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Albertsons Exits Loyalty, Slips on Data Opportunity

CardFreeSavings-BlogPostOne of the occupational hazards of operating a loyalty program based on providing preferential pricing is that at some point you end up giving the preferred pricing to everyone. That is the problem that Albertsons recently wrestled with, and seemingly pinned down, when it announced it was cancelling its Preferred Card loyalty program. According to the company, everyone has the card, so it decided to take the “special step” of not requiring one anymore.  It calls the new approach “Card Free Savings.”

“Our customers are the only reasons that our doors open every day,” the company explained on its website. “Because of you, we exist. It’s that simple. We feel it’s our job to give everyone a great shopping experience, and that includes offering great prices to everyone.”

Sure, everyone loves great prices, but what about the information consumers shared in return for participating in the loyalty program? One of the purposes of loyalty programs is to gain the insights to inform better decisions about merchandising, locations, pricing and hours – not just promotions. It is all part of elevating the customer experience.

This is what so many marketing heads were worried about so long ago. Two-tiered pricing models for loyalty are not competitively differentiating unless they are applied at the individual level. And when executed as mass programs, they especially won’t work when you can go to Walmart without a card and get the same prices or better.

True, Albertsons’ decision is not surprising if everyone is getting the same discount and you’re looking to make the experience easier for the customer. But it is shortsighted from a customer data perspective, and it ultimately may lessen the company’s ability to fully understand its customers and their behaviors – and this may impact its ability to engage them in the future.

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