revioWhat Is a Digital Loyalty Program? A Complete Guide for Small Businesses
A digital loyalty program lets customers earn rewards for repeat visits or purchases — tracked digitally on their phone instead of on a paper punch card. Here's how they work, what types exist, and how to choose one.
A digital loyalty program is a system that rewards customers for repeat purchases or visits, tracked digitally on their phone rather than on a paper card. Instead of stamping a physical punch card, customers present a QR code — usually stored in Apple Wallet or Google Wallet — and earn stamps, points, or discounts that update in real time.
For small businesses, digital loyalty programs serve two core purposes: they give customers a reason to return, and they give merchants data about who is returning and how often.
How Digital Loyalty Programs Work
The basic mechanics of a digital loyalty program mirror a traditional punch card, but the execution is entirely on the customer's phone:
- Enrollment — A customer scans a QR code (at the counter, on a table tent, or via a link) and adds a loyalty card to Apple Wallet or Google Wallet.
- Earning rewards — At each visit or purchase, staff scan the customer's pass using a QR scanner. The customer's stamp count or points total updates instantly.
- Reaching a reward — When the customer hits the threshold (e.g., 10 stamps), they receive a push notification and the reward is redeemable at the counter.
- Ongoing engagement — The merchant can send push notifications to customers about promotions, new products, or limited-time offers — directly to the customer's lock screen.
No app download is required for the customer. Apple Wallet and Google Wallet are pre-installed on every iPhone and Android phone.
Types of Digital Loyalty Programs
Stamp Card Programs
The digital equivalent of the classic punch card. Customers earn one stamp per visit (or per purchase above a minimum amount) and receive a reward after reaching a set number of stamps.
Best for: Cafes, bakeries, juice bars, quick-service restaurants, any business with frequent repeat visits.
Example: "Collect 10 stamps, get your next coffee free."
Points Programs
Customers earn points proportional to how much they spend. Points accumulate over time and can be redeemed for rewards at various thresholds.
Best for: Retail stores, restaurants, salons — any business where transaction sizes vary significantly.
Example: "Earn 1 point per AED spent. Redeem 100 points for AED 10 off."
Discount Pass Programs
Customers receive a digital pass that grants them a standing discount or access to member pricing — no stamping required.
Best for: Businesses with loyal regulars who want VIP treatment rather than transactional rewards.
Example: "Show your member pass for 15% off every visit."
Digital vs. Physical Loyalty Cards: Key Differences
| Factor | Physical Punch Card | Digital Loyalty Program |
|---|---|---|
| Card always available | No (forgotten at home, lost) | Yes (always on phone) |
| Fraud prevention | Low (easily duplicated) | High (cryptographic verification) |
| Customer data collected | None | Visit frequency, spend, engagement |
| Ability to send promotions | None | Push notifications to lock screen |
| Setup cost | Printing only | Monthly software subscription |
| Staff effort | Manual stamping | QR scan (2-3 seconds) |
| Card can be updated remotely | No | Yes (design, rewards, info) |
What Makes a Loyalty Program Successful
Research from Bain & Company shows that a 5% increase in customer retention can increase profits by 25–95%, because loyal customers spend more per visit and refer others. The specific loyalty mechanics matter less than these three factors:
1. Low enrollment friction. If a customer has to download an app to join, a large percentage will decline. Native wallet passes (no download required) have significantly higher enrollment rates than app-based programs.
2. Visible progress. Customers need to see how close they are to their reward. Digital passes show stamp count or points total directly on the card, which is visible every time the customer opens their wallet.
3. Attainable rewards. A reward that requires 20 visits to earn feels distant. 8–10 stamps is the sweet spot for most businesses — achievable in a few weeks for regular customers.
How to Choose a Digital Loyalty Platform
When evaluating platforms, consider:
- Does it require customers to download an app? App-based programs have lower enrollment than native wallet programs.
- Can staff scan using their own phones? Dedicated hardware adds cost and setup time.
- Does it include push notifications? The ability to reach customers between visits is a significant driver of repeat visits.
- What analytics does it provide? At minimum, you want visit frequency and active customer count.
- What is the pricing model? Look for flat monthly pricing without per-transaction fees.
Getting Started
Most digital loyalty platforms offer a free trial. The setup process for a basic stamp card program typically takes under an hour:
- Create an account and enter your business details
- Design your loyalty card (logo, colors, reward settings)
- Generate an enrollment QR code
- Place the QR code at your counter or on table tents
- Train staff to scan customer passes at checkout
The first customer can enroll and earn their first stamp on the same day you sign up.
Ready to launch a digital loyalty program for your business? Start a free 14-day trial with Revio — no credit card required.
Sara Al-Farsi
Head of Merchant Success, Revio