Setting the right reward threshold: too easy vs too hard

Why the number matters more than the reward

When most business owners set up a loyalty card, they start with the reward: a free coffee, a free haircut, 20% off. Then they work backwards to a number of stamps that feels "about right," usually landing on 10 because that is what everyone else does.

This gets it backwards. The number of stamps required is the most important variable in your loyalty programme design. It determines how long a customer takes to earn a reward, which directly affects their motivation, your margins, and the overall economics of the programme.

Set it too low and you give away too much too quickly. Set it too high and customers disengage before they get close. The right number depends on your specific business: how often customers visit, what they spend, and how much the reward costs you.

The problem with too few stamps

A five-stamp card sounds generous, and that is exactly the problem. If a customer visits weekly, they earn a reward every five weeks. If you are giving away a free coffee worth £3.50 after five £3.50 purchases, you are discounting every sixth drink by 100%, which is roughly a 17% discount on those transactions.

Beyond the margin hit, short cards also generate weaker psychological effects. The endowed progress effect, goal gradient effect, and sunk cost commitment all depend on the customer investing enough effort that abandoning the card feels like a real loss. Five stamps is often not enough investment to create that feeling.

There is a time and place for shorter cards: new programme launches where you want rapid early wins, or low-frequency businesses where customers visit monthly and a longer card would take half a year to complete. But as a default, five stamps is too few for most businesses.

The problem with too many stamps

A 15 or 20 stamp card protects your margins beautifully on paper. In practice, most customers will never complete it. The psychological evidence is clear: when a goal feels too distant, people do not try harder, they disengage entirely.

For a customer who visits once a week, a 15-stamp card takes nearly four months to complete. A 20-stamp card takes five months. Over that timescale, the chances of something disrupting the pattern (holidays, a new competitor, a change in routine) are high. Each week that passes without completion makes abandonment more likely, not less.

High thresholds also undermine the endowed progress effect. Giving a customer 2 stamps on a 20-stamp card puts them at 10% completion, which barely registers psychologically. The same 2 stamps on a 10-stamp card puts them at 20%, which feels like meaningful progress.

Finding your number: the visit frequency method

The most reliable way to set your threshold is to work from visit frequency. The goal is a completion cycle of 4 to 8 weeks for your typical customer. This is long enough to build psychological investment and short enough to maintain motivation.

The endowed progress advantage

Whatever number you choose, you can effectively shorten the perceived journey by giving customers a head start. Two stamps pre-filled on a ten-stamp card requires the same eight purchases as a blank eight-stamp card, but the completion rate is dramatically higher because customers feel they have already begun.

This means you can set a slightly higher threshold than pure maths suggests and still maintain motivation. A 12-stamp card with 2 pre-filled stamps offers better margin protection than a 10-stamp card starting from zero, while generating comparable or better completion rates.

The welcome stamps also create an immediate sense of value at sign-up, which increases the likelihood the customer returns for their next visit. It is one of the most effective and lowest-cost tactics available to any loyalty programme.

Points programmes: a different calculation

If you run a points programme instead of stamps, the principle is the same but the maths is slightly different. The goal is still a 4 to 8 week redemption cycle for a typical customer.

With points, you control the earning rate (e.g. 1 point per pound spent) and the redemption threshold (e.g. 100 points = £5 off). Multiply your average customer's weekly spend by your target cycle length to find the right threshold. A customer spending £20 per week over 6 weeks accumulates 120 points, so a 100-point threshold works well.

The advantage of points is granularity. You can reward higher spending without changing the programme structure. The risk is complexity: if customers cannot quickly understand what their points are worth, engagement drops. Always display the monetary value alongside the point balance.

When to adjust your threshold

A digital loyalty programme gives you something paper cards never could: data. You can see your completion rate, average time to completion, and where customers drop off. Use these signals to adjust.

If fewer than 20% of started cards are completed, your threshold is probably too high or your reward is not compelling enough. If more than 60% complete within the first two weeks, you are likely giving away more than you need to. A healthy completion rate for most small businesses sits between 25 and 40%.

Adjust in small increments, one or two stamps at a time, and give each change at least a month to produce meaningful data. Honour existing cards at the original threshold; changing the rules mid-card erodes trust and triggers loss aversion against you rather than for you.