A shopper reaches the till and gives a phone number or scans a barcode. The store now knows who she is. That small step is what a loyalty card does. It turns an anonymous sale into a record that can earn a reward.
What is a loyalty card?
A loyalty card is a physical or digital card that identifies a member at checkout. The retailer then links purchases to that person and rewards repeat business. It holds no money. It is an ID tied to an account that keeps the tally of points, stamps or spend. A stored value card is different, because it holds prepaid funds.
Programs differ in what the card gives. Some give points only. Others give member prices, offers or a tier. The card is the key, and the program terms say what it opens.
Retailers call the card their link to data. Kroger says over 95% of its transactions are tied to a Kroger loyalty card, thanks to its rewards program. It serves about 63 million households a year (Kroger 10-K). Albertsons says 51.2 million members are enrolled in its loyalty program (Albertsons 10-K).
How does a loyalty card work?
The flow has four steps: enroll, identify, accrue and redeem. A member signs up once. At each purchase the member shows the card, and the system links the sale to the account. Points, stamps or spend then build against the account. When a threshold is met, a reward becomes available.
| Form | How the member identifies | Strength | Watch for |
|---|---|---|---|
| Plastic card | Barcode scan | Familiar to members | Forgotten or lost cards |
| App | Barcode or QR code in the app | Offers and alerts in one place | Logins and app updates |
| Wallet pass | Pass in the phone’s native wallet | Always on the phone, can update live | Pass issuance and refresh |
| Phone number or email | Typed or scanned at the till | No card to carry | Typing errors and shared numbers |
Whatever its form, the card carries one thing: a member ID. Keep the ID unique and stable across channels. If a member holds a plastic card, an app and a wallet pass, all three should point to the same account. A new ID for each channel splits one person into several records.
Google says loyalty cards in Google Wallet give members easy access at the right time (Google Wallet loyalty cards). They also help members use their points well. Its guides cover rotating barcodes and importing cards from membership emails. Our pages on Apple Wallet and Google Wallet describe the same move for GRAVTY programs.
The card sits on top of a reward design. Points programs earn on spend, which our entry on spend-based earning covers. Stamp or punch programs count visits, as in our entry on the punch card. Cashback programs return a share of spend as money, as in the cashback program entry. The card is the same in each case. The reward rule changes.
What data does a loyalty card collect, and what do the rules say?
The card collects the sale and the person behind it. Albertsons says its loyalty programs collect data on sales and activity. It uses that data for offers and marketing (Albertsons). Kroger’s notice lists joining a rewards program as one way it collects data (Kroger notice).
Law allows these programs, with limits. California’s privacy law lets a business run loyalty, rewards or club card programs that follow the law (CCPA, section 1798.125). It also lets a business offer incentives for personal data. Under the GDPR, data must be limited to what a purpose needs (GDPR Article 5). This is not legal advice.
Do loyalty cards work?
They work as a measurement tool first. Kroger ties over 95% of its sales to a card, so its data covers almost every sale. Albertsons says active members drive higher sales and retention (Albertsons). That is a company’s own view, and the filing gives no figure.
They work as a sales tool less than member totals suggest. A study of Dutch households covered all seven grocery loyalty programs and 20 major supermarket chains. It allowed for loyal people choosing to join. Membership still raised share of wallet, but the effect was seven times smaller than a naive model showed (Leenheer et al., 2007).
Kroger’s figure is a coverage figure. It tells you how much of the business the data can see, and it does not tell you how much those sales changed because of the program. Keep the two questions apart.
So judge the card on three numbers: coverage, activity and lift. Coverage is the share of sales tied to a member. Activity is the share of members who earn in a period. Lift is the gain against a random holdout. Our entries on enrollment rate and active member rate cover the first two measures.
For illustration, a retailer takes 1,000,000 sales a month, and 600,000 are tied to a card. Coverage is 60%. A till prompt that lifts coverage to 70% ties 100,000 more sales to members each month. That is 100,000 more records to learn from. It is not extra revenue, so measure the sales lift separately.
How should a program run its cards?
Treat the card as a data pipe. Make identification fast at every till and in every channel. Our entries on POS integration and omnichannel loyalty cover the tills and the channels. Offer more than one way to identify, since a member without a card should not lose points.
Move members from plastic to a wallet pass or an app in steps. Issue the pass at enrollment. Send existing members a link to add it. Keep the same member ID and barcode, so old sales stay linked. Retire the plastic card only when most active members have switched. Test the scan at a real till with real phones before launch. Record the failure rate each week by phone model and by scanner, and fix the worst pairs first.
A program loses data through five common mistakes, and each one has a fix:
- Asking for too much data at sign-up. Ask for a little first, then more over time, as in our entry on progressive profiling.
- Letting a till skip the scan with no prompt.
- Giving each channel its own member ID.
- Leaving earned points in place after a return.
- Having no way to merge duplicate accounts.
Guard the data. Collect only what the program uses. Explain what it is for. Let members see and correct it. Watch for shared cards, which blur a household into one record. Watch for staff who scan their own cards on customers’ sales.
How GRAVTY handles loyalty cards
Loyalty Juggernaut says a wallet pass issues the membership card in the phone’s native wallet. The connector handles pass issuance and updates, so tier and program details on the pass stay current (Apple Wallet integration). The catalog lists Apple Wallet and Google Wallet connectors. Scope is set per deployment.
For purchases made without a card, GRAVTY AI-Scan parses a receipt from any merchant. It credits the earn or triggers offers (GRAVTY for retail).
Frequently asked questions
What is the difference between a loyalty card and a membership card?
A loyalty card tracks purchases for rewards, and a membership card grants access to a club or service. The two can overlap. Albertsons, for one, enrolls members in a loyalty program that offers personalized deals and digital coupons (Albertsons 10-K). Check the terms to see which one you hold.
Is a loyalty card the same as a gift card?
No. A loyalty card identifies a member, and a gift card holds prepaid money. Our entry on gift card redemption covers how points can turn into a card. Kroger’s loyalty card ties a sale to a household, and the card itself carries no balance (Kroger 10-K).
Do loyalty cards expire?
The card itself usually does not, but the points on it can. Expiry is a program rule, and it varies by program. Our entry on points expiration covers the common rules. Check each program’s terms before you rely on a balance.
What happens to my data when I use a loyalty card?
The retailer links your buys to your account. It uses them for offers and marketing. Albertsons says its loyalty programs collect data on sales and activity for personal offers (Albertsons). Read the privacy notice for your opt-outs.
Are digital loyalty cards better than plastic ones?
They are easier to carry and can update live. Google says loyalty cards in Google Wallet give members easy access at the right time and let them use points more efficiently (Google Wallet loyalty cards). A digital card still needs a way to identify members who forget their phones.