Are they solid practice? A wasted marketing stunt? Or is it the only way to retain custom in crowded coffee cities?
Model specific I feel. We don’t offer loyalty cards and instead have an open pricing policy that reflects both the quality of the buying price.
To some degree I feel that loyalty programs fail to differentiate us from the chains and devalue the product, but I may be over thinking it.
Instead we have random loyalty bonus program, every now and then I’ll buy a regular customers coffee, when they don’t expect it. This means much more than a full loyalty card.
We use bribe cards, that are simply a free coffee. It’s up front about what it is, explains that we want the person to come back and we’ve given out about 1-2000 per year.
If we end up getting someone come in with one then we’ve a good chance they’ll come back if we do them right on quality and service.
Loyalty cards suck simply because either you’re giving a discount to your best supporters (who support you because of what you do and how you do it, not particularly because its good value) or working that discount into your pricing, that way over pricing your coffee from the off.
I always tell new cafe owners, just give away coffee for free until you’re busy. If it’s good then it won’t be long (1-5 days as a wild stab in the dark) to get to a critical mass. Bribery works.http://runawaykiwi.com/wp-content/uploads/2015/05/Fields-Cafe-Bribe-1024x768.jpg
The place I’m working now uses Square’s built-in (optional opt-in, actually, I suspect) “stars” system. I’ve had negative experiences with the “get a free drink if you buy X drinks” cards mainly surrounding what is and is not a drink (Is a bottled fridge beverage a drink? Not usually. What about iced tea that’s been pre-brewed? Sometimes. Why? The barista can’t really say, and shouldn’t really have to. What about when I redeem – do I have to just get a filter coffee? Can I get iced coffee? Can I just pay the uncharge). I realize that making systems to answer these questions is not hard, but it is work that is rendered unnecessary by eliminating the practice. Square’s system lets us set our reward as a financial one ($X off your next purchase) instead of a “drink-based” one. I think I’m OK with it
I worked at a shop in Chicago that uses punch cards (buy 9, get 1 free) and it did seem to me that they were helpful in bringing people back to the shop, especially when we first opened.
As @Greg_Loring-Albright mentioned, there are plenty of complexities but I think most of them can be eliminated with some foresight and good staff training. You’ve just got to decide if it’s worth the effort.
Really, my biggest issue with it was how it can really slow down the flow of customers by adding yet another question, activity, and purse/wallet “i’ve got it here somewhere” digging.
I think ‘list building’ is vital for every type of business, whether it’s email, Facebook fans or loyalty cards. Then you have a way to reach out with offers, reminders, thanks etc. Good point about slowing down the line - in Australia the Rewardle card seems to have got good traction with cafes, and customers ‘do the work’, flashing their card at the tablet checkin. The challenge for any type of loyalty scheme is are you going to use the customer data you have?
Personally I don’t like loyalty systems that work just as a discount. The loyalty card promotion I like involves a cross category sale - e.g. buy ten coffees get a free food item or invite to our next cupping session.
Another promotion I recently saw involved giving away 5 coffees that had to be redeemed in a single order. I like this as it gives the customer a chance to shout coffee for their workmates and exposes new potential customers to your coffee.
The company I’m helping now has been using a “smart” swipe card at their cafes for over 10 years. I remember when I first worked with them about 7 years ago it was huge, they had over 2.5k people with cards and a good size database; people used to load money onto the cards (similar to what Starbucks does) and they would also get 10% of what they spent back into the card to spend as they please in-store.
But, I left and came back a few months ago. And, one of the worries they have is that now, instead of having more loyal customers using their cards, they have less than 400 active card users. Why? perhaps it is quite easy to find amazing coffee in Sydney nowadays, so people go where their taste buds take them, not where their wallets point to.
The owner of the company is investing heavily in perfecting the loyalty program, but I don’t agree with it, I think that money could be put in better use towards hiring better people (higher rates and more professional baristas). I think people are choosing more quality and are willing to spend a bit more, not expecting to be rewarded for it. In saying that, I do know a lot of people expect to get a loyalty card and a free coffee every 9 coffees or less, so it is a tricky one.
Loyalty programs should be more creative and focused on better experiences in-store (and maybe outside too?).
Really looking forward to reading how companies with over 5 locations are working with loyalty programs.
We are experimenting with sending out glass jars instead of cups, (that’s definitely community specific)
When a customer uses their own cup they get a point or when they bring a jar back. 10 returns then they get a free drink. We highlight the sustainability idea and even if you just offered it on “own mug”, saves the cost of a cup, which can go toward covering some of the cost of their free one.
How are the Bribe cards divvied out?
Do you just hand them to first time customers? Or just whenever the barista thinks that it’s the proper time?
