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Signing up for a customer loyalty program is often seen a great way to get discounts, but does it have some drawbacks? After all, you are providing personal data to a company, and that data could be used against you. These businesses invest in customer loyalty program software to store your data for a long time.

Is it worth signing up for a loyalty program that gives you discounts if it means that you have to give some of your data as a customer to that business? Let’s find out.

How Customer Loyalty Programs Work?

Essentially, business are rewarding their most loyal customers by offering them discounts and deals. Customers sign up at a cash register, online, or an app to join most programs. Most of the time, no purchase is necessary. Some stores and restaurants offer customers a free item just for initially signing up.

There are many incentives that are up for grabs with these programs. Some businesses give customers cash back through purchases. Customers can earn rebates for specific purchases with that company. Other businesses give out points that can be redeemed for a special offer. Some places also give out rewards for birthdays.

A 2018 review found that some of the most successful rewards programs are found at Barnes and Nobles, CVS, Dunkin Donuts, McDonalds, Petco, Rite Aid, and many other businesses. For customers, one of these might be the best rewards program.

If you are trying to be a savvy saver, then it is recommended that you join these discount programs. A customer loyalty program is a great way to cut down spending on businesses your frequently shop at. Many people use these programs to save money and improve their budget. It is highly recommended that consumers try at least one customer loyalty program to see how it can decrease their spending over time.

What You Are Giving Up To Join These Programs

Despite all of the benefits that come with a customer loyalty program, there might be a potential drawback. After all, why do you think these businesses are giving you discounts and deals? In order to get the discounts, customers must provide personal information, such as your name, address, age, telephone number, and email address. The companies will also have data about your spending habits.

Companies with rewards programs say that the data provided by customers is often used for customer research, marketing, and gathering data about customer purchases. For some people, this is bad enough because it empowers companies and encourages them to track customers.

However, it turns out that this is only the first step. Companies have been known to either share customer data with other businesses or sell that data — your data — to the highest bidder.

“Loyalty cards are not a new thing, but the volume of data available to advertisers and companies… combined with the bloated nature of companies vying for access to data is resulting in essentially the mass exploitation of people’s data,” Privacy International told the BBC. “This picture of who you are, what your motivations are, who you want to become, can all be used to nudge you to purchase something or even behave in a certain way.”

Even if that company doesn’t intentionally give your data to another company, a hacker could break in and extract your personal data. This year, there have been more consumer data breaches than ever before. Some programs are also linked to a credit card or a debit card, which is why these data breaches could be detrimental.

Should You Join A Customer Loyalty Program Or Not?

On one hand, you get deals and discounts. On the other hand, your personal data is at risk. The decision to join these programs is all yours. Make sure that you read the fine print first and you are aware of the risk.