Loyalty cards

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Loyalty cards are rewards offered to reoccurring customers that commonly buy from them. Other common names may include rewards cards, points cards, or club cards. this is usually done to drive up loyalty to the business due to a percent kickback or points alternative instead of a competitor. Loyalty cards are not also bound to just cards, lately they are more commonly being integrated as app forms offering coupons and free add-ons as exclusive benefits. Additionally some loyalty cards are not free and require an annual or monthly subscription to retain your loyalty status.

How it works

Company a wants to boost sales with their existing customer base without driving them away to other competitors. Instead of hosting limited run deals they decide to roll out a loyalty card that rewards you in points the more you spend with them. They likely also plan to run limited time discounts and coupons for loyalty card members only. And if it is really successful they will make it available as an app to increase their customer install base and may end up charging a monthly fee for such benefits.

Why it is a problem

Monopolistic practices

Many loyalty cards will lower the barrier to entry in promise of good rewards while in the process of basically trapping the consumer to only want to spend money with the associated brand under the guise of saving money. Things such as points or cash back credits enforce the habit of consumers feeling that they should buy anything they need with that store even if a better deal is available elsewhere

Examples

Zyn reward program giving points for buying their nicotine gum products

Amazon Prime offering member only deals and free 2 day shipping on prime products

Mc Donalds providing app only orders discounts such as free fries and points