A Trolley Load of Data: The Cost of Loyalty Cards

In the world of digital marketing, data is the lifeblood of effective campaigns. With the rise of privacy regulations such as GDPR and the ePrivacy Directive (one of the key drivers being the recent Consent Mode v2 rollout), digital marketers are constantly seeking new ways to gather vital information while respecting privacy rules. We meticulously manage our privacy settings on social media, scrutinize the permissions of apps, and debate the implications of cookies on websites. Yet, many of us overlook one significant area where we routinely hand over vast amounts of personal data; supermarket loyalty cards.

Despite increasing awareness about online data privacy, many consumers are unaware of how much personal information they hand over during everyday activities. And there’s no shortage of incentive to do so, with massive discounts available if you use a loyalty card.

The Convenience of Loyalty Cards

Loyalty cards offer a multitude of perks: discounts on shopping, exclusive deals, and points that can be redeemed for future purchases. These benefits make us feel like savvy shoppers, reaping rewards for loyalty to our favourite superstores. However, these cards come with a hidden cost, one that’s paid with data, and there’s an increasing backlash against supermarkets seen to be exploiting people’s stretched food budgets by offering big discounts in engage for your information.

How Loyalty Cards Collect Data

The concept of a loyalty scheme is the same across all companies; you spend more money with them, you get money off. However, every time you scan your loyalty card at the checkout, you're providing the supermarket with a wealth of information.

Purchase History: Detailed records of every item you’ve bought, from groceries to household goods.

Shopping Patterns: Data on how often you shop, what times of day you prefer, and which locations you frequent.

Demographic Information: Personal details provided when signing up for the card, such as age, address, and household size.

The Data Behind the Discounts

Supermarkets collect and analyse this data to gain insights into consumer behaviour.

Personalised Marketing: By understanding your shopping habits, supermarkets can send you targeted offers and recommendations, making their marketing efforts more effective.

Inventory Management: Insights into what customers are buying help supermarkets manage their inventory more efficiently, reducing waste and ensuring popular items are always in stock.

Pricing Strategies: Data on purchasing patterns allows supermarkets to adjust their pricing strategies, offering discounts on items that encourage repeat purchases while maximising profits on less frequently bought goods.

All of these seems fairly standard, but the value of your data goes beyond when it goes beyond the supermarket shelves.

The Real Value of Your Data

A recent piece in iNews highlighted the following;

“In a lengthy privacy policy document, Tesco outlines to customers the data it collects and the variety of third parties with whom it shares this information. In addition to “identity” data including the names, titles, addresses and phone numbers of Clubcard holders, the retailer collects information about customers’ bank accounts, payment card details and purchase history. This includes when, where, what and how you purchased that product or service,” the document states.

“We may share personal data with…our retail partners, media partners and service providers,” it says.

Tesco’s media partners include Facebook and Google, while Clubcard members who are also customers of Sky or Virgin Media “may see tailored TV advertising when using those platforms, based on your general shopping habits and those of similar households”.”

The Privacy Trade-Off

While the discounts and rewards offered by loyalty cards seem like a great deal, they are a strategic trade-off. The data collected is incredibly valuable, often worth more than the discounts provided. Unlike the digital realm where data privacy laws are becoming stricter, the offline world of loyalty cards often flies under the radar. Many consumers remain unaware of the extent to which their data is being used and monetised.

In the digital marketing industry, data is an invaluable resource, driving effective strategies and optimising campaigns. The rise of privacy regulations has made online data collection more complex, pushing marketers to find innovative ways to gather insights.

For consumers, the convenience and savings offered by loyalty cards come with a significant trade-off: your privacy. Supermarkets use this data to drive their marketing, inventory, and pricing strategies, often profiting more from the data than the discounts cost them. As marketers, it’s crucial to understand the value of this data and leverage it responsibly. As consumers, we must be aware of this trade-off and make informed decisions about how much of our personal data we’re willing to exchange for savings at the checkout. In the end, the real price of loyalty may be higher than we realise, paid not in dollars, but in data by the trolley load.