Advice for Developing a Bakery Loyalty Program

When looking for ways to increase sales and boost revenue for your bakery, your first instinct may be to seek out new customers. Though an ongoing stream of new visitors is essential to sustaining and growing business, it’s equally important to earn loyalty from people who have bought your goodies before.

Enter the bakery loyalty program.

Seventy-two percent of global consumers would rather purchase from a retailer with a loyalty program than one without, according to a Nielsen study. And research conducted by commerce marketing solutions provider Yotpo found 52 percent of consumers will join a loyalty or VIP program.

More than 60 percent of U.S. small-business owners earn more than half of their annual revenue from repeat customers. Yet, only 34 percent have loyalty programs. 

When implemented effectively, loyalty programs can fuel bakery growth by boosting the frequency of return customers’ visits and increasing their spending through initiatives that encourage upselling and cross selling. 

Why is this a worthwhile effort? It often costs more to acquire new customers than to keep existing ones. In fact, a study from BIA/Kelsey and Manta found more than 60 percent of U.S. small-business owners earn more than half of their annual revenue from repeat customers. Yet, only 34 percent have loyalty programs. 

This discrepancy presents a major untapped opportunity for bakeries. In addition to boosting revenue, a loyalty program can yield invaluable word-of-mouth marketing from existing customers.

Choose a Loyalty Program that Meet Your Bakery’s Needs

Look for a program that works with your budget, your point-of-sale (POS) system and your capabilities. In its simplest form, a loyalty program can take the shape of a paper card that gets stamped or punched with every customer visit and rewards customers after a certain number of purchases. But more sophisticated loyalty programs can accomplish the same task on a streamlined, electronic basis. 

Though offerings vary by provider, some systems require consumers to register on the bakery’s or service provider’s website. When their information is registered, they’re able to qualify purchases for rewards by providing simple identifiers, like their phone number, at checkout.

These systematized rewards systems also often allow bakeries to target customers through geo-fencing (sending notifications to mobile devices in a geographic area defined using GPS or RFID), personalizing promotions and tracking customer behavior. When you have access to these valuable insights, you’re better positioned to connect with customers and offer them a remarkable brand experience. For example, when your customer gets near your bakery, you can send a push notification offering a today-only discount on a dozen cookies. Or, based on purchasing history, you can offer a buy-one-get-one deal on their favorite product.

Keep Bakery Loyalty Simple and Sustainable

To succeed, a loyalty program must be simple and straightforward for customers and employees. If it’s confusing, customers will bail. If it’s complex, staff will get frustrated. 

“Making it as easy as possible to sign up avoids inhibition to entry,” notes Beth Fahey, co-owner of Creative Cakes Bakery & Café in Tinley Park, Illinois, and former president of the Retail Bakers of America. Fahey offers her customers the option to sign up for Creative Cakes’ rewards program online, in the store or on a mobile app.

For starters, consider requiring only the bare minimum of customer information to sign up: say, their name, email address and phone number. Having to input much more data can turn potential registrants off. And these identifiers are enough to keep in regular contact with your customers in a way that’s not intrusive or costly. In addition, after customers have used their rewards accounts, you can dig into personalizing their deals or recommendations, once you’re able to analyze trends in their purchase history and schedule. 

Similarly, ensure your program’s incentives are simple. For instance, “Buy four cupcakes and get a fifth free” is more accessible than requiring multiple purchases over a certain date range with restrictions on the reward. 

A sustainable loyalty program shouldn’t require a lot of time or resources. At the forefront, you’ll need to dedicate resources to launching the program, training staff on the policies, and marketing your offerings accordingly—but once established, the program should generally run on its own, as most third-party systems (such as Paytronix, TapMango and Repeat Rewards, for example) automate everything for you. 

Set Bakery Loyalty Program Goals and Track Success

The goals of a successful program include being cost-effective, driving revenue and staying customer-focused. Make sure you’re tracking against performance with specific metrics.

“We’ve got about 20,000 total customers in our database with close to 8,000 enrolled in our rewards program,” Fahey notes. “Our goal is to add at least 50 per week. We don’t always hit that number, but it’s a good [concrete] goal.”

Marty Matassoni, managing director of Beechworth Bakery in Victoria, Australia, tracks the number of times the bakery’s loyalty card is used during transactions. When he launched his bakery’s program five years ago, 10 percent of customers used the card. Today, that portion’s roughly 20 percent. 

Offer a Variety of Bakery Loyalty Rewards—and For Multiple Actions

While rewarding purchases is a natural part of loyalty programs, bakeries may also consider rewarding customers for behavior that doesn’t necessarily include purchases. This may include liking your Instagram page, checking in at your bakery on Facebook or completing a survey. 

You might also look for ways to expand loyalty—and your bakery’s footprint—by rewarding customers who visit more than one bakery location, or visit your bakery at off-site events, such as at a food truck or farmers market stand.

Additionally, you can drive loyalty by offering rewards other than discounts on baked goods, such as exclusive access to new items, members-only special events and promotions, or even donations to local charities in the member’s name. However, it’s important to track what resonates most with customers.

“We added more incentive to visit our other locations and offered a free branded mug for visiting,” Matassoni says. “But we’ve found it’s more about discounts for us. Dollars-off drives our customers.”

Influence Bakery Customer Behavior

A program also can be used to gently encourage customers to take a specific desired action. For example, Creative Cakes customers can rack up points quickly by purchasing premium products. And when Fahey wants to get rid of products before closing time on Sunday, the bakery offers program members purchase discounts later in the afternoon. You can also promote limited-time offers or seasonal offerings to drive customers to your door.  

And these programs provide concrete, long-term gains. Through his loyalty program, Matassoni notes, “We’ve collected 15,000 email addresses, which allows us to send specials and promotions, and even target our different bakery locations.”

When done right, a loyalty program can build a steady base of repeat customers, enhance the customer experience, increase revenue and cost-effectively gain new customers.