Definition
Loyalty program
A loyalty program is an arrangement that rewards customers for coming back. In hospitality it usually takes one of two forms: stamps counted per visit toward a free item, or points accrued against how much is spent.
Also called loyalty scheme, rewards program.
Stamps or points
Stamps count visits; points count money. Stamps are understood instantly — ten and you get a coffee — and comprehension is most of what makes a scheme change behaviour. Points are fairer where your prices vary a lot, because they do not treat a flat white the same as a full breakfast, but they need a conversion rate the customer has to be told and will not remember. For a café with a simple menu, stamps almost always win.
What it is actually for
Not to reward your regulars — they were already coming, and rewarding them is a cost, not a benefit. The value is in moving occasional customers into the habit, and in learning who has stopped coming. If a programme cannot tell you the second thing, it is doing half a job.
Why most of them fail
Three reasons, in order: the reward was too far away, staff never mentioned it, and nobody checked whether it worked. The third is the one that kills a scheme silently — without a before-and-after repeat rate, a loyalty programme is a discount whose effect nobody can argue for when it comes time to justify the cost.
Questions
- How many stamps should a card need?
- Enough that a regular finishes in roughly a month of normal visits. That means around ten for a coffee shop and far fewer for a salon or barbershop, where a visit is monthly and worth much more.
- How do I know if it is working?
- Compare the share of customers who return before and after launch. Total sales move for a dozen reasons; repeat rate is the number the programme is supposed to change.
Related terms
Digital stamp card
A digital stamp card is a loyalty card that lives on a customer’s phone instead of in their wallet. Staff add a stamp by scanning a code at the counter, and once the card reaches a set number of stamps the customer has earned a reward.
Repeat rate
Repeat rate is the proportion of customers who return at least once after their first visit. It is the most useful single number for judging a loyalty programme, because it measures the behaviour the programme is meant to change.
Reward
A loyalty reward is what a customer receives for completing a card. It is usually a free version of the business’s main product, though upgrades, add-ons and access-based perks often feel just as generous while costing considerably less.
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