Is square loyalty worth it?

[CafeCubana]

Determining whether or not we should start implementing square loyalty program and if it’s worth it? Can anyone provide real-time feedback on their square loyalty success? We are a small local coffee shop so every $45 adds up. Is it worth the monthly fee? And what have you seen that helps drive business the most?

[TheRealChipA]

Hey there @CafeCubana.  Before I give you my perspective, you should know that until a few years ago I was adamantly against ever having a loyalty program at Piper’s Ice Cream Bar.  I found the ones I participated in with other businesses to be painful, intrusive, hard to use, and quite honestly not worth my time.  But when Square rolled out a product that looked promising, I decided to jump on board.  So, I’m speaking as a former skeptic.

I’ve used Loyalty for a couple of years now.  I have around 2,600 current loyalty customers.  Is that a lot?  I guess that depends on your perspective.  I’ve found that customers who really like loyalty program will sign up and those that aren’t interested won’t.  I think that for an ice cream shop, my enrollment is about right.  

My program is pretty simple.  I award one point for every dollar spent.  Customers earn a $1 reward for every ten points ($10) spent.  They can redeem those rewards anywhere from $1 to $15 at a time — but no more than $15 can be redeemed in any one transaction.  I also have loyalty tiers that give my active customers the chance to earn multipliers of points so that they earn rewards more quickly.

Is it worth it?  I have a spreadsheet that I use to review all of my “Square” costs.  In it I track my card processing fees, Square service subscription fees, and discounts offered for my loyalty program.  I use this spreadsheet to monitor how much I am paying to “Square” as a percentage of total sales dollars.

In the case of Loyalty, when taking into account my monthly fees ($45 per month at my level) AND the reward discounts that customers choose to redeem, I am currently paying 1.43 cents ($0.0143) per sales dollar.  In other words, my loyalty program is costing me about 1.5 cents per dollar.  I consider discounts under $0.03 per sales dollars to be reasonable and acceptable, as a marketing cost.

We don’t use all of the loyalty bells and whistles.  For example, other than the normal text messages that customers receive updating them on their loyalty account status, we only message customers about special loyalty events and programs.  We don’t remind them to use their rewards.  We don’t beg them to visit us.  We don’t abuse the privilege they gave us to text them by inundating them with texts.  Keep in mind I’m a Boomer who hates all of this instant “we need you to remember us” communication that is everywhere these days.  LOL.  Anyway, this approach works for us.  Loyalty customers sign up on an average of around 100 new customers per month.  That’s perfect for me for a program that I don’t have to put a lot of effort into.

I’m going to tag @ryanwanner who is a fellow Square Champion and a coffee shop seller.  I believe that he uses Loyalty and can speak to the economics of it from that perspective of being a coffee shop.  

But my prices and check averages are probably close to yours, and I can tell you that for me it is absolutely worth it.  Best of all, my loyalty customer base loves it and they tell me so.  Last year, they made up 17% of my total sales, and that 17% spent on average 93% more than non-loyalty customers per transaction — $27.12 per loyalty transaction vs. $14.03 per non-loyalty transaction.  That’s pretty impressive in my book.

[ryanwanner]

Hello @CafeCubana , and thanks for the ping @TheRealChipA !

I did use Sq Loyalty in my store for quite a few years, and I can say that overall it was worth it in the long run.

I gave a star per visit, and their 10th star gave them a free drink. In order to prevent the trick of ordering a bunch of drip coffees then get the most expensive specialty drink for free, I put a $5 minimum spend on the program. Over the years I think I had one person complain about that minimum.

Where the Square loyalty program really shines in my eyes is the Tier option. This is where you can set up different tiers for your customers to reach. If your customers let their points build up and not redeem them, they can "level up" for better rewards. I have my loyalty tiers set to a Silver option, where they get 5% off every sale, and a Gold option, where they get 10%. You can then set up automated discounts based on their tier status, so every time you enter their phone number the system will automatically apply the discount. Side note, group based discounts aren't available for the online store, so you'll have to communicate a coupon deal for online usage.

As with Chip, I don't abuse the loyalty texting or email communications. In fact that's in my spiel to get them to sign up: "I HATE businesses that bombard me with messages, so I'm not going to do it to you." I do send out monthly newsletters and the occasional "I'm bored, come in for a discount" blasts but nothing overwhelming.

