How to set up a loyalty program for your business

Before you start, check it fits

A loyalty program pays when the same people come through the door every few weeks. Cafés, salons, barbers, boutiques, gyms and car washes see that. A business customers use once every few years does not, and no amount of setup will change it.

If you are not sure which side you are on, our guide to whether text-message loyalty programs work goes through it, including the cases where a program will not earn its keep. The rest of this page assumes you have regulars and want them back sooner.

Step one: choose one reward

Droom’s program has five kinds of reward, and you can mix them:

• Points for visits, adding up to a reward.
• Dollars off once someone spends a set amount. You choose both numbers.
• A birthday discount, texted to them on the day.
• Holiday offers, sent when you want them to go out.
• Win-back texts, which go out on their own to someone who has not been in for a while.

Start with one. A customer should be able to explain your program to a friend in a sentence, and that is hard to do with three rules stacked together. You can add a birthday offer or a win-back later, once the first reward is working.

Two questions pick the first reward: how often does a regular come in, and what would they be glad to get? Take two examples. A café regular who comes twice a week reaches a free drink at eight visits in about a month. A salon client who books every six weeks would need most of a year to reach eight visits, which is a long time to keep caring about a reward. For the salon, a reward on spend or a much shorter count fits better.

Work out what the reward costs you

Do this sum before you print anything. Droom’s own loyalty page uses $10 off once someone spends $100 as its example. That rule gives back $10 for every $100 a member spends, which is ten cents on the dollar. You set both numbers, so you can move them until the sum suits your margin.

A free drink after eight paid ones works the same way: for a member who earns it, one drink in nine is on the house. What it costs you is the price of making that drink, which is less than what it sells for. A birthday discount or a win-back offer costs nothing until someone comes in to use it.

Step two: put the sign-up where people pay

In Droom’s program a customer joins by scanning a QR code on a small stand at your counter and typing their phone number. That is the whole sign-up. Their number becomes their card, so there is nothing to hand over and nothing for them to lose.

Put the stand beside the till, where people already have their phone out to pay. A stand nobody mentions is easy to walk past, so ask whoever is serving to say a line about it at payment, something like “scan that and today counts”. Ask your regulars first. They come in most, so they are the ones closest to a reward.

The scan is also when they agree to hear from you. In Droom’s program customers agree to texts when they sign up, and every text lets them opt out.

Step three: decide what the texts say

Once someone has joined, the texts do the work of bringing them back, so give each one a reason the customer will recognise. A birthday text arrives on the day. A win-back text goes to someone who has gone quiet, and you can time it for your slow days. A holiday offer goes when you choose. A text sent only because a week has passed gives people a reason to stop the texts altogether.

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. This is a plain summary rather than legal advice.

A good loyalty text fits on a phone screen and carries four things: your business’s name, why it has arrived, what the offer is and how to stop the texts. This one is an illustration written for this guide, not a message from any real program:

[Your café]: Happy birthday! A free pastry with any drink is yours this week. Reply STOP to stop these texts.

In Droom’s program the card your customers see carries your business’s own name, not Droom’s, so the texts read as coming from you.

Step four: count what it brings back

Every member lands on a list with their phone number, their visits and their birthday. For the first three months, check it every couple of weeks for these:

• How many people have joined, and whether the number still grows. If it stalls, the stand is in the wrong spot or nobody is mentioning it.
• How often members come back. Their visits are on the list.
• How many people reach the reward. If almost nobody does, it is set too far away.

The sum that says whether it pays

Divide $249 by what a customer spends on an average visit and round up. That is how many extra visits a month the program has to bring back to cover itself. Count the win-backs, the birthday visits and the rewards people come in to redeem. As an example, a barber with a $25 average cut works out 249 divided by 25, which is 9.96, so 10 visits a month. The calculator on the loyalty program page does the sum for your own spend.

Keep two things in mind when you read the answer. It counts sales, not profit, so hold it against your own margin. And some members would have come in anyway: a regular who joined on day one and still comes every Tuesday is on the list, but the program did not bring them. The visits to count are the extra ones, from people who had gone quiet or who came in to use a reward.

What Droom sets up for $249 a month

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, separate from the $449 automation plan and from a website build, so you can have it on its own.

You get the QR sign-up, whichever of the five rewards you choose, the birthday, holiday and win-back texts, and the member list. Whether it connects to your till is a question for a call with Joe.

If you are moving off paper cards, how a punch card compares with text-message loyalty puts the two side by side. And if the stand will send people to a website that is out of date, a new website is a one-time build from $999, priced separately.

The next step

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