7. Loyalty cards

Some large shops such as supermarkets run loyalty card schemes.

When a customer applies for a loyalty card, they have to fill in an application form which asks for personal details such as name, home address, email and so on.

In return, they are issued with a Loyalty card that resembles a credit card in size and appearance. The loyalty card only contains their customer membership number. 

The card is swiped when the customer buys something and they are rewarded' with a discount, typically 1p for every £1 spent. 

This would only seem to benefit the customer as the entire scheme is free of charge.  However, supermarkets also benefit in other ways.

• Increase the amount customers spend as they are keen to get their loyalty points
• Build up a profile of their typical customer e.g. age, gender, average spend etc.
• Track customer spending habits
• Offer special promotions in partnership with other companies e.g. hotel discounts
• Measure the results of special offer campaigns
• So the loyalty card allows the supermarket to build up a very accurate picture their customers.

Another way the card can be used is to understand where customers come from in the local area, because the database contains names and addresses. If there appears to be a 'gap' in the locality, then it helps work out if it is worth building a new store to cover that area. So you can see the supermarket also benefits from running the scheme.

The Data Protection Act applies to the personal data gathered by the schemes. The mailing lists which supermarkets gather from points cards can also be sold to other advertisers as long as Data Protection law is followed.