The downside to loyalty schemes
Loyalty schemes are everywhere – petrol stations, supermarkets, clothing stores, online shopping, airlines – all offering customers discounts and rewards in return for sticking with their brand.
But the relationship may not be so clear cut. Big business don't just join loyalty schemes to make you loyal, they collect information on what, when, and how, you make specific purchases.
Massey University business analytics professor Leo Pass said data gives businesses an overview of your entire purchase history.
"Not only at your company but at other companies, and that way you get a more complete picture of the person you're dealing with," he said.
But the potential for what companies could do with purchase data is huge.
"Many companies have these tremendously large data sets on consumers' transactions. And there's so much more they could do with our data, but they can't analyse it, you need highly statistically knowledgeable people to do this," he said.
Companies are gathering more information on their customers' buying habits, but may barely be making use of it.
Companies increasingly felt it they had to join loyalty schemes to attract customers.
"There's a lot of possibilities. One is advertising directed towards the right person and predicting what people would be worth in the future," Pass said.
"One area is lending money - banks can know whether people are going to pay off the loan, or if someone is an insurance risk."
Do you join loyalty schemes? Or are you concerned it’s an invasion of privacy? Share your opinion in the comments below.
Written by Rachel Clayton. First appeared on Stuff.co.nz.