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Best of Alan Krigman

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Loyalty Cards: How Much Do You Want the Establishment to Know?

12 July 2006

Savvy shoppers use their customer loyalty cards at supermarkets, drugstores, and many other retailers. Doing so offers them benefits such as discounts on selected items or periodic rebates.

There's something in it for the merchant, too. Early on, that something was competitive advantage. An incentive for clientele to keep coming back. Why shop where goods and services were the same but rewards for spending the money were absent? Over time, as the cards became ubiquitous, this became a lesser factor.

Businesses ultimately pay for perks given to patrons. So they must have another impetus to support these programs. Otherwise, the cards would go the way of those yellow, green, and other trading stamps people used to paste into little books and redeem for toasters or blenders. The cards, along with information about what's being bought, let suppliers build extensive data bases describing particular consumers. These, in turn, help them rate individuals as to their revenue potential and act accordingly.

Maybe you received a personalized offer, say, for discounts on the brands of shampoo and catsup you usually buy. It came just as you were running out. This was not a coincidence. The computer projected that you'd need to replenish your stock, and spit out a coupon so you'd be encouraged to get these items you-know-where. This, since your shopping habit data indicated that any money lost on the bait would be covered by your other purchases.

Astute solid citizens will have made a connection between shoppers' loyalty cards and those they shove into the slot machines or hand to the pit bosses at the casinos. To players, they're the keys to coveted amenities from free meals and show tickets to invitational tournaments and membership in hoity-toity clubs. To casinos, they're means of tracking patrons' activity.

When a card is in a slot machine, a person's data base is continually updated to show the amount bet, at what rate, and for how long a duration. Combining this with the edge on the machine tells the casino the bettor's profit potential. To determine not only the comp credit to issue, but also how much it's justifiable spending to attract that person for another visit.

The cards are also used at the tables. Right now, mainly to facilitate identification because the gambling data are largely still gathered and input manually. Pit personnel estimate or use standard figures for bet size, speed of play, and in games like blackjack or craps where edge depends on strategy house advantage. The result is that players fuss about comped too little while casinos fret over giving away too much.

This situation is changing. Technologies are being tested to let casinos monitor every relevant parameter of play, not only bet sizes but also factors such as strategy decisions at blackjack or wagers selected at craps. This information yields accurate ratings along with deep insights into gambling patterns.

One of these technologies involves miniature "radio frequency identification" (RFID) equipment in the chips, cards, and table tops. The transponders are similar to the E-Z Pass devices that let drivers roll through toll booths on the highway. Another approach uses optics and works something like bar code systems.

Is capacity for data collection and processing all sweetness and light? The public today accepts it, mainly or exclusively for the benefits received. But privacy issues loom when comprehensive data are readily accessible to private organizations and governments alike. We could do worse than wonder about the current relevance of Charlie Chaplin's admonition in "The Great Dictator," the 1939 film: "We have developed speed, but we have shut ourselves in. Machinery that gives us abundance has left us in want. Our knowledge has made us cynical; our cleverness, hard and unkind. We think too much and feel too little. More than machinery, we need humanity." The poet, Sumner A Ingmark, may be anticlimactic after Chaplin. But here he is, anyway.

Be careful what you ask for, you may get it.
And having what you asked for, may regret it.
Alan Krigman

Alan Krigman was a weekly syndicated newspaper gaming columnist and Editor & Publisher of Winning Ways, a monthly newsletter for casino aficionados. His columns focused on gambling probability and statistics. He passed away in October, 2013.
Alan Krigman
Alan Krigman was a weekly syndicated newspaper gaming columnist and Editor & Publisher of Winning Ways, a monthly newsletter for casino aficionados. His columns focused on gambling probability and statistics. He passed away in October, 2013.