Hi Everyone,

For those of you that use a loyalty card for your customers, how do you run it? I mean do you have a sign or something letting customers know that their "freebie" is a coffee and not an extra large latte? or do you somehow mark on the card that they are buying latte's etc? We have just started this and there has been a great response and a sensible one (mainly just coffee) but I foresee issues at the counter without a policy in place. Any thoughts would be appreciated.

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Brady said:
Could someone please explain how GIVING a regular medium drip coffee customer a large vanilla latte every other week qualifies as an "upsell"?

We used to do this, but found that very few changed their regular order... they just looked forward to their freebie and got the biggest thing they could on that day. Those that claim converting people over... what percentage would you say actually did this?
Which is exactly why I changed our cards last November to have $3 freebie limit. Having separate cards for drip, versus espresso based, versus blended etc. too complicated IMO. Still allows a $1.75 small cup pour over drinker to have an espresso beverage now and then, but the max free is small latte, make it a small mocha and it'll cost 'em 40cents:-) Card does also apply for loose leaf teas, iced tea, chai lattes (my custom blend and concentrate brewed so better AND better price point than pre-packaged concentrates). They can use it towards an espresso or chai Frappe' but not towards a fruit smoothie, Ital' Soda, OJ etc.
We've recently done away with our punch card "loyalty" system. I was on the front lines when it happened and I heard maybe, maybe three or four complaints that were more than a casual "bummer" We had done the math and figured we were giving away around 100 dollars worth of free drinks per day, that adds up. So we set up an email list and said we'll trade you a 16oz coffee or 2 bucks off your drink for your email. Now we can send out updates and special offers, for example, 2 dollar proper capps. We can also target things other than drinks, we've seen our whole bean sales go up since we started email promotions. I think the customers enjoy being in the loop, rather than just being a regular with a punch card.

I also agree with Jay, sometimes it's just good for business to practice random acts of kindness. We trust our baristi to do so within reason, sometimes we'll call one of the stores and say "pick your favorite customer this morning, make them something they don't usually get" This frames the product loss as what it is, a gift, rather than something that the customer is entitled to. Our coffee is worth what people pay, every time, not ten out of eleven times. Making them think that they have earned something by coming back is devaluing our product. Just give them the best coffee and service and they will have no desire to go anywhere else, thus loyalty is sustained.

I don't think we've lost a single customer because we quit punching cards.
Hmmmm, excellent food for thought. Especially as I'm working to open my second coffeehouse at my roastery...

Jesse Bladyka said:
We've recently done away with our punch card "loyalty" system. I was on the front lines when it happened and I heard maybe, maybe three or four complaints that were more than a casual "bummer" We had done the math and figured we were giving away around 100 dollars worth of free drinks per day, that adds up. So we set up an email list and said we'll trade you a 16oz coffee or 2 bucks off your drink for your email. Now we can send out updates and special offers, for example, 2 dollar proper capps. We can also target things other than drinks, we've seen our whole bean sales go up since we started email promotions. I think the customers enjoy being in the loop, rather than just being a regular with a punch card.

I also agree with Jay, sometimes it's just good for business to practice random acts of kindness. We trust our baristi to do so within reason, sometimes we'll call one of the stores and say "pick your favorite customer this morning, make them something they don't usually get" This frames the product loss as what it is, a gift, rather than something that the customer is entitled to. Our coffee is worth what people pay, every time, not ten out of eleven times. Making them think that they have earned something by coming back is devaluing our product. Just give them the best coffee and service and they will have no desire to go anywhere else, thus loyalty is sustained.

I don't think we've lost a single customer because we quit punching cards.
Thanks Kathy. Of all the comments yours sums up most accurately. We deal with loyaty cards the same way. Have whatever you want as long as you're having it here!

Kathy Fadorsen said:
We have a lolalty card and we do not moniter what they buy or what they get free we just think it is good customer service. I used to go to a coffee shop before I owned one and would use their card I always got a large latte when I was due my free drink they told me I got a small coffee for free. I didn't take the coffee and I never went back. We do have a few customers who play that game buy small coffee get large latte but on the flip side we have converted some coffee drinks to latte drinks on a daily basis. The more they try a latte the more they want a latte.
The shop i work at has a little different spin on the loyalty card- rather than doing buy 10 get one free, customers who buy a gift card with 20 dollars or more get 10 percent extra put on the card. The only people that this isn't VERY advantageous for are those who would buy a small coffee, and only a small coffee, every day. Otherwise, it comes out to buy 10 get one free over the long run, no matter what is purchased, whether it be 2-5 dollar coffee drinks or bags of beans. It also acts as an automatic 10% interest loan to the shop from the customer. Rather than getting 20 dollars over the 10 days that they would buy a medium coffee, 20 dollars comes in one day and 11 coffees go out over the course of almost two weeks.
I have a lot of coffee shop owners that ask about loyalty cards and tracking the buy 10 get 1 free. These problems that are mentioned are pretty common. The other method I've seen is where every dollar is a point and the more money you spend the bigger the discount or free item.

