By Sarah Pritzker
By David Dougherty
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All you need to know about what a loyalty program is, the types of loyalty programs available in Canada, and why you need one for your store.
What is a Loyalty Program?
A loyalty program is basically a way to reward your best customers and to give those customers who don’t come so often an incentive to keep coming back.
What are the Different Types of Loyalty Cards?
Loyalty programs can be set up in various ways and different loyalty cards might reward users with points, cash back, or free items. Some loyalty cards are also credit cards, which reward customers for using their card no matter where they shop.
Cashback Loyalty Card
Cashback loyalty cards let customers earn back money from their shopping. Often, the cashback is given as a credit slip or a reduction on the credit card bill instead of actual cash. Some cashback loyalty programs mail the customer a cheque for the chasback amount.
Cashback loyalty programs can be particularly appealing to consumers when multiple businesses join together in the same program, allowing customers to earn cashback faster. But, some smaller grocery stores run independent cashback programs, giving customers in-store credit slips once they’ve spent a particular amount.
Air Miles/Rewards Points Loyalty Card
Air miles loyalty programs are always popular among Canadians and 81 per cent of Canadian shoppers belong to one. However, you’re not going to be able to set up an air miles loyalty program on your own.
Membership Loyalty Card
This is the simplest type of loyalty card, which makes your customers members of your business community. You create your own card design and give customers special offers and discounts when they show their loyalty card. One option is to send your members regular e-mails about special offers, provide them with coupons for discounts, or tell them about events and promotions around special dates like their birthday or your store’s fifth anniversary. Or, for example, you can have a standing, special offer of one free coffee a month for loyalty program members.
Another variation is to make a punch card that you give to every customer. When they collect 10 punches, for example, they get the 11th purchase for free. This works well for coffee, filling the tank with gas, or for carwashes.
Why Should I Consider a Loyalty Program?
The promise of a free gift, free money, or extra miles from a loyalty program draws shoppers to your business and builds bonds with your best customers. Eighty-four per cent of shoppers are more likely to visit stores that offer a loyalty program.
When you give out a loyalty card, you also gather some of your customers’ personal information in exchange, like their e-mail addresses, dates of birth, or the number of drivers in their households. Then, you can join smart marketers by e-mailing patrons to let them know about your seasonal promotions, send them coupons for their birthdays, or suggest tips on finding car insurance for new drivers. This not only gives them a good reason to visit your business again, it also strengthens their connection with your store.
Loyalty Cards are What Your Customers Expect
Today, nearly every corner carwash and boutique coffee store has some kind of loyalty card. It’s become an expected part of every business, and those businesses that don’t incorporate one into their strategy risk falling behind the competition. Now that you understand how loyalty programs work and what the benefits are of having one, go ahead and set one up yourself!
Sarah Pritzker is a professional writer who specializes in financial markets and trends in Canada and the U.S.