Points vs stamps vs cashback: the 6 types of loyalty program and which to pick

Points vs stamps vs cashback is the first decision in any loyalty program, and the hardest to change later. The good news: no type is better than the others; there's one that fits your ticket size, visit frequency and margin. Here are the 6 types with an example each, a table to compare them, the real-cost formula and a decision tree.

The 6 types of loyalty program

1. Punch card (stamps)

Each visit or purchase earns a stamp. Complete the card, get a reward.

Example: "Buy 9 coffees, the 10th is free." The customer sees 6 of 10 stamps on her phone and knows exactly how far she has to go.

Best when the ticket is similar every visit: coffee shops, barbers, car washes, ice cream shops.

2. Points (with optional tiers)

Customers earn points based on what they spend and redeem them for rewards of different values. You can add tiers (say, Bronze, Silver, Gold) with perks for your biggest spenders.

Example: 1 point per €1. 50 points = a small bag of pet food; 150 points = an accessory. Anyone who reaches 500 points in a year moves up to Gold.

Best when tickets vary a lot: bakeries with custom orders, stores, restaurants, pet shops.

3. Tiered discount

Customers don't collect rewards: they move up tiers based on spend or visits, and each tier has a fixed discount.

Example: from 5 visits, 5% off; from 15, 10% off.

Best for customers who'd rather save every time than wait for a reward, like at a beauty salon or a clothing store.

4. Cashback

Part of each purchase comes back to the customer as credit to spend in your shop.

Example: 5% cashback. A customer spends €40 on dinner and gets €2 of credit on their card. Once they've built up €10, they use it on another visit.

Best for restaurants and stores with medium or high tickets. It's easy to grasp: "you get 5% back".

5. Gift card

A prepaid balance customers buy for themselves or to give away. It can be reloadable with optional expiry.

Example: a €30 gift card for a haircut and beard trim. The recipient spends part today and the rest next month.

It's less a reward than a way to sell in advance and bring in new customers. More in gift cards for small business.

6. Membership or club

The customer pays a fee and gets a number of uses included.

Example: "2 haircuts a month for €45" or "a coffee a day for €45 a month", with remaining uses always visible.

Best for high-frequency recurring services. We go deeper in membership programs for small business.

Comparison table: which type suits you

How to calculate the real cost of a reward

This is where many programs go wrong: the reward is priced at menu price instead of cost price, or not priced at all.

The formula

Stamps example: a coffee costs €3. Rule: buy 9, the 10th is free.

• Customer spend to earn it: 9 × €3 = €27.
• If you count the free coffee at menu price: 3 ÷ 27 = 11%.
• If you count it at cost (say €0.60 for coffee, milk and cup): 0.60 ÷ 27 = 2.2%.

The first number is what you "give away" from the customer's point of view; the second is what actually comes out of your pocket. Use your own costs.

Cashback example: 5% of spend. If a customer spends €200 in a quarter, they build up €10 of credit. When they spend it, your cost is what it costs you to serve €10 of product, not the full €10. And if they never spend it, it costs you nothing (though ideally they do come back to use it).

Points example: 1 point per €1; 100 points = a product you sell for €5 that costs you €2. Real cost: 2 ÷ 100 = 2% of spend.

A practical rule

First decide the percentage you're willing to invest in loyalty (for instance, between 3% and 10% at menu price, depending on your margin), then adjust the rule to fit. If, with that rule, customers take months to see a reward, raise the reward value or lower the number of stamps.

Combining types: several cards at once

You don't have to pick one forever. Some combinations that work:

• Stamps + gift card: stamps for everyday visits, a gift card for the holidays or Mother's Day.
• Points with tiers + birthday: reward spending and add a personal touch once a year.
• Membership + stamps: members use their included coffees, everyone else collects stamps.
• Cashback + slow days: double cashback on Mondays to spread demand.

The condition: each card has a clear purpose. If customers don't understand what each one is for, you're just giving them homework.

Decision tree: which one to choose

Answer in order and stop at the first that fits:

1. Do you sell a service customers use several times a month (coffee, haircuts, washes, classes)? Consider a membership. If you don't want to manage fees, go to step 2.
2. Is the ticket almost always the same? Punch card.
3. Does the ticket vary a lot between visits? Points per €1 (add tiers if you have big spenders).
4. Is your average ticket high and do customers like "getting money back"? Cashback.
5. Do customers prefer saving every time over waiting for a reward? Tiered discount.
6. Do you want to sell more around holidays or attract new people? Add a gift card to whatever you already run.

What usually works by business type

These are starting points, not rules. Try it for a couple of months and measure whether customers come back more (we explain how in how to get repeat customers).

Common mistakes when choosing a card type

• Copying a big chain. Their margins and volume aren't yours. Run your own numbers with the formula above.
• Points with odd conversions. "1.5 points per €2" makes customers do math. Use round numbers: 1 point per €1.
• Cashback that's too low. 1% on a €10 ticket is 10 cents: nobody notices. If you choose cashback, let the balance visibly grow.
• Impossible tiers. If the top tier needs spending almost nobody reaches, it demotivates instead.
• Changing the rule every month. Customers stop trusting it. Test a rule for at least 8–12 weeks before touching it, and if you change it, honor what people have already earned.
• Choosing by the tool instead of the customer. First think about what your customers understand and value; then find a way to do it.

Setting it up with Stampaz

Stampaz includes all 6 card types on every plan: stamps, points with optional tiers, tiered discount, cashback, gift card and membership. Customers save them to Apple Wallet or Google Wallet (or use a web card) without downloading any app, and you can run several cards at once in the same business (2 on Local, 10 on Pro, unlimited on Chain). To start step by step, follow how to create a loyalty card for your business.