When you consider how many charities and voluntary organisations now generate some of their revenue from trading activities, and the way the sector is being encouraged to learn from the commercial sector, it’s actually surprising that so few charities with a shop network have even considered launching a loyalty card scheme. After all, in the retail sector, loyalty cards have served as an excellent way of gathering detailed information about shoppers’ preferences and tastes, enabling retailers to draw them back to the store with targeted offers
and discounts.

On the other hand, there may well be some in the sector who instinctively recoil from the very idea of using a tool that diverts some income away from its end-users or core aims, and is associated by some with the generation of junk mail. There’s also still a bit of a question mark over how effective loyalty cards have been for retailers, even for those using highly sophisticated customer relationship management software – something that would not be available to a majority of charities.

But one problem retailers have had with loyalty cards is that loyalty to a specific retailer brand is actually very unusual, even when that retailer tries to instil it through the bribery of extra discounts. You’re not going to see anyone fighting in the street over whether it’s better to have a Nectar card or a Tesco Clubcard. By contrast, many charities really do inspire genuine affection and loyalty among supporters. So why not take that a step further and use loyalty cards to build even closer relationships with them?

Not many charities are convinced – yet. Oxfam, the charity with the best-known chain of charity shops, has no plans in this area. “It’s something that gets talked about, but no decision’s been made, and at the moment we’ve decided to focus on other and existing priorities,” says Katie Abbotts, a spokesperson for Oxfam.

Other organisations have run pilots but not taken the idea any further. “It’s been trialled by a number of organisations, and it’s something that is definitely not universal and not necessarily all plain sailing,” says Lekha Klouda, executive director at the Association of Charity Shops. “You would think that if something like vouchers or a loyalty card had a clear advantage it would be adopted in the sector. The fact it hasn’t shows it’s not that straightforward; to introduce or to get value from.”

Cancer Research UK ran a trial of loyalty cards in 2005 in three flagship stores selected for trial refits. Shoppers were given incentives to spend money to earn points on the cards, with a discount offered when the cards were redeemed. The trial was moderately successful, but not taken any further for practical reasons common to almost every charity shop.

“We have no EPoS systems, so it would be very hard for us to gather information electronically,” explains Paul Cook, head of retail marketing at Cancer Research UK.
Yet in one of the three refitted stores in Wilmslow in Greater Manchester, where the trial ran for three months, there are hints of what might have been. Here, the shop manager has continued to use the information gathered during the trial to communicate with customers, inviting them to show events as special customers of the charity.

The only national charity which has managed to get a loyalty scheme up and running effectively is Sue Ryder Care, which launched its Care Cards in its chain of more than 370 shops in April 2006, following a trial in 30 shops (spread across both urban and rural areas) that began in 2004.

The Care Card is not based on any kind of advanced or expensive technology: it’s just a piece of card that folds into a credit card shape, on which customers can collect up to ten stamps, with one stamp collected for every £5 they spend in the shop.

When they have collected ten stamps the card can be redeemed, giving the customer £5 off their next (minimum £5) purchase. On a basic level the card generates income by encouraging customers to spend that little bit extra to get up to the next £5, or past the £5 limit to qualify for their discount, and, of course, by encouraging them to come back to the shop. The card also carries information about the charity and its work. Since last April more than 42,000 people have registered in the scheme, more than 8,000 cards have now been redeemed, and some shops have registered more than 500 customers.

“The maximum value is only going to be 10 per cent, so it’s not a great discount, but it means you’re spending regularly,” says Julie Beames, business development manager at Sue Ryder Care.

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Possibly of more significance in the long term is the way that the card is used to draw shop customers closer to the organisation. The form customers fill in during the registration process contains a question asking if they would be happy to receive additional information about the charity. Sixty-three per cent of the 42,000 scheme members have been added to the charity’s mailing list.

The charity has also been able to gather valuable data about why those registering for the scheme visit its shops in the first place, and how effectively the shops meet their needs, with customers also filling in a short questionnaire when they register. Unsurprisingly, value for money is the number one reason, but customer service was judged to be almost as important. “It just shows how important it is to talk to the customers, and Care Card builds that culture,” says Beames.

The charity has also looked at why the card has been less successful in other shops, and concluded that in some cases the reason is that staff are not so confident talking directly to the customers. “That’s something that you tend to take for granted, but some people are better at it than others,” says Beames. “So we have been able to address that issue in training.”

It has also become apparent that in some shops the drive to register customers was forgotten after the initial momentum faded, so some effort has been put into correcting this. Nor is the effectiveness of the scheme dependent on every cardholder having a particularly strong affinity with the charity.

“Not everyone signing up is necessarily aware of who we are, or even care that much, they’re just canny shoppers on the lookout for a bargain,” says Beames. “But where we think [the cards are useful] is when they’re shopping in a number of charity shops; then the Care Card has made us the shop of choice for them.”

There is certainly some evidence that the cards can inspire loyalty for practical, economic reasons among, for example, private landlords who use them to source furniture for their properties, or in the case of one particular customer buying clothing for an extended family, who has already redeemed more than 65 Care Cards.

Not everyone immediately welcomed the cards with open arms. The charity has encountered some members of the public and also some staff and volunteers with reservations about a charity effectively giving some money away. “When that happens we’ve just tried to explain that it’s about getting people to increase their spending in the shop and upping sales,” says Beames.

Some customers have even wanted to give the charity the £5 off earned through redeeming the card. “If that’s happened what we’ve told our staff to do is to give them the option of giving us that money as a cash donation,” says Beames.

Data collected through the scheme will now be used to help the charity with its next mailshot campaigns, at least one of which may well be based around trying to incentivise customers with Care Cards to come into the shop, possibly by using some kind of voucher. “We’ve focused on it very much from a retail perspective so far, but this year we will make the data available to the rest of the organisation as well,” says Beames. “Before we were really just seeing if this would work.”

The advice she says she would offer another charity that does decide to launch a loyalty card is to think carefully and realistically about how to use the information it produces about customers. “It’s all about making the best use of that data,” she says. “It hasn’t increased sales by 20 per cent, but we didn’t expect it to. There is evidence that sales have increased, but it’s not all about sales, it’s all the other add-ons.”

With even the likes of Cancer Research UK citing budgetary constraints as a reason for the slow movement towards shop refurbishment, it seems unlikely we will ever see the day when shoppers carry wallets packed with plastic charity shop loyalty cards, or charities use such schemes as the cornerstones of sophisticated CRM programmes.

But all the evidence from what Sue Ryder Care has managed suggests that with a bit of hard work on the shop floor even a basic loyalty card scheme just might make a big difference to the bottom line.

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