Customer Loyalty Cards: How to Get Started (2024)

Starting a customer loyalty program for your business can be highly beneficial—not only for you but also for your customers. Customer loyalty programs help build and retain customer relations and keep them coming back for more.

Setting up a customer loyalty program doesn’t have to be complicated, but there are a few things to consider before diving in. You’ll need to understand the different types of customer loyalty programs and balance rewards with the expense of running the program.

Don’t worry, though! We’ve compiled everything you need to start a customer loyalty program.

Understanding the Benefits

Before diving into the how-to, let's briefly touch on why loyalty cards are beneficial:

• Increased Customer Retention: Loyalty programs incentivise repeat purchases, encouraging customers to return to your company to earn more rewards. Retaining an existing customer is significantly more cost-effective than acquiring a new one, making this a substantial advantage.

• Customer Referrals: Loyal customers not only shop with you more frequently but also tend to share their positive experiences with friends and family. These customers are likely to become brand advocates, boosting your sales through word-of-mouth without the need for expensive advertising.

• Increased Sales: Loyalty programs encourage customers to buy more to earn more rewards. When executed correctly, this can lead to a noticeable uptick in sales as more customers participate in the program.

• Enhanced Customer Experience: Loyalty programmes make customers feel appreciated and valued, leading to higher satisfaction levels. As a business owner, prioritising a positive customer experience should always be a key goal.

Different Types of Customer Loyalty Programs

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Here are some different customer loyalty programs available: 

Stamp Card Programs

Stamp card programs are one of the simplest forms of customer loyalty initiatives. Typically, customers receive a physical or app-based stamp card, which they present during each visit. With every specified purchase, they earn a stamp. After collecting a set number of stamps, usually ten, they receive a free or discounted item.

These programs are particularly popular with coffee shops and eateries. An example is a “Buy ten coffees, get one free” card, encouraging repeat visits. The high opt-in rate is attributed to the ease of participation, as customers can simply take a card without signing up.

Points-Based Programs

Points-based programs are among the most popular customer loyalty schemes. They boast a low barrier to entry and high opt-in rates. Customers earn points for every specified amount spent, often at a rate of two points per pound (like Sainsbury's Nectar Points).

After accumulating a certain number of points, customers can redeem them for discounts, coupons, or other rewards. Unlike stamp cards, point-based systems apply to all purchases, not just a specific product. This flexibility and added value make these programs more appealing and secure, reducing the risk of fraud associated with fake cards.

Tiered Loyalty Programs

Tiered loyalty programs offer escalating rewards based on the customer's spending level or points accumulation over time. These programs usually feature several tiers, with each higher level offering greater perks, special deals, and exclusive offers.

The structure incentivises customers to spend more to reach higher tiers. This type of program is common among airlines and hotels, where top-tier members enjoy benefits such as free upgrades and waived fees. Uber also used a tiered system before transitioning to a paid loyalty program.

Paid Loyalty Programs

Paid loyalty programs, also known as fee-based loyalty programs, require customers to pay a one-time or recurring fee to join. These programs often have lower buy-in rates, as customers must perceive that the benefits outweigh the costs.

Amazon Prime is a prime example, offering members benefits like free one-day shipping, early access to deals, and exclusive events for an annual fee.

Value-Based Programs

Value-based programs are unique in that they focus on philanthropy rather than personal rewards. Customers' purchases support charitable causes or social initiatives instead of earning direct perks.

An example is TOMS shoes, which donates shoes to children in need for every pair sold. These programs appeal to customers who value social responsibility and want their purchases to contribute to a greater good, though they may be less attractive to those seeking personal rewards.

Step-by-Step Guide to Getting Started

Here is our step-by-step guide to getting your customer loyalty scheme up and running: 

1. Define Your Objectives

Start by identifying what you aim to achieve with your loyalty program. Common objectives include increasing repeat purchases, boosting average order value, or gathering customer data. Having clear goals will guide the design and implementation of your program.

2. Choose the Right Type of Loyalty Program

There are various types of loyalty programs to consider:

• Points-Based Program: Customers earn points for purchases, which they can redeem for rewards.
• Tiered Program: Rewards increase as customers move up tiers based on their spending.
• Paid Membership: Customers pay a fee for exclusive benefits and discounts.
• Stamp Card: Simple and effective, customers receive a reward after a set number of purchases.

Select a program type that aligns with your business model and customer preferences.

3. Select a Platform

Choosing the right platform to manage your loyalty program is crucial. Several options range from dedicated loyalty software to integrated solutions within your point-of-sale (POS) system. Ensure the selected platform can handle your specific needs, including tracking customer purchases and managing rewards.

4. Design Your Loyalty Card

Your loyalty card should be visually appealing and reflect your brand. Consider whether you'll offer physical cards, digital cards, or both. Digital cards are often more convenient for customers and easier to manage, especially if they can be added to your customer's digital wallet.

5. Set Up the Program Rules

Clearly define how customers will earn and redeem rewards. Make the rules simple to understand to avoid any confusion. Decide on:

• Earning Points: How many points per pound spent?
• Redemption: What rewards are available, and how many points are needed for each?
• Expiration: Do points expire after a certain period?

6. Promote Your Program

A loyalty program is only effective if customers know about it. Use multiple channels to promote your program:

• In-Store Promotion: Train your staff to inform customers at checkout.
• Email Marketing: Send announcements and reminders to your customer list.
• Social Media: Highlight the benefits and success stories.
• Website: Dedicate a section to your loyalty program details.

7. Monitor and Adjust

Once your program is live, continuously monitor its performance. Gather feedback from customers and staff to identify any areas for improvement. Use the data collected to refine your program and ensure it remains engaging and valuable to your customers.

Implementing a customer loyalty card program can significantly enhance your business's ability to retain customers and increase sales. By following the steps outlined in this guide, you'll be well on your way to creating a successful loyalty program that benefits both your business and your customers. Start planning today and watch your customer loyalty—and your bottom line—grow.