Loyalty Card Schemes
The best loyalty card schemes are those that are easy to understand by your customers, your staff and don’t impact heavily on your businesses bottom line. For SME’s, loyalty schemes need to be simple to operate and give customers clear achievable targets, promoted via marketing messages and in-store point of sale.
The three most popular types of loyalty schemes are points for pounds, points per transaction and points per visit. We’ll run through the key differences below, along with the pros and cons of each type of scheme.
If you want to skip ahead to the Loyalty Scheme Reward Calculator please click here.
Word Of MouthCustomers Love Telling Friends About Their Loyalty Rewards
Points for Pounds Scheme
A points for pounds loyalty scheme is generally the best received by customers as they know that every pound spent is going to be rewarded. Points for pounds schemes are ideal where the average transaction is above a nominal amount and when a retailer wants to track customers by revenue. Most points for pounds schemes offer a tiered incentive to encourage customers into building up points.
Tracking by revenue allows for great marketing opportunities as you can target the top / bottom 100 customers with additional incentives.
- Revenue tracking per customer.
- Ideal for tiered loyalty schemes.
- Can be used with or without till or payment terminal integration.
- Without till or payment terminal integration the transaction would need to be recorded twice. With the Reward-It Web Terminal and Reward-It Scan’r App software, points are calculated automatically based on the business rules set up for your company.
Points Per Transaction Scheme
A point per transaction scheme is ideal for businesses that have frequent shoppers such as a coffee shop, where the transaction value is generally quite low but the volume of transactions is relatively high. Every purchase would be rewarded with a point.
An example points per transaction scheme would be Buy 10 Get 1 Free.
- Simple to operate and setup.
- Can be used with or without till and payment terminal integration.
- Gives a less in-depth overview of your customers spend.
Points Per Visit Scheme
A points per visit loyalty scheme is ideal for where you are interested in rewarding footfall to your location as opposed to transactions. Examples of where a points per visit scheme may be run would be nightclubs, snooker halls and other sports venues.
Our software can limit the maximum number of points per day, so multiple entries would only count as a single visit.
- Quick to record visits via an app or web terminal.
- Ideal for certain locations where alcohol may be involved as the customer would need to show their loyalty card only once per visit.
- Great for tracking customer frequency.
- Can be used with or without till and payment terminal integration.
- No record of customer spend
What to give away as a redemption offer? Loyalty Reward Valuation
Calculating what rewards to give and what your loyalty point tiers should be needn’t be complicated. You need to know a few facts about your business – your average order value, average profit and the percentage you are willing to give back to your customers. Try our loyalty rewards calculator above to help you visualise your loyalty tiers.
We recommend to our clients that the perceived value of the reward to be around 3 -5%, whereas the actual cost to the retailer would be around 1 – 3% of spend dependent on mark up. This is a nice sweet spot as it doesn’t hit company profits too hard and the customer feels like they are getting a decent reward for their repeat business.
- A typical meal for 2 people at a mid-range restaurant in London is £51 (Numbeo, Jan 2019).
- The average gross profit margin for a restaurant is 40% (Buckley, Steven. “Common Food & Labor Cost Percentages.” June 2018).
- After the 3rd visit, the customer has spent on average £153.
- The average starter at the example restaurant has a cost price of £3.50.
Therefore, the restaurant owner could offer a redemption point of a free starter at 150 points (£150 mark) as they would be giving back 2.28%. The customer could alternatively save their points to reach the next tier which may be a free bottle of house wine after or save further for a free main course. Feel free to try the loyalty reward scheme calculator with your own figures to see what you could give as a reward.
A well run tiered loyalty scheme should encourage customers to save their points for the next tier, as every unclaimed redemption positively affects the businesses profit. Loyalty schemes aren’t designed to give away products for free, they are designed to increase revenue from your existing customer base, though incentivised offers and promotions.
What data to collect
As part of joining a loyalty scheme, we tell our clients that they should collect some personal information from the customer as a condition of joining. We recommend that retailers should ask the customer for their name, email address, date of birth, postcode and obtain consent to email marketing.
The name and email address allows for you to send personalised emails, the date of birth can be used to send an incentivised email such as ‘join us for your birthday and receive a free X’. The postcode can be used to verify the cardholder in case of lost cards and issuing replacements, as well seeing where your customer base is geographically located.
As part of GDPR, consent to email customers is required, thus all our generated forms have a simple checkbox that indicates that the customer consents to receive email marketing. A customer can relinquish consent to emails at any time. Our software also allows an export of customer data if so required.
Other details can also be collected at the time of sign up such as memorable dates (i.e. a car mechanic may record a car’s MOT date), product / brand preferences or other variable data. We offer a range of fully customisable fields from text fields, checkboxes and drop down fields to allow for laser targeted marketing. If you want to target males, over 50 who have an interest in football and support Fulham, that is entirely possible provided you collect the data.
Loyalty Card Design
The design for your loyalty card should reflect your business, branded in your companies colours and with the same style as your in-store decor or website. It should be instantly recognisable for anyone who shops with you and should take pride of place in your customers wallet.
In terms of card finishes there are two main options, matt and gloss. A matt card can look great when used with solid colour background, where as a gloss finish is ideal for a multicoloured card.
Choice of card material – the most used is PVC although other options include biodegradable, Teslin, PET and ABS.
The choice of technology is generally dictated by the hardware used to read the cards, be it a barcode reader, magnetic stripe reader or phone camera.
For frequently visited stores a keyring fob may be an option. Additionally for a family type card where one loyalty account may be shared between multiple members, a card plus 2 fobs could be an possibility.
For more options please see the Plastic Cards and Fobs page