Customer information and promotions: Quid pro quo


Ahold is an international retailer that operates supermarket chains in various countries, amongst which Albert Heijn (Netherlands) and Giant Food Stores (United States), in which they implemented BonusCard programs, respectively introduced in 1998 and 2000. Both cards are required to receive discounts, but while the AH card can be kept anonymous, Giant card holders have to reregister their card, giving their full name and home address every fall, to avoid deactivation. It appears that the amount of personal information required in these programs is directly related to the discounts that can be obtained. The more information is required, the more discounts are awarded.

GiantCard_small

Whereas in US, customers’ privacy concern seems relatively low when the BonusCard was just introduced it faced active protests. These ranged from mass e-mailings to Giants then CEO, to online BonusCard swaps where people could exchange their cards’ barcodes. This probably has to do with the many advantages of the card, which does not only give discounts but which through the A+ school rewards program also donates 1% of the total purchase price of each customer to a school of their choice. On top of that, the card also gives significant discounts on gas, up to $2.20 discount per gallon (which amounts to a 60% discount) at Shell.

The Albert Heijn’s customers received the BonusCard with more suspicion. Of the 10 million new BonusCards that were handed out since bonuskaartOctober 2013, only 2.5 million were activated online. Each customer receives discount if they have a card, but if they link this to their e-mail address they can also view the groceries they have purchased in the past, which of these are on promotion, and receive personalized promotions. Entering further personal details is not required.

Using these BonusCards makes sense from the perspective of the stores. It generates huge insights in the amount and type of groceries customers purchase. In combination with the stores’ websites where customers can view their purchase history as well as current promotions and recipes, they can gain insight into how each customer makes their purchase decisions. AH enables users to make a shopping list online that can be transferred to the mobile app. This way they can track whether customers purchase all the articles they were planning to.

However, are customers as willing to give out their personal information to the stores? Besides privacy concerns, customers have expressed their disappointment that although they have voluntarily given personal information and full insight in their purchases, the store fails to give them truly personalized promotions. Researchers found that customers’ trust in stores depends on its competence and integrity – the more information the store requires, the better service they expect (Komiak & Basbasat, 2004). AH, for example, received multiple complaints of individuals who received free delivery promotions, but who lived outside service areas of the delivery service. This means that stores are in a precarious balance in information exchange with their customers, in which they are critically followed to utilize the information they require.

Carly

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