Throw Away Your Punch Cards to Build Customer Loyalty

3 min read • Apr 10, 2013 • Ty Kiisel

No doubt about it, small businesses want to build loyal customers.

There’s a restaurant I go to at least once every week. My wife and I have become “regulars”—”loyal” customers. They have a punch card, that I often forget to get punched after dinner. Nevertheless, our waitress knows me, she even knows my order, and before we’ve even sat down, she’s got it started. The food is good, the service is great, the price is right, and it’s comfortable—the punch card is superfluous.

Yeah, I like the free meal in every ten, but because my waitress knows I always forget the card, she reminds me now when I pay the check. Although I carry the card, she’s keeping track of it for me. Why not just get rid of the card?

A few years back, following a haircut, the stylist said to me, “Thanks for being a good customer, this haircut is on me.”

Wow, they recognized me. They really do appreciate my business.

About 10 haircuts later, another stylist in the same place said something like, “Ty, since this is haircut number 11, it’s free this time.”

I was disappointed. Not because they were keeping track (I think every small business should do that), but she pulled back the curtain and dispelled the magic. They really didn’t know me, they were just keeping track of me. I get my hair cut someplace else now.

I think it’s better to “surprise and delight.” In other words, “Thanks for being a loyal customer, let me get it this time,” is much more powerful than, “You’ve earned a free meal by eating at our restaurant 10 times.” I know it’s tough for some businesses to do this because of the nature of their business, but even if you don’t track individual customer purchases, you could still surprise and delight your customers. Imagine standing in line to pay for your hamburger and the person behind the counter saying something like, “Thanks for being such a great customer, this one is free.”

You don’t know they’ve been counting and your the 100th customer that day. You’re just excited that you got the free meal and didn’t have to “earn” it. If you weren’t a loyal customer, you just became one to see if it happens again—and so did everyone else that was there at the time. You were surprised and delighted.

Punch cards make your customers do all the work of keeping track of their loyalty, it’s really you that should be paying attention. What’s more, I have several punch cards in my desk drawer that seldom see the light of day, because it’s not the punch card that makes me like you—it’s your service, your products, and whether or not I feel like I’m being treated fairly—the rest is just a bonus.

A couple of weeks ago, after a ride through central Utah, a friend of mine and I stopped at one of the local Harley dealerships. He had recently bought a new motorcycle and over the last year had purchased a number of other things from the dealer. He had $30 or $40 worth of reward points he hadn’t spent yet, and they were about to expire. About to expire? Since when did loyalty expire?

I had just redeemed some of the same type of loyalty points at another dealer and they had been accumulating for a couple of years. I actually had enough to buy a very nice leather jacket. What’s more, the young lady that helped me seemed excited that I was able to do it. I have to admit, I liked the loyalty program then. However, I had forgotten about it over the years and didn’t even know I had so many points until I got an email from the dealer announcing that they were doing away with the loyalty card and would now keep track of all my purchases on computer.

Because I still have to “earn” my reward points by making purchases, it doesn’t pack the same loyalty punch as a surprise and delight. I wonder what my reaction would be to something out of the blue like, “Thanks for being such a good customer, this time your motorcycle service is on the house.”

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Ty Kiisel

Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business financing and trends accessible in common sense language devoid of the jargon.