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Physical loyalty cards vs all-in-one loyalty apps: Which is best?

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23rd Jan 2014
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The loyalty card industry has matured in recent years, with brands looking towards solutions that will help shrink the stack of cards in consumers’ wallets and make it easier for them to reap the rewards. Increasingly, brands are tapping into technology, with the use of mobile devices and apps leading the trend for a more sophisticated transaction – often removing the need for a physical card altogether.

And yet it’s important to remember that the tangible element of the loyalty card is a poignant trigger that keeps brands front of mind. Without it, brands run the risk of becoming one in a sea of many, and of confusing customers when associating the brand with the relevant reward.   

There are a number of brands on the market that are experimenting with new technology – particularly in the US.

Coin is one that has extended the all-in-one concept beyond the loyalty sector to combine credit and debit cards, gift cards and rewards, allowing shoppers to carry multiple payment and loyalty devices via a single card. Although chip and pin restricts this technology from launching in the UK market, it’s likely that similar concepts will start to become viable options in the long-term as brands play to the convenience factor.

The average UK household is enrolled in 18 loyalty programmes from national chains and actively participates in a third of those. Given this, initiatives such as ‘coin’ all seem to make sense and point towards making life easier for the consumer who can get the most out of their rewards schemes.

And yet many of them come at an added cost that means that brands will have to work hard to quantify the one-off investment purchase, particularly when considering that loyalty cards are by and large handed out by retailers for free. Cards such as the ‘coin’ on the other hand cost roughly $55 each.  

Mobile apps

As well as streamlining multiple cards to just one, mobile apps have become a readily available alternative that removes the need for cards altogether. Stocard is just one on offer that allows users to scan all reward cards and store them on a smartphone. Once shoppers reach the check-out they can let the cashier scan a barcode on their mobile.

But the tangible element of the loyalty card is one that brands can play up to and tailor. Whether this is personalising a card with the consumer’s name or a certain design, introducing a referral scheme or gathering data when they sign up that enables brands to offer special rewards around their birthday or specific seasonal campaigns for example.

Elsewhere, many companies now offer one account that will tally up rewards for spending across multiple businesses. But with the majority of these online (and subsequently card-free) it’s becoming more difficult for brands to cultivate a personality and a sense of identity that stands-out. Therefore, brands that do offer a loyalty card automatically have an opportunity to develop a unique presence that the consumer will be reminded of every time they open their purse or wallet – particularly if the card has a permanent feel to it.

Delivering something weighty creates a feeling of quality that consumers will remember holding, versus punch-out paper cards that often lie either unused or stacked up over the months as shoppers struggle to find them, requiring a new card each time as a result.  

Furthermore, it’s essential that businesses communicate exactly what the reward is. Too often consumers are left wondering what they gain in return for spending at the store. Whether it’s money off a subsequent shop, points towards a bigger prize or entry into a competition, it’s key that the shopper is informed about the reward, particularly if the brand develops the scheme or the reward changes in line with a particular promotion. In doing so, brands will take one step closer to creating a loyal client base that can become successful brand ambassadors.

Finally, is the reward relevant? Making sure that you contact your target audience at the right time, as well as offering something relevant should be bread and butter when rolling out a loyalty programme that will incentivise the customer to have the loyalty card ready as they approach the till.

With consumer interaction at the heart of it, new technology in the loyalty sector is offering exciting avenues to enable companies to collate and streamline the rewards process for the shopper. And yet there is something unique and tangible about the physical hand-over of a card to the consumer that should not be disregarded. True, customers may not remember to use it every single time they enter the store but to have the brand’s name in the shopper’s wallet provides a physical presence that is hard to replicate across any other touchpoint.

Jonathan Fell is MD at Digital ID.

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