How Much Does A Rewards Program Cost To Implement?

Wondering whether a rewards program is cost-effective for your business?

In this article, we will guide you through the various rewards programs available for your business, and give you an idea of how much you can expect to pay for each.

We will compare the overall costs for:

- Paper Punch Cards

- Digital Rewards App

- Integrated POS Rewards Program

- Enterprise Digital Rewards Program

It’s worth mentioning that the cost of any given rewards program can vary depending on its size and scope.

Paper punch card costs

The first expense you’ll encounter with paper punch cards is designing your card. With so many trendy templates and free resources available though, card design doesn’t need to be a costly exercise. You can check out some great free punch card templates here.

For those of you who are prepared to spend a bit more money for a more unique and individual design, using a freelance designer will generally cost you around $100 – $500 depending on the level of detail you want, the skillset of the designer and whereabouts they are located. Services such as 99 Designs and Upwork can help you with that matter.

Now that you have your design, you’re ready to get your cards printed. Printing costs have been tumbling in recent years, and services like Vistaprint offer 2000 printed cards for around $80, depending on which country you’re in.

The ongoing costs of maintaining a paper punch card system are most likely going to be small, subject to the size of your business and the amount of customers who visit you each day.

Once you’ve settled on a design and card offer you like, you can keep your printing costs low by printing in larger quantities. Don’t print too many though, as inevitably you may change your style, offer or even upgrade to a more complete digital loyalty system!

Although, it’s important to consider the fact that we are living in a digital age and customers have come to expect digital loyalty solutions from businesses.

Read our article 5 Reasons Why You Should Replace Paper Punch Cards with A Loyalty App for more info on this.

Digital Rewards App Costs

The digital stamp card or loyalty rewards app is a modern take on the traditional paper card. While you generally need to pay slightly more to access the premium features of a digital rewards app, it has many benefits over the old-style cards.

Most operators of loyalty rewards apps allow merchants a free trial period to let them gauge the system and figure out whether it’s a good fit for their business. Occasionally you might have to pay a small setup fee, but these rarely exceed the $50 – $100 range.

The ongoing cost of a digital rewards app is normally based on a monthly fee per location. As an example, the Stamp Me Rewards Card App that we offer to merchants typically costs between $43 and $74 per month.

Integrated POS Rewards Program Costs

Once you start integrating loyalty rewards programs into your POS systems, the costs typically start to increase.

Integrated systems can vary widely from software plugins to compatible point of sale systems to proprietary modules that your POS company has designed.

Software plugins are similar to digital rewards apps in that they usually come off an SaaS (Software as a Service) subscription model. Typically, the costs of these systems can range from around $50 to $500 per POS device per month that you operate.

If your POS is an older style Windows-based solution, this type of solution is often not available out of the box. In this instance, you would need to have a developer build your integrated solution. This is generally an expensive exercise and a developer will cost anywhere from around $100-$250 per hour. It may take weeks or even months to build a full solution and then you run into the issue of support.

POS loyalty modules are often available from your POS system provider. These can often be limited in their features, as POS companies are good at building POS systems, but managing loyalty rewards is not a core strength.

The cost of these can vary widely from free to upwards of $500 per month. You can see an example of this with the Square POS system here.

Enterprise Digital Rewards Program Costs

The customized enterprise option is the gold standard in loyalty rewards solutions. This is for businesses who want a top-notch digital rewards program for their most loyal customers, and can come in the form of airline loyalty points or a digital platform built for consumer brands or franchise groups, for example.

Brands & Franchise

There are generally two options for building a rewards platform for your brand or franchise group.

You can build and develop your own platform using a developer or agency from the ground up. This is an expensive solution both in the short and long term. However, you will control all aspects of the IP, functionality and design.

Developing from scratch is expensive; to do this properly you need to hire a User Experience and User Interface designer to plan out your concept, customer journeys and wireframe your solution.

Then, you need to build the program – this will typically cost between $150,000 and $500,000. The next cost is supporting the solution; you can either do this with in-house developers or employ an agency either on a retainer or as required. You should budget at least $15,000 per month depending on the size of your project.

The second option is to customize a solution from an existing rewards app platform. Generally, the cost structure will be an initial build and customization fee which typically would range from $15,000-$40,000.

Then you’ve got ongoing license and support fees. These vary depending on the size of your business, but generally would be upwards of $2000 per month.

Supermarkets & Large Retail

Large rewards programs for retail groups are generally proprietary systems that are tailor-made for that specific business. Retail groups know the value of introducing these programs and will invest significant capital to develop and manage their programs.

How much capital? Enough to cover IT investment, development and ongoing support, advertising and marketing, business staff costs, rewards redemption and accrued liability, third party and consulting contracts, research, design and development, among other things.

Large programs can easily exceed a million dollars just to initiate the build and design and cover ongoing maintenance costs. However, the benefits can be substantial.

Starbucks, which operate one of the world’s most successful loyalty programs and rewards apps, states that each of its loyalty customers spends three times more than a non-loyalty customer.

Myer, a major high-street retailer in Australia, has quoted that its five million loyalty members are responsible for around 70 percent of its sales.

Airline Rewards Programs

Airline rewards programs are now well developed and generally cost millions of dollars to introduce and support. Just about every successful, commercial airline now has some form of a loyalty rewards program… this is not by accident.

These programs provide value through offering points or “air miles” to convert to rewards or upgrades. Programs such as the Qantas Frequent Flyer have developed into individual business units, and it’s reported that the Qantas Frequent Flyer program now brings in more than $400 million in profits after the costs of running the program have been covered, and analysts estimate that the program itself is worth over $4 billion to Qantas.

You can read about how we build customized rewards platforms here.

We hope this article gave you a rough idea of how much you can expect to pay to set up and maintain your loyalty rewards program.

If you’d like to speak to one of our loyalty experts about a rewards program for your business, ROI or have general questions, please get in touch.