Traditional loyalty programs can't handle the digital age

While business owners once relied on tactics like print ads or TV commercials, companies today embrace digital advertising methods, such as social media and search engine marketing, to better target potential customers. A technology-based approach also helps businesses grow a more effective loyalty program.

Card-linked loyalty programs offer one way to target engaged customers, allowing them to swipe and scan their way to rewards — all while increasing brand loyalty, boosting sales and providing merchants with valuable transaction data. And the fact that most consumers say they’re more likely to stick with brands offering a loyalty program is proof that these programs are worth investing in.

Consumers are increasingly embracing the culture of loyalty programs, with nearly three quarters of customers saying membership is a meaningful part of their relationship with brands. These programs create a deeper connection between consumers and your business, which in turn leads to increased spend during each visit.

Traditional loyalty programs provide customers with tangible benefits, such as a free item with purchase or a reward for return visits. But these are limited in reach — only targeting customers already coming through the door. In contrast, programs tied to debit- and credit-card-linked loyalty also allow merchants to attract new customers.

This approach also offers much-desired convenience for the customer. Instead of carrying around an additional card or pulling out an app to indicate that they’re a program member, customers simply pay with a registered card and automatically receive rewards each time they swipe.

Card-linked programs don’t just improve customers’ opinions about your business — they also bring real sales benefits. Last year, a consumer survey found that 74 percent of customers choose stores based on a strong loyalty or discount program. Additionally, 72 percent of brands that use card-linked offers said transaction volume spurred by these programs increased by more than 50 percent over the previous year.

Card-linked marketing initiatives enable merchants to meet customers where they are, and reward them using their currency of choice, whether that’s frequent-flier miles, hotel points or cash back. This flexibility attracts a diverse base of repeat visitors who come back more often and spend more during each visit.

Beyond increasing customer affinity for your brand, card-linked loyalty programs offer another huge benefit: data-driven insights. Access to customer transaction history allows merchants to better understand loyal shoppers, and learn what differentiates them from other guests. Studying the resulting data and trend analyses can help businesses make smarter decisions.

For example, a restaurant might glean from card data that its most loyal customers come in during a certain daypart, or from a particular geographic range. It can also identify what these valuable customers prefer to eat. The restaurant can target locals during certain times of day or bring additional people from a specific local area. The goal? Incremental visits from regular guests and new visits from people with similar demographic profiles.

While some consumers are wary of companies analyzing their transactions, research shows they’re willing to share data with brands in exchange for receiving customized offerings. Ninety-one percent of consumers said they would be more likely to shop with brands that provide relevant offers and recommendations — and 83 percent are open to sharing data to make this work. This attitude is intergenerational, with 46 percent of Gen Z consumers and 55 percent of millennials willing to share their data in exchange for personalized experiences.

These programs can quickly pay off for businesses that implement them — and the accompanying data collection capabilities will allow you to track and analyze your way to success.