How Much Does a Loyalty Program Cost?
How Much Does a Loyalty Program Cost?
Wondering how much loyalty programs cost? If so, you’ve come to the right place.
How much a loyalty program costs varies widely depending on their size and scope. From simple paper stamp or punch cards through to fully integrated solutions that are woven through the fabric of a business.
In this article, we’ll cover the following topics to give you some idea of the different loyalty program options and how much you can expect to pay for a loyalty program:
– Stamp Card Loyalty Programs
– Paper Loyalty Card Costs
– Digital Loyalty Card App Costs
– Integrated POS Loyalty Costs
– Enterprise Digital Loyalty Solution Costs
Stamp Card Loyalty Programs
Stamp Cards or Punch Cards are one of the simplest and easiest forms of loyalty programs to introduce to your business. The are generally inexpensive and are a great quick solution that are particularly popular in cafes, hair and beauty and hospitality
There are two options available for a merchant. Either a traditional paper card system or a digital solution.
Digital Loyalty Card App Costs
The digital stamp card or loyalty card app, is a modern take on the traditional paper card. It has many benefits over the old style cards however you will generally need to pay a little more to access these features.
You may have to pay a small setup fee but generally you should be able to start your program without setup costs and more likely you will be offered a free trial period to try out the system. If there are setup costs then these would normally be in the $50 – $100 range.
The ongoing cost of a loyalty card app is normally based on a monthly fee per location. As an example the Stamp Me Loyalty Card App that we offer to merchants, typically costs between $20 and $50 per month per location.
You can find out the exact details of pricing for our loyalty app here…
Paper Loyalty Card Costs
Depending on the type of business you have and the amount of customers you serve in a day, then you will have a small ongoing cost. Once you’re happy with your design and type of card then you can bring your printing cost down by printing a much larger quantities.
Don’t print too many though as inevitably you may change your style, offer or even upgrade to a more complete digital loyalty system.
Integrated POS Loyalty Costs
Integrated systems can vary widely from software plugins to compatible point of sale systems to proprietary modules that you POS company has designed. Software plugins are similar to digital loyalty apps in that they usually come of a SaaS subscription model. Typically the costs of these systems can range from around $50 to $500 per POS device per month that you operate.
If your POS is an older style, windows based solution then often this type of solution is not available out of the box. In this instance to have an integrated solution, you would need to have a developer build your solution. This is generally an expensive exercise and a developer will cost anywhere from around $100-$250 per hour. It may take weeks or even months to build a full solution and then there comes the problem of support.
POS loyalty modules are often available from your POS system provider. These can often be limited in their features as POS companies are good at building POS systems but loyalty is often not a core strength. The cost of these can vary widely from free to upwards of $500 per month. You can see an example of this with the Square POS system here.
Enterprise Digital Loyalty Solution Costs
The gold standard in loyalty solutions comes with customized enterprise solutions. These can range from airline loyalty points solutions to a digital platform built for consumer brands or franchise groups.
Brands & Franchise
There are often 2 options to build a loyalty platform for your brand or franchise group, you can either build and develop your own platform using a developer or agency from the ground up. This is an expensive solution both in the short and long term. However, you will control all aspects of the IP, functionality and design. Developing from scratch is expensive, to do this properly you need to hire a User Experience and User Interface designer to plan out your concept, customer journeys and wireframe your solution. You then need to build the program a typical build cost will be in the range of $150k-$500+k. The next cost is then supporting the solution, you can either do this with in-house developers or employ an agency either on retainer or as required. You should budget at least $15k per month depending on the size of your project.
The second option is to customize a solution from an existing loyalty app platform. Generally the cost structure will be an initial build and customization fee which typically would range from $15-$40k. Then ongoing license and support fees. These are often variable depending on the size of your business and generally would be upwards of $2k per month.
Supermarkets and Large Retail
Large loyalty programs for retail groups are generally proprietary systems that are built for the specific business in mind. Retails groups know the value of introducing these programs and will invest significant capital to develop and manage their programs.
- IT investment, development and ongoing support
- Advertising and marketing
- Business staff costs
- Rewards redemption and accrued liability
- Third party and consulting contracts
- Research, Design and Development
Large programs will often cost at least a million dollars to initiate the build and design and significant ongoing costs. However, the benefits can be substantial. Starbucks, who operate one of the worlds most successful loyalty programs and loyalty apps, state that one of their loyalty customers will spend 3x more than a non-loyalty customer. Myer, a major high street retailer in Australia, have quoted that they have around 70% of their sales being conducted by one of the 5 million loyalty members.
Airline Loyalty Programs
Airline programs are now well developed and generally costs millions of dollars to introduce and support. Just about every successful, commercial airline now has some form of a loyalty program. This is not by accident. Generally these programs provide the consumer value through providing points to convert to rewards or upgrades. Programs such as the Qantas Frequent Flyer have developed into individual business units, it’s reported that Qantas Frequent Flyer program now brings in more the $400M in profit after the costs of running the program and analysts estimate that it is worth over $4B to Qantas.
We’ve hope this article gave you some some idea of the price you can expect to pay for your loyalty program.
If you would like to speak to one of our loyalty experts about a loyalty program for your business, ROI or have general questions, our team is here to help. Contact us.