The Loyalty Program I Wish I'd Started With

Jeffrey Gitomer said, "Customer satisfaction is worthless. Customer loyalty is priceless." After ten years in business, I agree with that completely. And I don't just agree with it — I can prove it.

Look at my sales data.

In August 2026, average customer spend was $27.07 for loyalty members. Non-members spent $17.87. That's 51% higher for loyalty customers. In fact, 61% of our sales came from loyalty customers that month. Our top loyalty customer this year has spent $1,471.50 in the store. None of that even includes DoorDash or Uber Eats orders.

I should mention — we're a plant-based ice cream store. Which makes those numbers even more surprising.

Loyal customers make up a huge part of our business. Possibly even too much of it.

But it hasn't always been this way. It took over ten years and three completely different loyalty systems to land on what we use now. Some caused confusion. Some cost us money. One took real work to make it stick.

We started with punch cards. Then went the total opposite direction and spent thousands on tablets and equipment. Today, we use the simplest system we've ever had. Five years after we stopped our physical punch cards, someone actually walked into the store with one. I was in genuine shock — especially when, after I explained we'd stopped that five years ago, they told me they'd been given it the week before. That card should have disintegrated.

Loyalty works. It's something you need to build into your business.

So if you're a small business owner thinking about starting a loyalty program — or you've already got one nobody seems interested in — here's what we tried, what didn't work, and what I wish we'd done from the start.

The Punch Card Era

When we first opened, we did what a lot of small businesses do: nothing. No loyalty system. We were too busy figuring out how to run everything.

Then, once the opening chaos settled, a customer said something that changed things: "I come here a lot. I wish there was a punch card, like my coffee place has — it makes me come back all the time."

Good idea. So we got punch cards. Except they weren't really punch cards — they were a bright yellow, double-sided business card with some ice cream photos, a logo, and four empty boxes (this was designed before Canva existed — quite the feat). We didn't even have an actual hole punch. We used a Sharpie. Buy an ice cream, get a mark. Four marks, get a free one.

Four. That's it — and it wasn't four visits, it was four orders. A family of four could fill an entire card in one visit.

It was an insanely trusting system. All we did was mark a box with a Sharpie. Anyone could have taken it home, filled it in themselves, and come back for a free scoop. We had no way to check.

Thankfully, most people are more honest than you'd expect.

Looking back, the threshold was also just too low — we were giving things away before customers had visited enough times to make it worthwhile. But the math wasn't even the biggest problem.

Nobody could keep track of the card. Customers forgot them constantly. They'd come in, realize they didn't have it, and my staff had no way to verify anything — so we'd just hand out a new one. Which meant half the "tracking" we thought we were doing wasn't really happening at all. It existed more in theory than in practice.

Then We Made It Way Too Complicated

So we scrapped it. And like a lot of small business owners do when something's broken, we overcorrected completely.

We moved to a system called FiveStars.

This thing was a beast. Two extra tablets at the counter. Cables everywhere. Combined with our online-order tablets and Square POS, we had five tablets crowding the checkout desk (this was before all the clever integration apps existed).

Customers entered their info digitally, which felt like a huge upgrade over Sharpies, and the system logged all the activity and points. We'd finally fixed the punch-card problem.

But we'd created a different one.

It was expensive and overkill for what we actually needed. Hardware that had to be maintained. One more system my employees had to learn on top of everything else during a rush. Customers got confused by all the extra screens. Signing someone up, logging a visit, or redeeming points was never simple.

It was putting people off.

That's something I've become much more sensitive to after ten years running a physical store. Every extra step matters. Every extra question your employee has to ask. Every screen the customer has to touch. Every system your team has to remember. They all become another hurdle. KISS — keep it simple, stupid. The harder something is, the less anyone uses it. And that's exactly what was happening.

None of these things seem like a big deal individually. But add enough of them together and you've made a simple transaction unnecessarily complicated — and we were paying a lot of money for the privilege.

Eventually we left FiveStars (happily paying a cancellation fee to get those tablets out of the store) and moved to Square, which we were already using for our point of sale.

That's where we finally started getting loyalty right.

What We Do Now

Our loyalty program today is almost embarrassingly simple.

