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  • Arlena Mack

Loyalty Schemes Within an App

Updated: Jan 8

A big draw to any user of an app is a tangible benefit to an existing service they are already receiving. A big incentive as a result for an app user to continue using your service is a direct financial gain to themselves. To this end, loyalty schemes appeal to consumers on a raw value level and allow you the business to gain theoretically a great degree of consumer interest and retention with little investment.


For a start, app based loyalty schemes are almost universally more successful than physical loyalty schemes. A physical loyalty scheme has numerous extra issues attached. Even a very typically stamp collection card system, the standard get nine stickers and receive a free coffee, just by being physical now requires the creation cards and stamps. This is not only a needless extra layer of supply, but if supply is not met the loyalty scheme could backfire and be seen as unreliable. Digital connection issues are far more rare and not needing constant extra printing saves costs and risk. This is crucial as expert studies show, that over 40% of customers will change loyalty after just two negative incidents, increasing exponentially in chance after that - so it is important to never upset good loyal customers. At the same time, whilst fraud is unlikely it is undoubtedly easier for thieves to fabricate physical loyalty scheme cosmetics, especially if they used underhanded tactics such as pressuring staff to push it through whilst busy. A digital scheme is far less likely to get hacked and it is far more likely to be an easy to detect scam if people ever attempt to exploit your app based loyalty scheme.


On a raw financial level, studies have been carried out into the direct economic effectiveness of loyalty schemes and customer loyalty overall. Studies put the cost of gaining a new customer to be five times that of the cost required of simply implementing services to retain a customer that would have left. Therefore, their estimations put proper investment of loyalty schemes into businesses where their consumers desired the benefit as generating anywhere between 25% to 95% extra income in the long-term, depending on the size of the business and their model.


The conclusion then, is that whilst an app may seem like a substantial investment for just a loyalty scheme, the long term result could be far more profitable that many realise provided the right situation. Especially with the longevity of an app, for little maintenance the customer retention rate of a business can be potentially massively increased. It removes the worry for dropping or not maintaining a physical loyalty scheme, cutting costs long term whilst potentially on increasing benefit.


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