Using ID-card as a loyalty card - Prisma Peremarket
Using ID-card as a loyalty card - Prisma Peremarket
Prisma peremarket AS is one of the largest Estonian retail chain companies. There are a total of 8 Prisma hypermarkets in Estonia, 5 of them locate in Tallinn, 2 in Tartu and 1 in Narva. The sales area in total is over 70 000 m², the company employs more than 1100 people.
Prisma family market did not have its loyalty program in Estonia. Until 2008 they had been cooperating with ETK (The Central Society of Estonian Consumers’ Co-operatives) and customers had been able to collect bonus points on purchases made with Säästukaart at Prisma.
However there was a clear interest towards a loyalty program among customers. Likewise, Prisma found the loyalty program commercially reasonable in order to widen its circle of regular customers.
During the development stage of a new program various possible options were thoroughly considered. It was important to find the most cost efficient and applicative loyalty card solution. All the related costs of loyalty card system, like production costs, issuance costs and utilization costs were viewed consistently. An ID-card occurred to be the cheapest solution after comparing it with a regular magnetic stripe card and a membership chip card.
From alternatives an ID-card had following advantages:
- Issuing a plastic loyalty card is in itself a costly undertaking. It involves a production of cards, transportation, acquiring of expensive personalization systems, and elaboration of card issuing and renewal work processes. An implementation of ID-cards excludes all the foregoing costs.
- A membership chip card is an expired technology and reading a magnetic stripe is not particularly reliable.
- Each additional card is uncomfortable for a customer.
- The marketing people did not see a particular asset in developing a unique and independent Prisma loyalty card – customer loyalty is not obtained by a membership card but a customer-friendly attitude. A card is just a tool for a quick identification of the customer at the checkout.
- Using an ID-card goes together with a Prisma slogan to customers “One less concern”.
After a thorough consideration and calculations of various implementation costs, it was decided to go ahead with inculcation of ID-card based loyalty program.
Nature of the solution
An ID-card was implemented as a customer identification tool within a loyalty program called Prisma Konto.
In order to identify themselves, a customer inserts their ID-card into a point-of-sale terminal. Thereafter the purchase is transferred into a customer’s account for further bonus calculation. Percentage of the bonus depends on amount of monthly purchases. Received bonus points can be used to pay for purchases.
The program can be joined only online – it helps to enlarge data quality and save up labour costs (loyalty program applications that are submitted on paper are not needed). So as to provide the fastest and the most convenient registration process as possible, online ID-card login or a digitally signed application is not required.
Comprehensibility and greater comfort for customers was crucial, therefore the idea of having separate ID-card readers was excluded. Instead, ID-card identification functionality is realized by point-of-sale terminals. A customer inserts an ID-card into the terminal, then they replace it with a bank card when paying with it.
Collected bonus points can be seen on the website. At the moment, a user ID and password is required for login. In the future logging in to the website with an ID-card will be realized.
Realization of technical solution of the loyalty program was considerably easier, cheaper and faster due to the use of an ID-card.
Adding the ID-card identification functionality to point-of-sale terminals required additional software solution. The solution was bought in from a point-to-sale terminals providing company. Thanks to correct ID-card specification, development of the solution proceeded without interruption. Advice was asked from a certification centre when necessary.
Since the development company was of Finnish origin, the English language version of ID specification was a useful advantage. While the specification merely described the recent ID-card data, the identification of old ID-card parameters was basically the only drawback.
Due to the use of an ID-card, there was no need to develop card management processes and obtain necessary equipment for card personalization. The customer registration process got more convenient since there was no necessity of managing a loyalty card number separately in the customer’s account.
A technical solution of using an ID-card as a loyalty card is essentially uncomplicated, therefore the risk of realization is low.
Initially, there was no particular knowledge about how many people routinely carried ID-card with them and how receptive they were to use it. Therefore it was a clear risk point in the initial stage. In reality the number of joined members exceeded the forecast. The statistical inference of observed data shows that many people who did not own ID-card acquired the card on account of the loyalty program. Currently, Prisma loyalty program has more than 100 000 customers.