Do membership/loyalty cards help or hinder a retail business?

Question

Does it depend on the type of retail business or would it be the same across the board?

Answer 1

The safe answer is that it depends. Here are my thoughts:

The real value of a loyalty card is not so much the fact that it brings you back to the same store...it's more about marketing data. Here's what I mean. When you apply for a loyalty card, they learn some basic information about you. Every time you make a purchase, a record of what you bought is stored in a database under the "heading" of your membership ID. Over time, they can interpret this data, combined with the data of all the other shoppers, to determine patterns and correlations between your demographics and your shopping habits.

Because of this, I believe a membership card makes more sense for a retail business that serves a wide variety of demographics, ie grocery store, department store.