Plain-English definitions of the loyalty terms local businesses actually
use, from stamp cards and completion rate to lifetime value. No jargon,
no fluff.
- Digital loyalty card
- A loyalty card that lives on a customer's phone in Apple Wallet or Google Wallet, with no app to download. It works like a paper stamp card, but the customer can never lose it and the business can see how it is used.
- Stamp card (punch card)
- A loyalty card where a customer collects one stamp per visit or purchase and earns a reward once the card is full. The classic example is the coffee shop card where the tenth coffee is free.
- Loyalty programme
- A structured way for a business to reward repeat customers so they come back more often. For most local businesses this is a simple stamp-and-reward card rather than a points system.
- Completion rate
- The share of issued loyalty cards that reach the reward. It is the clearest single measure of whether a loyalty programme is actually working, because a card that is never finished changes nobody's behaviour.
- 8-Week Threshold
- A pattern from FaveCard's completion-rate study: most customers who are going to finish a loyalty card do so within roughly eight weeks, and cards still unfinished after that rarely get completed. It tells you how long a reward realistically has to land.
- Wait-Time Formula
- A rule of thumb for choosing how many stamps a card should need, based on how often customers visit, so the reward feels reachable rather than distant. Set the target too high for your visit frequency and completion collapses.
- Endowed progress effect
- A behavioural finding that people are more motivated to finish a goal when they are given a head start toward it. A card that starts with a couple of stamps already filled is completed more often than an identical empty one.
- Head start
- Pre-filled stamps on a brand-new loyalty card that give the customer momentum toward the reward from day one. It applies the endowed progress effect in practice.
- Multi-reward card
- A loyalty card that gives rewards at several points rather than a single reward only at the very end. Smaller wins along the way keep customers engaged instead of asking them to wait for one distant prize.
- Reward redemption
- The moment a customer claims the reward they have earned. Redemption is a natural high point for the customer, which makes it a good time to ask for a review or a referral.
- Customer retention
- Keeping existing customers coming back, rather than only chasing new ones. For local businesses retention is usually far cheaper than acquisition and is what a loyalty programme is built to improve.
- Repeat visit rate
- How often customers return over a given period. A rising repeat visit rate is the everyday signal that loyalty is working, well before you look at revenue.
- Churn
- The rate at which customers stop coming back. Loyalty programmes exist to slow churn by giving customers a reason, and a small ongoing goal, to return.
- Customer lifetime value (LTV)
- The total profit a business can expect from a customer across the whole relationship. A rough version is the average spend per visit multiplied by visits per year, multiplied by how many years the customer stays.
- Reward cost
- What it actually costs a business to fund a loyalty reward, which is the cost of goods for the free item, not its menu price. Because loyalty rewards are only given to returning customers, the cost is usually small next to the extra visits they drive.
- Wallet pass
- The digital pass format that lets a loyalty card sit alongside boarding passes and event tickets in Apple Wallet or Google Wallet. It means a loyalty card needs no separate app to install.
- Review gating
- Screening customers so that only happy ones are asked for a public review. It is against Google's policy. The compliant approach is to ask every customer at a natural moment, such as just after they redeem a reward.
Put the theory to work
Build a digital loyalty card your customers keep in their phone's wallet, no app needed.
