The four types of loyalty scheme: which is right for you?

Starting a loyalty scheme can be one of the biggest and best marketing decisions you’ll make for your business – so you don’t want to rush it. We’ve outlined the four main types of loyalty schemes out there so you can see which one is best for your business.

1. Points

In this type of loyalty scheme, points are used as currency so the customer can redeem them for an item/service of worth in return for their loyalty to your business. The points system is simple to understand and take part in. Showing the customer their points balance at regular intervals, in a mobile app, for example, is important to ensure they can clearly see the extra incentive for that next purchase.

2. Discounts

Providing discounts to reward loyalty is seen very often in supermarket marketing thanks to the rise in online shopping data. They can personalise offers down to time, date and product for each customer. This also works well for businesses which get to know their clients well, such as restaurants, where they can throw in extra food or drinks with an order for a regular customer, or leave something off the bill. This type of loyalty reward is highly valued by customers as they feel like they are the only ones getting special treatment.

3. Rebate

A rebate scheme allows customers to earn money back on purchases of products or services. This works well for businesses with frequent-purchase products as it can take time to build up the cashback amount. This is similar to the Boots Advantage Card in the UK.

4. Frequency

The age-old loyalty scheme format – buy 5 drinks, get 1 free. This is often the low-cost option as it can be easily implemented with a stamp card and doesn’t require sophisticated data or redemption technology. It is easy to understand and market to your target audience, however, customers need to remember to carry their ‘stamp card’ (or similar) and it is easily open to fraud.

Have you got a different loyalty scheme in place? We’d love to hear about it!

13th June 2018 Articles, Loyalty, Marketing
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