This article is sponsored by our partner, SumUp.
For a long time, coffee loyalty programs were pretty straightforward: simply reward regular customers for frequenting the business, probably with a punch or stamp card. While there’s nothing wrong with that format, it’s just one among many options available to today’s business owners.
After all, loyalty programs hold untapped potential as powerful marketing tools. According to Alex Rawal—head of growth marketing at SumUp, a technology company that focuses on payment options for small businesses—“people are willing to try something once,” but the true test is getting them back a second time. As coffee is a daily ritual for many, it offers businesses the ideal opportunity to make deeper connections with customers—and loyalty programs are key to turning one-time visitors into regulars.
These programs are also a powerful way to disrupt established customer routines, a particular advantage for new coffee businesses. Rawal recalls a conversation with a cafe owner who asked, “Our coffee is better than the shop down the street. Why aren’t people coming here?” The answer lies in the loyalty customers have to their familiar spots. “It’s because they’re used to going there—that place has been around for 15 years,” he says.
This is where loyalty programs can come in, giving customers a reason to choose the new cafe over the old habits. With incentives like punch cards, points, or exclusive perks, they create tangible motivation for patrons to return—and help boost a business’s profitability in the process.
But loyalty isn’t static. “As customers return, they start to buy their regular drink, and maybe every third or fourth purchase, they add something,” says Rawal. Over time, these small additions—like an extra shot or a pastry—can improve margins and turn loyal visitors into consistent sources of revenue.
To tap into all of this potential, cafes can and should implement loyalty programs that encourage repeat visits and maximize profitability. Here are four strategies to consider.
Loyalty Program #1: Punch Cards
Punch cards are a classic loyalty program option for coffee businesses—and for good reason. They’re simple, easy to implement, and effective. Some cafes, like Cafe Domestique in Madison, Wisconsin, put a unique spin on the traditional “buy 10, get one free” system.
“We give a customer a punch for each drink they get in a reusable cup,” says owner Dan Coppola. This includes ceramic and glass cups for drinks ordered “for here,” as well as travel mugs and HuskeeSwap cups for to-go orders. Either way, “Ten punches get you a free drink,” Coppola says.
He says that the idea had been in the works since 2016, but it wasn’t until after the business survived the pandemic that he felt bold enough to implement the reusable punch card system. The results have been positive, with the cafe on track to redeem 1,500 punch cards this year—preventing more than 15,000 cups, lids, and coffee sleeves from ending up in landfills.
This system provides a double incentive: Customers are rewarded with a free drink while making a positive environmental impact. “We didn’t set out to create a program that would make customers choose us over other coffee shops,” says Coppola. “Instead, we wanted to encourage customers to think about how they take their coffee and help reduce waste.”
One advantage of punch cards like Cafe Domestique’s is that they’re customizable and straightforward. Unlike more complex loyalty systems, they require nothing more than a card and a hole punch or stamp. Particularly for small cafes, they offer an easy and cost-effective way to engage customers. There’s no need for technology or tracking software—just print the cards, and they’re ready to go.
Loyalty customers don’t just visit more—they spend more. Alex Rawal, SumUp
However, punch cards come with limitations. One main drawback is they don’t provide businesses with customer data. While digital systems can track individual preferences and buying habits, punch cards only offer basic information about how often a customer visits. This lack of data means that cafes miss out on opportunities to tailor promotions or gain insights into consumer behavior.
Despite this, punch cards remain a popular choice for cafes looking for an easy-to-manage, affordable loyalty program. They allow independent cafes to reward customers without the technology or complexity of more advanced systems.
Loyalty Program #2: Banked Points
Banked points systems are becoming more popular as point of sale (POS) platforms like SumUp integrate loyalty programs directly into their systems. These programs typically operate on a simple 1:1 points structure: $1 spent equals one loyalty point. The goal is to reward repeat customers, and having the loyalty system integrated into the POS makes the process seamless. Customers can redeem points for free drinks, discounts, or other rewards once they hit a certain marker.
