Is the Loyalty Card Dead?

The decline in loyalty cards usage has nothing to do with loyalty programmes.

It is to do with expectations. Customer expectations and the purchasing experience.

In an era where mobile phone payments are now being adopted by smartwatches and smart gadgets, customers rarely look for their plastic cards in their physical wallets. In fact, more and more we are hunting for the simplest ways to pay and be rewarded for it, immediately.

We asked some people in our industry these questions:

“Is the loyalty card dead? And is integrating loyalty with payment cards the best way to win back customers?”

6 loyalty professionals wrote fantastic articles about this very subject which we have published in Part Two here

And this is how 9 others directly answered the question:

The content of the ‘offer’ or reward is arguably more important than the mechanism by which it is delivered, which then stems from the importance of the data sets that merchants have on their customers.

With that in mind, it goes without saying that we now live in a time where frictionless experiences are an expectation, and increasingly people don’t even carry around a physical debit or credit card, let alone a loyalty card, so I think it’s important that the two go hand in hand.

For example – and it’s perhaps more of an opinion – but even if I have a super valuable offer or reward, I’m unlikely to go out of my way to remember a loyalty card to redeem it – I would expect to be able to redeem it through a digital channel.

So, I think it’s important for merchants to first examine the datasets they must create compelling offers in the first place, and then find a way to deliver those offers to customers through channels that align with expectations – which tend to be digital (the pandemic having accelerated a lot of this innovation that was already going to happen, just not as quickly!)

Payment and loyalty must go hand in hand. I can imagine that when digital mobile based payments mature, you do not need a loyalty scheme at all. You can serve the offers and rewards on the back of the payment data.

Nothing is dead! 😁 I’m afraid the human being is laced with self interest in the first instance 😞 and they love games! They want FREE money or Value Add services (that equate to FREE money)! And a bit of gamification to boot. The hardest things are to “fund” the cash/cash equivalent to give people, make them aware of the existence and get them to engage. One must be careful not to mistake “loyalty” with “incentives”. A “user” is NOT a “customer”.

Different age groups and socio-economic groups will also differ. For example, a Baby Boomer will think very differently to a Gen Z. As will those on sub-prime income to those on 6 figures. Across the board, motivations, outlooks and expectations will vary massively. Ultimately, people don’t buy “what you do”. They buy “WHY” you do it! 🤷🏽‍♂️  It’s the WHY that counts.

The mechanism for accessing loyalty offers is not the issue. It is relevance, personalisation and timeliness of the offer made that drives consumer loyalty. If a brand can get that right then whether the offer is accessed via a plastic card, an app, a wallet or a payment card is somewhat immaterial.

Having customers entrust you with their data and their preferences enabling offers of real value and merit to be presented is the crux to loyalty success.

Combining loyalty and payment makes total sense in terms of customer experience but should also recognise different payment preferences. We also recognise a very strong trend to sustainability and purpose, which creates the opportunity of new types of loyalty programmes based on social engagement rather than discounts and rewards for yourself.

Plastic loyalty cards are becoming replaced by loyalty apps, I would say definitely not dead if our audience are anything to go by. Shopping local is increasing in popularity, loyalty schemes like us who encompass this will thrive. Integrating payments cards is not a solution to loyalty; customers don’t have a clue where they are getting Cashback usually. They would much rather earn rewards or save money supporting a business and know about it. Group loyalty within communities will really help to drive footfall and help businesses to get back on their feet.

“Hotel Loyalty Memberships are bought for Emotional Reasons and Not for Logical Reasons.” A Hotel Loyalty Program or reward program is a tailor-made concept which is designed and run by the hotel chain looking at maximising the needs of the traveller and to benefit the guest who is loyal and a more frequent visitor to a brand. The current era which is no doubt the digital era where everyone is talking about digitalisations and turning to Hi Tech Technology and further customising loyalty Programs.

As I belong to a service industry, I completely believe that no matter how digital or fast forward hotel loyalty programs develop into, the real success will always be in the personalised interaction and human touch.

So here are my three golden principles to sell and connect emotionally!

  1. Empathise – it simply means to understand, relate to or getting in the shoes of the prospective buyer.
  2. Trust-it is critically important to earn the trust of the perspective. Without it we can never get a Yes.
  3. Benefit – don’t sell the feature because in the hospitality industry there is nothing called benefit or product; all we must sell is the experience.  Loyalty Cards are still a preferred choice amongst the members for hotel loyalty programs.

Yes, loyalty (or more precisely, rewards) and payments go hand in hand. By offering the consumer both intrinsic and extrinsic rewards during, and crucially after, the purchasing process, we can transform consumer psychology and create a mechanism that drives repeat business and increases the average spend.

Offering meaningful, instant rewards, with a good deal of entertainment (gamification) is going to be a significant future driver of loyalty. Cards, points and coupons worked fine in the past, but I doubt traditional rewards will do it for future, digital generations.

I don’t think the concept of the loyalty card is dead.  Streamlined technologies have made using apps and/or personal data (e.g., phone numbers) with point-of-sale systems much more fluid.  I’m not sure that integrating loyalty with payment cards is the best way to win customers back either.  Based on how audiences choose to engage should determine if the payment card is the right path for those customers. Use the data and insights gathered from loyalty program members to learn how to create value for specific audiences rather than a one-size fits all payment card.

Please see further articles on this topic here!