Loyalty cards — portals for customer experience

It’s about first impressions

Prateek Vasisht
Jun 18, 2019 · 7 min read

A recent experience of signing up for a loyalty card made me realize how loyalty cards are much more than price discount mechanisms, and are indeed, central to customer experience.

I reflect on the formats of loyalty cards I’ve encountered, my experiences in using them and factors that contribute to well-designed loyalty schemes.

Design

Analogue

The paper-based “loyalty card” is quite widespread. Coffee shops often use these. For most of us, this is our first introduction to “loyalty” stamps. The concept is standard. Every purchase earns a stamp, progressing the buyer towards a free reward. Execution varies. The number of purchases required can vary from say 5 up to 10. The number of slots represented on a card also varies. Some have larger and fewer slots. Recently, I’ve seen cards come with smaller slots, effectively condensing 2 or 3 cards into one. This saves paper (and therefore cost) and makes the card last longer for the customer.

The card itself can also vary. Most are standard business card sizes but some have thicker card while others can have very thin paper. Upmarket shops tend to have a higher quality card. In fact, a boutique tea shop gives out a square sized gloss card with each slot represented as a clock face with the 12th purchase being free. The card is aptly called Tea-Time.

Paper cards have their obvious disadvantages. Customers can lose them, they can get wet or mangled, or even be too tiny for stamps to be placed precisely, etc. Plastic cards solve this problem. Simple magnetic stripe cards have been around for some time now. From a customer perspective, these are sturdier, easier to pick from the wallet and don’t need renewal.

Despite offering better “performance” in terms of carriage and transaction speed, they do lack the personal touch of being visibly stamped. The discount is shown on the payment terminal but the visual action of seeing a stamp bring us closer to our target is missing.

Digital

Loyalty cards are prime candidates for digitization. Many loyalty cards now accompany a website. The level of integration can vary. Physical cards can link to a website or purely be a phone/app based virtual loyalty card. Some vendors become part of an aggregator app which allows various “loyalty cards” to be stored within one platform. Others have their own dedicated app.

App-based loyalty cards save space and offer a convenient payment mechanism through mobile wallets. Apps can also deliver sophisticated rewards systems which ultimately benefit the customer. Customers are often part of multiple loyalty cards/schemes. Loyalty apps do a great job of solving this customer problem. The only downside is perhaps the inertia for customers who may not want to download yet another app, or not want to have everything on the phone or not familiar with mobile wallets, etc.

Value

I have a loyalty card for a cafe. It’s a plastic card with a barcode printed on it which ties to an account. Every 6th coffee is free while other purchases are tracked on the card to trigger profile based rewards. I like the cafe but I don’t enjoy the coffee so much. So I don’t avail that discount. Instead, I like the coffee of a nearby competitor which is slightly more expensive. They have a paper-based loyalty card — for hot drinks only which I avail instead.

Loyalty (or repeat visits) are driven by the value added by a product. Value can also be driven by attributes of the product. I got a loyalty card for a cafe because it was the most convenient one to visit. The waiting times were very long but the handy location made up for traveling to other cafes. Since the product (coffee) and price were comparable, convenience became the driver of loyalty here.

For multi-vendor schemes, the loyalty card plays a dual role. It represents the products of vendors involved in the scheme. It also becomes a product in its own right. I signed up to a loyalty card which gave fuel discounts. The card is not very widely accepted but includes a popular fuel station and supermarket. The vendors are selling substitutable products (fuel, grocery). The loyalty scheme operators are, by extension, selling a substitutable loyalty card. The fuel discount is automatically applied. While we certainly save, we don’t always know how much or how it compares. The reward is not very tangible or relatable and the core product is substitutable. I rarely use this card.

Loyalty schemes use rewards or discounts to encourage future purchases. These, however, are only useful when the underlying product has value.

Experience

While having an attractive product and loyalty proposition is crucial, the experience aspect cannot be understated.

At a store I was visiting for the first time, the attendant completed a quick in-store registration for my loyalty card and asked me to later go online and fill in other details to activate more rewards. A registration email confirmed my membership and asked me to log in. This presented a conundrum.

