Digital loyalty card for a cafe: how to set it up
A cafe is the easiest place in retail to run a loyalty programme and the easiest place to run one badly. The basket is small, the visits are frequent, and the reward everybody reaches for, a free coffee, costs you a fraction of what the board says it does. Here is the arithmetic, with your numbers rather than ours.
Frequency is the lever, not spend
In most shops the way to make more money from a customer is to get them to spend more per visit. In a cafe it is almost entirely the opposite. A regular is not somebody who buys two coffees at once, it is somebody who comes on Tuesday as well as Friday. So the reward should be attached to coming back, not to the size of the basket.
That is why a stamp card has survived in cafes long after it died everywhere else. Buy five, get the sixth free is a frequency reward wearing a paper hat. The digital version should do the same thing and not quietly turn into a points scheme that rewards the person who buys four coffees for the office.
A free coffee costs you the cost price, not the menu price
This is the number most shopkeepers get wrong, and it is the difference between a programme that pays for itself and one that frightens you. When you give away a flat white you do not lose £3.40. You lose the beans, the milk and the cup.
Suppose that comes to 75p. Your number will be different, and the table below works with whatever it is. A customer who buys five at £3.40 has given you £17 before they take the sixth.
| Your cost to make one | Cost of the reward | As a share of the £17 | What the same reward would cost as money off |
|---|---|---|---|
| 50p | £0.50 | 2.9 per cent | £3.40, or 20 per cent |
| 75p | £0.75 | 4.4 per cent | £3.40, or 20 per cent |
| £1.00 | £1.00 | 5.9 per cent | £3.40, or 20 per cent |
| £1.25 | £1.25 | 7.4 per cent | £3.40, or 20 per cent |
The last column is the point. Handing over a free coffee and taking £3.40 off a bill feel identical to the customer and differ by four times to you. If you are going to give something away in a cafe, give away a thing rather than money.
Where to set the numbers
Three settings decide everything, and there is a sensible starting point for each.
- Every fifth or sixth visit earns the reward. Below five it feels cheap and you are giving away margin to people who were coming anyway. Above eight it is too far away to change anybody's Tuesday.
- Count a visit as a day, not a transaction. Otherwise a customer buying three coffees for colleagues collects three stamps for one trip, which is not the behaviour you are paying for.
- Make the reward a named item rather than a value. A free coffee reads as generous and costs you cost price. Two pounds off reads as mean and costs you two pounds.
The one thing worth adding later
Once the basic reward is running, the useful addition is a category bonus rather than a bigger reward. Double points on pastries for a week moves the thing you actually want to move, which is attach rate at the counter, and it costs you the margin on one line rather than across everything.
Resist making the core reward more generous to fix a quiet week. A promotion can be withdrawn. An earn rate, once your regulars have got used to it, cannot be cut without it being noticed and resented.
Related
- How generous should a loyalty card reward be?
- Digital stamp card or points: which suits your shop
- Which loyalty card reward costs you least
Written for shopkeepers rather than for a search engine. The arithmetic here is yours to check, and if a figure looks wrong for your trade, tell us and we will correct it.