Running an effective loyalty card program

  • by cwdevelopment
  • 04.06.2013
  • Articles

In modern business, some retail companies have come to rely on loyalty card programs as an effective tool for customer retention. It is a great way to improve your standing amongst your competitors as you are able to gather valuable insight about your customers’ preferences and behaviour, while they are rewarded with a mix of both money and discounted gifts. Customers have found these systems to be very popular as they offer a way to reward them for purchasing items that they would usually purchase anyway.

An effective loyalty card system can really draw in potential clients and entice them to shop with you rather than your competitor, so it is important that you pull out all the stops to ensure you stay ahead. Over time this allows you to grow your brand and your business with a loyal customer base.

How does a loyalty card system operate?

A loyalty card system enables you to keep track of your customers while enabling them to get special privileges and discounts on items that you stock. This works well for both parties as you will be making money off their purchases, while they will be saving more than if they didn’t have a card.  There are a number of different loyalty card systems available depending on where you decide to shop, but in general these systems will operate under a points system where you are awarded a certain number of points depending on how much money you spend.

Once you have accumulated enough points you can often convert these points into items or cash back depending on the type of loyalty system you are operating. You may also be able to use your loyalty card as a way to get a discount on existing items through special members-only offers which are only available to loyalty card owners.

What benefits might this bring to my business?

Loyalty card systems help to increase the exposure of your business while attracting customers at the same time. Some benefits include:

  • Gather useful information regarding customer preferences
  • Identify your most profitable customer segments
  • Increase fulfilment of demand
  • Increase the average transaction value
  • Increase purchase frequency
  • Establish sustained and sustainable brand building
  • Achieve market differentiation

Aside from special discounts, payback schemes and coupons, loyalty card programs can also be used to appeal to individual customer segments by offering segment-specific services and value added benefits. Sophisticated member status systems can be used to motivate customers to deepen their relationship with your company even further.