The reward is the part of a loyalty card customers care about most, and the part owners worry about most. “Free coffee” can sound like giving money away.
In practice, it costs far less than it appears. Once the real cost of a reward is clear, most turn out to be good value. This guide shows how to work it out.
Menu price vs cost price
Everything a business sells has two prices:
- Menu price is what the customer pays.
- Cost price is what it costs to make: ingredients, packaging, the cup and lid.
When a free coffee is handed over, the business pays the cost price, not the menu price.
There is one caveat. If that customer would have come in and paid for the coffee anyway, the sale is also lost. So the worst case is the full menu price. What matters is whether the card brings people back more often, which is covered below.
A worked example
For simplicity, this example ignores VAT, rent and wages. Say a flat white is £3.40 on the menu, and the beans, milk, cup and lid cost about 70p. The café runs an 8-stamp card with a free coffee as the reward.
What the reward really costs
By the time the card is full, the customer has bought eight coffees: £27.20. The café then gives away one coffee that costs 70p to make. That is under 3p in every pound the customer has spent.
Even in the worst case, counted at the full £3.40, it is 12.5p in every pound. That is a real cost, but far smaller than “giving coffee away” suggests.
Compared with a discount
Now compare “10% off every coffee”. Over the same eight coffees, that is 34p off each, so £2.72 off takings, guaranteed. The free coffee costs between 70p and £3.40. At most the amounts are similar, but only one is something customers look forward to. A 34p saving rarely motivates anyone.
When does a reward pay for itself?
A reward pays for itself when it brings someone back more often than they’d have come anyway.
In this example, each extra coffee a customer buys leaves the café about £2.70 (£3.40 minus the 70p it costs to make). If the free coffee is a visit they wouldn’t otherwise have made, one extra paid visit covers it nearly four times over. Even in the worst case, two extra paid visits over the life of a card (2 × £2.70 = £5.40) more than cover the full £3.40.
So anything that brings people back a little sooner helps. When a stamp lands, the card on the customer’s phone updates straight away, and a card showing 7 of 8 is a clear prompt to return. On a slow afternoon, a promotion puts the owner’s own message on customers’ lock screens through their Apple Wallet or Google Wallet card. On the Growth plan, proximity notifications bring their card up when they are nearby.
The same sum works for the scheme as a whole. StampMate’s Core plan is £29 a month. On these numbers, eleven extra coffees a month across all customers (11 × £2.70 = £29.70) covers it. Growth, at £49 a month, takes nineteen (19 × £2.70 = £51.30). The pricing page lists what each plan includes, and both start with a 30-day free trial.
What makes a good reward
The best rewards have a big gap between what they’re worth to the customer and what they cost the business.
- Something the business already sells. A coffee, a pastry, a side, a pint. No special stock to buy in.
- Something people would actually buy. If they wouldn’t pay for it, they won’t chase it.
- Easy for staff to hand over. “Free coffee” is clear. “Free item up to £4.50, excluding specials” is a queue-stopper.
- Kind to busy times. If the reward costs time rather than stock, like a haircut, say when it can be used. “Free cut, Monday to Wednesday” keeps free cuts out of the Saturday rush. More on our salons and barbers page.
For restaurants and takeaways, a free side or starter is cheaper than a main and still feels like a treat. More on our restaurants page.
With StampMate stamp cards, owners write the reward themselves, so it can be as specific as needed.
Want a bigger prize? Use the wheel
A big reward like “brunch for two” is exciting, but too expensive to give on every full card. The answer is to give it on some of them.
Spin the wheel comes with the Growth plan. Once it is switched on, every full card draws a prize from the business’s own wheel. Owners set between 2 and 10 prizes, and give each one a weight that decides how likely it is.
Worked example: a three-prize wheel
Same café, same 8-stamp card. Say the wheel looks like this:
- Free flat white: costs 70p, weight 15
- Free slice of cake: costs £1.20, weight 4
- Brunch for two: costs £8, weight 1
The weights add up to 20, so over 20 full cards the expected result is roughly 15 coffees (£10.50), 4 slices of cake (£4.80) and 1 brunch (£8). That is £23.30, or about £1.17 a card.
A plain free coffee on all 20 cards would cost £14. So the wheel costs about £9.30 more across those 20 cards, under 50p a card. In return, customers have a chance at brunch for two, and an element of anticipation every time they fill a card.
Making the big prize rarer
If that is more than the budget allows, change the weights. For example: coffee 31, cake 8 and brunch 1. The weights now add up to 40, so the brunch comes up roughly once every 40 cards instead of every 20. The average drops to about 98p a card.
Avoid making it so rare that nobody wins. A top prize only gets talked about if someone wins it.
Staff mark prizes as claimed, and a prize can’t be claimed twice or after it expires (seven days by default).
The quick checklist
- Work out the true cost price of the reward.
- Work out what a customer has spent by the time their card is full.
- Check the reward is a small slice of that.
- Make sure it’s something people genuinely want.
- For a bigger prize, put it on the wheel and set the odds.
With a reward chosen, try it in the pass designer: pick a template, add a logo and colours, and check the live preview. No account is needed.
