One of the key decisions that a business will need to make in introducing a loyalty program is what loyalty badge to use.  A loyalty badge is the identifying token or the means through which a member of a program will be recognized at the point of sale.  These can take on many forms:  paper stamp cards, plastic laminated cards, printed membership card with a barcode, magnetic stripe, QR code, smart cards, RFID cards or tags, or even biometric devises such as finger print recognition. Most recently, mobile phones have become loyalty badges, either through downloadable loyalty apps or even just location based tracking technology.
 
So what is the best loyalty badge for you?  Paper, plastic, or phone? 
 
Paper
Do not underestimate the power of the simple stamp card.  Recently, I was given a loyalty stamp card by my local salon.  The card is the size of a folded calling card.  In the inside flap, there are salon services which customers typically avail of.  Beside each service are five boxes that are signed manually by the manager upon availment of that particular service.  Upon availing of a service for 5 times in a span of one year, the customer is entitled to the 6th service for free.   The card is given only to select customers at the discretion of the manager. I felt delighted to receive one.  It recognized me as a frequent customer and rewarded me accordingly.  For this salon's purposes, this paper stamp card sufficed.
 
Paper is cost-effective.  It is, however, limited for short-term programs that have a clear beginning and end date.  It is also especially prone to tampering so should not be used in programs that entail large rewards with large groups of customers.  A stamp card will not allow you to track purchase behavior or generate any data that can be used for better marketing later on.   Paper cards may also diminish a company's image, giving off the impression of being "unsophisticated."
 
Plastic
Plastic cards are the most common identifying tokens for loyalty programs.  Cards can be varied in the technology they use:  magnetic stripe, RFID, smart chips, etc.
 
Plastic cards are easily carried inside the wallet of a customer.  It is durable and can last for two to three years before it needs to be replaced.  Depending on the technology utilized, a card can be read at the point-of-sale to capture purchase data.  Large-scale customer data can be then analyzed leading to better customer insight and customized rewards.  Plastic cards can enhance company branding and can make customers feel special. 
 
Plastic, however, has become too ubiquitous.  Almost all establishments now offer loyalty cards.  There are too many cards and this can be a drag for those who do not want a wallet full of extra cards.
 
Phones
The mobile phone has become indispensable to the modern consumer.  It is not only used to make and receive calls or text messages, but it is used to chat, browse, Facebook, Instagram, take photos, and a slew of other applications.  It would be logical to extend the mobile phone's use to that of loyalty badge.
 
Phones can be read at the point-of-sale through cost-effective devices such as tablets.  They can be detected when you simply walk in a store.  Rewards can be given instantly.  Promotions can be sent to your phone in a timely manner.  Consumers need not be burdened with carrying dozens of cards in their wallets.  Multiple programs can all be downloaded in one phone.  A mobile loyalty app can enhance your company's image as modern or leading edge.  This may be especially important to a company that serves the younger population or one that deals in technology.
 
Mobile loyalty apps, however, will only work with smartphones.  While smartphone ownership has grown considerably with the introduction of cheaper smartphones, it has not yet reached critical mass.  Furthermore, slow internet connection or no internet connection inside a store will diminish the use and reach of a mobile loyalty app.  Phone based loyalty programs may also alienate the older members of the population who are not as comfortable with the use of their phones for a loyalty application. 
 
In choosing the right identifying token for your loyalty program, consider your budget, the duration of the program, the type of information that you would like to capture, the image that you would like to project, and your customer preferences and behavior.  You may even decide to use a combination of loyalty badges:  a paper card for a lower tier or temporary customer and a plastic card for a higher tier or permanent customer or a plastic card for customers with no smartphones and a mobile app for those who are more tech savvy.


Frances Yu is the Chief Retail Strategist of Mansmith and Fielders, Inc. She runs breakthrough Mansmith programs, 2nd Power Brands: Attaining Retail Marketing and Branding Excellence and Power Tools: Earning and Keeping Customer Loyalty. For comments and other inquiries, email mentors@mansmith.net