About Me

John Fahy is the Professor of Marketing in the University of Limerick and Adjunct Professor of Marketing at the University of Adelaide. He is an award winning author and speaker on marketing issues around the world.

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What To Do With All Those Loyalty Cards!

No self-respecting service firm these days would be seen without a a loyalty card scheme! Of course, supermarkets have had them for years and generally use them very well but now wine merchants, beauty salons, coffee shops and the like use them as well. So is it worth stuffing our wallets with more of them and how can we get the best value out of these cards?




At their most basic, loyalty schemes are an attempt by companies to try to retain their best customers by providing them with rewards for their custom. So for example, your local coffee shop might stamp your paper card each time you use it and give you every 7th coffee free. If you can still find that kind of scheme, take it – it is a good one. You get a real, tangible benefit and you do not have to give any information in exchange. More frequently brands like Costa will sign you up (requiring personal details) for a fancy plastic card and offer you points each time you shop. But figuring out how much these points are worth needs a little work and as we know most customers never bother with that kind of effort. In the UK, Costa offers five points for each £1 spent with the cheapest Americano costing £1.95. 100 points equates to £1 or 1p per point. Leaving aside the possibility of double point promotions that means you would need to buy 39 Americanos to get one free!!!! And you have given them your information for this privilege!  


In this era of big data, information is gold and companies continue to get better at using it. Tesco was a trail blazer in this area, showing how loyalty card information could be used to get a very accurate picture of what customers bought allowing for much more efficient marketing spend and much more tailored offerings. Today, supermarkets are interested not just in what you spend with them but what you spend elsewhere. For example, if they provide your debit/credit card data to analytics firms, they get an insight into your spend with competitors and in related product areas. And while this might make you uncomfortable, it does have an upside. The best offers usually get sent to those customers that the firm thinks is defecting or spending less in an effort to lure you back. So if you really want to mess with the data scientist’s head, have two cards for the same supermarket. They will think you are spending more elsewhere and send you better offers. And that’s no joke!!!


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The Problem With Market Research

The Irish Government shouldn’t be the only ones reeling from last Friday’s decision by the electorate to reject a constitutional amendment to abolish the Seanad or Upper House of government. It was another bad day for the market research industry as well. Consider this. Just three days before the election an Irish Times/IpsosMRBI opinion poll predicted the following result. Those in favour – 62 per cent and those against – 38 per cent when the undecided were excluded. How did the market researchers get it so wrong?



Let’s first examine a couple of ‘mitigating’ factors. After the poll, government ‘sources’ described themselves as ‘confident, but not complacent’ because 21 per cent of those surveyed responded that they were undecided while a further 8 per cent said they would not vote. There was some worry about which way the ‘undecideds’ would go but with a solid 17 point lead among the majority that had already made up their minds, the ‘Yes’ camp had reasons to be confident. And second, there was the issue of what might happen in the intervening three days up to the vote that might swing opinions, though, in hindsight, little of significance occurred during this period.


More to the point though is that this election demonstrated again, what is a common issue throughout the world namely, that opinion polls are not a reliable guide to how voters are going to behave. Earlier this year in the British Columbia elections in Canada, the NDP were given an eight to nine point lead the day before the election by two respected opinion polling organisations only to lose the election to the Liberals by five percentage points. Even early exit polls conducted on the day of the election did not show the extent of the swing. And of course, one of Margaret Thatcher’s election wins in the UK, came famously after polls predicted a win for Labour.


The commercial arena is similarly littered with famous examples of market research ‘mistakes’, the launches of New Coke, Red Bull and the Millennium Dome in London to name just three. While experts can argue forever about data collection instruments and sample sizes, one thing is certain – what people say they are going to do is not a good guide to what they actually will do. It is not that humans are dishonest though this can be the case. Instead there is a much bigger issue. People are constantly being asked to rationally explain what they have done in the past or will do in the future when in fact most of the decisions we make are emotionally driven and happen at a sub-conscious level. So it is little wonder that the market researchers so frequently get it wrong.

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