The Punch Card Problem: How your loyalty program is hurting your VIP customers

By Margaret Link

Punch cards might drive increased visits — but if you don’t know who your best customers are, you’re doing damage to your brand long-term. A great loyalty program should not only drive increased visits, but give you a way to connect with your customers directly.

Your loyalty program should do more than track and accrue your customer’s loyalty points… modern, data-driven loyalty programs are the future of business intelligence for brick-and-mortar businesses. Here’s why punch cards fall short when it comes to identifying and rewarding your best customers. 

You should be able to identify your best customers… and connect with them directly

I follow a few of my favorite local restaurants on instagram (because who doesn’t love #foodporn?!), and I was struck by a recent post: an ice cream place I follow was putting out a call to find “Sun H.”, their best customer. Sun had visited this shop 49 times in one year, and they were desperately trying to get ahold of her via social media so she could be rewarded for her loyalty.

Photo courtesy of instagram

While the intent is admirable, this ice cream shop has fallen prey to what I call the “punch card problem” — you might be driving additional visits, but you have no way of closing the data loop and directly thanking your best customer for their patronage! When a punch card is redeemed for a free drink, free sandwhich, etc… it gets thrown away and your loyal customer starts back at zero — the recognition doesn’t go beyond their free item. When your VIP customers can account for nearly 50% of revenue, it’s too risky to treat them like every other customer.

When VIPs lapse… how will you respond?

Imagine this top customer, Sun, starts lapsing in their patronage for this ice cream shop — they’ve started trying a new shop down the street. While your icecreamistas (is there a barista equivalent for ice cream?) working the front counter might be able to reactively recognize this customer by face when they’re ordering at the counter, there’s no good way to proactively reach out to this customer once they’re outside the four walls of this business. That means that, even if your incredible waitstaff manages to notice this customer’s absence, they’ll have no means by which to remedy it. Just as Sun was unreachable via instagram when they wanted to reward her, once her frequency lapses, there’s no way to communicate with her to win her back.

As loyalty programs become more digital, the data they collect serves as a customer information bank, allowing brands to know exactly who their top customers are and reach out to them when they lapse. That’s why modern loyalty programs can double as a CRM (customer relationship managment software) for brick-and-mortar businesses… and why “punch card” programs that fail to connect an individual with their purchsae behavior should be a thing of the past.

Interested in learning more about your top customers (and building a program that keeps them loyal)? Talk to us today.

Schedule a demo >>