Do text-message loyalty programs work?

Why the customer you already have is worth more

Finding a new customer costs far more than keeping one. Writing in Harvard Business Review in 2014, Amy Gallo put getting a new customer at anywhere from five to 25 times the cost of keeping an existing one. The textbook Marketing Metrics, by Farris and colleagues, gives the odds of selling to a customer you already have at 60 to 70 per cent, against 5 to 20 per cent for someone new.

Both are broad figures drawn from many kinds of business, so read them as a direction rather than a forecast for your shop. For a café or a salon the direction is plain enough. The person who came in last Tuesday is the easiest sale you will make this week, if something reminds them to come back.

How a text-message loyalty program works

A small QR stand sits on your counter. A customer scans it with their phone camera, types their phone number and they have joined. There is no plastic card to hand over and nothing for them to lose.

From then on their phone number is their card. You decide how they earn:

• A point for every visit, adding up to a reward.
• Dollars off once they spend a set amount, such as $10 off after $100. You choose both numbers.
• A birthday discount, texted to them on the day.
• A win-back text to someone who has not been in for a while, with a reason to return.
• Holiday offers, sent when you want them to go out.

You can use one of these or mix several. Behind all of it is a list: every member’s phone number, how often they visit and when their birthday is. A paper punch card tells you none of that, and it usually ends up in a drawer.

A month at a café, one customer at a time

This is an example, not a real shop. Picture a neighbourhood café whose owner has set two rules: one point a visit, with a free drink at eight points, and a win-back text to anyone who has been away three weeks.

On the first of the month Priya buys a flat white on her way to work. She sees the stand by the till, scans it and types her number. That visit is her first point.

She comes in a few more times over the next two weeks, mostly on weekday mornings. Her birthday is the 16th, and that morning a text arrives offering a free pastry with any drink that week. She stops in the next day to use it.

By the 20th she has six points. Then her schedule changes and she stops passing the door. Nobody at the counter is keeping track of that. Three weeks after her last visit, the program sends her a short “we miss you” text with a reason to come back.

Nobody can promise she comes back. What changed is that she has a reason and a reminder, and the owner can see her on the list: when she joined, how often she came and when she went quiet.

When it works and when it does not

It works when customers can reach a reward in weeks rather than years. A coffee shop, a barber or a car wash sees the same faces often, so a point a visit adds up quickly and the reward feels close. It also works when the reward is something people want. A free coffee after eight visits is easy to picture. Five per cent off after thirty visits is not.

It fails in three ways. The first is too few repeat visits: if a typical customer comes back once a year, the reward is so far off they forget they joined. The second is a reward nobody cares about, which turns the program into a number on a screen. The third is texting too often. Every text gives someone a chance to opt out, so each one should have a clear reason, like a birthday or a reward nearly earned. A weekly blast with nothing in it teaches people to ignore you.

It will not rescue a product people do not like. Points bring a happy customer back sooner. They will not change the mind of someone who did not enjoy the first visit.

What Canadian law asks of loyalty texts

Promotional texts count as commercial electronic messages under Canada’s Anti-Spam Legislation, known as CASL. The federal government’s guide to texting customers says you need consent before you send them, that your business name belongs in the message, and that a customer who texts STOP must be respected.

In practice that means two things for a loyalty program. Customers have to agree to the texts when they join, and every text has to give them a way out. Droom’s program does both: customers agree to texts when they sign up, and every text lets them opt out. This is a plain summary rather than legal advice, and the government page is worth ten minutes of your time.

How Droom runs it, and what $249 a month covers

Droom’s loyalty program is $249 a month, with no setup fee and no contract. It runs month to month and there is nothing to pay to start or to leave. It is its own product: it is not part of the $449 automation plan and not part of a website build, so you can have it on its own.

It is for any business with repeat customers. Restaurants, cafés, salons, boutiques and gyms are the obvious fits, and a barber, a pet groomer or a car wash fits for the same reason. Customers join with the QR code and their phone number. You pick the rewards from the list above: points for visits, dollars off a set spend, automatic birthday discounts, win-back texts and holiday offers. What your customers see carries your business’s own name and brand, not Droom’s. You get the member list with each person’s phone number, visits and birthday.

How many visits it takes to pay for itself

Divide $249 by what a customer spends on an average visit and round up. That is how many extra visits a month the program needs to bring back to cover itself. Count the win-backs, the birthday visits and the rewards people come in to redeem.

Say your café’s average visit is $12. $249 divided by $12 is 20.75, so 21 extra visits a month cover the program. At a salon with a $60 average ticket, it is 4.15, so 5 visits. Those numbers count sales, not profit, so hold them against your own margin. The calculator on the loyalty program page works it out for your spend.

The phone is the other place regulars slip away, and that is a separate product. Our guide to what an AI receptionist costs in Canada covers the $449 plan. And whoever runs your loyalty program, ask who holds the customer list and what happens to it if you leave. It is the same question as who owns your website files, and it deserves an answer in writing.

If the QR stand is going to send people to a website that is out of date, a new website is a one-time build from $999, priced separately.

Who it does not suit

A business customers use once in a long while. A roofer might see the same house every fifteen years, and no points scheme survives that gap. The same goes for a wedding photographer or a moving company. If people only come back when something breaks, $249 a month buys you a list nobody will use.

The next step

Put your own average spend into the calculator on the loyalty program page and see how many visits it takes. If the number looks reachable, ring 778-504-7535 or book a short call with Joe, and he will walk you through how it would run at your counter.