Selecting the right loyalty program to suit your business

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You’ll find a minimum of 10 loyalty programs in the wallets/smartphones of 10 people today. Many loyalty programs exist, and every restaurant or shop tries to get customers back into their stores.

How much do you know about the most basic types of loyalty programs? There are many types of loyalty programs. However, the majority of them fall into three categories.

Which type of loyalty program is best for your business? We’ve listed the pros and cons of the three most popular types of loyalty programs so that you can choose the best one for your store.

Type 2: Classic Punch Card

This one is well-known to everyone. This is the classic punch card that businesses have used since the dawn of time to get customers to buy more. There are many reasons why this scheme is so popular.

Pros:

The customer needs help understanding the way it works.
The cost of running this game is meager. You only need a few printed cards to get started.
You can easily create tiers to reward ever-increasing purchase levels.

Cons:

Customers are expected to bring something physical to the store. This can be a big responsibility.
A custom punch or stamp is essential to prevent customer from cheating on the system.
The simplicity of the program is its biggest flaw. You don’t gather any information on customers or complementary purchases.

Type 2 – Points program

A points-based loyalty program is the second most popular (consider your credit card with airline miles). This loyalty program awards points to customers based on their spending habits.

Pros:

It’s easy to understand customers, too: Buy X and get Y points.
Customers can also easily earn more rewards by making larger purchases.
There is no change to the rewards you receive for purchases. The points you earn are equal to the amount you spend.

Cons:

Users of this type usually wait for the longest to collect their rewards. There is no instant gratification.
You’ll need to spend more time maintaining the program. You will have to track customers and remind them where they are.

Type 3 – Cash Back Program

Cashback or rebate programs are also top-rated. This program allows users to earn money from previous purchases that they can spend on future purchases.

Pros:

Cashback rewards are an excellent incentive for customers to frequent your business.
By requiring users to spend their rewards at your store, you will encourage them to return for more visits. This is always a positive thing for business owners.
Spend X and get Y.

Cons:

The user must wait before redeeming their reward. Cashback rates tend to be low, so it can take a few visits before users build up a bonus worth spending.
The rewards tend to be low, so it can be costly to build them.
This type of program is less appealing to customers who visit your store rarely.