Square Loyalty is the customer Rewards Program built right into Square POS and ecosystem. Because it’s integrated into the Square system, it is an absolutely wonderful option for a Rewards Program to keep your customers engaged and coming back to your business. But is it worth it?
We’ve been using Square Loyalty at our Ice Cream shop since 2017, and it has done a fantastic job of making our customers happy and coming back.
Let’s break down all of the features of Square Loyalty into their benefits and downsides, and see if it is any better than using Paper Punch Cards or a third-party digital Loyalty Program.
With Square Loyalty, you can structure your program in a lot of different ways, just as you would with a paper-based or third-party program.
Square Loyalty is a purchase based system, so you can set up your Loyalty Points to be rewarded based on per visit, per item/category purchased, or the dollar amount spent in a transaction. You can then set up your Rewards to work as a Percentage Off, A Dollar Amount off, or a Free Item. You can even set up multiple reward options in the form of tiers for even more customization and options for your customers to redeem their points. A nice little bonus feature is that you can set up points to expire after a certain period of time, as a way to keep a handle on your Rewards program, and keep your customers coming back sooner.
Despite how customizable your rewards program can be with Square Loyalty, it does have some limitations, and may not work for some business models, such as referral programs. As I mentioned earlier, Square Loyalty is a purchase based system, so as long as that’s what you’re looking for, it should work very well. But if you’re looking for a more complex system like a referral program, it does not have that capability as of right now. Luckily Square is always listening to feedback from Sellers, so keep pitching your feature requests, and they will definitely listen!
One of the biggest benefits of using Square Loyalty is the fact that it’s completely automated. Because it’s built right into the Point of Sale system that we already use, there is nothing extra to do to reward our customers. Square Loyalty automatically recognizes any and all eligible items purchased, and when a reward is redeemed, it automatically applies it to only the eligible items. This means that the program needs next to no training for employees, and leads to virtually zero mistakes, which saves time and makes your staff and your customers happier.
Happier customers means that more people are more likely to use your program. Customers love simplicity, since you’re not the only business they’re visiting. If they don’t have to remember to bring a bunch of cards with them or have to ask for yet another card, then instead of getting aggravated they will instead be excited to use your program. If they’re more likely to use it, then they’re more likely to keep coming back to earn and redeem their points.
We also no longer need to go through the hassle of ordering paper punch cards. We don’t need to keep track of paper card inventory, remember to order more on time, have space to store them, refill the card holders, and go through the expense of these cards. We also no longer have to spend money buying new Custom punchers when they inevitably jam and break, and we don’t have thousands and thousands of little paper cutouts getting everywhere. Those things were a huge pain to clean up, and became a big liability in a food service environment.
Easy Sign Up
Having customers sign up for your Square Loyalty Program is extremely quick and easy. All they have to do is tap on Claim Rewards and type in their Cell Phone Number at the end of the transaction, and they’re in!
At first we were a little concerned that people wouldn't want to put their cell phone number into our system. But after speaking to other sellers using this and other Loyalty Programs that all use cell phone numbers, it turned out to be a complete non issue.
And sure enough, as soon as we launched it, the majority of customers instantly typed in their number without a second thought. For the few that were hesitant, we reassured them that the system is secure and that we would only contact them with information about their transactions and Loyalty Program. That seemed to work and assuage any fears they might have had, and now we have over 20,000 unique customers signed up for our Rewards.
Because it’s a digital system, your Loyalty information is always available online. Your customers can even check their Loyalty status and Points balance themselves. They will get a text message with a personalized link to their status page when they sign up for your program, and any time that they reach enough points to earn a reward. They can save this link to check their Loyalty history at any time and you can even set up a link on your website that they can click through to reach this page too. And now there’s even the option for your customers to use the Cash App to track all of their Rewards from other Square Sellers in one place.
Another great feature is that you can modify customers’ points balance as needed, at any time. If for example, a customer had a bad experience and you wanted to send them some extra points as an apology, or if the customer mistyped their phone number during the signup process, or forgot to sign up altogether, you can very easily fix this. All you have to do is hop onto your Web Dashboard, or the Square POS app, find the transaction or the customer in the directory, and make any changes you need to.
One downside of being digital only, is that customers don’t have a physical reminder of your business in their pocket. But at the end of the day, paper gets lost, gets in the way, and in the end gets thrown in the trash. That paper reminder ends up being more of a burden to the customer than it is a boon to the business. We all live on our phones these days, so having your business live on their phone is definitely the better way to go in this digital age.
Low Touch & Contactless
Another huge advantage is that the Square Loyalty system is very low touch and basically contactless. This was always a great feature, and it has been even more important over the past couple of years with COVID.
Instead of handing over a physical card to our employees to handle, punch, and hand back, the customer simply enters in their phone number, keeping our employee’s hands free and clean. And once a customer has their phone number in the system, it links to any and all credit cards they use, so they don’t even have to enter in their phone number the next time they use one of those cards.
Even more importantly, Square Loyalty works with Online Orders through our Square Online store, so that our customers can earn and redeem their rewards no matter how they decide to make their purchases with us. Our customers absolutely loved this, especially since the majority of our sales in 2020 were through our online store.
One downside of this is due to the current slight limitation in the way Square Point of Sale interacts with Square Online. Right now the Categories you make in Square POS don’t sync over to Square Online, so if your Loyalty Program is Category based, you will have to change things over to be Item based. It takes a little bit of extra time to set up, and update if you add new items, but it’s definitely worth it to make it work with the Online Store. Square Online is still a relatively new product, so hopefully this will be fixed and updated relatively soon.
