6 Steps to Create a Successful Loyalty & Rewards Program for Your Cafe
A loyalty and rewards program is an important part of the growth strategy for cafes. If you increase your customer retention by just 5%, that can increase your profit by 25% to 95%. A rewards and loyalty program is an excellent way to keep customers engaged and interested in your brand.
But it can be challenging. If not handled correctly, a loyalty and rewards program could do more harm than good.
We’ve come up with a list of steps you can take to ensure your program works for your cafe, and provide customers with the best possible experience.
1. Keep Your Program Simple
Your customers are more likely to use your rewards program if they can understand it. If your program is too complicated, customers will grow frustrated and abandon it. Make it easy to understand how each point is earned, and how they can be redeemed.
For example, offer 1 point for every $1 spent, and allow your customers to redeem for a free coffee once they’ve earned $75 points.
2. Incentivize the Right Behaviours
Think of what you want your customers doing (or rather, what you want them purchasing) and reward them for that.
The common mistake that coffee shops make with “Coffee Cards” or “Stamp Cards” is only rewarding the purchase of a specific menu item. With these cards, the customer earns a free coffee after purchasing a certain number, usually ten. But that signals to your customers that they should only spend their money on coffee because nothing else counts towards their goal. If one morning they don’t want coffee, but rather just a croissant, they may visit a different cafe since it doesn’t matter, since they aren’t collecting points.
However you design your rewards program, ensure you are rewarding your customers for their loyalty and choosing to spend money with you, regardless of what they buy.
3. Don’t Set Expiry Dates
Heads up, in some states, setting expiry dates on points can be grounds for lawsuits. Customers don’t like to lose something that they’ve been given, so be careful not to take loyalty points away. From a business liability point of view, having a lot of unused points is risky, but instead of setting expiry dates, encourage your customers to redeem them quickly.
Hilfer Law has a quick Q&A page that covers some of the legal considerations of loyalty programs.
4. Offer Free Items Instead of Discounts
At the heart of it, a loyalty and rewards program is about showing your appreciation to your customers. Associating their hard-earned rewards points to dollar amounts will create the impression of a cash-back program instead of a thank-you for their loyalty. Our experience shows that rewards and loyalty programs that offer redemption of points for free items result in more engaged and loyal customers.
Show your appreciation by giving your customers free items that they love. These could be a drink, branded swag, a muffin, or anything else on your menu. This brings the focus of the program back to your customers rather than money.
5. Turn Your Loyalty Program into a Game
Make a game out of your loyalty and rewards program to increase engagement levels with your customers. Just be careful to keep it simple.
One method is a tiered rewards system. The first tier is easy to reach, while the second one is harder but offers a better reward. This continues for as many tiers as you want to set up. The better rewards offered at higher levels will encourage your customers to work towards them by collecting more points and spending more money.
6. Ensure Your Program is Easy & Convenient to Use
As we said in Step 1, the easier it is to understand and use your loyalty program the more likely customers are to do so. Think through how your customers collect points, check their balance, and redeem their points. They should be able to do this whether ordering in-person, online, on your app or however you accept orders. Don’t make them carry an extra card in their wallet.
Instead, collect their phone number or have them collect points through your branded app. In a branded app, your customer can also check their points balance, and how close they are to their next reward.
Design your loyalty and rewards program to create a positive experience for your customers. If you succeed, your customers will in turn buy from your cafe more often, and refer you to their friends.
Offer real value to your customers to keep them engaged. Ensure your program is designed with their interests in mind, and you will succeed.
Amin Yazdani is the CEO and Co-Founder of Craver, a fast-growing mobile platform for Restaurants, helping them gain and retains their loyal customer base.