Punch Cards: What Are the Pros and Cons for Business?

Thinking of creating a punch card for your small business? We’ve all seen loyalty punch cards — the simple wallet-size cards that get stamped or punched every time you make a purchase at the coffee shop.

 

And since, a recent survey found that 43% of people are more likely to buy weekly with a loyalty program, you may feel you need to offer one just to stay competitive. Loyalty punch cards can be a great way to increase customer retention at your small business.

 

If you think a punch card loyalty program would be a good fit for your business, there are some pros and cons to be aware of before making a final decision. Here are a few points to consider if you’re using a punch card for a small business loyalty program.

 

To launch a punch card program, you’ll need small, wallet-sized cards for your customers. When a customer makes a qualifying purchase and presents their punch card at the point of sale, they get their card stamped or “punched” as evidence of the purchase. The customer earns a free item or a discount after a certain amount of punches. This system is an easy way to build customer loyalty at a low cost.

 

As a business, there are three other decisions to make: what action earns a punch; how many punches it takes; and what the reward for punches is. Loyalty punch cards are easiest for businesses with limited item selections, such as coffee shops or pet food stores. For example, a coffee shop could offer a free coffee for every five punches on a card, representing five previously purchased coffees.

 

Producing a punch card is inexpensive. Card formats don’t have to be fancy. A business can print out punch cards on either plain white paper or card stock. A loyalty punch card should include a business’s logo, name, and a grid of “punch” spots. So, your costs are just the time involved to design the card, the paper, the printer ink, and either a one-hole punch or stamp for your staff to use.

Unlike more complicated digital rewards programs, loyalty punch cards are easy to teach to your staff. They need to know which purchases earn a punch, how many punches a card should include to get the free item or discount, and what the item or discount is. That’s it. Simplicity is one of the best characteristics of this rewards system.

 

All the punch card simplicity comes with a price. Just as it’s easy to launch, produce, and train staff on loyalty punch cards, it’s also easy to create counterfeit punch cards. So, you could end up giving away free products. For some businesses, business punch cards are just the price of building customer loyalty.

 

Some customers will cheat. It’s easy for customers to punch an extra hole or two in their punch card so they’ll get their free item sooner rather than later. The good news is that if your customer decides to cheat, they clearly love your product. The bad news is that your business may end up giving away too much free product.

 

There are ways to make it harder for customers to cheat. Businesses may want to consider getting a custom-made stamp or punch, which will make the mark more difficult to duplicate. Another way is to have customers put their initials next to the punch, which adds an extra layer of complexity.

Part of the appeal of technology-based loyalty programs includes their ability to collect useful customer data. Collecting phone numbers, customer data, and buying habits of customers can help you fine-tune your marketing or product design. You could even introduce new services or products based on the data collected. You gain loyal customers plus access to valuable data. But business punch card data is not easily trackable, so all you get is a repeat customer. However, keep in mind that storing sensitive customer data can be risky.