Customer Trends & Data
Using Square Loyalty gives us really great insight into customer data. Without Square Loyalty, customers might pay with different cards, or cash, and these sales might not all be connected into the Customer Directory under a single Profile. This makes keeping accurate customer records next to impossible if you have a lot of customers.
Because Square Loyalty is fully digital and uses cell phone numbers as unique identifiers, it provides a true tally and record of your customers and their purchase history. Not only do you get access to this information, it’s also extremely easy and accurate. You can also make your customer profiles more complete with the option to offer extra points in exchange for their email address and being added to your email marketing list.
This building out of contact information makes Square Loyalty really integral to customer communication. You can use the contact information pulled from Loyalty to reach your customers through Square Marketing. This lets you send automated and one-off Email Campaigns to any of your reachable customers, typically those who have manually entered their email addresses and signed up for your emails.
Where Square Loyalty really kicks in is with Square’s new efforts of Text Marketing. This takes advantage of the cell phone numbers collected, and uses them to send automated or manual individual marketing text messages to help both you and your customers.
Square also has new Messaging features, which makes it very easy to contact individual customers. This feature lets you quickly send a text message or email to individual customers to follow up on orders, or easily settle any issues that may arise.
While there’s a lot of customer data that you get by using Square Loyalty, I’m of the mind that we can never have enough data, so I would of course love to see more data than what is currently given. I would love to see more details about Points Expiration including how many points are about to expire this month, how many expired each month. Also in order to make more educated decisions about expiration, it would be extremely valuable to see the average length of time it takes customers to reach and redeem a reward.
Seeing how many points are out there, how many times customers have cycled through the program and how many rewards each customer has reached and redeemed. But luckily Square is constantly improving their products, and has already revamped and added in a lot more data visualization over the years. So I’m confident that they will keep listening to our feedback, and keep adding in these requested features.
Is It Worth It?
So after all of that, is Square Loyalty worth the price?
That depends on your business, but I absolutely think it is, and it definitely is for my business.
The pricing for Square Loyalty is a sliding scale based on the number of Loyalty Events, which means any purchase where a customer receives or redeems Loyalty Points. This is a nice payment structure because if you have fewer Loyalty customers or sales, you would pay less than another much busier business.
The downside of this is that if you do have a lot of customers that use Loyalty, or just a lot of transactions in general, you will end up paying more per month.
But overall, for us the price is absolutely worth it. We went from using Paper Punch Cards up to using Square Loyalty, and the benefits of having everything integrated and automatic is well worth the price.
Sure, you could use Paper Punch Cards, or a third-party digital Loyalty Rewards program that may or may not be cheaper. But the advantage of Square Loyalty is that it is completely automated and integrated into the Square Point of Sale. Not having to train employees or customers, have them use a secondary system, or literally anything else, provides tremendous value for a streamlined business.
Key Points & Summary
Square Loyalty has some incredible benefits and has really helped keep our customers coming back. It’s customizable so it works for many different business models, automatic so our employees don’t need to learn anything new, digital so it’s quick and easy for our customers to use both in our store and through Square Online, and gives our business tremendous insight into our customers habits. Overall, we can’t imagine running our shop without it, let alone going back to paper punch cards or a non-integrated third-party system.
Thanks for putting so much time into this article @Pesso !!! You are a rock star!!
I am right there with you in how long we have used Square Loyalty and how over the moon we are about it's benefits!! It is a huge win and Square did it very well with it's features, configuration flexibility, and the ease of use for us and our customers. ☺️🦋
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Probably my only missing feature from Square Loyalty is the ability to use it with invoices. My customers pay in a variety of different ways - many at the POS, but many ask me to invoice them and right now that requires manually entering loyalty points using an adjustment after the fact which in real terms means some clients loose out on points. I will say I do think it should be an account _option_ to turn on loyalty points for invoices, as I believe some businesses use points as an incentive to pay at the POS instead of invoice.
Other than that, the Loyalty program has been great! Almost every one of my clients uses it, and I give very generous rewards through it. Before the loyalty program I was often giving customers arbitrary discounts and this helped standardize everything and get my discounts under control.
I'm glad that Square Loyalty has been working for you!
That's definitely a good point - I know sellers have been asking Square to add Loyalty to Invoices for a while, and hopefully it's on their list.
That's a good incentive to encourage people to pay now rather than via invoice -- "You can pay via invoice, but if you want the Rewards, you should pay now at the POS!"
Yeah but a lot of my customers are also not local - so I have to send them invoices or payment links to avoid asking for their credit card details over the phone or email etc. So I mean that sounds good and all but in practical terms it means I spend hours every week manually adjusting people's points when they pay with invoices or payment links.
I'm always tempted to switch over because of everything you laid out here (all that ease of use!), but our loyalty rewards are so variable that it can't work. We give customers a credit equal to their average purchase price over the last ten items, and I haven't found a workaround yet to make it work automatically within Square.
Great question - it would require a change, but you could accomplish a similar result in a few ways.
What it boils down to is that you're basically giving a 10% credit.
If you do $1 Spent = 1 Point, you can make 10 Points = $1 Off, 50 Points = $5 Off, 100 Points = $10 Off, etc.
While this doesn't directly give you the 10 Items requirement, it would give them the credit for 10% of their previous purchases.
If you want to maintain a similar effect to the 10 Items can just do the higher amounts to make sure that they spend a certain amount in order to start redeeming points -- like only starting at 100 Points, or whatever number works for you based on your item prices!
There may be other ways to do it, but this seems to be the most direct to keep most of the advantages of your current program.
Let me know if this gets you close enough or if I can help come up with an alternative!