We all love a bargain. Especially the "buy nine coffees, get your tenth one free" type cards.
Used in the correct way, they work fabulously. I am a sucker for it. It works on me. If I have a choice between BP and Esso, I'll choose BP because I can add my Nectar points. The loyalty programme has worked. It's drawn me to BP instead of Esso.
Coffee shops often have offers; Cafe Nero - buy nine coffees get the tenth free. It works. There's competition. If you've got a Cafe Nero Loyalty Card and there is a choice of Cafe Nero or AN Other - you'll probably go for the Cafe Nero. Loyalty cards are all about retention of current customers - not really about gaining new clients.
But I've seen some smaller businesses giving away loyalty rewards for no real reason, other than they maybe think they have to or it's cool to do so.
For example, say you have a small beauticians and it's the only one in the town. No other competition. Or at least no competition that can hurt you. You have a super retention rate.
So, in this case, giving a loyalty card might not actually be necessary. Your clients will probably 99% be sure to come back to you whatever. There is not a risk of losing clients as there is no real competition. Or more than likely, your clients come to you because you're awesome and they love the service. Why give away a free treatment? "Buy nine get the tenth treatment for free" might just be giving away something that the client would have paid for anyway.
It might be better to think of some other scheme to attract NEW customers, if you already have a good retention rate.
I'm not saying don't do nice things for good customers. But think about it. Do your research.
You might tell a good valued client that as they have been so valued you'll give them a discount next time. Or bring a friend and you'll give them a discount / free treatment, etc. The customer then feels all warm and fuzzy because you've valued them. But giving them a reward card, they just feel like they've earned it and you owe it to them. Draw in a new customer by offering your current valued customer to bring someone new.
Or offer a free upgrade. It's usually cheaper to you to upgrade than do a cheaper treatment for free. Who doesn't love and upgrade?!