We'll support you ever more

CURRENT ACCOUNT: Loyalty cards are on the loose, but a better way of winning over customers is to turn them into shareholders

HOW many cards can you get in your wallet or purse? Yet another supermarket - Safeway - is issuing a customer loyalty card. Doesn't it realise the damage that these cards do to a wallet? But apart from that, these cards seem to me to be a rather unimaginative way for retailers to defend their turf. Here is another way.

About 20 per cent of us now own shares in companies. Nearly 100 per cent of us purchase goods as consumers. Why is so little made of the natural loyalty of shareholders as customers?

In these days of cut-throat competition, retailers particularly are trying to entice us to buy their goods, and quite rightly consumers are starting to benefit from the odd gift and discount. But with these loyalty cards they are going that one step further. There is a sinister term now being used, of "locking in" customers. Not with padlocks and chains, of course. What they are trying to do is discourage us from going to competitors at all.

This strikes me as becoming inevitably rather defensive as all the shops will end up issuing such cards. Perhaps I can then ask for a discount if I do not have a card.

If instead you want to find consumers who have already stated both their loyalty and interest in the company then look no further than its small shareholders. In marketing terms this would be described as an "affinity group", the stuff of a marketing manager's dreams.

Affinity groups consist of parties already predisposed to what you are doing who are, therefore, probably potential customers.

Shareholders are in a league apart in this respect. They have already demonstrated their loyalty by putting up capital for this business. They should be pretty soft sells. So why do many companies ignore them? Traditionally small shareholders have been seen by many companies as a burden. You have to pay them dividends each year and provide them with an expensive annual report, and then they have the cheek to ask tiresome questions at annual meetings. Even then it does not end, as you then have to pay the registrars to keep them on the company register.

There is another jargon word nowadays: "stakeholders", people with any connection to, and therefore an interest in, the business, whether customers, employees or suppliers. Turning these groups into shareholders should also create valuable allies.

In the past some companies have introduced perks for small shareholders, varying from free tea and biscuits at the annual meeting to discount vouchers. But they are rarely seen as a marketing method to encourage custom. (Exceptions include P&O, which gives discounts on its ferries and British Airways, both in fiercely competitive markets.) The idea makes sense for retailers but is also applicable to other companies. Business customers as well as employees and suppliers could all be made that much more "loyal" if they had shareholding stakes.

q Justin Urquhart Stewart is business planning director at Barclays Stockbrokers.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consulant

    £20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

    Guru Careers: Financial Controller

    £45 - £55k DOE: Guru Careers: A Financial Controller is required to join a suc...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £12500 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Recruitment Genius: Sales Adviser - OTE £24,500

    £22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

    Day In a Page

    Mullah Omar, creator of the Taliban, is dead... for the fourth time

    Mullah Omar, creator of the Taliban, is dead... again

    I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
    Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

    Margaret Attwood on climate change

    The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
    New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

    New Dr Seuss manuscript discovered

    What Pet Should I Get? goes on sale this week
    Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

    The cartoon hedgehog leading the way into a whole new reality

    Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
    Ants have unique ability to switch between individual and collective action, says study

    Secrets of ants' teamwork revealed

    The insects have an almost unique ability to switch between individual and collective action
    Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

    Donovan marks his 50th year in folk

    The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
    Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

    Simulator recreates thrill of F1 circuit

    Rory Buckeridge gets behind the wheel and explains how it works
    Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

    Twitter accused of 'Facebookisation'

    Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
    Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

    Jane Birkin asks Hermès to rename bag

    The star was shocked by a Peta investigation into the exotic skins trade
    10 best waterproof mascaras

    Whatever the weather: 10 best waterproof mascaras

    We found lash-enhancing beauties that won’t budge no matter what you throw at them
    Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

    Diego Costa: I go to war. You come with me...

    Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
    Ashes 2015: England show the mettle to strike back hard in third Test

    England show the mettle to strike back hard in third Test

    The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
    Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

    Charley Hull: 'I know I'm a good golfer but I'm also just a person'

    British teen keeps her feet on ground ahead of Women's Open
    Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

    Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

    Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
    Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

    Our choice is years of Tory rule under Corbyn or a return to a Labour government

    Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'