Loyalty Cards Advantages- Pros and Cons

by
Ira Nachtigal
December 13, 2020
3 min read

If you’re a restaurant or a store owner, you might have wondered how you can gain an edge over larger establishments that have bigger marketing budgets. One way is to offer loyalty programs to your top-spending and regular customers, as studies repeatedly show that regulars spend more than new customers do. There are multiple ways to implement a loyalty program, and loyalty cards are a favorite of small businesses.

What are customer loyalty cards?

Loyalty cards are given by businesses to their regular customers so that they make purchases repeatedly. Each time a customer purchases something, points are credited to the card. The customer can redeem these points for any products or services of their liking at the same establishment.

In the past, most businesses offered physical loyalty cards made from plastic. As customers often lose them and tracking information is difficult, many establishments have moved towards digital loyalty cards. Digital loyalty cards can be accessed via loyalty management apps on smartphones and other devices.

Take a look at the potential benefits of loyalty cards for a small business:

1. Build valuable customer relationships

Loyalty cards are given to regular and repeat customers who tend to spend more, and remain committed to your business. This provides you with an opportunity to build valuable relationships that are enduring and mutually beneficial.

Loyalty cards act as a reminder of this special relationship between you and your customer. Rewards motivate customers to remain in this relationship. This is very important for smaller businesses such as indie stores, salons, and restaurants as they have a smaller ad spend.

2. Give a boost to marketing campaigns

Marketing campaigns are notoriously expensive, and often feature a hit or miss strategy. Loyalty programs, on the other hand, target regular and faithful customers who are more likely to patronize your store or restaurant. You can use loyalty cards to market your restaurant or store to existing customers, instead of spending more to gain new customers.

3. Increased sales and profits

Research shows that those who are loyal to a brand tend to spend multiple times more than a new customer. 73% of customers recommend businesses with appealing loyalty programs to their friends and families. In other words, loyalty cards help in building a devoted customer base, which results in increased sales and profits.

What are the challenges of using loyalty cards?

1. Customers are skeptical

71% of those surveyed revealed that they will not purchase from a brand that collects a lot of personal details.

What you can do: Focus on rewarding purchase behaviors and not on collecting personal data. Use an automated loyalty tool that gently notifies customers when they are eligible to redeem reward points.

2. Customers are put off by physical cards

According to a Wilbur survey, 79% of US citizens who were interviewed in a survey confessed that they wouldn’t join a loyalty program that mandates them to carry a physical card. A Bond survey revealed that 95% of consumers prefer to use loyalty cards via technologies such as their own smart devices.

What you can do: Prove to your regular customers that you are a professional and modern business just like larger establishments. Use digital loyalty cards through a loyalty management app instead of physical ones. Differentiate from smaller nail salons, indie stores, and cafes that still issue physical loyalty cards.

3. Your loyalty program may not be strong enough

If you do not tie your loyalty cards to an engaging loyalty program with suitable rewards, it will simply fail. Your customer loyalty cards may also fail if the associated rewards fail to sustain customer interest and motivation for a long duration.

What you can do: Use an automated digital loyalty card that uses customer insight to help you create personalized loyalty campaigns.

Incorporate digital loyalty cards in your business today

Loyalty cards are an excellent way to get people to enroll in your rewards program. Digital loyalty cards can be implemented through loyalty management applications such as Glue. Customers not only desire but expect businesses to use electronic loyalty cards. If you run an independent store or restaurant, digital loyalty cards will help you appear more successful and professional. This increases customers’ confidence in your products and services, and help you grow as a business.

To find out how you can start issuing digital loyalty cards to your customers, contact us today

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