How much is your loyalty program giving away?

My wife went to buy coffee yesterday morning, and instinctively picked up their “loyalty” card – a paper-based stamp system that awards a free cup of coffee after you purchase 10 others. Caffe Nero – my favorite London coffee spot – and hundreds of other small retailers offer the same thing. But few if any, take advantage of the opportunity to capture customer information. I recognize that small businesses may not be able to invest in a full scale customer intelligence or CRM system, but that doesn’t mean they can’t take the opportunity to understand their customers better.

Loyalty cards

Emily Collins‘s research on intelligence-driven loyalty is relevant for both Fortune 100 companies and small coffee shop owners. As she writes, the first component of an intelligence-driven program is ‘strategy’ — aligning a loyalty program with marketing and corporate strategies; articulating how the program supports marketing goals; and using the information gleaned to enhance customer understanding and segmentation. Giving away coffee, while gratefully received, misses the opportunity to understand and engage customers.
What could these places do short of investing in a full-scale loyalty program?
  • Ask customers to include an identifier – an email address, Facebook address, or twitter handle – so that they can understand how often the same customer redeems a free coffee;
  • Offer another free perk – the chance to win a bag of ground coffee, a mug, whatever – to encourage people to provide their real information;
  • Create an ongoing contest to see which customer drinks the most coffee – based on redeemed rewards cards – and award other prizes monthly/annually;
  • Track which perks (pun intended) seem to encourage greater participation to inform their pricing/merchandizing strategies.
Every interaction with customers is an opportunity to know them better and to serve them better. Giving stuff away without attempting to do both of these seems like setting up an entire program designed to just give stuff away.
It’s ironic that we often talk about large companies seeking the intimacy that a local coffee shop has with its customers, yet when you look at how those small firms seek to engage with customers, many of them miss the opportunity too!


  1. Emily Collins says:

    Thanks for the shout out Dave! Another thought: offer up free perks other than coffee to introduce customers to new products they may not have tried yet. A (good) free muffin or breakfast sandwich may lead to a bigger basket at the next visit.

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