With a Swipe of the Smartphone, Loyalty Punch Cards Becoming Obsolete

(Star Tribune/MCT) -

The days of the “buy-10-get-one-free” loyalty punch card are as numbered as the paper punch itself.

Mom-and-pop restaurants, convenience stores and other retailers are joining national programs that equip them with an iPad at the register where a customer either swipes a loyalty card or waves a smartphone to record the purchase and any reward. National programs such as Belly, SpotOn, Perkville and FiveStars use cloud and mobile technology to enable retailers to offer programs that reward the customer faster and with more creativity than a punch card.

“Within five to 10 years, we’ll move away from punch cards and key fobs and even apps, and go to smartphones,” said Rik Reppe, director of PricewaterhouseCoopers’ customer experience practice in Minneapolis.

D. Brian’s, which has six fast-casual restaurants in Minneapolis and its suburbs, switched to the Belly system recently. The company manages loyalty for 7,000 merchants in 20 U.S. markets with 2.5 million users. Customers use a key fob, card or smartphone at the register to get a free beverage, chips or a buy-one-get-one entree.

“Two years ago, we had a buy-an-entree-get-a-coffee punch card, but it seemed so 1980s and dated,” said Paul Fournier, vice president of D. Brian’s. “The customer always fumbled for it at the register, or they couldn’t find it at all.”

The Belly program is free for customers. Businesses pay $79 to $149 a month for the service, but they don’t have to run the program themselves.

Anita Birmingham of Minneapolis uses her Belly card by waving her smartphone in front of an iPad to get a free cup of coffee every two weeks. “It’s a good savings,” she said. “I like being able to use my smartphone instead of looking for a card.”

Many consumers collect reward cards like playing cards, thumbing through more than a dozen in their wallet or purse. The average consumer has 18 cards but only uses eight actively, according to the market research firm Colloquy in Cincinnati.

The number of loyalty memberships in the U.S. has more than doubled, from 973 million in 2000 to 2.09 billion in 2011, according to Colloquy. But signing up for a loyalty program doesn’t mean consumers are actively using it.