# Loyalty programs for bakeries: why cake businesses need a different one

> A stamp card suits a bakery whose customers buy weekly. Celebration cake customers come back for a birthday reminder and a referral credit. How to cost each reward.

A stamp card works for a bakery whose customers buy every week. It does not
work for a celebration cake business, because a customer who orders two or
three cakes a year would take four years to fill a ten-stamp card. For cake
makers, the loyalty program that brings people back is a reminder before next
year's birthday, plus a referral credit for whoever recommended you. For a
counter bakery, a short stamp card with a reward costed at what it costs you
to make is still the right tool.

## Match the program to how often people buy

Pull last year's orders and count how many times your top fifty customers
bought. That number decides the program.

| How often they buy | Typical business | Program that fits |
| --- | --- | --- |
| Weekly or more | Bread, pastries, coffee counter | Stamp card, 8 to 10 stamps |
| Monthly | Market stall, cookie boxes | Points per dollar or pound spent |
| Two or three times a year | Custom and celebration cakes | Date reminders and referral credit |
| Both | Shop with a counter and custom orders | Stamp card at the counter, reminders on cake orders |

## For cake makers: the birthday reminder

A celebration cake is tied to a date that comes round again. The child who
turned five in March turns six next March, and the parent will order a cake
from someone. The cheapest repeat order you will ever win is a message that
arrives before they start looking.

**When to send it.** About five weeks before the date comes round. Many
birthday cakes are ordered one to three weeks out, so five weeks lands before
the search starts and before your diary for that week fills. Send a second,
shorter note two weeks out only to people who have not replied.

**What to say.** Two lines, personal, no discount needed: "Ava's cake last
March was a unicorn with a rainbow drip. If you'd like something for her
sixth, I have a few spaces around the 14th." Naming the cake does more work
than a percentage off.

**What it is worth.** Work it out from your own list. Say 200 customers
ordered a birthday cake last year at an average of $120, and one in six
reorders from a reminder who would otherwise have gone elsewhere. That is
about 33 orders and $4,000 of revenue from a message you write once. Your own
reorder rate will be different; track it for one year and you will know.

## For cake makers: the referral credit

At a party, thirty people eat your cake and one of them asks who made it. The
person who answers is your best marketing, and a referral credit rewards them
for it.

Keep it simple: when a new customer names who sent them, the referrer gets a
credit off their next order. Size it against your margin, not your price. On a
cake with a 45% margin, a $20 credit on a $200 order costs 10% of the price
and about 22% of that order's profit, paid only when the referrer orders
again. Credits that expire after twelve months keep the liability small.

## For counter bakeries: cost the reward at your cost

A reward costs you what the item costs to make, not its shelf price. That is
why a free item usually beats a discount.

Take a loaf that sells for $8.00 and costs $2.40 to make, ingredients and
labour included, and a card that gives the tenth loaf free after nine bought.

Reward cost per card = $2.40, against 9 x $8.00 = $72.00 of sales, or 3.3%

Now compare 10% off every purchase for the same nine loaves: $7.20 given away,
or 10% of the same sales. Three times the cost, and the customer barely notices
it because it is spread thin. The free loaf costs less and is remembered more.

> **Do not reward what would have sold anyway**
>
> If your bestseller sells out every morning, a reward on it gives away margin
> for no change in behaviour. Point the reward at something with spare capacity,
> or at the item you want people to try.

## Rules to set before launch

- **What counts.** Exclude wholesale and one-off large orders so the program
  rewards regulars.
- **Expiry.** Ninety days for a stamp reward, twelve months for a referral
  credit.
- **One reward per order**, and none stacked with a discount code. Stacking
  turns a 3% cost into something much larger on a single order.
- **Refunds.** A refunded order loses the stamp or credit it earned.
- **One sentence.** If you cannot explain it at the counter or in a message in
  one sentence, customers will not join.

## Running it in ibakepro

In ibakepro you record the occasion against the customer (a child's birthday,
a wedding anniversary) and a journey in Marketing sends an email or SMS a few weeks before it comes
round again, without you keeping a list. Loyalty is part of [Marketing](/features/marketing-automations)
on every plan: stamp, order-count or points programs, rewards such as money off
or free delivery with an expiry you set, and a card customers see in their
order portal. One reward applies per order. For how loyalty sits alongside
email and SMS campaigns, see
[can I run a loyalty program and campaigns from my bakery software](/answers/can-i-run-a-loyalty-program-and-email-or-sms-campaigns-from-my-bakery-software).