Keep clients coming back · Every business
Punch Cards, Points or Perks: Picking a Simple Reward
For most owner-run service businesses a punch card with a short goal and a head start beats a points program, and a members' perk beats both when customers already visit on a steady cycle.
A punch card is the right choice when you sell one main service at a similar price and want occasional customers to come one more time a year; points make sense only when prices vary widely and you have software that tracks them automatically; and a perk, such as priority booking or a free add-on for members, suits businesses whose best customers already return on a schedule. Whichever you pick, keep the goal short, start the customer with progress on the card and choose a reward that costs you little in product and time.
The comparison to copy
| Punch card | Points | Perks | |
|---|---|---|---|
| How it works | A stamp per visit; the tenth or sixth earns a reward | Points per dollar, redeemed for services or products | A standing benefit for regulars or members |
| Best for | One main service at a steady price: cuts, washes, classes, coffee | Wide price range: med spas, auto repair, retail with services | Steady regulars: memberships, maintenance plans, recall patients |
| Setup | Printed or digital card, same day | Booking or point-of-sale software that tracks points | A written list of what members get |
| Main risk | Rewards go to regulars who would come anyway | Customers forget their balance; liability builds up | Perks that cost more than they bring in |
| Cost control | Reward with an add-on, not a free full service | Set a redemption value below your margin | Choose perks with low product cost, like priority times |
Five rules for a reward that pays
- Keep the goal close. Customers speed up as a reward gets nearer, a pattern a café field study in the Journal of Marketing Research found when card holders bought coffee more often as they approached the free one.
- Start with a head start. Give two stamps on day one, or count today's visit; in a car wash field experiment, a ten-stamp card with two stamps already filled was completed far more often than a plain eight-stamp card, though both needed eight washes.
- Price the reward at your cost, not your menu price. A deep-conditioning treatment, a tire rotation or a guest pass can feel generous while costing the business a few dollars.
- Count your regulars first. List last year's top 20 customers and count the rewards they would earn without changing a thing; that number is the program's built-in cost.
- Show progress every visit. A stamp, a line on the receipt or a note in the text confirmation keeps the goal in front of the customer.
Why it works
A customer who sees progress already made treats the reward as a task under way rather than a task not yet begun, and acts to finish it. In the car wash study, 34% of the head-start cards were redeemed against 19% of the plain cards, and the head-start customers also came back sooner between washes, which is the change in behavior a reward program exists to produce.
Sources
- Nunes, J. C. and Drèze, X. The Endowed Progress Effect: How Artificial Advancement Increases Effort. Journal of Consumer Research 32(4), 2006. 300 car wash loyalty cards.
- Kivetz, R., Urminsky, O. and Zheng, Y. The Goal-Gradient Hypothesis Resurrected: Purchase Acceleration, Illusionary Goal Progress, and Customer Retention. Journal of Marketing Research 43(1), 2006.
Related reading: Loyalty Programs for Small Service Businesses: What Works and What Wastes Money · What a Discount Really Costs You, Shown in Margin Math · Memberships That Work for Med Spas, Barbershops and HVAC Companies
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