Is the Loyalty Card Dead?

Loyalty card

Customer loyalty card and compact disc (CD) have a lot in common. They’re shiny, from the 1980s, and were once really useful, but technology has advanced and quickly turned them both into relics. Yes, there are people still using them, but most have moved on to better options.


What’s the problem with loyalty cards?

Physical cards are easy to damage or lose or forget at home. And if someone has joined many loyalty programs, they’re likely not very fond of having a wallet fat with cards – or they simply don’t have space for yet another card! Loyalty cards also don’t magically transform customers into loyal devotees. Businesses find loyal customers when they understand and respond to people’s needs. And you can learn about and understand them by paying attention to their purchases.



Many business attempt to encourage loyalty among their customers by giving out buy-10-get-1-free cards or using another stamp or sticker option. The biggest issue with this is that most restaurants that offer this simply give the card away and stamp it each time a customer makes a purchase. In other words, restaurants can’t learn anything about their customers this way because they aren’t getting a name or email address in exchange for the card. Nothing is traceable. One key aim of your customer rewards program should be to learn more about your customers so that you can provide better service and smarter marketing. Another issue with buy-10-get-1-free cards is that they may attract discount-seekers, rather than loyalists. To gain loyal customers, your business has to offer something better and something unique that competitors can’t match. Offering exactly what everyone else offers won’t turn occasional customers into loyal customers.


A smoothie joint in my neighborhood recently gave me a buy-10-get-1-free card. I diligently frequented the spot until I got that free smoothie. Then I was “upgraded” to a loyalty card, which gives me a small discount per purchase, a free smoothie on my birthday, and a card taking up space in my already crowded wallet. So boring! I was disappointed (and also annoyed that they asked for my birth year). Have I been back there since? Nope. I still love their smoothies and will go next time I want one, but they provided zero incentive for me to keep going regularly. In some ways, I was “upgraded” to a disloyalty card. What would have worked? 


Customer loyalty program rewards

Every business with a customer loyalty program should come up with their own unique rewards (with a healthy mix of transaction- and experience-based rewards).

  • Free extra berries or toppings with every smoothie order
  • 10 points for every $1 spent
  • Preview/rate new smoothies
  • Create your own smoothie
  • Name a new smoothie


There are so many possible incentives for turning a customer into a loyalist.


The Shinier, Newer Alternatives

The foundation of any modern customer loyalty program is provided by a Customer Relationship Management (CRM) system. That way, whichever option you choose to use to encourage and track customer loyalty links back to a central program. If you decide to skip the customer loyalty card (and we certainly hope you do), what is your alternative?

Technology has advanced in incredible ways in the last few years (not to mention in the 30+ years since we first started seeing loyalty cards). A smartphone app is a natural, modern replacement for the old loyalty cards because your customers are already using smartphones and they love apps. Keep in mind that a loyalty program is a two-way street. It’s a way to encourage loyalty towards your business, but it’s also a way to demonstrate loyalty to your customers. Part of that is adapting to their needs. Smartphones are already an essential part of your customers lives, so using that platform to connect with them makes good sense. Two-thirds of Americans have smartphones, and we’re starting to see similar numbers all over the world. Having a smartphone app means you can meet your customers on their own digital turf. A customer loyalty app means they can easily participate in your program and you can easily track their participation, behavior, and purchases while in your restaurant. It’s win-win!



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