Is it just a free grab one pile?
I’m interested. We have a loyalty program that is consistently used (every 7th cup free) and I believe it helps, but we have also had some of our long time customers stop using them or tell us flat out that they feel weird about it sometimes. Other’s love it.
If we mess up an order (forgotten, wrong, badly made), they get one.
If it’s someone’s birthday they get one. If they’ve just moved into the area, started a new job, got an interview and having a quick coffee at ours beforehand, we wish them all the best, welcome to the area, whatever, and say here’s a couple free coffees, it’d be good to see you again. Provided we do what we do well, they should come back, and make a habit of coming to us. The owner of Yo Sushi said every family he looks at walking through the door should be seen as £1000 turnover per year (or something to that effect). If they like the experience, and come back once every month they’ll spend a lot of money. I feel the same. If it costs me 3 coffees to get someone to come once every week when they do yoga, it’s well worth it.
Loyalty cards however just give discounts to the very people who are already loyal for other reasons, and keep giving the discount forever more.
We also put the cards in tiny brown envelopes with the word [BRIBE] on the front and give them out in the street.
A grab one pile would be nuts unless it was for a free coffee at a sister coffee shop (we’re just the one though).
One thing to consider if you were thinking about getting rid of loyalty cards, is the backlash. I’d recommend having bribes or something similar, then giving people three or four in exchange for their loyalty cards. Buy them off. Colin Harmon spoke about it being easier to add, than to take away, in his Tamper Tantrum, and that has kept me from ever adding loyalty cards to our shop.
Good luck with whatever you end up doing!
The loyalty card (an electronic fob or smartphone app) for my favourite local coffee shop includes the ability to use the app to go back to a transaction within a window of a couple of hours and comment and/or tip electronically. I find this very useful as it lets me tip after I have been served and base the tip on great service and great coffee (hopefully) rather than tipping up front. It lets me leave confidential feedback on the coffee or the service I receive from a barista. I’d love to see something like this become more widespread.
We’ve been using a buy X get 1 free app for a while, and it’s okay. The biggest frustration is actually having to swap over to the app on the terminal to give punches. I think this type of system could be valuable depending on the local market.
We are considering swapping to a system that is almost a pure discount; spend X dollars, get Y back in discounts. The most attractive part about this though is that customer info would be tied to email address and tracked automatically based on credit card (you can add manually for cash customers). The thought is that you then build a huge database with customers, spending habits, frequency, etc… and can automatically send emails based on triggers (customer frequency changes, special events, etc…)
What are your thoughts on the system we are considering moving to? To me, it seems seamless and effective, but I would love the feedback.
PS I believe the best option is like what @Mat_North mentioned about random rewards and such, but that becomes difficult with staff rotation, schedule rotation, multi-stores, and such.
Another thing that has been interesting to see pop up is “3rd party” quasi-loyalty programs.
Here in Chicago, we have both Brewpass and Indie Coffee Passport. They are a bit different but they both have a selection of specialty shops that you can go to for a free drink. Brewpass has a monthly fee and you can go once a day. ICP is a one time charge and you can go to each shop once. Both are so lowly priced that I have failed to wrap my head around how they make money.
This is much better.
Treat the system as an acquisition tool, based on intelligent customer lifetime value.
And if you can keep track of it all through a smart card or whatever you’d be able to do real analysis.
Do you know what this system is called??
One thing I’m curious about - especially as it relates to the bribe cards is how do you prevent too many of them from going out to friends/family of your staff? Do you regulate how many cards staff can give away or only permit management staff to hand them out? In an ideal world all employees would be completely trustworthy and this would not need to be a consideration. However, I do know of a prominent local coffee chain that switched to digital cards years ago because it was common practice for their baristas (mainly in college towns) to fill out extra stamp cards and hand them out to friends so they could get free drinks at other stores. Hopefully this isn’t the case in most smaller shops but it’s worth consideration. Do any of you have tips on how to manage this risk effectively?
Paper punch cards are a retro cool touch, rather personal.
Especially that extra punch, for no reason!
Agreed. Devalues the product. There have been studies supporting loyalty card use and their effect on increased sales however I do feel that providing the best customer experience is a sure winner for growing sales vs a loyalty program.
Just RE your bonus loyalty program, there are apps that can plugin to your EPOS that build in random rewards to make it a system. i.e. customer receives an average of 3 free coffees over a 50 coffee period and the app randomizes it. Maybe they will get 3 in a row or maybe they will be spread. Who knows? At any rate, it certainly allows you to keep a better track on the cost for your business whilst also retaining the random rewards aspect (one does not have to tell the customer that the app generated it, they can instead say “hey, this ones on us” when it pops up with an alert).