2.2 The organisation: loyalty cards

Many supermarkets and other firms (such as petrol companies and airlines) use loyalty cards: cards that offer a customer some form of incentive, such as a future discount or gift, to continue buying from that firm. For example, the British supermarket chain Tesco issues such cards. The holder of a loyalty card is regularly sent vouchers which give the holder discounts from their shopping bills and also vouchers which enable them to gain a discount on items that the supermarket wishes to promote.
When applying for a loyalty card you are required to fill in a form which asks for your name and address, and possibly details about your lifestyle, such as what sort of car you drive, your annual salary range, and so on.
Once you have your loyalty card, it will be swiped through a reader whenever you take your purchases to the check-out.
This subsection is concerned with how a supermarket, or any other organisation, uses the data:

• taken from the loyalty card application form;
  
• generated when the loyalty card is swiped through the reader at the check-out.
  

Exercise 5

Can you think of a use for the postcode data that is written on the loyalty card application form of a supermarket chain?

Discussion

You might have said that it is used to send special offers to card holders, and that's correct. However, the senior management of the supermarket chain might use postcode data in a much more subtle way. They often open new branches, and your postcode is a valuable piece of data which helps them to anticipate what the effect might be of opening a new branch in a particular area.

When a loyalty card is swiped at the check-out, the data associated with the holder is linked to the set of products which the holder has just bought. This provides further information for the senior management of the supermarket chain. For example, it could be used to detect whether there is any pattern in the buying habits of customers. If, for example, one product is consistently bought with another (e.g. bottled beer with snacks) this could lead the supermarket chain to display the linked items together in the aisles or near to the check-out in the hope of increasing sales.