Shops set their loyalty reward by feel, and the feel is usually too mean. A free coffee after ten seems like a lot of free coffee until you count what the person buying ten coffees is actually worth to you. Do this arithmetic once, on the back of an order pad, and the reward will set itself.
Start with the spend per visit
Take an ordinary regular, not your biggest spender. For a cafe, the daily coffee is four and a half dollars, and perhaps one visit in three adds a pastry or a sandwich, so call it six dollars a visit on average. For a bakery, a weekly loaf and something sweet is twelve to fifteen dollars. For a butcher, a fortnightly shop is fifty. For a bottle shop, a weekly visit is thirty to forty. For a greengrocer, a mid-week top-up is fifteen and the weekend shop is thirty-five.
Write yours down. Be honest; use the ordinary regular.
Multiply by how often they come
The cafe regular comes four days a week for forty-six weeks: about 180 visits a year, around 1,100 dollars. The bakery regular comes weekly: 50 visits, 650 dollars. The butcher regular: 25 visits, 1,250 dollars. The bottle shop regular: 50 visits, 1,750 dollars. The greengrocer regular: 100 visits, 2,500 dollars.
That is one person, one year. A shop with two hundred regulars at those numbers has somewhere between 130,000 and 500,000 dollars a year walking through the door on habit. That habit is the thing the card protects.
Now cost the reward
A free coffee costs you the beans, the milk and the cup: under two dollars. A free loaf is a dollar or two of flour and the oven you already had on. A kilo of sausages is a few dollars of your own mince. A bottle up to twenty-five dollars from a shelf you chose costs you the wholesale price, perhaps fifteen. Ten dollars off a greengrocer shop costs you ten dollars.
Set against the yearly spend, the cafe gives away eighteen free coffees a year to the daily regular, about thirty-five dollars of cost against 1,100 dollars of sales. The bakery gives away eight loaves, perhaps fifteen dollars against 650. The butcher gives away four kilos of sausages, twenty dollars against 1,250. Every one of those is under four percent, and the butcher's is under two.
That is the number to hold in your head. The reward is a small percentage of what the regular spends, and the regular feels it as a gift because they see the retail value, not your cost.
What the card is actually buying
Not more visits from the regular; they were coming anyway. Three other things.
A reason to choose you on the marginal day. The day they could go to the place nearer the station, or order online, or skip it. Seven stamps on a card tips a lot of marginal days.
A name on a list. Before the card you knew faces. Now you know that 240 people joined, that 30 are close to a reward, and that you can say something to all of them when there is something to say. That list is the asset. The free coffees are its rent.
A thank you that is actually said. Most shops are grateful to their regulars and almost never express it. A card does, every tenth visit, without anyone having to find the words.
What a lost regular costs
Run the numbers the other way. A cafe regular who moves to the place nearer the station takes 1,100 dollars a year with them, and you will not notice for a month because you do not have a list that shows who stopped coming. If a card and an occasional message keep one regular in twenty from drifting, it has paid for itself many times over, and a few free coffees were never the question.
Setting the reward from the numbers
With the arithmetic in front of you, the reward chooses itself. Pick something you make or stock, so your cost is a fraction of the value. Make it generous enough to be remembered: a free loaf of your choice, not a free roll. Set the target so the regular reaches it in six to eight weeks. Then stop worrying about the cost, because you have already counted it and it is a rounding error against what the regular is worth.
The thing not to count
Do not try to measure whether the card increased spend per visit. It might, a little, but that is not what it is for, and a scheme designed to lift the basket turns into tiers and points and conditions and loses the thing that made the stamp card work: it is simple, it is a gift, and the regular knows exactly where they stand.