I also love the fact that you can track your sales by loyalty/non loyalty so you know how well it's going for you. THe more that's enrolled, the more touch points you have to your customer base for both marketing and promotions. In theory, that increased customer base will offset the costs of the program for you.

[BidwellPerk]

HI again (this is my second reply to your posts tonight. :)). I like how you've simplified the Loyalty formula and might switch to your model. Right now I'm 1 Loyalty Point for a $5 minimum purchase, and 3 points gets you a $2 off coupon. I wanted people to get rewarded sooner, but not give away the farm, like you mentioned. The only people that have complained are my in-house drip coffee buyers who take advantage of my free refills anyway, so I'm ok with a few of them being upset. 

Where I'm struggling is figuring out the best way to reward my bean buyers, who are used to a Buy 10 get 1 punch card that I eliminated. I still want them to be rewarded. Do you have any accommodation for them in your program?

[ryanwanner]

@BidwellPerk that’s exactly what I saw with my loyalty program originally. The people that tried to scam a expensive drink after getting just drip coffees very quickly realized I wasn’t playing that game

for my bean buyers, I haven’t figured out a way to do this easily. I’ve campaigned over the years to have the option of multiple loyalty programs, but it isn’t going anywhere. I suppose you can set up a smart marketing group that kept track of counts of bagged coffees that you could then send emailed coupons to, but I haven’t explored that yet.

[RobynR]

Hi @CafeCubana, Welcome to the Community! Thank you for joining us here, and a big shoutout to @TheRealChipA and @ryanwanner for sharing such detailed feedback.

@TheRealChipA, having a 2,600-member loyalty program is definitely something to celebrate—huge congratulations on that achievement! 🎉 

If you'd like an overview of our Square loyalty program, you can learn more about it here.

Please let us know if you have any questions along the way; we are here to assist. 

[ChickenRacer]

I really wish I could use Loyalty, as in the past I have used this on other systems, to a high degree of success. My issue is the only option to bring up their membership is by putting in the phone numbers. Being a pub, asking this info, slows us down to much when we are in peak times. Last year I did 50,172 transactions, of which better then 70% are in a 2 hour period, of our 12 hour opening time. 

I wish we could use a swipe card or use a barcode scanner.

It's not Square's fault, I understand why they have gone that route, and I am an oddity, but it sucks

In regards to OP questions, the reasons I have liked membership systems in the past are:

• Being able to measure and shoutout your best customers, whether it be publicly or privately. 
• The ability to find any hidden white whales, that you may have missed. Sometimes I find I have customers that spend much more then I realised, simply because they are quieter about their spending. Don't want those guys to miss out on the opportunity for us to say thanks and treat them well!.
• Sponsorships, I find Loyalty such a good thing for helping you guage sponsorship monies. So there's a sports club looking for a donation, sweet, here's $200, but also, here's a club membership card, get all of your members to use it, and the rewards will go to the club for this month. Get them to drive traffic for you. 
• Locals vs travellers. For me currently, I would love to have a locals card, wherein locals get X amount back, or discount certain items etc. That way, the travellers who are happy to pay a bit more, you can make that tiny bit more off them.
• Makes it easy to track birthdays etc
• Know your customers names, because their name comes up once swiped, you can use their name, which makes it more personable!

[TheRealChipA]

Hi @ChickenRacer.  My business is an ice cream shop with walk up window service, only. So, similar to a bar when the summer craziness kicks in on weekend nights.  I’m betting I see as many, if not more, customers than even busy bars do during high season, and we’ve been able to make Square Loyalty work for us.  Here’s how.  Instead of having my employees run cards and complete transactions, we purchased Square Terminals which we use as customer-facing payment devices in what is known as Connected Terminal mode.  

When we send a transaction to the connected terminal and they choose to pay with a card, if they have used that card before then Square automatically knows they are a loyalty customer.  It adds new points to their accounts and if they are eligible for rewards it gives them the option to apply those to the current transaction, or not.  If they use a card that Square has not seen before, they are prompted to “join” the program by entering their phone number on the terminal.  After that, this new card will be recognized in the future by loyalty.  Basically, for card paying customers, Square loyalty DOES have a card to swipe — the credit/debit cards that customers use to pay for their transactions.

