What does the programme cost you? The right reward arithmetic
Work out each kind's real cost, and the rate that makes sense for your shop.
Choose your programme, grow your shop
Web, iPhone and iPad, Android
The most important number in the whole programme: what the customer spent before the prize, against what the prize costs YOU. Note that a prize costs you its ingredients, not its menu price, while cashback costs you the full riyal.
A stamps example
A cup at 18 riyals that costs you 5. A 6 stamp card: the customer spent about 90 riyals over 5 visits and takes the sixth. They feel 18 riyals (about 20% of their spend); it cost you 5 (about 5%).
A points example
One point per riyal, and a 25 riyal dessert that costs you 7 at 200 points. The customer spent 200 riyals, feels 25 back (12.5%), and it cost you 7 (3.5%).
A cashback example
5% cashback: a 200 riyal bill returns 10 riyals. The customer feels 10 (5%), and when it is spent it costs you a full 10 riyals of sales (5%). The same feeling with stamps would have cost you much less.
The rule of thumb
A practical rule of thumb: keep the prize's menu value roughly 7% to 15% of what the customer spent to reach it. Below that it does not excite; above it eats your margin. For cashback, 2% to 5% suits most shops, and higher only where your margin is wide.
Work out yours: (the prize's menu price) ÷ (your average bill × the visits to the prize). Between 0.07 and 0.15 and you are in the right zone.
Aloke