Whether a loyalty scheme pays depends on your numbers, not anyone else's. This article shows how to do the sums for your own business, with a worked example you can copy.
What a loyalty scheme costs
There are two costs. The first is running the scheme: printing paper cards, or a monthly fee for a digital one. RewardForge is $33.99 a month after a 30-day free trial.
The second is the rewards. If you give a free coffee after nine paid ones, each reward costs you what that coffee costs to make, not what you charge for it. That's the number to use.
A worked example
Here are the sums for an imaginary café with a "buy 9, get the 10th free" card. Swap in your own figures.
Thirteen extra paid coffees a month is fewer than one every two days. If the card brings your regulars back even slightly more often than they would have come anyway, it covers its cost. If it doesn't, you'll be able to see that, and you can change the reward or stop.
What to measure
- Members: how many customers have joined.
- Stamps each week: whether members are coming back.
- Rewards claimed: this is your reward cost.
- Stalled cards: customers stuck on a few stamps may need a shorter card or a better reward.
- Takings: compare a few months before and after, allowing for the time of year.
Benefits that are harder to put a number on
Some of the value doesn't show up in the sums:
- Knowing your regulars: a list of members, and when they last came in, helps you notice when someone stops coming.
- A reason to choose you: a customer who is six stamps into your card has a reason to walk past the café next door.
- Word of mouth: with referral bonuses switched on, customers have a reason to tell their friends about you.
- Steadier trade: regulars who come in as part of their routine help even out the quiet days.
How long before you know?
Give it two or three months. The first few weeks are mostly about signing people up, and you won't see many finished cards until regulars have had time to fill them.
The 30-day free trial covers the first month, so you can sign customers up and see how they take to it before paying anything.
The short version
Work out what each reward costs you to make, add the monthly fee, and divide by your profit on a normal sale. That's how many extra sales a month the scheme needs to bring in. If you sell something people buy regularly, it's often a small number.
If you'd like to try it, RewardForge is free for 30 days.