Loyalty Card Programs: How do they work?

A loyalty card program is a customer-focused incentive plan that allows a retail business to acquire, retain and gather data about its customers.  Customers are offered various rewards for their participation in the program such as product discounts, coupons or points. The primary goal of a loyalty card scheme is to entice customers to spend in your store as opposed to a competitor and the right reward can be a great way to achieve this.

The secondary goal of a loyalty card scheme is to build repeat business by offering those who take part something that isn’t available to non-participating customers – Everybody likes to feel exclusive

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Loyalty cards typically take the form of small credit card size plastic cards but can also be smaller or larger depending on the business needs.  A loyalty card usually has a barcode or a magnetic stripe which is used to interact with the point of sale terminal. This barcode or magstripe is what identifies the customer and links back to a database containing the customer’s information such as name, date of birth and card balance among others.

The information in this database can be used by a retailed to better understand the customers spending habits. According to a survey carried out by Print World approximately eighty-six percent of American shoppers are listed in some form of loyalty database.

Types of Customer Loyalty Programs

  • Points Programs

The most common type of loyalty card program is the points program. This system allows customers to accumulate points each time they use their card. These points can be redeemed later for rewards or free products. These systems are simple to set-up and use and as such, they account for 73% of modern loyalty programs.

The problem for most businesses is of course to get customers. Whether you’re a brick and mortar store or an online eCommerce retailer, without customers, your business will fail. Points based loyalty programs are an excellent way to gain and retain customers.

  • Spend Programs

In spend programs; customers get credit in return for the amount they spend at your business. This program is very easy to understand, implement and maintain. It is also proven to be an effective way to increase transaction amounts and reduce churn rate.

  • Paid Programs

In paid programs, Customers pay a fee to join your VIP members club. This gives access to special discounts, services or unique opportunities unavailable to the general public. Your paid program should include tangible benefits that are exclusive to members or else risk losing its value.

Where to start?

The first point of contact should be a software provider, their software will provide the foundation on which your loyalty program is built. Once you have your software package up and running you’ll need a loyalty card printer for your physical cards. There are numerous specialist printers such as https://cardlogic.ie which provide such services.

Your software provider will let you know the specifications you need for your cards.

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Pavlos Papadopoulos

TechNews

TheLatestTechNews is a personal news blog that is covering Latest Technology News, Computers, Smartphones, Cameras, Digital Marketing, SEO Tips & Tricks

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