A new technology could render retailer loyal reward cards passé while making branded credit cards an even more integral part of consumers' lives.
This week, loyalty marketing tech firm Chockstone will unveil the next generation of "Single Swipe," a technology used by retailers that enables a single payment terminal to process gift, loyalty and credit cards. The new Single Swipe technology lets retailers put loyalty card info onto consumers' major branded credit cards. That would essentially eliminate the need for the key fobs, plastic and punch cards that form one of the primary costs for retailers in loyalty programs, and the biggest source of headaches for consumers.
The technology will be available to all retailers on Chockstone's network—including Subway, Ticketmaster and Chili's—of more than 46,000 locations.
"[The new Single Swipe technology] is absolutely something that we're looking to deploy," said Carman Wenkoff, president at Value Pay Services, a division of Independent Purchasing Cooperative, Miami. IPC is a Subway franchisee-owned company that handles all Subway Card programs, plus other services. The group now uses Chockstone for loyalty programs at 24,000 locations in the U.S. and Canada.
"It's a convenience for the consumer and a savings in time and plastic for Subway," said Wenkoff. He said that gift and loyalty cards are often lost, or need to be merged, causing slowdowns in retail location business and added costs for franchisees. Having loyalty information incorporated on consumer credit cards is "absolutely something that we think will make a huge difference in our program," said Wenkoff.
The new technology comes at a time when consumer participation in loyalty programs is on the rise, according to Kelly Hlavinka, managing partner at marketing consultancy Colloquy, Milford, Ohio. Colloquy studies show the average U.S. household was signed up for 12 different loyalty programs in 2007, a 35% increase since 2000. Acceleration was particularly strong in financial services, which grew 164% during the seven-year study period, and specialty retail, up 93%.
"Census numbers show consumer interest and appetite for these programs is still growing. Something like [Single Swipe] could make it easier for customers to participate," said Hlavinka.
However, Hlavinka said that eliminating branded loyalty materials could damage brand awareness. "You've got little billboards out there with the key fobs and cards. They're a visual reminder for customers to return," she said.
Subways' Wenkoff said he's not concerned about erosion of brand awareness. "There is an advantage to having customers carry your loyalty card in their wallet. But the benefits of this particular kind of technology would outweigh the cost of having that card. We feel that just having the rewards program is enough to bring our customers back, and the added convenience for the customers is a big plus."