A cashless society and the death of the loyalty card

I've heard so many stats and figures that say, basically, if cash isn't already dead, it's certainly on its last legs.

If I'm honest, I'm not yet convinced. Whilst cash is on the decline, I don't wish to declare it terminal quite yet.

Cashless and contactless payment is definitely a Big Thing, don't get me wrong, and adoption is certainly high in London and increasing in other metropolitan areas from my own anecdotal experience. But the staff at the Fat Friar chippy in my village still look bemused if you want to pay by card. And the village post office always has a till full of change. Waving my wrist at them might result in a call to the police rather than a wave and pay.

But another consequence of the decline of hard money, combined with the growth in omniweb, the corporate benefits of Big Data, and a changing attitude towards personal data and privacy, is that the traditional loyalty scheme might actually be closer to the end of its life than the ten pound note.

Why?

Well think about it - where did the traditional loyalty cards and loyalty schemes come from? It was a form of reward for handing over identifiable personal data about your buying habits - "what" and "how" and, over time, a bit of the "why" too.

In return for in effect submitting some or all of your purchasing habits over time you might get tailored offers on soft toilet roll or 10p off a packet of skinless sausages. And in the meantime, Tesco or a.n.other supermarket was learning about you, your habits and preferences, and how to get you to spend more and/or spend differently.

But now it's not quite the same.

Consumers are much, much more savvy, and have far more data more easily available to make buying decisions. We make far more purchases online. We are moving our money away from mega-retailers to a wider and diverse range of retailers (note the change of profit profile in the supermarket sector and other Big Retailers).

And how they make decision has changed; in the past twenty years I have certainly become far more aware of being manipulated by retailers, and often consciously rebel against it. I have consciously shifted my purchasing from supermarkets to smaller independent retailers, and am far more concerned about the social, ethical and environmental consequences of how I spend and on what.

And that sometimes means I buy expensive cheese of variable quality and flavour from a bloke with a beard at the Farmers' Market in Frome on a Saturday morning.

And I pay him cash.

And I don't see him changing that for some time to come.

Conversely, every time I fill the car with fuel I make sure I hand over my Nectar card. Well, I say every time, but basically maybe the 2 out of every 3 times I'm not distracted by the wide and varied array of chocolate en-route to the till, I hand my card over. Why? Well every so often I earn enough points to convert to a fiver of credit on EBay to purchase something I don't want my wife to find out about. Nothing sinister, mind, usually a CD of some cycling related thing.

What do Nectar get out of it? Well, probably not a lot. I tend to buy the same amount of fuel around the same time on the same day of the week. Does it make me more loyal to a garage or brand of fuel?

Nope.

I buy fuel and the occasional cheeky Topic from my local village garage because I don't want it to close. Fuel is cheaper in the local town, but there are plenty of people to buy from those garages. I make a choice based on my beliefs and values. And being a bit selfish as it's the first garage on the way to work.

Dispositional analysis of social media produces non-linear data that marketeers could only have dreamed of when the Tesco Club Card was in its infancy. Folk are also far more willing to actively give away a bit of data and maybe some privacy too for a more direct and immediate reward.

Millennials are absolutely leading the way in terms of the changing attitudes to privacy and personal data and also in the adoption of new payment technologies too. I think it's not unrealistic to expect a significant decline in the use of cash, but I don't yet see a future where it doesn't exist.

So cash, may have a cold, but I think we may need to choose the hymns and write the eulogy for the traditional Loyalty Card.

Do you agree?

Thanks to my friend and colleague Martin Hart for the conversation that lead to this post.