loyalty in a service business: why points are not enough

The standard loyalty program in service looks almost the same everywhere: 5% cashback per order, points on a bonus account, redeemable on the next visit. Half a year later it turns out that the average check, the visit frequency and the churn have stayed the same.

The program works not as loyalty but as a distributed discount. The network gave away part of its revenue and got no change in client behavior in return.

what gets confused with a discount

A discount is about price. The client gets a discount, and it's cheaper for them. But cheaper now, in this order. The lower price doesn't carry over to the next order two months later — the client again chooses where to go on equal terms.

Loyalty is about coming back. It is the client's habit of returning to this very place, even when there are equivalent alternatives. And it is built not on 5% cashback but on the memory of the client.

A client returns to a coffee shop where the barista asks, “Your usual — an oat-milk cappuccino with no sugar?” A client returns to a shoe cleaning shop where the technician says, “You have suede shoes, we waterproofed them last time, let's check their condition.” At that moment the client feels they have been recognized as a person, not as a payment account.

Loyalty is not the sum of points on an account. It is the feeling of “they remember me here” that the client gets every time they cross the threshold.

the memory of a client must live in the system

By default, the memory of a client lives in the head of a particular employee. The barista who remembered the preferences. The technician who remembers what shoes the client dropped off. The administrator who knows the client doesn't like being addressed informally. It works, but it's a fragile memory: the employee quits, goes on vacation, moves to another location — and the memory disappears.

The memory of a client must live in the system, not in an employee's head: the order history, what they brought and when, conversations from all channels in one inbox. Then any person at any location opens the client and sees what the whole team together would know.

In CRM.Knopka this memory rests on orders. Each order is kept by items — with performers, statuses and before-and-after photos. Conversations from Telegram, WhatsApp* and the website are collected in a unified inbox, and VK and Avito can be connected. From a conversation you can open a deal right away, so a request isn't lost. The SneakNFresh network is 175,834 clients and 70+ locations in 6 countries (across the SneakNFresh network, including locations that keep their records outside the CRM).

a club instead of flat cashback

A flat percentage is the same for everyone and asks for nothing in return. A club gives the client a reason to return: their purchases add up to something more than a one-off discount. In CRM.Knopka the loyalty club works like this:

• club levels — the client sees they are not “one of everyone”;
• cashback in points for orders;
• a club card with a QR code — the client is recognized by the card, not by a number read out loud;
• writing off expired points — points have a lifetime, and that is a reason to come back rather than hoard them for years.

It is important that the club is tied to orders: points are credited for real purchases, not for manual marks.

the client portal on the phone

A client shouldn't have to call to find out whether the order is ready. The client portal holds the order status, points, promotions and before-and-after photos, if the location decided to show them. The portal opens in a browser and is installed on the phone as an app, without an app store. Push notifications arrive when an order status changes, points are credited or a promotion appears. On an iPhone, push notifications work after the portal is added to the Home Screen.

segments instead of “all clients”

In an ordinary loyalty program all clients look the same: everyone has a card, everyone gets 5%. In CRM.Knopka clients are automatically sorted into segments by recency, frequency and purchase amount (RFM):

• New — has made their first orders. The task is to bring them to the next visit.
• Active — returns regularly. The task is to keep the frequency up.
• VIP — comes often and brings the most money. They need personal attention, not a general mailing.
• At risk — used to come regularly but hasn't been in a while. The most important segment for winning back.
• Lost — hasn't come for a very long time. Winning them back costs more than keeping an at-risk client.

A segment can be chosen as a mailing audience, and the “Segments” report shows how many clients are in each.

a mailing with a reason, not “a discount for everyone”

A client who hasn't come in for a while is not yet a lost client. If you do nothing, in time they will become one. What helps win a client back is a mailing to your own base — with a reason, not with “a discount for everyone”.

In CRM.Knopka mailings go out by SMS, WhatsApp* and Telegram. Sending is gradual, and the repeat protection doesn't let you write to the same person again sooner than 7, 14 or 30 days. A birthday greeting is also a reason, and every client has one.

what we are trying to say

Cashback is a mathematical operation. A loyalty program is a system of memory, levels, segments and communication that works to bring the client back. If a network has only cashback, it has no loyalty program — it has a built-in discount.

Real loyalty is built on the system remembering the client. This can't be entrusted to one employee or one location. It has to live in the CRM and be tied to orders — then the club sees real purchases, not manual marks. How the loyalty club, client portal and mailings in CRM.Knopka work you can see on the product page, and the path of the order itself — in the article CRM for a shoe cleaning network: how an order works from intake to pickup.

frequently asked questions