For cash customers — which we obviously have a decent amount of — we have signs about our loyalty program and inform customers to tell us if they’d like to join.  If they do, then they do have to give the number to my employees, or the employees can swivel the iPad for the customer to do so.

We also have a link on our website for customers to sign up and check their loyalty status.

I’ve had Square Loyalty for 2+ years now.  I have around 2,500 loyalty customers most of those signed themselves up using this procedure.  It’s quick and painless, by and large.

Anyway, you might want to give it another look.  I’d be more than happy to set up a Zoom call and show you how things work in my shop, from my point of view as well as the customer’s point of view.  I have test customer accounts that I have created for just this purpose.  Just let me know.

[ChickenRacer]

Yeah I get what you are thinking, and understand how it can work, I think it's also my demographic. Asking my locals 10 times a visit for their number, in a crowd where you can hardly hear their order will be a tough one. We have three tills spread out around the bar, and a very small percentage are at the till, they are all around the bar. 

For me it's not just the entering, it's the

- customers remembering their number (again, demographically half of mine wouldn't)

- customers not feeling comfortable shouting their number out in public (they aren't next to till predominantly, our bar is about 25m round (they are only a few metres away, as it's a u-shape bar)

- staff having to pause during a transaction, and wait to be able to hear/interpret the number (alot of staff are backpackers, so language can be an issue)

- we have a musician in bar 7 nights for 5 months, so it'll be hard work getting a phone number from predominaltly 60+ haha

- we don't do tabs in general, so most of the locals are paying cash, per transaction, and aren't coming to till, they are getting served where they are

Not being negative or dismissive, I really want to be able to do loyalty/membership, so any discourse is great!

[TheRealChipA]

As a 60+ Boomer, I understand completely! And now it makes much more sense. Obviously I was just throwing spaghetti at the wall to see what might stick, based on my experience. Your results may differ! Such is life. That’s why we are here. I don’t for a minute take your comments negatively. In the end, we all must do what works for our business model. As the 12-steppers say, “take what works and leave the rest.” That’s pretty much my mantra anymore!

[ChickenRacer]

Ahaha awesome thanks. Yeah I didn't think you'd take it the wrong way, just didn't want to come across that I didn't want input. 

I have some internal hatred of the fact that I haven't done somehting around loyalty, as I think it would work well. Another part of me is scared as some "locals" get upset when seasonal staff don't recognise them, even though they don't come in enough for that to be staff's fault, so if they are questioned or staff forget to ask them for loyalty card, I am worried about fallback. 

There is a third party that does loyalty with a card, but it's expensive, so with my incoming second venue, something to look at in future when cash flow is a touch better. 

[RobynR]

Hey @ChickenRacer,

Having a quicker way to bring up loyalty memberships, like using a swipe card or barcode scanner, would be a great addition, especially with the high volume of transactions you're processing in such a short window.

While Square's current setup uses phone numbers to ensure a seamless and secure experience, we understand that every business has unique needs. We’d love for you to submit a feature request in the Square Community’s Ideate Board, as seller feedback plays a key role in shaping future updates.

It’s great to see how you've used loyalty in the past to recognize top customers, support sponsorships, and engage your community!

Thank you for being a member of the Community.

[Headpinz]

Square Loyalty has been an absolute game-changer for us across our two locations. The numbers speak for themselves—62,734 visits by loyalty members and 11,539 new sign-ups prove that the program is driving customer engagement and repeat business.

Beyond just visit counts, our loyalty members are spending significantly more, with an average spend exceeding $200+, compared to most non-loyalty customers spending under $100. This shows that rewarding customers for their repeat business encourages higher spending and deeper engagement.

Tracking loyalty through phone numbers and credit cards tied to accounts has made it seamless for our customers while providing us with valuable insights into purchasing behavior. This data, combined with automation tools, allows us to drive additional sales by promoting relevant products and experiences based on customer habits.

The ability to analyze customer spending patterns and incentivize additional purchases makes Square Loyalty not just worth it—but essential to maximizing revenue and customer retention. The investment in loyalty data pays for itself by creating more dedicated, high-spending customers who return again and again.