· 5 min
Before setting up a loyalty scheme, it is reasonable to ask whether it will actually pay off. Here is how to work out the numbers for your business.
Setting up a loyalty programme costs money and takes time. Before committing, it is worth working out whether the return is likely to justify the cost.
The key numbers to know
Research consistently shows that loyalty programme members visit 20-40% more frequently than non-members, and spend slightly more per visit because they are engaged with your brand.
A worked example
Take a cafe with 200 regular customers, each visiting twice a week and spending €4 per visit. Monthly revenue from this group: roughly €6,400.
If a loyalty programme increases visit frequency by 25% (from 2 to 2.5 visits per week), revenue from the same group rises to €8,000 per month. That is an extra €1,600 per month from customers who already exist.
The rewards cost you cost price, not retail price. A free coffee that retails at €3.50 might cost you €0.60 to produce. Account for that when calculating the real cost of rewards.
What actually drives the ROI
- More frequent visits from existing customers (the main driver)
- Fewer customers lost to competitors (reduced churn)
- Word of mouth from satisfied members who tell others
What to track once you launch
- Average visits per month before vs after launch
- Number of active loyalty members vs total customers
- Redemption rate (how many rewards are actually claimed)
- Churn rate (how many regulars stop coming back)
40% average increase in revenue reported by Loyenix merchants after 3 months
How this compares to chasing new customers
Acquiring a new customer typically costs five to seven times more than keeping an existing one, once you account for advertising spend, discounts used to win them over, and the time it takes staff to convert a first-time visitor into someone who trusts your business. A loyalty programme works the opposite way: it spends a small, predictable amount on customers who are already walking through your door, and turns that spend directly into more frequent visits.
That is why loyalty ROI tends to compound over time in a way paid ads do not. An ad campaign stops producing results the moment you stop paying for it. A loyalty programme keeps working on the same customer base month after month, because the habit of coming back for a stamp or a reward sticks even after the initial excitement of joining wears off.
Common mistakes that quietly kill the ROI
- Making the reward too generous, so each redemption eats most of the margin from the visits that earned it
- Never telling customers the programme exists — a card nobody signs up for cannot produce any return
- Requiring too many visits before the first reward, so casual customers give up before feeling the benefit
- Not tracking redemption rate at all, which makes it impossible to know whether the numbers above are actually holding true for your business
None of these mistakes are expensive to avoid — they mostly come down to keeping the reward simple, promoting the card at the till and in your window, and checking your numbers monthly instead of assuming the programme is working. Businesses that do this consistently see the ROI curve above hold up well past the first few months, not just in the initial launch period when novelty alone drives sign-ups.