Is the customer loyalty program really worth it?

[AlanA]

I would like everyone’s opinion on the Customer Loyalty program. Did it increase sales enough to cover the monthly charge. I want answers from actual users. Thanks,

[katieand]

Hi @AlanA - I'm tagging in a few of Square's merchants since you said you wanted answers from actual customers. 🙂

@pessosices @LocavoreStore - we'd love to hear your thoughts about Loyalty. Thanks! 

[pessosices]

Hey @AlanA

Great question!

It's kind of hard to track to see just how much Loyalty affects sales data, since there are so many factors to customer habits, and it's creating new data about customer habits, where there wasn't data before.

But that doesn't mean it doesnt work. Here's what I can tell you:

1. Customers want to use the Loyalty Program = Success

We started our business 14 years ago with paper punch cards, and we switched over to Square Loyalty 1 year ago.

With our paper punch cards, we were getting so many people who stopped caring about the program and did not want a new card because they kept losing and forgetting the old ones and they just didn't want to bother with it anymore. It dropped to less than 40% of our customers that wanted a punch card.

As soon as we switched over to digital, our customers were excited again about our program. They love just entering their phone number and all of the work being done behind the scenes, with nothing to remember. Now, about 99% of our customers want to start a Loyalty account, and 100% of people who already are on it, keep entering in their phone number and using the program.

A good Loyalty program is one that customers want to use. That's when you start to see the benefits of increased sales and customer retention really hit.

When people stop wanting to use a program, it's a failure. Our paper punch cards worked for a while, and then it was essentially like having no program. We transformed this failure into a successful program with our switch over to the Loyalty Program.

2. Loyalty Program Makes Things Easy

Our paper punch card program was great, but it was a logistical nightmare.

We spent so much money on printing new cards, since customers kept losing them, and they finish them somewhat quickly. And buying customer Punchers that kept breaking. These costs added up. 

We spent so much time training our employees on how to actually use the punch cards, and they would inevitably mess up and either give away too much for free, or forget to actually give the free item. Bad experience for us and for our customers.

With Square Loyalty, everything is automated. Customer buys items, customer enters phone number, customer earns points & rewards.

Nothing to train our employees for, nothing to go wrong. It's seamless for us and for the customer.

3. But is it Worth the Price?

That is the real question.

Unfortunately, only you can answer that. It depends on how much a Loyalty Program is worth for you.

Square recently changed their pricing model for Loyalty, and you can estimate how much the program will cost you. 

This pricing may change for better or worse in the future, but it is what it is now.

I've been doing punch cards since I started my business, and I can't stop or else my customers will hate me, so I picked Loyalty because it's the simplest option that integrates with the POS with no added steps or trainings.

Yes, it may cost more than paper punch cards at this point, but it's so much more than just punch cards - it gathers customer data, integrates it all, and makes running a Loyalty program an absolute breeze.

The studies that Square uses to gather data says that it is still worth it, and you will make up the program & discount cost in new sales.

So I'm not sure if it's worth it for you, but it is definitely a great program.

Let me know if you have any other questions, I'd be more than happy to talk more about it!

Pesso

[LocavoreStore]

The Loyalty Program is awesome no doubt! Customers love it. We have a 2% reward setup, so a customer gets $5 off for every $250 spent... It's pretty difficult to know for sure if the program is paying for itself or not. When a customer comes in and uses a $10 off reward for a $10 item (and doesn't buy anything else), it certainly does not feel like its paying for itself. But whatever! That customer walks away super excited about spending money at my store (and that's invaluable)

If I had 1 gripe, it is in the reporting.
I'll explain. Currently, the only report that you can download showing you what customer used a reward, and on what purchase is the Detailed Transaction Report (from your sales dashboard). The problem is the reward shows up in the discount column and gets added together with any other discounts that you might have applied to the transaction at the time of checkout. So it becomes almost impossible to separate rewards from discounts. The Dashboard does a good job of telling you how many rewards were claimed during a specified timeframe but is incredibly lacking when it comes to the details.

If those particular details were spelled out a little more clearly in the reporting, you would be able to create a list of customers, how many points each of them has/how many rewards they've used/when/on what/how often/etc./etc/etc...
With that data, you would be able to do the math, and determine whether the loyalty program is paying for itself or not...

Truth is, whether the program pays for itself or not. It's worth it. I'd go out on a limb and say that a positive customer interaction is worth more than nothing.