A loyalty scheme looks like a discount arrangement and functions as a measurement system. The discount is the price a retailer pays for identifying which purchases belong together.
Anonymous transactions are hard to learn from
Without a card, a till receipt tells a retailer what was bought together in one visit and nothing more.
It cannot say whether the same person returned a week later, whether they switched brands, or whether a promotion brought in new customers or rewarded existing ones.
A card links visits into a continuous history, and that history turns thousands of disconnected baskets into a picture of household behaviour over years.
The valuable question is what changes
Retailers care less about what a household buys than about what makes it buy differently.
Linked histories allow a promotion to be judged properly: did it attract people who had not bought the category before, or did it discount purchases that would have happened anyway?
The second outcome is common and expensive, and identifying it is worth far more than the margin given away through points.
Offers become individual
Once purchases are linked, offers can be aimed at a specific household rather than printed for everyone.
The targeting logic is usually straightforward. It looks for a category a household buys elsewhere, a brand it has drifted away from, or a gap in the pattern that suggests a switch.
Two customers in the same queue can therefore be offered different prices on the same item, which is normal within these schemes and unfamiliar outside them.
Suppliers pay for the same information
Manufacturers want to know who buys their products, what those shoppers buy instead when they defect, and how a competitor's promotion affects them.
Retailers sell access to aggregated versions of that analysis, and for large chains it has become a substantial business alongside selling goods.
This is why schemes persist even where the visible reward is modest. The data revenue does not depend on the shopper finding the points generous.
What the shopper is actually trading
The exchange is legitimate and disclosed, but it is worth understanding as an exchange rather than as a gift.
Members receive a discount and, increasingly, prices unavailable without a card, which shifts the scheme from a reward towards a condition of the ordinary price.
Deciding whether the trade is worth making is easier once the record, rather than the points, is understood as the thing being collected.