Latest / The Retention Marketing Podcast with Fexingo: Email, SMS, and Loyalty for Repeat Customers / How a Coffee Brand Uses Loyalty Tiers to Drive Repeat Purchases
Transcript
- Lucas: You know that moment when you're standing in a coffee shop, staring at a punch card that says 'buy 10, get one free,' and you think, okay, I'm in for the long haul. Luna: Right. That little card has a surprising amount of power over my behavior. Lucas: Absolutely. And today we're looking at a coffee brand that took that concept and turned it into a digital loyalty engine. The brand is Mañana Coffee — they're a mid-sized roaster out of Austin, about 50 locations, mostly in the Southwest. And they recently overhauled their loyalty program from a simple points system to a three-tier structure. Luna: Before we dive in — I want to say something. If these marketing conversations have sparked something you've actually used in your own work, honestly, if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. Lucas: Yeah. It's the smallest thing, and it keeps these episodes ad-free and focused on the tactics that actually move the needle. Luna: Exactly. So back to Mañana — what did the old program look like? Lucas: It was flat: one point per dollar, redeemable for a free drink at 100 points. No tiers, no extra perks, no differentiation between a customer who buys once a month and one who buys daily. And their repeat rate was hovering around 22 percent — meaning only about one in five customers came back within 30 days. Luna: Which is pretty low for coffee, right? I feel like coffee has a natural repeat cycle. Lucas: Exactly. The category should support a much higher repeat rate. So they looked at what the big players — Starbucks, Dunkin' — were doing, and they noticed something: tiered programs that offer escalating benefits tend to create a 'sunk-cost' mindset. Once a customer invests enough to reach a higher tier, they don't want to lose that status. Luna: So they introduced tiers. What did they settle on? Lucas: Three tiers. The base tier is 'Roaster' — one point per dollar, same as before. Then 'Barista' at 500 points in a year — that gets you double points on all purchases, plus a free birthday drink. And then 'Master' at 1,500 points — triple points, free drink every month, and early access to new seasonal blends. Luna: The jump from 500 to 1,500 points — that's a big gap. Did customers find that motivating or demotivating? Lucas: That was the key question. They actually A/B tested the thresholds before launch. They tried a 1,000-point Master tier and a 1,500-point version. The 1,500-point version actually drove more engagement because it felt more exclusive. People who reached it felt like they'd really earned something. Luna: So the higher threshold created more perceived value. That's interesting because a lot of brands worry about making tiers too hard to reach. Lucas: Right. But Mañana's data showed that the customers who hit Master — about 8 percent of their loyalty members — accounted for 22 percent of revenue. So it was worth giving them a premium experience. Luna: What about the middle tier? Barista at 500 points — that's roughly 10 visits if you're spending $5 each time. That feels achievable. Lucas: Very achievable. And that's intentional. They wanted the middle tier to be a realistic goal for the occasional customer. Once you hit Barista, you're earning double points, so your next 500 points come faster. That accelerates the path to Master. Luna: So it's like a loyalty escalator. You get on at Roaster, then the rewards speed up as you climb. Lucas: Exactly. And the mechanism that makes it work is the point threshold nudge. They set up automated SMS triggers for when a customer is within 10 points of the next tier. So if you're at 490 points, you get a text: 'You're 10 points away from Barista status. Your next coffee earns double points.' Luna: That's smart. It creates urgency without being pushy. Did they measure the impact of those messages? Lucas: Yeah. They saw a 20 percent increase in redemption rate for the free drink offer after those SMS nudges. And the 30-day repeat purchase rate jumped from 22 percent to 32 percent within six months of launching the tiered program. Luna: 32 percent is solid. But I'm curious — did they see any negative reaction from customers who felt left out? The bottom tier doesn't get much. Lucas: They did get some complaints initially. About 5 percent of existing loyalty members emailed support saying they felt the old system was fairer. But Mañana responded by giving everyone a one-time 'status boost' — they credited 100 bonus points to all active members at launch. That softened the blow. Luna: A nice retention tactic in itself. So the new program is driving repeat purchases. But the real win — did they convert any of those tier members into subscribers? Lucas: Yes. They introduced a subscription tier within the loyalty program. If you sign up for a weekly or biweekly coffee delivery, you automatically get bumped to Barista status, regardless of your point total. That was a huge incentive. Within three months, they had 12,000 subscribers, and those subscribers had a 90 percent retention rate after six months. Luna: So the loyalty program effectively becomes a funnel into subscription. And once you're a subscriber, you're earning points faster, which keeps you engaged. Lucas: Right. The data showed that subscribers — who make up about 30 percent of loyalty members — now account for 60 percent of revenue. That's the power of combining a tiered loyalty program with a recurring revenue model. Luna: I want to push back a little. We've seen cases where tier complexity actually hurts. A 2024 study in the Journal of Marketing found that if customers perceive tier thresholds as unattainable, they disengage entirely. How did Mañana avoid that? Lucas: Good question. Two things. First, they kept the base tier valuable — one point per dollar still gets you a free drink at 100 points. So even if you never reach Barista, you're still earning. Second, they communicated the tiers as 'achievable with a little consistency.' Their onboarding email for new loyalty members says: 'Most of our members reach Barista within three months.' That sets a social norm. Luna: Social proof plus attainable goals. That's a strong combination. Lucas: And they backed it up with data: 60 percent of new members hit Barista within 90 days. So the claim was true. Luna: So the key takeaways for a marketer listening: one, tier your loyalty program to create a progression. Two, use SMS to nudge at threshold moments. Three, consider a subscription tie-in that automatically upgrades status. Lucas: And don't forget the sunk-cost effect. Once customers invest time and points to reach a tier, they're less likely to defect. Mañana saw a 15 percent reduction in churn among Barista and Master members compared to Roaster-only. Luna: That's a pretty clear ROI. Any other data points they shared? Lucas: One more: average order value increased by 8 percent among tiered members. Because when you're earning double or triple points, you tend to add that pastry or the larger size. Luna: Classic behavioral economics. So Mañana's story is a good example of how a relatively simple tier structure, combined with smart trigger communications, can transform a commodity purchase into a loyalty habit. Lucas: Exactly. And it didn't require a massive tech overhaul. They used a standard loyalty platform — one of the big ones — and just configured the tiers and SMS triggers. The heavy lifting was in the design of the thresholds and the messaging. Luna: Which means any brand with a reasonable repeat purchase cycle could adapt this approach. Coffee just happens to be a great case study because of the frequency. Lucas: Right. If you're selling something people buy weekly or monthly, this playbook works. The tier structure creates a game-like progression, and the SMS nudges keep it top of mind. Luna: Alright, that's a solid episode. I'm going to go check how many points I have at my local coffee shop. Lucas: Same. See you next time.