Customer loyalty is becoming more and more of an issue as retail stores compete amongst themselves and with e-commerce for consumer spending. Integrated Card Technology (ICT) believes that smart cards should play a growing role in loyalty solutions. These solutions should result in a closer commercial relationship between retailers and their customers.
Many South African retail chains make use of magnetic stripe based loyalty cards to encourage consumers to shop with them, and in exchange for spending money with them, they reward the consumer through a points system - the points can then be exchanged for discounts or prizes.
ICT`s product manager, Stirling McBride, however, believes that smart cards with an embedded microprocessor are the loyalty cards of the future and are set to replace the magnetic stripe.
"The days of the smart card being considered `a solution looking for a problem` are long since gone," says McBride. "Key business drivers are now beginning to look at the advantages of the smart card and the advanced technology it offers.
"There are so many advantages to the smart card - its features are simple yet it is an extremely powerful information management tool. Data can be stored securely and processed quickly using its built in microprocessor and now customers and retailers can benefit from this computer in their pocket.
"In the case of a loyalty smart card, the features of the card give the retailer access to current customer information at the point and time of the transaction. This assists the retailer in understanding who their best customers are, what the customer wants, what products they use, why they use them and what sort of shopping environment suits them best. This information is then taken from the card and the retailer can provide a more targeted service and entice the consumer into the store with goods and services they really want.
"In return for giving the retailer this information, the consumer receives rewards in the form of points accumulated on the smart card. When the customer uses the card to make a purchase, transaction details are captured on to the card. The service provider then processes these transactions in order to assess what is being bought, how frequently and by whom. The processing of this information allows the retailer to gain a better understanding on the likes and dislikes of their customers and the overall value to the business. Marketing services can now be based on customer needs and wants. This rewards the consumer, as well as the retailer by increasing loyalty
"The smart card offers the retailer several advantages over the magnetic stripe card. The first and most obvious advantage is the amount of information that can be stored on a smart card. A smart loyalty card would normally contain a 1 kilobyte chip which can store 1024 characters while the standard magnetic stripe card can only store 226 characters.
"A further saving made by the retailer is on administration and employment costs. The information stored on the smart card is updated on a continuous basis, and can be accessed at any time. Therefore the issuing of statements to the customer becomes obsolete. Should a retailers network be off-line when a magnetic stripe card is used, the consumer needs to call a customer care line the following day to enable the points within the system. However with a smart card there is no need to use a dial-up connection, all transactions are instant and are processed directly on to the smart card chip. The smart card makes life easier for both consumer and retailer," says McBride.
Using the smart card in a retailers loyalty programme is the ideal way for retailers to stay in touch with the consumer and add value to their business. Today`s customers demand smart loyalty programmes which benefit them and give them added value. Smart retailers should take advantage of the smart card technology to give additional benefits and increase their profitability.
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