Are loyalty cards good for small businesses?

It's quite common these days for small businesses to give a loyalty card to customers to encourage repeat business.

By 'loyalty card' I am referring to the type of card that is stamped each time the customer visits, and then they receive a free item after a set number of purchases.

This type of card is especially common in places like coffee shops where the customer receives a free coffee after they collect 6 stamps on the card. It's also common in places like car washes, takeaways, cafes, and small shops where the customer is likely to come back again and again.

But these cards are not always a good idea. It's possible that you could be giving away free items to customers who would have bought from you anyway. That's just like throwing away profits! There is also the risk that the customer might wait until they have received the free item, and then just stop visiting altogether.

Perhaps more importantly, using loyalty cards as part of your customer loyalty strategy, should never take the place of fostering a sense of long-term emotional attachment to your brand. Bribes and incentives can only ever help to get people into a habit of buying from your business. To get real long-term 'attitudinal' loyalty, you need more than just a financial incentive or a 'freebie'. 

Clearly the use of these cards by small businesses needs to be carefully thought through. In an article next week I am going to give some useful tips and advice on making your loyalty card successful if you do decide to go ahead with providing one to your customers.

If you are thinking of giving a loyalty card to your customers, it would be worth reading an interesting article that appeared recently in The Guardian. You can read the article by clicking here.