Q: How are "loyalty" programs funded?
Stores are not exactly volunteering information about the cost and funding of their "loyalty" programs. However, it stands to reason that printing up cards and application forms, entering shoppers' identifying data, storing all those individual records, advertising the scheme, and coordinating data transmissions from the cash registers to the database each day is a very expensive undertaking.
It seems the only supermarkets willing to talk about funding are the ones that have decided not to implement a "loyalty" program. In a recent trade article, Mark Price, marketing director for Waitrose (a United Kingdom Supermarket which has opted out of the surveillance business), offered the following:
Stores must pay for these programs either by raising prices or by finding a way to make money from the data they've collected.