Loyalty Card Calculator: How Many Stamps?

What your loyalty card really costs you, and how long it should be.

Most owners pick ten stamps because the card they were handed in 1998 had ten squares on it. Ten is sometimes right and often not, and the reason is that a free item costs you what you paid to make it, which is less than its price. This works out what your card is really giving away, as a share of the money a customer spends and as a share of the profit that customer leaves behind.

Real discount = what the reward costs you ÷ (stamps × average sale). Share of profit = what the reward costs you ÷ (stamps × average sale × margin).

• You can have the answer emailed to you. We use the address once, to send that one email, and then we are done with it: you are not added to any list and we do not email you again.
• We use what the reward COSTS you, not its menu price. A $5 coffee at 75% margin costs $1.25 to give away.
• One full card is that many paid visits and then one reward. We work out the gross profit those visits leave behind, and take the reward out of it.
• The real discount is the reward against everything the customer spent across the card. On a ten-stamp card at $5 that is $50 spent and $1.25 given back: 2.5%, not 10%.
• We also show how many EXTRA visits the card must cause before the reward has paid for itself. Not visits in total: only visits that would not have happened.
• The suggested card length is the shortest one that keeps the reward under a fifth of the profit it produced. A fifth is a judgement, not a law, and it is the number to argue with.
• That is the SHORTEST card that works. We also show the longest one that still makes sense, which is whichever of these three comes first: 20 stamps, because that is as many as the card maker prints; 10 stamps, so each one is worth at least a tenth of the reward and feels worth collecting; and however many the customer could collect in three months at the rate they already visit.
• If you tell us how often a regular comes in, we also show how long one card takes to fill. A card nobody ever finishes is not a loyalty scheme.
• A reward that costs more than the whole card earns is refused rather than shown as a negative. That is a business problem, not a rounding one.

How many stamps should a loyalty card have?

Enough that the reward costs under about a fifth of the gross profit the card produced. At a $5 sale, 75% margin and a reward that costs you $1.25, even a two-stamp card clears that. So the real limit is how long a card a customer will finish. Most shops land between 8 and 12.

Is a ten-stamp card a 10% discount?

No, and this is the most common mistake. Ten stamps means the customer paid for ten visits and got one item. The item costs you its cost, not its price. At a $5 coffee and 75% margin that is $1.25 against $50 spent: about 2.5%.

Should I count the reward at its menu price?

Only if you would otherwise have sold that exact cup to someone else and turned them away. Almost no shop is in that position. Use what it cost you.

What if my card is too generous?

Lengthen the card rather than cheapening the reward. A smaller reward is noticed immediately; one more stamp is barely noticed and does the same arithmetic.

Does a longer card mean fewer people finish it?

Yes, and that is the trade. The tool shows how many months a regular takes to fill one at their usual rate. Past about three months most people stop thinking of it as theirs.

Does this work for a salon or a barber?

Yes. Use the average service price and its product cost. A card that takes ten haircuts is a year and a half for most customers, which is why service businesses usually reward on five or six.