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/ Digital Stamps

Why Your Business Could Benefit From Digital Loyalty Stamps

Why Your Business Could Benefit From Digital Loyalty Stamps

Ahh, the good old-fashioned Loyalty Stamp.

A mainstay of coffee chains the world over, it applies to any retail business. This simple tool is surprisingly effective at generating customer loyalty by incentivising repeat purchases with a reward.

Traditionally, it takes the form of a small slip of paper with a set number of spaces on it to be stamped every time a purchase of a particular product is made. When all the spaces are stamped, the reward can be given. Usually, this takes the form of the product that the customer has been buying – but this time completely free.

Businesses running loyalty stamp campaigns enjoy a significant competitive advantage.

For products with only minor differences to the competition's offering, it makes way more financial sense for customers to continue purchasing from the business offering loyalty stamps, as eventually, they will be able to enjoy their favourite product without the cost. It is a kind of 'investment' from the customer's perspective, which cannot be enjoyed at businesses that aren't operating this system.

Put simply, customers who commit to loyalty stamp campaigns save money, and businesses who run them earn more repeat purchases and discourage customers from moving towards the competition.

This is an important way to increase your bottom line, because of the positive impact on Customer Lifetime Value, which we have previously discussed in our earlier article.

Ok, it sounds simple enough, but is there a downside?

Well, as with everything, the answer is unfortunately, yes.

The Problem with Traditional Loyalty Stamps

First off, the obvious limitation with traditional loyalty stamp schemes is their physical form. Not only is the small slip of paper incredibly easy to lose, get wet, or otherwise destroy, but with the amount of businesses running the campaign, customers seem to get frustrated with 'card overload'. Nobody wants clutter.

They may not have their stamp card on them when they make their order, or have a card but for the wrong establishment.

It can even lead to a worst-case scenario, when customers are discouraged from purchasing because they forgot to take a card.

Or because after completing one card, they are not making a new 'investment', when they make a normal purchase. This is exactly the opposite of what the system is designed for.

Enter the age of digital loyalty stamps.

Digital Loyalty Stamp Revolution

Digital loyalty stamp campaigns run pretty much the same way as traditional loyalty stamp campaigns, but it all takes place in the digital realm.

Specifically, at a location that the customer is intimately familiar with – their own smartphones!

In our system, the customer opens their app and selects from a list of businesses running loyalty stamp campaigns.

They can easily see how many stamps they have collected so far, and how many are left to collect before earning their free reward. The distance to the nearest retail location where they can continue their stamp-collecting efforts is also conveniently displayed.

As people are rarely without their phones, the advantage of this stamp campaign style is clear – they will almost never be in a situation where stamps can't be collected. This erases all the frustrations with the legacy model and keeps customers motivated to continue buying.

Which means more repeat purchases for you... not to mention money saved on stamp ink! Controlling your customers' digital stamps is an order of magnitude easier for your business than doing the same with everything that would go into managing legacy paper stamps.

And in times of global pandemic, having digital stamps instead of paper ones, is also a responsible step to make as a business.

Loyalty Stamp Best Practices

Despite its simplicity, there are many variables you can play with as a business running a loyalty stamp campaign that can have measurable effects on its loyalty outcomes.

These variables include:

  • Number of purchases required for a reward

Setting this figure lower will increase the motivation for repeat purchase in the short-term. Still, it will also hurt Customer Lifetime Value (CLV), as the overall profitability of loyal customers will be lower as the rewards will likely be given out more frequently.

Setting it too high, however, would discourage repeat purchase as the reward seems too distant to be worth it.

Most business will find their 'sweet spot' between 5 and 10 stamps.

  • Product purchase that earns a stamp

This is the type of product that you deem worthy of a stamp reward. For a coffee shop, it would most likely be one coffee priced at £3.50 for example, as it's in the upper half of their menu in terms of price.

If it were a bottle of water priced at £1, though, then customers would take advantage of it and simply buy waters repeatedly to get a free coffee, which leaves you with an undesirable profit margin.

But sometimes, letting customers "take advantage" of the great value of stamps can be good for your business. You can take note of a new campaign from Pret a Manger that runs coffee subscription for £20 a month. In theory, they might lose some money on coffees alone, but customers will buy other items while in a store, and that's worth a lot more to a business.

Think about products that you can similarly select for stamp rewards for your own business.

  • Rewards given upon stamp completion

As the main driver of repeat purchase, the reward offered to customers upon collecting all the necessary stamps is probably the most important variable. Most opt for the strategy of using the product that earns a stamp as the reward, as the customer obviously values the product in question and would appreciate getting it for free.

However, using higher-value rewards is a great way to supercharge motivation for repeat purchases. In the coffee shop example, you could offer a medium coffee with their choice of sandwich, soup, or baguette for 8 coffee purchases, so long as the business earned from the coffee is greater than the value of the free lunch reward.

More so, it's clear to us, based on our experience, that making the decisions necessary for setting up your loyalty stamp campaigns should be based on actual data collected from your customers.

Joining the OMG network is a great way to start gathering this data, which will inform your loyalty stamp campaigns and your other loyalty practices.

Other tips and tricks for creating successful loyalty stamp campaigns include the effective promotion of the campaign and creating a broader customer loyalty programme, which you can read more about here.

The All-in-One Loyalty Stamp Solution

We hope you understand the radical power of loyalty stamp programmes in creating valuable lifetime customers by now.

What you may be wondering now is how to get started. This is what we at OMG have been busy creating, and we're happy to report that our system is ready for action.

You can set up and fine-tune every detail of your loyalty stamp campaign with us without any staff training or additional hardware. And we have an established network of discount-hungry customers looking for their next favourite place.

The best part? We offer all of this absolutely free.

Don't miss out. Join the digital loyalty stamp revolution today by joining our waiting list.

Maria Vasilikou

Read more posts by this author.