The future of loyalty

The next big evolution in loyalty programs, say pundits, is expected to be the way in which marketers exploit and integrate the full potential of new 'smart' card and back-end technologies.

The next big evolution in loyalty programs, say pundits, is expected to be the way in which marketers exploit and integrate the full potential of new ‘smart’ card and back-end technologies.

James Christensen, president and CEO of Vancouver-based Ernex Marketing Technologies, says new electronic loyalty marketing programs eliminate the high cost of help desks, shipping and third-party rewards suppliers, while fostering real loyalty by bringing consumers back into the stores.

‘Major credit card programs spend over $100 million on the rewards in their programs. Every dollar is going into some back-end warehouse company who is selling those products and shipping them,’ says Christensen.

‘Why have a warehouse in the background when there’s an entire retail sector out front? Instead of calling up a help desk and saying, ship me the Walkman I saw in the catalogue and waiting weeks to get it, consumers simply walk into a participating store, swipe their card and pay with points instead of cash. That’s what technology can do for you.’

Ernex is a subsidiary of the Royal Bank of Canada. It runs the bank’s credit card loyalty program as well as real-time loyalty points programs, electronic gift cards and customized point-of-sale offers for retailers such as Eddie Bauer and Niketown, restaurant chains and golf, travel and hotel companies. It is also working with a number of major U.S. clients.

These POS programs are built around a real-time central database that tracks customer spending and instantly responds with coupons, messages or prizes printed out on the receipt. There is no help desk. Participants can find out their totals at any store, by calling a 1-800 number or using the Internet.

‘The future is all about finding out who your best customers are and treating them differently based on what they do,’ says Christensen. ‘That’s the end result, what you need to do to get them to come back and spend more.’

PointSite Inc. of Toronto also centres its loyalty programs around point-of-sale. The company, which provides turnkey in-store, wireless and Internet loyalty programs, has also recently added a new ‘smart’ card to its offering called the GraphiCard.

The card functions as a loyalty card, a gift card and, because it’s re-loadable, a stored-value card. Its real point of difference is an added feature – a silver screen built into the face of the card where point balance information, offers, or advertising can be printed using thermal imaging.

There are no Canadian GraphiCard programs up and running as yet but Farhan Merchant, CEO of PointSite, says a number of pilots are currently under discussion. Created by New Zealand-based Visible Results Group of Companies, the GraphiCard has been used in the U.S. since 1997 by major brands such as McDonald’s, Kentucky Fried Chicken and Mobile Oil.

One of the best examples of the card’s usage is McDonald’s in Hawaii where they estimate over 75% of the state’s population carry a McExtra Card, he says.

‘They not only have information on three-quarters of the population of Hawaii,’ says Merchant, ‘but if McDonald’s is launching a new product or a special, it goes on the card. McDonald’s figures that more people find out about promotions in Hawaii from the card than from any other advertising medium.’

Merchant says since PointSite handles the back-end, merchants of any size can run a loyalty program with the GraphiCard – all they need is one of PointSite’s GraphiCard POS terminals.