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Loyalty Programs

What are the Different Ways To Operate a Loyalty Program?

Written by 
Brad Davis
September 23, 2019

Loyal customers are imperative to business success. Though there are many different ways you can go about implementing a loyalty program to create them for your business.

Some programs involve paper cards at the counter, others require a tablet to be installed at your POS, and others come in the form of a mobile app.

With a multitude of loyalty program options available, how do you know which one is best suited to your business model?

Let’s explore which types of loyalty programs are out there, to help you get an idea for which type would work best for your brand.

1. Paper Punch Cards

The traditional paper punch card is the original loyalty program.

You know the drill; first-time customers receive a card with a grid of squares on it and every time they make a purchase at that shop, one of the squares gets a hole punched through it. Once every square has a hole punched, the customer gets a reward or incentive for their loyalty.

For cafes, this reward is generally a free coffee, for salons it might be a discounted haircut, for car washes… you get the idea.

The paper punch card was a hugely successful system for businesses around the world for decades. But while the remarkable simplicity of this form of loyalty program worked so well for businesses in the past, the digital era is quickly deeming it defunct.

If you want to weigh up the pros and cons of paper punch cards a little further, you can read more on that subject here.

pile of loyalty cards

2. POS-integrated Loyalty Program

This type of loyalty program is integrated into your point-of-sale system. When customers make purchases, staff members can bring up the customer’s loyalty program membership and link it to the transaction.Points are accrued and rewards redeemed directly through the system at the time of payment. The loyalty program records data such as how much the customer spent, what items they purchased, how frequently they visit the store, and so on.

POS-integrated loyalty programs are an effective and convenient option, however, they are usually quite costly and complicated to implement.

customers paying at cash register

3. Loyalty App

And finally, there is the loyalty app.

If you're thinking "umm.. I can't afford to build my own app!" - don't worry... there is plenty of affordable loyalty technology readily available in the market. You don't have to spend thousands on building your own app.

You can subscribe to a loyalty app provider (like Stamp Me) and have access to a fully functioning digital loyalty platform at a very reasonable monthly cost. For example, our loyalty app starts from just $43 per month.

Loyalty apps are a remarkably convenient option for both the merchant and the customer, and are generally the most cost-effective option for businesses.

hand holding phone showing digital app

How do loyalty apps work?

There are various loyalty app providers available in the market and each differs slightly from the other.

However, the process generally requires the customer to download an app, create an account, and begin redeeming rewards through the app each time they make a purchase with your brand.

It’s essentially a loyalty card that the customer stores on their phone, rather than in their wallet.

What are the benefits of a loyalty app?

By digitalizing customer loyalty, you open the door for a whole bunch of cool stuff.

For example, you can send loyalty program members Push Notifications and automated texts directly to their phones. Customers are effectively informed of special promotions, limited-time offers, and the occasional random reward to keep your business front-of-mind.

Loyalty apps also allow you to engage customers in “Scratch & Win”-style campaigns to keep the program fresh and exciting.

A digital loyalty program also allows for businesses to capture and store loyal customer data. 

This provides valuable insight into who their loyal customers are, and how frequently they visit their business. Merchants can then use this information to personalize offers for specific customers.

Have a read of our other blog posts on how loyalty programs can benefit the community and how digital programs can benefit your business

So, there you have it, some of the different ways to operate a loyalty program… which of them works best for your business?

Of course, there are other kinds of loyalty programs out there, but most of them are variations on one of these three methods.

The loyalty program that best suits your business ultimately depends on who your customers are, what kind of product you sell, and how customers typically engage with your brand.

Have a think about your business, and how each of the three types of loyalty programs mentioned above would appeal to your customers. This will help you pick the best way to operate your loyalty program.

If you’re still not sure which is the best way to operate a loyalty program for your business, please get in touch with our team for some free loyalty advice. We’re always happy to help.

Stamp Me provides loyalty solutions to businesses large and small, from our own Stamp Me Loyalty App to fully customised loyalty and rewards programs for enterprises and brands.

Contact us if you would like to discuss a loyalty or rewards solution for your business or brand.

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