I was in a M&S store recently and soon after getting through the front door I was approached by an assistant who handed me a Greetings Cards loyalty card. The assistant said that I could have a my choice of greetings card absolutely free! And of course I took up the offer and found one that I liked at a retail price of £2.50.
Clearly this promotion was all about introducing M&S customers to both their greeting card range and the loyalty card. A useful exercise as there were many more customers looking at the greeting card display than I have seen on previous visits to M&S stores. Their loyalty card deal is buy six greetings cards and get the seventh card free. This would appear to be more generous than offered by Warwick based independent Greeting Card retailer AE Contemporary Art where customers need to buy 10 cards for a free one.
The loyalty cards scheme such as the M&S one give the opportunity of greater sales and cash profit. If customers buy 6 cards at the cheaper end of their range costing £1.50 and make the presumption of a 50% profit margin would deliver £3.75 profit exclusive of VAT. If the customer then chooses a more expensive card, say £2.50 with a cost price £1.04 this brings the profit on the 7 cards to £2.71 or 28.3%.
Bringing customers back regularly to shop for cards gives the store the chance to be first choice for greetings cards and with more visits sell more from the rest of their range. Cafes like Starbucks have have been offering their customers loyalty cards for years. Loyalty cards do have merit, so may be it is a marketing tool you should consider.