Rawal points out that loyalty programs integrated with POS systems also offer businesses valuable insights into customer behavior, something he’s been able to see at SumUp. “Loyalty customers don’t just visit more—they spend more,” he says. The banked points integration helps cafes identify repeat visitors and tailor marketing strategies accordingly. “We’re also discovering that these customers tend to tip better, which is a huge win for staff and helps create a more rewarding experience all around.”
The simplicity of a banked points system is one of its key strengths. Customers earn points with each purchase and can easily track their progress toward a reward without having to remember complicated rules or details. Plus, as customers watch their points grow, they’re motivated to return to the shop to reach the next reward level.
While the points system is straightforward to implement, its success depends on how effectively a cafe can offer rewards that feel valuable enough to keep customers engaged. The real appeal for business owners, meanwhile, is the insights that loyalty data provides.
Loyalty Program #3: Tiered Systems
Online roaster Fire Department Coffee’s loyalty program is designed to do more than just reward purchases. “Loyalty for us is continuing to re-engage customers, encouraging repeat purchases, and rewarding behaviors to keep them coming back and extend the lifetime value of the customer,” says CEO Luke Schneider.
The company’s tiered rewards system is structured around levels like “Lieutenant,” “Captain,” and “Chief,” each with its own set of benefits. A social media follow earns 20 points (social media is a key part of Fire Department Coffee’s remarketing strategy, which is why it rewards online interactions); writing a review can score 150 points; customers receive 500 points as a birthday treat each year. As shoppers accumulate points, they move through the tiers and unlock more exclusive rewards as they go. The higher the tier, the more valuable the rewards, with top-tier members earning bonus reward points with every purchase.
By creating a sense of progression and exclusivity, this tiered approach offers more than a banked points system. The further customers move through the ranks, the more valuable the rewards become. “If someone brews coffee at home, they might appreciate redeeming their points for a bag of coffee,” says Rawal. This model is designed to reward more spending, which is ideal for businesses like Fire Department Coffee, where the average ticket price is larger than the average purchase at a cafe.
Loyalty for us is continuing to re-engage customers, encouraging repeat purchases, and rewarding behaviors to keep them coming back and extend the lifetime value of the customer. Luke Schneider, Fire Department Coffee
However, tiered programs do come with challenges, like setting the right thresholds: If they’re too high, customers may feel discouraged, but if they’re too low, the business might lose money. Also, tracking these tiers requires a robust POS system and consumer data collection, which can be costly for small businesses. Despite these hurdles, the reward of deeper engagement and customer retention makes it a worthwhile option for some.
Loyalty Program #4: Fee-Based Loyalty Programs
The Blank Street Regulars program is a loyalty subscription model by coffee chain Blank Street Coffee. Members pay a weekly fee ($8.99 or $17.99, depending on the plan) to unlock perks.
The lower tier offers discounts on essentials like tea, drip coffee, and Americanos, while the higher tier expands to cold brews and specialty drinks. This fee-based loyalty model appeals to dedicated customers who want steady perks and are willing to pay a bit more for premium access.
Fee-based loyalty programs offer coffee brands the opportunity to provide exclusive perks that might be too expensive otherwise. However, these programs come with challenges. The membership cost can limit who joins, and once customers pay, brands need to make sure they deliver on their promised rewards consistently. Striking the right balance between the membership cost and rewards is also essential for keeping members engaged.
However, the 4,000-person waitlist for Blank Street’s Regulars program proves the concept resonates with many customers, and shows there’s strong interest in joining—even before members can get in.
Finding What Works
For new coffee shops and roasters, the world of loyalty programs might feel overwhelming, but it doesn’t have to be complicated.
Schneider suggests a simple starting point: “Tap into groups of other coffee shop owners to see what tactics they’re using. Surround yourself with people doing similar things and who may be willing to share their experiences.”
Experimentation is also part of finding the right fit for a business. The strategies that work for one shop might not work for another, so being open to trial and error is essential. “Don’t be afraid to experiment,” says Schneider. Whether it’s through social media, in-person interactions, or email marketing, the goal is to find what clicks with customers and fine-tune the approach over time.
Sponsored by SumUp
SumUp provides small businesses with a suite of digital tools designed to help them grow, from taking and processing payments to driving repeat business through personalized marketing and loyalty campaigns. Learn more here.
