Loyalty & reward program delivery mechanisms (Part 2)

This segment explores some of the delivery mechanisms of loyalty & reward program models as well as key metrics to track their effectiveness and success

Continuing from Part 1, this segment explores some of the delivery mechanisms of loyalty/reward program models as well as key metrics to track their effectiveness and success

Loyalty & reward delivery mechanisms

Aside from the back-end systems to support the loyalty/reward platform, it is equally imperative for businesses to implement an extremely friendly and intuitive front-end User Interface (UI) and consumer experience (CX) initiatives

Dependent on the business type and products/services offered; there are 4 key delivery mechanisms for loyalty/reward programs –

  1. Simple Paper Card
  2. Traditional Plastic Card
  3. Smart/Keyring Card 
  4. Mobile First

Furthermore, businesses could pair their loyalty/reward program initiatives with suitable m-Payment & m-Channel platforms that increase the potential to better understand potential shoppers & current customers through data science

1. Simple Paper Card 

Oldie but a goodie; where basic paper card (with graphics & advertising) allows for ‘hole punches’ to record reward/transaction

Challenges: Traditional paper card formats could easily be misplaced, stolen, transferable (read: no unique ownership), mostly not eco-friendly and/or potentially end up in the washing machine

2. Traditional Plastic Card

‘Old school’ credit card sized reward cards that sport either a barcode or mag-stripe

Modern versions may have a chip or RFID built in to better improve security as well as accurately understand the unique member’s shopping behavior

Challenges: Given that customers may have multiple loyalty/reward programs, the key user experience challenges could vary from “do I have to carry yet another plastic card” through to “I can’t find that loyalty card” at the POS

3. Smart/Keyring Card

Slightly more compact format than traditional credit card size with the added benefit of placing with everyday house & car keys

Similar to it’s bigger brethren keyring cards could also sport barcode, magstripe, chip or RFID

Challenge: Though easier than searching for a plastic card, customers may still be left searching for their keys at the POS

4. Mobile First

Mobile first formats (smartphones, watches, etc.) is where businesses invest in a scalable digital platform (m-wallets, QR codes, etc.)  for loyalty/reward program delivery to end users

These digital loyalty/reward could further be implemented with any m-payment platform that could make make the reward transaction more intuitive & straightforward for shoppers 

The key benefit of a mobile first approach is the ability for businesses to better understand their shoppers/customer’s purchase behavior (read: data)

Businesses (with user permission) could also have the option to integrate personalized discounts, rewards and services thereby enhancing the overall customer satisfaction engagement

Measuring Program Effectiveness

As with any strategic initiative, reward/loyalty programs too require set of KPIs that measure their long-term effectiveness

The measure of success for any reward/loyalty program should ideally be closely aligned with customer-centric metrics; namely program satisfaction, promoter scores & retention/churn rates

Some common metrics used in the industry are –

Retention Rate

Typically an indication of how long customers stay ‘actively loyal’ to the business

When done right, a loyalty/rewards program should help grow/improve customer retention scores for the business


Typically described as the rate at which customers leaves a business” for its competitors

Conversely negative churn measures the propensity of current customers to cross-purchase, upgrade or commit to a longer term

Net/Promoter Scores

Typically a representation of customer satisfaction metric that measures (usually on a scale of 1-10) customer’s advocacy of the business’s products & services to their friends & family

In this day and age of social media, it is equally imperative for businesses to measure consumer/customer’s promoter scores (metric); particularly due to risks associated with managing negative brand experience (via multiple social media channels)costs and brand name


Whether off the shelf or custom designed; loyalty programs still remain one of the most effective acquisition & retention tools (if done right) broader retail, QSR and service industries have at their disposal

Following segments will aim to explore key attributes and monetization models of select loyalty/reward programs.

Stay tuned!