Payment Card Linked Loyalty Programmes are the Next Generation of Loyalty, Replacing Traditional Loyalty Programmes

By Colin Munro, Managing Director at Miconex

Ask any business owner what their objective is and customer loyalty will almost certainly be near the top. A  2019 KPMG survey of 18,520 consumers in more than 20 countries found that 86% of loyal customers will recommend a company to family and friends, 66% will write a positive review and 52% will buy from a favourite brand, even if it’s cheaper and more convenient to go elsewhere. A startling 85% of growth for mature brands is down to loyal customers.

Businesses want and need customer loyalty to survive, particularly in the competitive post pandemic world, and most will have attempted to attain it- whether through a stamp system or a traditional loyalty card- but it would appear these schemes are missing the mark.

In the UK, 45% of consumers made purchases that earned rewards or benefits several times each week, higher than China (31%), India (33%), UAE (39%), Brazil (38%) and a number of European countries, but below Canada (56%), Italy (56%), South Africa (47%), Australia (61%) and Japan (53%). 45% is considerable, showing that customers are willing to engage in loyalty programmes, yet 69% of Millennials say that loyalty programmes are difficult to join and earn rewards, and 96% believe that companies should find new ways to reward customers.

The flaws of traditional loyalty card programmes are well documented. From a customer perspective, a traditional loyalty card is something they have to remember to take with them when they shop. These loyalty programmes work well when the customer is prompted by the staff member to remember to use their loyalty card but when this doesn’t happen, participation levels start to drop off. Even if customers have the loyalty card with them, it’s an effort on their part to take out and present the card, often triggering an internal effort vs. reward analysis in their mind.

With a traditional loyalty card scheme, bringing businesses together in a coalition can cause operational headaches. A business may have their own stamp or loyalty scheme that they need to remind customers to use; it’s highly unlikely they will also remind customers to use the loyalty card for the coalition scheme too.  Making loyalty programmes easier for customers means removing these traditional pain points for both customers and traders.

When you integrate loyalty with payment cards, there’s a one off action on the part of the customer to register their debit and credit cards, but then the technology runs in the background with customers receiving rewards automatically, and no need to train staff. Loyalty schemes are only useful to customers when the rewards offered are of value to them. By using payment card led loyalty programmes, places can showcase the best of their area, with local prizes that reinforce the shop local and shop loyal message, and giving customers rewards that they truly value.

From a business perspective, payment card driven loyalty programmes enable cross pollination, creating a community of support with linked rewards and promotions. The data capabilities are extremely exciting too. Instead of data only being available when a customer presents a loyalty card, the data is generated each and every time a linked payment card is presented in a participating business. This enables businesses, and places, to better understand customers, measuring and identifying what works and what doesn’t.

Payment card linked loyalty programmes are the next generation of loyalty, replacing traditional loyalty programmes. Not only do they give customers valuable rewards from businesses they love with minimal effort on their part, they provide businesses with access to consistent, insightful data to drive their decision making, hone their product offering, and make elusive customer loyalty a reality. In payment card linked loyalty schemes, we have the solution to the conundrum of high street loyalty.

Press information

Miconex was founded in 2010 and works with towns and cities across the UK, helping to support successful local economies. Miconex developed the UK’s first city wide gift card programme in Perth through its Town and City Gift Cards initiative in 2015. In 2021, over 60 cities/towns across the 4 countries of the UK are part of the Miconex Town and City Gift Card programme. This programme is designed to lock in money locally for participating businesses, drive footfall and stimulate economic activity, in effect creating a local currency through the Mastercard network. In 2018 Miconex launched Mi Rewards, a loyalty programme that automatically rewards consumers for spending money at registered businesses in a specific local economy, encouraging consumers to spend more in their town or city. The data and insights provided through Mi Rewards generates data and insights to help towns/cities and participating businesses to better understand customers, customer behaviour and to drive loyalty.