For a while, the stamp card was the currency of customer rewards at Presotea Co. Ltd., a bubble tea retailer with 12 locations in the Greater Toronto Area. The system was simple: Card holders got an ink stamp for every bubble tea they bought and were rewarded with a free beverage after so many purchases.
But Presotea's managers soon realized the stamp card system came with a host of problems and disadvantages. Earlier this year, the company switched to an electronic service that lets customers tap into the loyalty programs of multiple retailers using one digital card.
"It's so much more efficient than the stamp card, which costs a lot of money for printing, stamps and ink, and we were finding that some staff were giving away stamped cards to their friends and family members," says Ian Tan, Presotea's sales and marketing manager.
"Also, we couldn't really tell how well it was working because we had no way of tracking how many customers had the cards and how often they were coming back."
In their quest for the loyal, repeat customer, many businesses today run programs that reward those who buy more, spend more and return more frequently. Consumers seem to love these programs; an estimated 12 million Canadians today belong to a loyalty program, with eight loyalty cards on average per household.
For small businesses, running a rewards program can take up significant resources and, as Presotea found out with its stamp cards, the costs and risks may outweigh the benefits.
"Like any other type of marketing, loyalty programs need to be measured in terms of what they're going to cost in time, effort and dollars versus their benefits," says Barry Sharp, a small business consultant and owner of Vancouver-based AMA Management Ltd. "This is especially important for a small company that typically has only a small amount of money to spend on marketing."
A number of rewards program providers have launched in recent years to address the particular needs – and more limited resources – of small businesses looking to win and retain customers through loyalty marketing. Here's a look at three of these providers and what they offer small business owners.
- In a nutshell: Customers tap their Vicinity card or provide a mobile phone number to collect rewards.
- Good to know: There’s no software to install and vendors need only a phone number to register a customer.
- Cost to business: Starts at $129 a month.
Introduced last year by Rogers Communications, Vicinity lets registered customers earn points for their purchases by tapping their electronic Vicinity rewards card or by giving the retailer their mobile phone number. With more than 1,000 businesses across Canada signed up as vendors – including Presotea – Vicinity gives consumers access to many vendors through a single loyalty account.
Fiona Lake Waslander, general manager at Vicinity, says vendors like the fact they don't have to install any software on their systems because Vicinity's backend is all in the cloud. Retailers set up their loyalty program through a secure dashboard on the Vicinity website. Through this dashboard, they can track customer activity and send customized promotions to Vicinity members via text or e-mail. Vicinity comes with one piece of hardware: a paperback-sized device with built-in, near-field communications technology that cardholders tap when they buy something.
"We take care of all administration, setup and material," Ms. Waslander says. "Businesses don't have to think about anything except how they want to customize their program."
- In a nutshell: Customers earn rewards by using an e-mail address when they book appointments or purchase a product or service.
- Good to know: This online system, which requires no cards or additional hardware, connects directly with vendors’ point-of-sale or scheduling systems.
- Cost to business: Starts at $49 (U.S.) a month.
San Francisco-based Perkville has carved itself a niche in the health, fitness and beauty industry, with vendors that include yoga studios, gyms and salons. Its offering is based on a completely online platform that uses members' e-mail addresses to track transactions – such as attending a yoga class or getting a haircut – and provide rewards.
Perkville also lets vendors track and reward members who refer friends or promote the business on social media.
A big differentiator for Perkville is that it connects with vendors' own point-of-sale or scheduling systems. This ensures that points are awarded only when a transaction is actually put through the POS system, or when a customer schedules a visit to a vendor, such as a beauty salon.
"This prevents double entries," explains Sunil Saha, Perkville's founder and CEO. "It also allows vendors to track the dollar results of their loyalty program because of the integration to their POS system. Instead of just tying their rewards program to the number of times their customers visit, they can also tie it to what those customers bought and how much they spent."
- In a nutshell: Customers score points by scanning their Belly card or app on a Belly interface loaded onto a vendor-based iPad.
- Good to know: Through the Belly Bites program, vendors can drop sample offers into customers’ accounts.
- Cost to business: Starts at around $130 a month, with iPad and iPad stand included.
Chicago-based Belly offers a digital rewards program that works with two physical components: an iPad with Belly interface, and either a Belly card or the customer's mobile device loaded with the Belly app. When customers visit a business, they "check in" at the iPad, which scans the unique QR code on their Belly card or Belly app. This check-in is registered in the Belly system as a customer visit that counts toward future rewards.
"We really like how simple the system is to the point where it's stupid simple," says Jamil Bhuya, co-owner of Burgers n' Fries Forever Inc., an Ottawa restaurant that specializes in halal, grass-fed beef burgers. "And our customers love interacting with the iPad – in our first week with Belly we signed up 74 people, compared to our previous program where one or two people were signing up per day."
Belly is big on social media marketing. After each transaction, customers are prompted on the iPad to tell their friends through Facebook or Twitter that they've just scored points from a particular vendor. To increase customer traffic, Belly lets companies drop "Belly Bites" – sample offers into the accounts of Belly card members in the area who have not yet visited their business.