Why are Card Based Customer Loyalty Programs Dying Out?


A loyalty card offers a lot of shortcuts to coupons, discounts and special incentive programs. But the biggest problem in the digital age of fast connectivity and even quicker customer fulfilment, customer loyalty programs based on cards are dying out. Many consumers even feel these cards violate privacy or result in too much marketing spam. Given that cards require personal data, the question of data privacy in the GDPR era is too much of an issue.

  • How Data is Used

When businesses sign you up for customer loyalty schemes, they have the incentive to use data collected to send marketing collateral and this can prove to be a source of unwanted intrusion. Based on company policies and practices, a loyalty card can be a real information gathering device for businesses and customers may, therefore, distrust the card-based loyalty schemes.

  • Limited Savings

For many customers, the amount saved through loyalty cards is not worth the effort of giving out personal information. Loyalty programs vary in terms of their conditions. Some stores offer reduced rates on numerous items to loyalty card members. Others send coupons to frequent buyers.

So despite the fact that such loyalty programs are on the rise, business loyalty membership numbers are falling. Customer loyalty s on the rise in countries like the US where program membership grew by 26.7 per cent from 2010 to 2012 alone. Studies reveal that only 9.5 percent of loyalty program memberships are active. In 2012, there was a decrease of 1 percent from 2010 when it came to loyalty program memberships. It’s not just loyalty program cards or fobs that are a problem.

Top grocery brands like Shaw’s, Acme Markets, Albertsons and Jewel Osco were associated with the elimination of card-based customer loyalty programs.

  • The Mobilisation of Loyalty Schemes

Loyalty schemes are increasingly becoming smartphone-friendly. In a nutshell, the mobilisation of customer loyalty schemes provides a plethora of benefits such as convenience and ease of usage, increased personalisation and enhanced value for money. The interactive nature of smartphone-first loyalty schemes makes these a huge favourite with consumers.

Cards are also cumbersome to carry in contrast to apps, which form an easily accessible loyalty technique. Vibes found that 66 per cent of customers viewed a brand more positively, if it has app as opposed to card-based customer loyalty programs. With the rising number of smartphone users and the evolution of technologies, can mobilisation of loyalty schemes be far behind?


As technologies have rapidly progressed, customer loyalty schemes have undergone a massive transformation. Card-based systems no longer hold value, as storage and data privacy remain big concerns. Customer loyalty programs are constantly evolving with changes in technology.

As apps offer a host of features including push notifications, interactive features and a chance to access and redeem coupons in the store or outside of it effortlessly, they are set to take over the loyalty schemes and systems in the digital era. Top brands such as Starbucks, Tesco and Harvey Nicholls are increasingly relying on app-based loyalty programs for this reason.

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