Customers enter their phone number when they pay. They earn points. At five points, they get a free topping. At ten points, $8.95 off anything.

That's it. No separate tablet, no card in someone's wallet, no complicated rewards catalogue. And because Square is already our POS, my employees aren't running two different systems.

I'm not sponsored by Square, and I'm not saying it's the best system out there — it worked for us because we were already using their POS and it integrated into every transaction with zero friction.

Over time we tried to improve it — more reward tiers (15 points for a scoop and a topping, 20 for a free pint), even gold/silver/bronze tiers. They all just complicated things and confused customers.

If you're building your own system: keep it to one or two rewards. The magic of "5 points = free topping" and "10 points = $8.95 off" is that some people will always cash in at 5 without thinking twice, even though holding out to 10 is the better deal. We've had customers who just want to collect as many points as possible — they don't even care about redeeming, they just want to be the "most loyal customer." I've told them more than once: you don't get anything for 100 points. Doesn't matter.

Three systems — punch cards, FiveStars, Square. And the one that actually works is the one most integrated into what we were already doing.

But there's a piece of our loyalty strategy I think matters even more than the points.

Ice Cream Wednesday

Every Wednesday, loyalty customers get 20% off their in-store purchase. We introduced it because Wednesdays weren't exciting for us. It's now our busiest day of the week — inspired, honestly, by Taco Tuesday.

Think about what that's doing. We're not just saying "please remember to come back sometime." We're giving customers a specific reason to come back on a specific day. Wednesday means discounted ice cream. That's a habit — one we reinforce every week because our loyalty system lets us message members and remind them.

Loyalty Isn't Really About Points

We tend to think customer loyalty means rewards — buy ten coffees, get one free, collect points, spend $100, get $5 back. Rewards help. We still use them. But I don't think the points themselves are what create loyalty.

A loyalty program works when it gives someone another reason to choose you. Sometimes that's a reward. Sometimes it's a routine. Sometimes it's something they can only get from you. For us, Ice Cream Wednesday gives people a recurring reason to visit. We have flavors that only show up on certain days. We send an email every Saturday telling customers what's happening at the store.

All of those are doing slightly different versions of the same job: giving someone who already knows us a reason to think about us again.

Getting someone to discover your business for the first time is hard — you have to advertise, show up in their feed, get recommended, get walked past on the street. Somehow you have to earn that first visit.

But once someone has already walked through your door and bought something, you've done the hard part. They know who you are. They know where you are. They've tried the product. The question becomes: what are you doing to give them a reason to come back?

Honestly, the system itself isn't the hardest part — building it on Square is simple. The hard part is getting your team to actually tell people about it and ask them to sign up.

What I'd Do If I Started Again

If I opened another store tomorrow, I wouldn't start with an expensive loyalty platform. I definitely wouldn't buy a box of punch cards.

I'd start with whatever loyalty functionality was already built into the point-of-sale system I was using. I'd make the rewards incredibly easy to understand. And I'd spend a lot more time thinking about the behavior I actually wanted to create.

Do I want people to visit more often? Come on a quiet day? Try something new? Spend a little more when they visit? The reward should support the behavior. For us: five points gets a topping, ten gets $8.95 off, and Ice Cream Wednesday gives people a reason to make Wednesday their day.

It took ten years, three systems, and more equipment than I want to admit, to figure out that the best loyalty system isn't the fanciest one. It's the one customers understand, employees can use without thinking, and that actually gives people a reason to return.

Oh — and that guy who walked in five years after we'd stopped using punch cards? I honored it. Then moved him onto the current system. What else was I going to do, say no?

And if you're thinking about how to get customers back through the door, there's another part of this that completely changed how I think about marketing. We started texting our customers — and one tiny change resulted in them actually replying to us. That's the article I'd want to read next.

About Me

I'm Michael Philippou, co-founder of Big Love, a plant-based ice cream business in Santa Monica that I've been running with my wife Victoria for over ten years. Before ice cream, I was a lawyer. I write about the real, unpolished lessons of running a small business — no gurus, no hype, just what's actually worked and what hasn't. Watch more on YouTube (Real Business Real Lessons) or follow along on LinkedIn.