Nobody’s against a freebie. The sandwich shop’s problem is that the free sandwich turns up around the time you’ve changed jobs and stopped walking past. Shoppers clocked this a while ago and drifted towards brands that pay them back within days, usually with something they’d have bought anyway.

A surprising number of firms are still printing cards for schemes their customers binned during a kitchen drawer clear-out. However, some demographics—like UK casino players—still highly value a physical card.

Points Cards Are Losing Their Appeal

The classic points scheme asks for a lot of faith. Spend now, and at some vague point next year you might get a fiver off your shopping. That deal made sense when nobody had anything better to compare it with. Now everyone does.

Part of the problem is the maths. Plenty of schemes return well under one per cent of what a customer spends, and shoppers have worked that out. Another part is admin. Every new scheme wants an app, an email address, a password and permission to send offers on Tuesdays. Ask anyone who lost a stash of airline miles. Once a customer feels a scheme is working against them, no amount of bonus points will win them back.

The Rise of Instant, Personalised Rewards

Supermarket apps were among the first to get there. Instead of a generic voucher, you get money off the oat milk you buy every week, which is a small thing but oddly satisfying. Coffee chains followed with a free drink on your birthday and the odd surprise upgrade.

A decent till system knows who buys the same loaf every Saturday and who only turns up at Christmas. Plenty of shops sit on that information for years and do nothing with it.

Digital entertainment has gone further than most. Platforms built for UK casino players run tiered reward systems where perks unlock as you go, from free spins to quicker withdrawals and the occasional personal note from an account manager. Whatever you think of the sector, it learned early that people stick around when a reward lands this week rather than next spring. Meanwhile the average high street coffee card still wants ten stamps and a fair bit of patience.

Where it goes wrong is volume. The Competition and Markets Authority has been looking harder at pressure tactics online, and customers hardly need a regulator to tell them when they’re being nagged. A gym that sends three push notifications a day about a streak you broke on holiday isn’t building loyalty. It’s building resentment.

Smaller firms have an advantage here, oddly. A local wine shop can remember that you like Rioja and set a bottle aside. A café owner can knock a pound off for the regular who’s in every morning at ten past eight. No app needed. That kind of recognition is exactly what the big digital schemes are spending millions trying to fake.

Picture a dog groomer who texts on the morning of a client’s birthday, the dog’s that is, with ten per cent off the next trim. It costs her next to nothing. The owner mentions it to half the park by lunchtime.

So start small. Give it a quarter and see what happens. If customers use it, add another. If they don’t, it cost very little to find out, which is more than most big-brand schemes can say.

Read the full article →