Developing customer loyalty at Chelmsford Star Cooperative Society... The use of Smart Cards

Essay by meenalbhatUniversity, Master's January 2004

download word file, 3 pages 3.7

1.Consider the research findings and make recommendations about a future strategy for Starcard. Your recommendations should suggest potential areas for development and consolidation

Starcard the smart card being used by the Chelmsford Star Co-operative society is one of its initiatives to improve its customer loyalty. But Starcard is not being used to its full potential to justify the investments made in it.

The 500 club members have some knowledge about its potential and the introduction of the card has helped in increasing spending at the store, therefore reinforcing the brand loyalty in customers. But in the lower categories this was not seen. All the people had joined the bandwagon because of the dividend scheme.


*Reduce the number of initial investment categories

oMaximum of four categories should be present because in six categories there is no significant difference in the number of points or dividend earned except in the 500 pounds categories.

o The number of points and the dividend earned for the card with £1 investment should be reduced so that people are enticed to purchase the smart cards with higher investments.

oThe food center should earn the minimum points in the £ 1 investment card and there should be a sharp hike in the number of points that a person is enticed to take the next higher level.

Modified Reward and Investment Structure

Investment levels£1£50£200£500

Food Center 153060100

Department Store103050100

Motor Services 103050100

Travel 3%5%10%15%

Funeral Services 3%5%7%10%

*Educate the users on the various applications of the smart cards.

oAll the users are right now being attracted towards the system because of the dividend and discount policy. Therefore steps should be taken to educate the users about the system. This can be done through

Customer relationship representatives explaining the users about the utilities of smart cards

Displays featuring pictorial representation of how smart card is useful.


*Extensive use of smart card in electronic purse system

oRight now the use of smart cards for transactions is very less. The store should try to make extensive use of this feature because it is going to ease the method of payment.

oUsers can buy cards with certain value and this could be used to make purchases and after purchases for the entire amount has been made the consumer can refill his card at the store.

*Have an extra points scheme for the people who advocate for the card and are able to get new customers for the store.

*Tie up with other establishments :

oHave tie ups with petrol pumps, parking lots, restaurants etc. where the stores consumer can pay using the Starcard.

oProvide points to your customers when he uses the Starcard to pay at the above establishments to encourage the users to use the card.

*The smart cards can store the personal data of the consumers, his shopping preferences and this can be used by the retail store to conduct various customer analyses to improve the sales, customer satisfaction and reduce inventory.

*Smart cards can be used to aid in warehouse management.

oSmart cards can be attached to batches of goods to monitor the movement of the goods along the supply chain.

oThe information stored in the smart cards can be used to analyze the pain points of the supply chain.

2.Based on the experience of society with smartcard technology, draw up a critical appraisal of its use which would demonstrate the advantages and disadvantages of the technology to a retailer considering the introduction of a loyalty scheme?

Smart card has a number of advantages because it is like a mini storage cell which can store a lot of information and it can allow the users to do away with his entire wallet. It can be used for payments, storing personal information and as an ID.


*Ease of payments. With e- purse system the user does not have to carry money for his shopping. All he needs to do is present his smart card and the money can be debited to him.

*Faster mode of payment: None of the users have to be connected for the payment to be made and no authorization is required during the payment.

*Security. As the card is protected by a security code and has the users personal information programmed into it, it cannot be used by someone else for making purchases.

*Ease of data analysis and tracking of goods

oDemand analysis: Tracking of customer preferences

oFinding a trend in the products which are being sold and those which are not sold.


*Flexibility: One card can simultaneously be an ID, a credit card, a stored-value cash card, and a repository of personal information.


*Cost is a major factor for the use of smart cards. The initial investments required for the purchase of smart cards and terminals to read smart cards is high. But with the advance in technology this disadvantage has been eliminated.

*Apprehension among the people regarding the security and utility of the use of the card. This can be eliminated by educating the users on the utilities of the smart card.

*The chances of fraud using the smart cards are there. A person may get an amount debited to his smart card and is unable to pay that amount.

Thus because of its advantages the smart card can be used by the retailers to draw customers and also in reinforcing brand loyalty.