Today we will be talking about the different types of loyalty programmes and each of their pros and cons.
1. Stamp / Punch Card
We’ve seen the stamp card system being commonly used by cafes and salons since we were kids. A rubber stamp is used to stamp on the printed card each time the customer orders. When the number of stamps fulfills the required quantity, the customer can redeem for a free drink or hair cut service.
Pros: Easy to start a loyalty programme. Just print and hand out the stamp card.
Cons: Doest not track the customer’s progress and the customer seldom completes the redemption.
2. Annual Membership Card
The membership card system is often deployed by retails, attraction parks and hotels for a small annual membership fee. Registered members enjoys a long list of attractive deals which includes free meals & stays and various discounts on selected products. A newsletter is also sent out on a monthly or quarterly basis with vouchers and it showcases products that you can exchange with points.
Pros: Easy to acquire new customer because the deals are worth at least 10x of the membership fees.
Cons: Very minimum data analytic and customer loses interest fast after redeeming all the free deals.
3. Credit Card Cashback
The cashback systems took off when credit cards companies were competing with each other. When a customer uses their credit card for purchases, a small percentage of the payment amount is return to the customer and its cash value can be used to deduct for the next payment.
Pros: Customers saves money on the next payment.
Cons: The cashback value is usually disguise with a maximum limit per month and only the very big companies can have their own branded credit card.
Cost: Medium / High
4. E-wallet Cashback
Many e-wallet companies have appeared in Asian countries like Malaysia and Singapore. Customers can top up value through an app and spend across thousands of merchants by just using a QR code.
E-wallet companies also offer a cashback system as a form of loyalty feature. Merchants can decide to offer 5% or 10% cashback to be returned to the customer.
To give an example, Starbucks offers 10% cashback on all purchases. Joe who spent $100 at the outlet would receive $10 in cashback value in his e-wallet. He can use the $10 for his next visit to the outlet.
Pros: A loyal customer would return to spend their cashback.
Cons: It can get very expensive because the merchant would have to pay the e-wallet company for the total amount of cashback which was issued.
Cost: Medium / High
5. Online Loyalty Points & Rewards System
It is an online solution specifically for running a loyalty programme. Customer can login to view their loyalty card balance, flash their QR code to earn points and browse through the rewards store to redeem for a reward.
It also has other features build-in to increase store visits and revenue by getting customers to perform various actions.
Pros: Various ways for businesses to increase store visits frequency.
Cons: Can be time-consuming for business owners to setup the right rewards structure.
Cost: Low / Medium