Understanding Customer Relations - Doc

Running Head: Understanding Customer Relations
Understanding Customer Relations
Benefits & Challenges

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Benefits of Membership Cards
Loyalty cards are a fantastic way of spreading the word about the company as well a
simple way to retain the customers and use the concept of push marketing to make
them buy more at the supermarkets. Patmore and Balnave in their book published in
the year 2018 on the topic,” A global history of co-operative business” have stated that
the membership cards are a great way to know the customers. It also helps them in
identifying their shopping patterns, shopping habits which can then be adjusted to the
loyalty offers to match their needs. The authors have also mentioned that supermarkets
are constantly eying to get a new customer on board with them; membership cards are
a great way of spreading positive word of mouth about the supermarkets to their
relatives and friends.
So, Danaher and Gupta gave some interesting insight on “What do consumers get and
give in return for loyalty programme membership ? “ , they mentioned that customers
get good discount and offers when they avail membership card from the supermarkets.
According to the authors the members can avail early bird discount on selected product
categories along with the increased benefits of higher discount. Supermarkets in order
to target and retain the customer provide information on the new product offering to
the customers via email and make it a point to make them feel special on their birthdays
or any other important days. Danaher and Gupta mentioned that at certain
supermarkets, customer having membership cards have the option of fast check-out,
which saves them a good amount of time. Thus, loyalty cards are not just beneficial for
the supermarkets it does hold a significant amount of benefits for the customers
creating an aura of Win-Win strategy.
Pearson in the year 2016 mentioned that the supermarkets are able to create a strong
brand identity with the usage of membership cards. At some places the cards are seen
not just as a symbol of customer loyalty but also as a status symbol. Pearson then
mentioned that membership cards are a good way to retain the customers, as the
customers are aware that they have certain points which they can redeem to buy
products from the supermarkets. This would push them towards the store and knowing
the consumer behaviour, they always end up buying more. It is thus a tried and tested

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formula for retaining the customers and stays competitive in the ever evolving retail
sector. Customers are always looking for discount when shopping at supermarkets,
membership cards ensure that they receive a good amount of discount when they buy
certain products at the supermarket. Another major benefit which was identified by
Pearson was identifying the shopping patterns of the consumers through loyalty cards
and targets them on the social media with such products, creating a comprehensive
strategy to get the customers back to the store. Loyalty cards are thus a great way of
attracting and retaining customers with visible advantages.
Challenges faced by Supermarkets in adopting membership cards
Auer and Petit in the year 2015 mentioned some of the challenges encountered in
retaining customers through membership cards. Membership cards are a great source
of benefits to the customers, but it does not appear as plain as it sounds. Membership
cards give a lot of information to the supermarkets about the customers, supermarkets
are able to identify and track even the debit and credit card payments made for the
goods with precise details. This is very powerful information in the hands of
supermarkets; customers are becoming increasingly aware of the pitfalls of falling into
the trap of membership cards. In order to save themselves from getting their email
spammed by the offers of supermarkets refrain from adapting to the cards, thus causing
trouble with the loyalty programs of the supermarkets.
Customers have become smart due to the advent of social media and the tools of digital
marketing, Shan in the year 2017 emphasised on how a smart consumer easily dodges
the lucrative deal of super markets. Shan mentioned that as supermarkets know about
the customer’s shopping habits as to what he purchases, what he wears or prefers to
eat, they target them using the tool of Google adverts. They play the card of relevancy
with the consumers and influence them in making their shopping decisions. This, by a
number of consumers is seen as an encroachment on their privacy, thus they decide to
move out of the membership programs. They take the loss of missing out on the
discount and other benefits provided by the membership cards at the cost of keeping
their lives really private.

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Greenwald, Williams and Senjuk emphasised the challenges faced by the supermarkets
in retaining the customers along with the added inefficiency of certain loyalty programs
in tandem to the membership cards. The authors stated that membership cards reward
the card ownership and not loyal customers. This implies that it does not necessarily
mean that every person who has a membership card is loyal to the supermarkets. This
creates kind of questioning on the real benefits behind the creation of membership
cards. Membership cards in many cases do not yield the benefits as expected by the
customers, as they give those rewards only on the intent that they buy more. This is
definitely not a good strategy to lure the customers increase sales as the customers are
getting smarter each passing day. Companies spend a lot of money in creating and
designing the cards, as it is an extension of its brand identity, however, seeing that
people are not catching up to the membership cards puts the strategy of the
supermarkets in question. Supermarkets have a membership fee for the cards; they
charge a minimum fee, which they put back into the card which can be redeemed on
their next purchase. A larger section of customers are not willing to pay this charge
upfront as they have a higher bargaining power because of large number of substitutes,
resulting in the failure of customer retention strategy.

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References
Auer, D. and Petit, N., 2015. Two-Sided Markets and the Challenge of Turning Economic
Theory into Competition Policy.
Greenwald, A.E., Williams, W.L. and Seniuk, H.A., 2014. Decreasing Supermarket
Tantrums by Increasing Shopping Tasks: Advantages of Pre-Teaching. Journal of Positive
Behavior Interventions, 16(1), pp.56-59.
Patmore, G. and Balnave, N., 2018. A global history of co-operative business. Routledge.
Pearson, S., 2016. Building brands directly: creating business value from customer
relationships. Springer.
Shan, Y., 2017. A Mobile Application for Maximizing Credit Card Rewards (Doctoral
dissertation, California State Polytechnic University, Pomona).
So, J.T., Danaher, T. and Gupta, S., 2015. What do customers get and give in return for
loyalty program membership?. Australasian Marketing Journal (AMJ), 23(3), pp.196-206.

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