Loyalty card schemes are widely operated throughout the World in a range of vertical markets including retail, travel and leisure. Schemes range from a simple cardboard card which is stamped each time the holder makes a purchase to a multi-platform nationwide scheme operated using a plastic card, website and mobile phone app. Whatever the scheme type and size, they are all designed to ensure that the customer comes back to make their next purchase.
Schemes can reward customers in different ways; some will give a discount on the purchase as it is made, some will give cash back as the customer reaches certain targets, and some build up points which can be redeemed against the purchase of products or services at a later date.
A basic scheme normally uses a cardboard card which is stamped each time the customer makes a purchase. These are widely used in smaller retailers such as independent coffee shops who will, for example, give one free drink for every ten the customer purchases. These schemes are simple to setup and operate but lack a customer database which is not as good for the retailer as they cannot track the buying patterns nor send marketing communications directly to the customer.
A mid-range scheme is typically operated by a single retailer who will have a branded plastic card with a barcode, magnetic stripe or even a smart card. Some of these cards will be personalized with the card holder’s name as well as a membership number. The schemes will normally be linked to a database which will be used, at a very basic level, to hold the customer details for marketing purposes. More advanced retailers will track the purchases made, in order to allow them to complete direct target marketing. This will enable retailers to offer individual customer based incentives.
Loyalty schemes at the higher end of the market are typically operated by a group of organisations at a regional, national or multi-national level. This allows customers to earn points against purchases made with a large number of retailers and then redeem these against a wide choice of products and/or services in many different markets. This is commonly seen in large shopping malls where all retailers will join the mall loyalty card scheme, often in addition to their own, as it encourages customers to visit the same mall again and again. In the travel industry airlines, hotel chains, & rental car companies often operate joint loyalty schemes to ensure that customers always fly with the same airline, stay in the same hotel chain, and rent their car from the same company. Points earned are often redeemed against flight, hotel and car upgrades.
In most schemes, the loyalty card will be a plastic one featuring a barcode or magnetic stripe which is simply used to store a membership number to identify the card holder. All of the customer & transaction data is held in a central database so the card can be used at multiple locations, all of whom have access to the same data. In situations where it is not possible for multiple sites to access a shared database, it is possible to store all of the customer and transaction data on a smart card which is read and updated with the new points balance each time it is used.