  • How do I access my new account? It asked for username and password. None was set up. How could I log-in? I thought the shop assistant had registered me? Was I supposed to log-in or register again?

Confused, I registered online — again. In my experience, this was a duplicate step. After I registered, my recent order was not visible. Maybe it’s on some database? Maybe it’s lost? I don’t know. Not such a big deal but it did detract from an otherwise outstanding in-store experience.

Design is not what it looks like, design is how it works — Steve Jobs

While technology is a key enabler, what determines customer satisfaction is how technology is implemented and used. If technology is not judiciously employed, it can create new friction points!

Empathy with the customer is crucial.

Understanding the customer lifecycle, scenarios, exceptions and actual customer behavior allows technology to play the appropriate leading or supporting role.

A great experience can be provided with low technology also. Some coffee shops, for example, give an extra (free) stamp for new customers or very old ones also. This is good psychology on part of retailers. From a customer perspective, provided we like the product, the extra stamp is a delightful gesture that directly saves us money and brings us closer to that free coffee. Similarly, when an attendant stamps a card, that can be a useful time to make eye contact or small talk.

Low technology can create more space for human elements to shine through. Technology though brings its own advantages.

With technology, the loyalty card can become a portal for designing superior customer experience across the entire customer lifecycle.

One clothing store never asks for (their) loyalty card in-store. Instead, they work off a name and phone combination entered into their database and give the loyalty discount at the register. A card is just a barcode. A barcode is an identifier. If an identifier can be (translated into) something we easily remember, it simplifies the experience. Here technology is working invisibly behind an analogue front end to provide a natural and human experience.

The strength of brand loyalty begins with how your product makes people feel — Jay Samit (Digital Innovator)

Small things add up in terms of the overall experience. The more features a loyalty sign up provides, the greater our incentive to sign up and the better our brand perception.

During a recent purchase, the store said that loyalty card sign up allowed orders to be recorded electronically. If a receipt was ever lost, the record would still be there. Receipts are hard to keep track off and many fade over time. An electronic record is permanent and if we ever need to exchange or return, there is no need to rummage through receipts. With technology, a low-frequency minor pain point was transformed into a delight.

Loyalty cards are portals

Loyalty signups are a Moment of Truth in the customer journey and play an important part in influencing almost the entire range of Pirate metrics — acquisition, activation, revenue, retention, referral.

My recent loyalty sign-up experience reinforced this realization. The beautiful format of the card, the way benefits were outlined and initial in-store registration — all came together to give me the feel of joining a select group as opposed to the great unwashed signing up for discounts. Importantly, the signup experience was consistent with the in-store ambiance, customer service, product design, and packaging. It was an integrated service experience, consistent with the service customers can expect at an upmarket establishment. I encountered a slight online registration issue but only underlined the importance of the finer details right so that they don’t distract from the overall experience.

Loyalty signup is an early and important part of the customer onboarding process. They are windows of opportunity to delight the customer. For customers, loyalty card signups bring to the fore an organizations product, promotions, and processes, which in turn influences brand perception.

Loyalty cards are the first impression that customers take away.

Products, experiences, and technology can be structured in various ways to design loyalty offerings. Loyalty cards vary diametrically from paper stamps to integrated apps with a variety of hybrid approaches in between. The best design is not about bells and whistles. It’s one that’s fit for purpose and aligned with the overall customer and brand experience. It’s one that gets the basics right and using empathy, addresses finer details to delight customers.

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Prateek Vasisht

Written by

Write about reality with a splash of the abstract. Management Consultant | Football Fan | Design Lover. www.prateek.co.nz

The Business Design Rover

Discovering and deciphering good design within a business context - across business processes, service/product offerings, customer experience, organizational structures and strategy.

Prateek Vasisht

Written by

Write about reality with a splash of the abstract. Management Consultant | Football Fan | Design Lover. www.prateek.co.nz

The Business Design Rover

Discovering and deciphering good design within a business context - across business processes, service/product offerings, customer experience, organizational structures and strategy.

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