If you looked inside 10 people’s wallets/smartphones today, you’d most likely find at least 10 different loyalty programs they’re signed up for. It seems that loyalty programs are ubiquitous, with every type of restaurant and shop trying to lure customers back in-store with ever-greater frequency.
But how much do you actually know about the basic types of loyalty programs? While there are more than a handful of types when it comes to loyalty programs, most programs fall into one of the following three buckets in one way or another.
So which type is right for your store? Below we’ve outlined the pros and cons behind the three main types of loyalty programs so you can decide which is best for you.
Type 1: Frequency Program – Classic Punch Card
Everyone knows about this one right? It’s your classic buy 9, get the 10th free punch card scheme that businesses have been using since the beginning of time to encourage patrons to visit—and buy—more frequently. And there are good reasons that it’s so popular.
Type 2: Points Program
The second most popular type of loyalty program is a points program (think your airline miles credit card). In this type of program, points are allocated to the customer based on spending behavior.
Type 3: Cash Back Program
Another very popular type of loyalty program is the cash back or rebate program. In this type, users earn money back from previous purchase behavior that they can then spend on future purchases, effectively discounting the future purchase.
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