Updated February 2, 2021
If you are old enough, you remember getting Green Stamps as a reward when you bought stuff. Fill the book and you could go to the Redemption Center and turn them in for new stuff. The stamps are long gone, but they have been replaced by “loyalty programs” where you get rewarded for using an airline, shopping at a particular grocery chain, or using a credit card.
Starting in the travel industry, loyalty programs have become common in many aspects of our lives. You even find them in needlepoint shops. But they can be confusing. There are two basic types of clubs.
Store Credit Programs
Like many credit card purchases, these clubs accumulate points with each qualifying purchase. These points can be applied to future purchases at the same store. The amount of the credit can vary from half a percent to over 15%. Compare this to credit card programs which often offer between 2 and 5%.
Stores also differ in the number of points you have to reach to use your credit, the expiration date of these points, and the items that qualify for credit.
These programs work like this: When you buy items at the shop, the amount of the purchase is recorded in your account. Once you reach your spending threshold you can apply your credit to the purchases.
Many kinds of stores, not just your LNS, offer these kinds of programs. In fact, your wallet and email may be full of cards and member discounts. For the shopowner these programs have some hidden costs. They may need special programs inside the shop to run them or they may be run by a third party.
Buy X, Get One Programs (BOGO)
The first loyalty programs I saw at shops were this kind of program. The shop called it a “canvas club.” Simple to run each time you bought a painted canvas it got recorded on a card with your name on it. After you bought a set number of canvases you got one free. Usually, the price of your canvases was recorded and there were limits on the price of the free canvas.
There are also clubs like this for finishing or for classes.
These programs are very low-tech to run and do not have hidden costs.
Gift with PUrchase
These are not exactly a loyalty club, but free gifts when you purchase offers are becoming more common. By making a commitment to the purchase of a series of items the shop has a long-term sale (like a magazine subscription). The gift is usually something that adds to or works with the set.
How Do Consumers Feel
I heard from many stitchers when I asked about loyalty programs. In general, people liked them and were happy when shops offered them. However they did not make a difference in where people shopped, great customer service as well as being local were the two biggest issues for stitchers to use a particular shop.
One thing was a big turn-off for stitchers — inconsistent loyalty programs. If a program comes and goes, seemingly randomly, and if the time to use rewards is short, customers don’t like it. I suspect this is for a couple of reasons. If there is a loyalty program, they want to set it and forget it instead of wondering if it is around right now. This is true even if they don’t often use their rewards.
Short expiration periods are another turn-off for stitchers. For the shopowner unclaimed rewards can be a liability, like unused gift cards. For the stitcher who might work several months on a project, she may not visit a shop before the reward expires.
Does It Make Sense for Shops to Offer Them?
Certainly consumers like rewards programs. While it is not a primary factor, it often adds to the appeal of a shop. For shops, it may provide you with ways to sell more items or get people in the door.
Even so, every loyalty program has costs. And, like any other kind of advertising, the shopowner needs to weigh those costs with the benefits.