards."

Loyalty cards are retailer-specific plastic cards that are distributed free to consumers who fill out a form detailing information such as their name, address and size of household, and marital status.

Some retailers even ask for information about pets, which could conceivably put to use when making decisions about things like pet food promotions.

The incentive for the consumer is a point system that allows for a discount of about 1% off all purchases. A magnetic strip on the back of the card, which is scanned each time the customer shops in the store, links the customer's card number to

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