What Is a Loyalty Scheme? A Guide for Hospitality and Leisure Businesses

In this article

1. How does a loyalty scheme work?
2. What are the main types of loyalty scheme?
3. What can a loyalty scheme help you achieve?
4. How should cafés choose a loyalty scheme?
5. How might a leisure venue approach loyalty differently?
6. Use this loyalty scheme design worksheet
7. What should you decide before launching a loyalty scheme?
8. Where does loyalty software fit?
9. What makes a good loyalty scheme?

For a café, that could mean considering a straightforward visit-based reward. A family-entertainment or leisure venue might want a different structure because customers visit less frequently and spend differently.

This guide explains the main approaches and gives you a practical worksheet for designing a scheme before deciding how it should be administered.

How does a loyalty scheme work?

Most loyalty schemes can be understood as a simple sequence:

Customer action → progress or qualification → reward

The customer does something defined by the scheme. The business records that action or determines whether it qualifies. Once the customer meets the stated conditions, they receive the relevant reward or benefit.

For example, a hypothetical café could decide that an eligible drink purchase earns progress towards a future reward. Another business might award points based on eligible spending rather than visits.

The important word is defined. Customers and staff need to understand what counts, what the customer receives and when they receive it.

Before deciding on points, stamps or another mechanism, start with the behaviour you actually want the scheme to encourage. A mechanism is useful only if it supports that objective and remains practical to operate.

What are the main types of loyalty scheme?

There is no single loyalty-scheme format that suits every hospitality or leisure business. Common approaches include the following.

Visit or stamp-based schemes record qualifying visits or purchases, with a reward available after a defined number. The concept can be easy to explain, particularly where customers make relatively frequent, similar purchases.

Points-based schemes allow customers to accumulate points according to rules set by the business. The rules determine how points are earned and what they can eventually be exchanged for or used towards.

Spend-based schemes link progress or rewards to eligible customer spending. This can make sense where transaction values vary significantly, although the business needs clear rules about what spending qualifies.

Tiered schemes provide different benefits or status when customers reach specified thresholds. They can introduce more complexity, so the value of that complexity should be considered carefully.

Other schemes may use member benefits, defined rewards or combinations of different mechanisms.

These are broad models, not rigid categories. The useful question is not “Which type of loyalty scheme is best?” but “Which structure fits the behaviour we want to encourage and the way our customers actually buy from us?”

What can a loyalty scheme help you achieve?

Before designing the reward, define the objective.

A café might want to give regular customers an additional reason to choose it for a future visit. A family-entertainment venue might be more interested in encouraging customers to consider another visit several weeks or months later.

Other objectives could include encouraging an eligible type of purchase or giving established customers access to a defined benefit.

Those objectives lead to different scheme designs.

This is also where expectations should remain realistic. A loyalty scheme cannot compensate for poor service, an unsuitable offer or an experience customers do not want to repeat. Nor does launching a scheme mean customers will automatically change their behaviour.

Instead, treat the scheme as something you can design around a specific objective and then evaluate.

Ask:

What customer behaviour are we trying to encourage, and how will we know whether the scheme is helping?

That question should come before deciding whether customers collect ten stamps, 100 points or anything else.

How should cafés choose a loyalty scheme?

Cafés often have relatively short purchasing journeys and may have customers who visit frequently. That can make simplicity particularly valuable.

Consider what staff will need to explain while a queue is forming. If joining, earning or redeeming a reward requires a lengthy conversation every time, the scheme may introduce friction at exactly the wrong point.

Also think about what should qualify. Is the objective based on visits, eligible products or eligible spending? Would the proposed reward still make sense for customers with very different order values?

There is no universal answer. The purpose of asking these questions is to make the scheme deliberate rather than copying a format simply because another café uses it.

Hypothetical café example

Imagine a fictional independent café. This example does not describe an EPOS Bookings customer or product feature.

The café decides its objective is to encourage customers who already visit occasionally to consider coming back more regularly.

It considers a simple scheme in which qualifying drink purchases count towards a defined drink reward after a stated number of qualifying purchases.

Before launching it, the café would still need to decide:

• exactly which purchases qualify;

• whether multiple eligible items in one transaction count separately;

• what reward is available;

• whether there is an expiry rule;

• how progress is recorded;

• how staff explain the rules; and

• how the café will judge whether the scheme is useful.

The valuable part of the exercise is not the particular reward. It is the process of turning a vague objective — “increase loyalty” — into clear rules that customers and staff can understand.

How might a leisure venue approach loyalty differently?

A family-entertainment or leisure business may have a very different customer pattern from a café.

Customers might spend more on each visit but visit much less frequently. There may also be different activities, packages or purchases within the same venue.

That changes the design problem.

A mechanism built around frequent low-value purchases might not fit a venue where a family visits only a handful of times each year. The business may instead want to think about eligible spend, return visits, membership-style benefits or another structure appropriate to its customer journey.

Hypothetical family-entertainment example

Imagine a fictional family-entertainment venue.

Its customers typically make larger but less frequent purchases than those in our café example. The venue wants to explore whether a scheme could give families an additional reason to consider a return visit.

Rather than immediately copying a café-style stamp system, the team first maps the customer journey. It asks how often families realistically return, which purchases should qualify, what sort of reward would be understandable and how long customers might reasonably need to earn it.

The venue then sketches a hypothetical points-based structure linked to defined eligible spending.

That does not establish that points are the “best” choice for leisure businesses. The example demonstrates something more useful: the earning mechanism should follow the customer behaviour and business objective, not the other way around.

Use this loyalty scheme design worksheet

Before looking at software or implementation, complete this worksheet. It forces the important decisions into the open.

Try completing the worksheet before choosing technology.

If the objective and rules are difficult to explain on paper, adding software is unlikely to make the underlying scheme clearer.

What should you decide before launching a loyalty scheme?

Once you have a proposed structure, test it from both the customer’s and the operator’s perspective.

Could a new member of staff explain it accurately? Could a customer understand what they need to do and what they will receive? Are unusual situations covered by the rules? Is the reward realistic for the business to provide?

Consider how progress and rewards will be recorded and what happens if a customer questions their balance or eligibility.

You should also consider whether the particular design involves collecting or using personal data. Some loyalty schemes may involve processing personal information, while the exact data implications depend on how the scheme is designed and operated. Businesses should establish what information they intend to collect and why they need it. The Information Commissioner’s Office explains purpose limitation when personal information is involved.

Where does loyalty software fit?

Once you know what the scheme is supposed to do, you can consider how it should be operated.

That is deliberately a separate question from defining a loyalty scheme. Software should support the rules and customer journey you have chosen rather than determine the objective for you.

If you are evaluating the EPOS Bookings product specifically, see our EPOS loyalty software page for current product information. We keep those details there rather than attributing particular software capabilities to this general guide.

What makes a good loyalty scheme?

A useful loyalty scheme starts with clarity: a defined objective, understandable earning rules, an appropriate reward and a process that works for both customers and staff.

For a café, simplicity and frequent purchasing patterns may shape the design. For a family-entertainment venue, longer gaps between visits and different spending patterns may lead to a different approach.

There is no need to begin with “points or stamps?” Begin with the customer behaviour you want to encourage.

Then use the worksheet to define the qualifying action, mechanism, reward, rules, operational process and measurement. Once those decisions are clear, you are in a much better position to decide whether — and how — software should support the scheme.

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