How to start a loyalty program for a coffee shop

What the program is for

A coffee shop lives on regulars. A loyalty program does one thing well: it gives the people who already like you a reason to choose you again this week, and it tells you who they are. It is not a discount. A discount lowers every ticket from the first visit; a card pays out only when someone comes back.

Keep that in mind at every step below. If a choice makes the card more generous but no more likely to bring a second visit, it is the wrong choice.

The seven decisions

In the order we take them with a new café.

1. 1. Choose the kind of cardStamps, one per scan, suit a counter where most orders cost about the same: a coffee, a pastry, a sandwich. Points per visit do the same job with more than one reward level. Points per dollar follow the bill, for a counter where a drip coffee and a family order are not the same sale. One kind per program, fixed when you create it; the Stamps or points guide, listed beside this one, walks through the choice.
2. 2. Put the first reward closeIn a 2006 study of a real café's reward card, Kivetz, Urminsky and Zheng found that customers came in more often as the free coffee got closer. So the first reward should sit within a few weeks of a regular's normal visits, not at the end of the season. A small reward reached by many beats a big one reached by few.
3. 3. Decide what you giveStart with something small that customers do not usually buy with their coffee: a pastry, a cookie, a flavour shot. Keep the free coffee for the top of the card, if you offer it at all. Avoid a percentage off: it discounts every ticket that redeems it, while a small item costs the shop far less than its menu price.
4. 4. Decide what counts as a visitOne scan per order, at the moment the cup is handed over. Give the staff the rule in one line, so a single bottle of water does not earn what a lunch earns. With points per dollar, an optional minimum purchase does the same job: purchases below it earn nothing. With stamps or per-visit points, staff confirm the purchase reaches it before the scan counts.
5. 5. Put the QR code where people waitCustomers join by scanning your QR code and adding the card to Apple Wallet or Google Wallet: no app, and nothing to fill in at the counter. Print the code at the register and at the pickup counter, where people stand with nothing to do. Ask for an email on the sign-up page: it is what brings a card back when a customer changes phones.
6. 6. Give the staff one sentence“Do you have our card? Scan here.” That is the whole script. At handover the barista points the phone at the pass, sees what the scan will do, confirms, and can undo a wrong scan on the spot. A plug-in USB scanner does the same without a phone.
7. 7. Watch a few numbers once scans startScans, redemptions by reward, and new versus returning customers, all on the dashboard. If regulars join but do not reach the first reward, it is too far away. If the top reward is redeemed more than the first one, the card is upside down.

What a reward costs you

The menu price of a free pastry is what the customer sees. What it costs you depends on whether they would have bought it anyway. A pastry most people do not add to their coffee costs you its ingredients, not its price; the free coffee at the top of the card replaces a coffee they would have bought, so it costs you about its full price. That is why the small, rarely bought item comes first and the main item last.

A percentage off has no such cushion: it comes off every ticket that uses it. We work through your menu with you before the card is set.

Questions cafés ask before they start

We launch it at your counter

We set your program and rewards up, launch it at your counter with your staff, and then run it for you: you tell us what you want, we make the changes. You keep full access to the merchant app and the web dashboard, and you can reach us whenever something needs to change.