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Types Of Loyalty Programs: Which Is Right For Your Business?

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The objective of any loyalty program is to generate repeat visits. It is believed the first modern loyalty program commenced in 1793, when a Sudbury, New Hampshire merchant began rewarding customers with copper tokens. People could accumulate the tokens and use them for future purchases. The idea has been replicated by other retailers over the centuries — from branded metal tokens, over cutting-out trademarks from product packaging, various paper checks, tickets, certificates, and coupons, to plastic cards, stamps, miles, and points.

But customers are not the same now as they were back then. We spend nearly a few hours a day on our mobile phones nowadays. Mobile phones allow us to stay connected, shop, or stay informed. And we have more choices than ever before and are less loyal than ever before, right?

So how your start-up or small business can reach customers on their mobile phones? Developing a mobile app would cost you a fortune. But, people have mobile wallets — such as Apple Wallet and Google Pay — on their mobile phones. These mobile apps are among the most popular ones people use in general as they are the service behind mobile payments.

And beyond transactions, mobile wallets allow people to use digital content from businesses. Such as loyalty cards, coupons, and customer cards. And much more actually  — such as all sorts of information cards, fan cards, subscription cards, business cards, property information passes, membership cards, event tickets or entry passes, booking confirmations, appointment tickets, and so on. People have them at their fingertips and can just tap and show to redeem, enter, or access their benefits.

So why not come up with something new and find new ways to engage with your customers? People can simply add your digital loyalty program to Apple Wallet or Google Pay without downloading another mobile app. The mobile wallet is also great for you to engage with your customers. It allows for both your marketing and service-based communication to appear as push notifications on the lock screen of mobile phones. By adding your digital loyalty program, people can receive your push notifications, and you can provide real-time updates. And then, location-based notifications feel extremely relevant. People would see your location-specific message right on the lock screen in exactly the place and time they need it. They would then just tap and use your digital loyalty program for action in the real world. Therefore you can use your digital loyalty program in peoples’ mobile wallets as your new engagement channel.

Digital Points Card

All points programs are largely the same today as they were back then. In a typical points program, for every euro spent, members earn 1 point. Then you send a €5 digital coupon to people when they accumulated 100 points. Essentially, members should spend €100 to get €5 to use towards merchandise. It is a pretty simple value proposition. Such membership is free for people and that means a low barrier for them to enter. It is great for you at acquiring members to start collecting data. With customers accumulating quite a few points it can take some time before you see increasing engagement and spend levels.

Digital Coupon

In a typical cashback program, people would spend a certain amount to get a certain amount back. For instance 2% in digital coupons that can be used — on just about everything — exclusively at your place. They are very easy to understand and maintain. Like points programs, cashback programs are also very easy to sign up for. And the redemption of store exclusive rewards can drive additional sales when people redeeming their digital coupons.

Digital Stamp / Punch Card

Instead of physical paper cards, you would give members digital cards that will be digitally “stamped” or “punched” when people buy products or services. After about nine or so stamps or punches, people would get a free reward. The value of stamp and punch card loyalty programs is easy for people to understand. They also have a low barrier to entry for customers.

Digital Customer Card

Tiered loyalty programs are more complex and offer different rewards based on milestones that members cross. Typically, these milestones are measured in euros. The more people spend, the higher the tier they enter. The milestones add levels of exclusivity. Everyone gets the same thing with non-tiered programs. Here, it becomes a status thing. Better benefits and a different color of the digital customer card come with each tier.

This adds a gamification element. Gamification is about using game mechanics in non-game environments (such as your loyalty program member community) to increase participation. It basically creates similar experiences to those experienced when playing games in order to motivate and engage people.

You can even show members what percentage of the total members are in each tier. This allows members to see their status relative to others in the program and plays on the competitive desire for a higher social status. Also, since the higher levels provide better benefits, tiered loyalty programs by nature make your most valuable customers feel the most valuable. They know they are getting rewards not available to everyone. They feel like VIPs.

About Ladislav Poledna

Ladislav is a part-time blogger who inspires readers to “Become Digital” by publishing materials about digital marketing in his Prague Monitor column and aptly named blog. He has 27+ years of experience in different sales roles within multiple industries. In the last 2 years, he has been leading the introduction of new commercial lithium-ion batteries to the EMEA region with the world’s leading producer of engines for outdoor power equipment. And recently, he also co-founded a B-to-B software service company that makes mobile marketing affordable and easy to use. Ladislav’s philanthropic contribution consists of a long-term relationship with a charity focused on funding dreams for people with muscular dystrophy.


Mobile phones are long becoming the main “screen” in peoples’ lives. Mobile marketing is no longer an innovation but a part of important decisions. Read articles on mobile marketing to get inspired on how to connect with people where they spend a lot of their time. Ladislav started Become Digital in May 2019 and since then he has added over 75 articles.

About Digikupon

Born in Europe in 2019 and available worldwide, Digikupon provides businesses with self-service tools that make mobile marketing affordable and easy to use. Digikupon helps businesses attract, serve, and retain customers by creating digital experiences for customers through mobile phones with our mobile wallet, proximity, and incentive solutions. Digikupon also easily links to and integrates with a wide range of software solutions allowing to programmatically automate and simplify the creating, updating, and deleting of custom branded digital content for mobile wallets.

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