HOWEVER, recently I'm seeing more and more people choosing one of the following:
Buy a $25 gift card for $20 (instant $5.00 percieved value) - this increases the prepaid cards.
Buy a $25 + card and get a free drink right then. Again, this increase the prepaid cards, cuts down on overall credit card transactions and starts a habit. Immediate gratification.

Just my two. . .
Can anyone actually show demonstrable results that really justify these cash outlays? Giving 10% or 25% away for free seems ridiculous since the Prime Rate is now below 4%. Driving down your prices to match those of the chains then giving away up to 25% of your revenue sounds crazy to me.
Yeah, Jay, right on.

We had a loyalty card program, and then I was made general manager. I did some figures and put them in front of the owner. We did away with loyalty cards the next week. We allowed people to still cash theirs in if they had free ones, but we did not give out any more punches or cards.

When we did away with them you know what the most common thing we heard from customers was?
"Oh, yeah, given how everything is that makes sense. Kinda saw it coming." Things to that nature. Very little complaining.

Instead, now, a semi-common phrase around the shop is, "Hey _________, when was the last time we thanked you for being such a regular?"
Confused look.
We pass their money back across the counter and smile.

Guess where that money normally ends up?
Tip jar.

-bry
I'm with you on that, Bryan; we have a few regulars who, quite honestly, tip too much. Every now and then I tell them to stop trying to pass off counterfeit and I'll slide their money back to them. It's much appreciated; as is their business.
There are a ton of statistics out there on gift cards. One of our referral partners in the credit card industry (mercury payment) did a study on their customers last year and shared some of the results with me:
Stores using Gift Cards had a higher average monthly credit card volume (more sales):
It was an average of $1,222 compared to $929 without gift cards.

Average monthly credit card volume was $41,882 vrs $30,336

I'd take this with a grain of salt - they work with a number of types of locations but I still think it shows a tiny bit of how this can help in stores. There are many other stats out there on this as well.

Jay Caragay said:
Can anyone actually show demonstrable results that really justify these cash outlays? Giving 10% or 25% away for free seems ridiculous since the Prime Rate is now below 4%. Driving down your prices to match those of the chains then giving away up to 25% of your revenue sounds crazy to me.
Mike Spence said:
There are a ton of statistics out there on gift cards. One of our referral partners in the credit card industry (mercury payment) did a study on their customers last year and shared some of the results with me:
Stores using Gift Cards had a higher average monthly credit card volume (more sales): It was an average of $1,222 compared to $929 without gift cards.
Average monthly credit card volume was $41,882 vrs $30,336

I'd take this with a grain of salt - they work with a number of types of locations but I still think it shows a tiny bit of how this can help in stores. There are many other stats out there on this as well.

Jay Caragay said:
Can anyone actually show demonstrable results that really justify these cash outlays? Giving 10% or 25% away for free seems ridiculous since the Prime Rate is now below 4%. Driving down your prices to match those of the chains then giving away up to 25% of your revenue sounds crazy to me.

I think Jay (and others, like me) was looking for loyalty card data.

Interesting gift-card stat. My question is, what about the overall sales? If it was unchanged, that is a pretty bad deal - their CC fees went up by 30%. We're looking for ways to REDUCE our number of credit card transactions without changing overall revenue (i.e. migrate people to cash or gift card).
Thanks for pointing that out Brady - I know that the overall sales went up in this survey as well. On the loyalty side, I think my point was muddled :). I have more people doing away with the traditional loyalty and moving towards methods of selling and re-selling the gift card. If you can make that gift card attractive by selling it at small actual loss ($5.00 of product is not $5.00 profit) then you can help boost business in other ways. Now, remember - I look at all of this through POS eyes with the thought that there is an easy way to track, market etc. It all changes if you are paying fees to use a gift card etc.

I love the discussion and seeing how all of you on the front lines are doing it! It's one of best things about bX!

Brady said:
Mike Spence said:
There are a ton of statistics out there on gift cards. One of our referral partners in the credit card industry (mercury payment) did a study on their customers last year and shared some of the results with me:
Stores using Gift Cards had a higher average monthly credit card volume (more sales): It was an average of $1,222 compared to $929 without gift cards.
Average monthly credit card volume was $41,882 vrs $30,336

I'd take this with a grain of salt - they work with a number of types of locations but I still think it shows a tiny bit of how this can help in stores. There are many other stats out there on this as well.

Jay Caragay said:
Can anyone actually show demonstrable results that really justify these cash outlays? Giving 10% or 25% away for free seems ridiculous since the Prime Rate is now below 4%. Driving down your prices to match those of the chains then giving away up to 25% of your revenue sounds crazy to me.

I think Jay (and others, like me) was looking for loyalty card data.

Interesting gift-card stat. My question is, what about the overall sales? If it was unchanged, that is a pretty bad deal - their CC fees went up by 30%. We're looking for ways to REDUCE our number of credit card transactions without changing overall revenue (i.e. migrate people to cash or gift card).

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