In your shopping experiences, surely you’ve found yourself at a checkout counter being asked to join that store’s loyalty program. To clarify, I’m not referring to store credit cards, but rather programs that offer rewards for shopping frequently.
Loyalty programs come in various forms, from punch cards granting you a free item after a certain number of purchases, to points systems where each purchase amasses points redeemable for rewards, to cashback programs earning refunds on future purchases.
Store loyalty cards typically cost nothing, making them seem harmless and desirable. However, have you considered whether these programs benefit you or potentially hurt you? Keep these pros and cons in your mind the next time you are offered to join a store loyalty program.
ADVANTAGES OF STORE LOYALTY CARDS:
1. GREAT OFFERS AND SAVINGS: Store loyalty cards could offer more than just “points”. Membership often gives you access to exclusive deals, discounts, and coupons. Generally, the more you spend, the more you save.
2. FREE ITEMS: Through programs like punch cards or points systems, you can earn free items, ranging from gift cards to air tickets and even hotel rooms. However, these rewards usually reflect the magnitude of your purchases – the more you spend, the better the rewards.
3. CASHBACK: Cash back programs allow you to earn a percentage of your spending back. Despite cashback rates being relatively low sometimes, customers generally appreciate collecting cash.
4. SIMPLE AND COST-FREE: Loyalty programs are usually free and less complicated than credit cards. They don’t demand a commitment nor do they carry the financial risks associated with credit cards.
5. ENHANCED SERVICE: Though intangible, the value of good service is immeasurable. Some shops use your membership to track your preferences and offer personalized service.
DISADVANTAGES OF STORE LOYALTY CARDS
1. INCREASED SPENDING: Loyalty programs run on the basic principle of spend and earn. However, it’s easy to start overspending in your haste to accumulate rewards. Businesses often present offers that encourage customers to spend more than initially intended.
2. HIGH COST OF INCENTIVES: It’s essential to question if these reward payoffs are worth your investment. Cashback rates may be low and points systems might be slow to accumulate, which means you’ll likely need to spend a lot at the store before reaping the benefits.
3. PRIVACY RISKS: Personal information is a common requirement for joining loyalty programs. This data can be valuable to businesses and used to their advantage, whether by selling your details or bombarding your inbox with tailored ads. This also poses a risk of your identity being compromised or stolen.
In today’s retail industry, many businesses have loyalty programs. As appealing as these programs are with their promised rewards, always read the fine print and understand what you are agreeing to. After all, loyalty programs are designed to provide value, not make you spend more.
Question to consider: What are some loyalty programs that you’ve found truly beneficial? How many such programs are you part of?
