Customer loyalty program software: what to track and how to keep it simple for everyone

A loyalty program of your own works when it does three things: customers join with their phone number, checkout gets just one extra step, and you get numbers that show whether people come back more often. Miss any of those and it ends up like a paper punch card lost in a wallet: nobody uses it and nobody knows if it helped.

This guide is for shops people buy from again and again: health food stores, pet shops, bakeries, neighborhood hardware stores, wine shops. If you run a coffee shop, there's a separate piece on a loyalty app for coffee shops. Here I'll cover what to decide before choosing between points and punch cards.

First: what do you want to change?

“Loyalty” is vague. A program works when it targets a specific behavior, and there are three common ones. Come back sooner: the customer who comes monthly starts coming every three weeks. Buy a bit more: they add the item they're buying somewhere else today. Come back at all: the customer who quietly stopped showing up returns.

Each goal calls for a different reward. To bring people back sooner, offer a perk that expires. To grow the basket, tie a reward to a product category. To win back lapsed customers, send a personal message with a reason to return. If you don't pick, the program just hands out rewards to people who were coming anyway.

Punch cards, points, tiers or perks: which one fits

You can combine them, but the simpler it is, the easier it is to explain at the counter.

The phone number is the card

The simplest way to identify a customer is their cell number. No card to forget, no app to download. At checkout, the cashier asks for the number, types it in and the purchase is added. The first time, you add their name and whether they're OK getting messages; after that, the number is enough.

On the customer's side, a link by WhatsApp or text shows their balance and how close they are to a reward. The same channel tells them when a perk is about to expire. What matters is that everything the customer needs to know reaches them without asking.

Checkout can't slow down

A program that holds up the Saturday line gets dropped within a week. So the design starts at the register: one field for the phone number, the amount that's already on the sale, and an on-screen alert if that customer has a reward to redeem. No long forms at the counter.

If your register also records what's sold, even better: the program knows what each customer bought, not just how much they spent. That's what makes category rewards possible. I covered that side in point of sale with inventory control.

What to track to know if it's working

Without numbers, a loyalty program is just a feeling. These are the ones I'd look at first:

• Visit frequency: how many days between visits for members, and how it changed after they joined.
• Lapsed customers: who used to come often and stopped. It's the most valuable list in the system.
• Redemptions: how many rewards get used. If nobody reaches one, it's too far away; if everyone does, it's too easy.
• Member basket size: whether members spend differently from non-members.
• Sign-ups at the register: how many new members join each week. If it drops, the cashier stopped offering it.

Why your own and not an off-the-shelf app

There are ready-made platforms that work fine to get started. Your own program makes sense when you want it inside your register, you want your customer data to stay yours, and you want rules that fit your shop instead of the ones the tool ships with. It also makes sense when you already have a system and don't want the cashier juggling two screens.

To read the program's numbers alongside sales, sales reports for retail shops might help. I work remotely from Buenos Aires, Argentina (UTC−3), with video calls and progress you can open from a link, and I quote each project separately.

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