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Digital Loyalty Cards: A Better Way to Get Repeat Customers?

Small merchants now have a slew of new options, thanks to this growing industry.
Mobile-payment service Square is providing digital loyalty cards for businesses to enrich the customer and merchant relationships.
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Looking beyond daily deal sites to attract customers? Try digital loyalty programs.

Often cheaper and more convenient for customers, digital loyalty cards are becoming more attractive to small businesses looking to beef up repeat business and gather customer data, according to a new report in Bloomberg. Companies in this space have attracted more than $155 million in venture capital, and experts predict by 2015, 900 million merchant transactions will be tied to digital loyalty programs.

"We think if you make it easier for merchants to use these [loyalty] programs and more delightful for the customer to pay and more rewarding, then both sides win at that point," said Ricardo Reyes, spokesman for mobile-payment service Square. The San Francisco-based start-up announced last week the launch of a new feature, which allows merchants the ability to keep track of and reward frequent customers.

Square isn't the only one in on the action. Cartera Commerce, a Lexington, Maryland, company, creates a loyalty program tied to credit cards, so when a customer swipes at your store you can provide discounts or rewards automatically. The company just raised $12 million in funding, Bloomber reports.

And CardSpring, a Palo Alto company, allows businesses to create Web-based and mobile apps that can be connected to payment cards for loyalty programs, coupons, and digital receipts.

In addition to giving your customer an easier way to get deals, digital loyalty program options can often be cheaper for the merchant as well.

Bloomberg pointed out that some of the largest daily deal sites, including LivingSocial and Groupon, reportedly take a 30% cut of a transaction. Compare that with the 5% to 15% cut a loyalty program typically takes.

IMAGE: Courtesy company
Last updated: Jun 26, 2012

CAITLIN BERENS | Staff Writer

Caitlin Berens writes about business innovation and entrepreneurs. Before Inc., she worked at Billboard, SELF, and Better Homes and Gardens. She attended Drake University, and lives in Brooklyn, New York.




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