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5 ways retailers buy your loyalty

Retailers are adding programs and trying new tactics to retain your business.

By Karen Datko Jun 3, 2010 3:02PM

This Deal of the Day comes from Kelli B. Grant at partner site SmartMoney.


Retailers are pulling out all the stops to increase membership in their loyalty programs -- but frequent shoppers may want to think twice.


Loyalty programs have historically been an easy way for retailers to collect information about shoppers' habits. Now, with consumers spending cautiously, businesses that didn't have programs are adding them to better stretch marketing dollars. Those that already have programs are increasing the ways they interact with customers.


"It's the one-on-one marketing holy grail," says Michael Gatti, executive vice president of the Retail Advertising and Marketing Association, an industry group.


For consumers, growing programs are a mixed bag. Although there are more chances to save, retailers have begun using the transaction history collected to tweak pricing, says Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse, a nonprofit consumer advocacy group. Shoppers in loyalty programs may see different pricing or offers based on their history with that company. Those who opt not to participate get hurt, too, as some businesses increase prices to offset the availability of, say, a 20%-off coupon, he says.


There's also some concern about privacy. Almost all loyalty programs are opt-in, so first read the fine print about how your information will be used, and whether it can be sold to other companies, Stephens says.


Shoppers focused on savings will likely find that the latest breed of loyalty programs offer them more avenues to rack up rewards:


Personalized discounts. Until just recently, loyalty programs tended to offer the same discounts and deals to all members; now, retailers are moving toward personalizing deals, says Willard Bishop, a Chicago-based retail consultant. Many online coupon codes are one-time use, others print with your name on them to prevent sharing. Other deals are based on purchase history.

In August, Sam's Club introduced an eValues coupon program for Sam's Club Advantage Plus members ($100 annual fee), with personalized coupons that can be viewed online or printed at store kiosks. CVS also offers personal discounts that print out on shoppers' receipts.


Social media. "Liking" a brand on Facebook or following one on Twitter can yield extra deals and discounts. For example, Facebook fans of Del Taco can print a coupon for a free Big Fat Crispy Chicken Taco with any purchase (good through June 11).


Loyalty via cell phone. Retailers have talked about mobile marketing for years, but with the app market, it's finally happening, Gatti says. Social game apps Loopt Star and Foursquare both reward customers who use their phones to "check in" at various locations.


Gap, for example, sends Loopt Star users a 25%-off coupon after two visits. Pepsi's Loot app tracks nearby stores that sell the brand's drinks, rewarding each purchase with a point toward music downloads and other freebies. And Starbucks has an app version of its loyalty card, which provides a free drink after 15 paid visits.


Health care rewards. In April, Rite Aid launched its Wellness+ rewards program, offering 25 points for every prescription filled and a point per dollar on other store purchases, with rewards redeemable for free health screenings and store (nonprescription) discounts of up to 20%. Last month, CVS also announced a health-focused extension of its ExtraCare program, called ExtraCare Advantage for Diabetes. The program offers double rewards on purchases related to diabetes care. (Regularly, members earn 2% back on store purchases and $1 for every two prescriptions filled.)


Supermarket crossover. Grocery chains have added new features that were previously more common in programs for other types of retailers. Shoppers can opt in for e-mail newsletters with exclusive (and often personalized) coupons, Bishop says. They can also rack up rewards for later redemption.

In late May, Giant Eagle announced it would launch a FoodPerks program that offers a 1% discount for every 10 gallons of gas purchased at a GetGo station. Rewards, which expire within three months, can be used immediately or saved for a maximum discount of 20% (up to $60 total).


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