As the final 2019 amendments to the California Consumer Privacy Act were winding their way through the legislative process in Sacramento early this month, the retail industry watched A.B. 846 with special interest. This bill, originally touted as saving retail loyalty programs from the reach of the CCPA's nondiscrimination prohibition, had morphed into a complicated safe harbor saddled with limitations.

Some in the retail business community questioned whether the final version of the bill would truly save loyalty programs from the CCPA. But all of this begs the question, did loyalty programs need saving in the first place? And with the failure of A.B. 846 to pass, will loyalty clubs survive the CCPA?

Retail Loyalty Clubs — History and Recent Trends

Among marketers, it is an oft-told anecdote that loyalty programs date back to the early 18th century when retail merchants began giving their customers copper coins that could be exchanged for merchandise with future purchases. These early programs were focused on the first rule of retail marketing — get the customer back in the door. And in truth, the loyalty program model has not changed much in the past 300 years. For example, you may still have a punch card that earns you a free coffee on your tenth visit to your local coffee shop.

But while the fundamentals have remained constant, retailers in today's digital marketplace have seriously upped their loyalty program game. In this fiercely competitive environment, these programs remain effective mechanisms for retaining and engaging consumers. And, in addition to serving that first rule of retail marketing, these programs are now one of many means by which retailers collect and use customer data to grow and enhance relationships.

Today, sophisticated retailers are focused on building trusted and enduring relationships with their customers by providing curated experiences. The level of personalization that many retailers provide to their loyalty club members is unprecedented. While exclusive discounts and promotions remain a core part of many programs, they also seek to leverage technology and make the shopping experience as convenient and user-friendly as possible.

For example, many programs offer perks like free shipping and no-receipt returns. Some are supported by integrated mobile apps that seamlessly track member points, customer rewards, purchase history and payment preferences to make transactions frictionless. While these conveniences are invaluable to busy consumers, today's loyalty programs go even further and seek to build relationships and a sense of community among their members.

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