The Hub

Where we talk about ideas, events, cases & more
9 January 2014

The trends of loyalty cards at small and medium enterprises. How to become a top dog!

Many people say that a dog is man’s best friend. From them, we can learn a lot about loyalty. My dog is an English Cocker Spaniel and she is loyal until the point where her nose and instinct takes over. Since it is a hound, the instinct takes over most of the time.

The same principle can be applied to the subject I wish to discuss, namely the new trend of customer loyalty cards. I will comment on this trend by giving my own experiences as a catering entrepreneur.

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9 months ago my friend and I took over a sandwich bar in the centre of Leuven. Within a radius of 50 meters there are 4 competitors. Therefore we needed to differentiate ourselves from other snack bars. We did this by offering a different range of sandwiches, prepared à la minute and served with a smile. In the beginning we kept on using the loyalty system of the previous owner. A little cardboard card offering 2.5€ after purchasing 15 sandwiches. We didn’t like this system because of several reasons: we had no idea how many cards were circulating, we were giving 2.5€ discount to people we had never seen before and it was easy to cheat. What bothered us most was that people who used the card were our most difficult clients who would always ask for more stamps than they deserved or would beg for an extra discount. On the other hand, the clients who came daily did not ask for this loyalty card and therefore didn’t get rewarded. So we were treating our not so good customers really well and our great customers not so well. That is why we wanted to change our loyalty system.

We all have a lot of fidelity cards in our wallet and often when you need one you didn’t bring it. A good solution to this problem was implemented by Freedelity who uses the ID card, a card you always have on you. For national retailers it is relevant to use a customer card, but for a shop with one point of sale, it is unrealistic to expect that clients will always carry your card. Therefore we searched for a general loyalty system used by other merchants in Leuven. We found two companies active: Citylife and Qustomer.

Citylife is part of the Mobile Viking company. In my opinion they didn’t do their homework properly on this fidelity system since it is crucial that both clients as well as merchants are convinced that the system works. They invested a lot in convincing people on the street to get a card. However, they forgot to inform the merchants about it. So at the moment you only have a few merchants using this loyalty program, but thousands of people owning the card. It is probable that a lot of these cards will be thrown away.Their biggest problem is to persuade merchants that saving points at one shop, but spending them at another is commercially viable. This means that people could go and buy a sandwich in another bar every day, but for their free coffee they would come to our shop. In this way you are not rewarding loyal clients. On top of that the Citylife app is not ready yet, but they do already speak about it on their website. If I were Citylife; I would invest more in convincing merchants to adopt the system by keeping it linked to one shop. At the end of the day, the merchant will make it a viable business model, since they are the ones paying for the service! It should also be linked to the possibility of informing Mobile Viking customers about special offers. For instance when they are within a few meters of your shop and have indicated that they want information, they could be informed about special offers. This would be a USP both for the Mobile Vikings as well as the merchants.

The loyalty system we use at the moment is Qustomer. This is a company founded by four young guys who have adapted the system along the way. Clients use the Qustomer card or their Smartphone which is scanned by the Qustomer app on our iPad. The client gets 5 points per visit and can for instance choose a free coffee at 80 points or a gift voucher of 15€ at 200 points. The points earned by the clients are only valid in our shop, but the same card can be used in different places within Belgium. Feedback of the customers is really positive. They think it is really modern, young and professional. They get rewarded in a simple way by clicking on the iPad and scanning their card and they don’t need to ask us for a stamp anymore which is timesaving for us as well. In addition, Qustomer offers a merchant platform where you can follow up some basic statistics. Another important point is that the first merchants in town invest more than the followers because the cards have to get spread along the people in the town. Therefore I would suggest Qustomer should offer the first 10 merchants per town one thousand cards for free in order to spread the cards among the citizens. On top of that I would also advise them to invest in informing people about the network of merchants in their town when a new Qustomer point has opened. In this way they could create a community. 

To conclude, we see a shift from one loyalty card per shop to a platform offered by a third party. From a personal perspective we can state that we are satisfied that we decided to use this system. If you don’t believe the idiom; you cannot teach an old dog new tricks I would advise you to be critical about your loyalty system and become a top dog! It is however important we don’t shift to an overflow of platforms, since clients will then again be faced with too many cards in their wallet. Therefore either a small player should become well known or a national player should offer this. Maybe an idea for bpost, HighCo data,…?

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