Despite their promises, I'm unsure if loyalty programs are actually the best way to generate customer support.
This was so interesting! I used to be the person who signs up for every loyalty program everywhere (just in case!). But as I’ve gotten older I don’t always take the loyalty card when it’s offered to me. I don’t know when that change happened or even why exactly.
I think I agree with your initial response to that barista though in that I’d still go to the places I like even without the loyalty card. If a place has good quality products and friendly enough employees, then they’re already coming out on too for me compared to the big chains who treat their employees like shit and ultimately create a bad experience.
I do love a freebie here and there, but it feels that much more genuine when an employee slides you an extra cookie as a special treat and it isn’t tied to how many star stamps I’ve acquired.
I also dislike loyalty programs, although my biggest annoyance is for the grocery store ones.
Did any of the research talk about the whole 20 / 80 concept, where 20 percent of customers are going to be the highest value customers?
I would guess that the point of loyalty cards for small shops is that a customer who gets in the routine of getting a coffee at a particular shop every day or every weekday, etc, is much, much more valuable than the kind of customer who just comes in for a coffee now and then.
If the loyalty card makes it where even a small percentage of those people turn into regular customers, it’s probably more valuable than the cost of giving them the free 10th drink. Because also, what is the cost basis for that fancy drink compared to the retail price? It might only cost the shop $1 or less in actual ingredients.
A once a week $6 coffee customer is worth $300 a year. A customer who comes every weekday is worth $1,500. If they get a free drink every 2 weeks that costs the store $1, it only costs them $25 a year in actual ingredient costs to give those drinks away. It doesn’t really cost them the retail price of the drink.
The specialty coffee shops I go to locally in Dallas do not have loyalty programs that I am aware of. Or at least the baristas never ask me to sign up and they don’t promote them. I like to switch it up because there are so many good independents to choose from, so I wouldn’t sign up anyway.
This has made me change the way I think about loyalty cards. It also got me to reflect on why I go to coffee shops, when I can just make coffee at home. And it’s to foster a sense of community and place of belonging. And loyalty cards don’t really do that, it’s the people who work there who create that sense of community.
This raises tons of great questions. As a customer, I’m not surprised by the stat that people are passively enrolled in tons of loyalty programs. It’s so true that the ability to start a punch card at any time takes the feeling of “loyalty” out of it on both sides. I’m all for paying employees better and empowering them to serve customers with real care!
I started as a barista at a chain that required us to offer the paid loyalty card during every transaction (in case of secret shoppers; is that still a thing?), and the most common effect was annoying our most frequent customers, who didn’t want the card but had to endure the question every day.
My loyalty to a local hardware store (more expensive than large retailers) is due to their service, employee’s attitudes, and ability to stand behind their products. They have replaced, exchanged, and repaired products that most companies wouldn’t dream of.
Our fave Oakland cafe, Paradise Park, has a loyalty program - but it very mysterious! your loyalty ‘account’ is linked to your credit card (there are no physical cards to schlep, thank God), or so they tell me, and when you buy something you do get a message on the payment screen ‘You’ve earned points!’ (or at least you do if you use the same cc - have not tried using a different one, and there has never been a sign up screen or such like to manage these things... like I say, mysterious), but you have no way to find out how many points you’ve accumulated, except by asking (with embarrassment?) the staff ‘How many points do I have?’ and then they have to spend time looking you up, and they are so bloody cheerful and lovely that they do not complain, but just how you got that many points is, well, a mystery -- and then too, how many points do you need to get something in return? and what is the reward? that I have asked the staff, and have gotten a couple different answers (am not sure even they are sure), so I am just waiting for the day when I find out I have enough points for... whatever I can then get --
Ashley, I promise I will let you know when that day arrives!