Reading: Matching Information to Paragraphs: Question 7

A Long before the arrival of digital points systems, many independent grocery stores in the mid-twentieth century issued paper trading stamps with every purchase, which shoppers pasted into books and redeemed at dedicated stamp-company shops for household goods once enough books were filled.

B The switch from paper stamps to fully automated tracking arrived with the frequent-flyer schemes airlines introduced from the late 1970s, which used centralised computer databases to record each passenger's mileage automatically, removing the need for any physical token and letting a single account accumulate value across many separate trips.

C Most contemporary schemes are structured around tiers: a customer typically earns a fixed number of points for every unit of currency spent, and crossing defined spending thresholds unlocks progressively higher membership levels that carry additional privileges such as priority service or early access to new stock.

D Behavioural economists have noted that setting an expiry date on accumulated points exploits a well-documented psychological principle: because people weigh the pain of losing a benefit more heavily than the pleasure of gaining an equivalent one, the looming loss of unredeemed points can prompt a purchase that would not otherwise have been made.

E Although the rewards themselves represent a real cost, many retailers more than recoup it: every transaction made through a loyalty account generates a detailed record of individual purchasing habits, and this information is frequently valuable enough, for refining stock decisions and tailoring future promotions, to offset the value of the points given away.

F Belonging to too many overlapping schemes can also work against the businesses that run them: surveys of consumers have found that once a shopper is enrolled in more than a handful of programmes, general engagement with any single one tends to decline sharply, since the effort of tracking multiple balances and expiry rules outweighs the perceived reward.

G The current direction of the industry is away from a single blanket discount for every member and toward individually tailored offers: algorithms trained on a customer's own purchase history now generate personalised coupons and product recommendations, aiming to feel less like a generic promotion and more like a reward calibrated to that specific shopper.

H This growing reliance on detailed purchase records has not gone unchallenged: consumer advocates and regulators in several jurisdictions have begun to scrutinise how long loyalty operators retain personal data, whom it is shared with, and whether customers have given meaningfully informed consent before their spending patterns are compiled into a permanent profile.

Which paragraph contains the following information? Write the correct letter, A–H, for each statement. NB You may use any letter more than once.

1. An explanation of how a business can profit from a loyalty scheme even though it appears to give customers a discount.
2. A description of an early, non-digital forerunner of modern loyalty schemes.
3. A reference to a psychological principle that pushes customers to spend money before a benefit disappears.
4. An account of the technological shift that allowed loyalty programmes to track individual customers automatically.
5. A concern that gathering extensive customer data raises questions about oversight and legal compliance.
6. A description of a structure in which customers unlock greater rewards as their spending increases.
7. An observation that holding membership in numerous overlapping schemes can cause customers to disengage from them.
8. A description of a shift toward tailoring offers to each individual customer rather than offering the same deal to everyone.