Quartz 4

loyalty-membership-funnel

3 min read

Loyalty → Membership → Subscription Funnel

The Three Tiers

The product is three layers that upsell into each other:

1. Free loyalty (points program)

  • Points per visit + points per dollar spent
  • Convert points into store credit
  • Integrates with Square Loyalty (or replaces it for stores without one)
  • NOT “buy 10 get 1 free” — that model doesn’t create engagement
  • The act of visiting the store should feel fun even without spending money

Reference point: Dungeon Books and Mana Pool’s Extra Mana program — levels, rewards, store credit conversion.

2. Paid memberships (Patreon model)

  • Sustainer-priced: $25/mo + perks (events, member pricing, book-of-the-month)
  • Minimum 3 minimum and actively discourages $1 tiers because expenses exceed revenue
  • NOT cheap discount memberships ($99/year for 20% off = Barnes & Noble model). Only volume stores can sustain those.
  • If a store wants the cheap membership model, they should just run a free loyalty program instead

See square-loyalty-gap-analysis for the Type A vs Type B framework.

3. Subscriptions

  • Upsold to existing members: “Hey member, we’re sending out subscription boxes. Here’s what’s in them. Want one? Just click add.”
  • Frictionless because member already has payment method on file and trusts the store’s curation

How the Tiers Connect

Free loyalty → Paid membership

  • Give free loyalty users member perks for a limited period (trial membership)
  • Invite them to a member-only event
  • Some convert to paid after experiencing the benefits
  • Freemium game model: if a user accrues enough loyalty points, they can pay for a cheap membership with points alone. When the free period ends, it’s an upsell to paid. Same model as freemium games (Magic Arena: earn enough “gems” through play to buy a season pass without real money).
  • Already have infrastructure for this — doubling loyalty points for existing members
  • Direct offer to existing member base: “We’re launching a book-of-the-month box. As a member, just click to add.”
  • Existing payment relationship reduces friction to near zero

Gamification Mechanics

Borrowed from video game economies:

  • Points per visit + points per dollar: dual accrual makes visits feel rewarding even without purchases
  • Members-only events with 2X point multipliers: drives attendance and spend during events
  • Tiered earn rates: higher-tier members earn points faster (see starbucks-rewards-playbook — Gold 1.2x, Reserve 1.7x)
  • Low-cost quick redemptions: let members redeem small rewards early to avoid “I’ll never earn enough” dropout

Pricing Philosophy

  • $10/mo absolute floor for paid memberships
  • Sweet spot is $20-25/mo with meaningful perks
  • Cheap memberships ($99/year for 20% off) are margin-negative and only work at volume — this is Type A in square-loyalty-gap-analysis
  • Free loyalty should be the alternative to cheap memberships, not a watered-down paid tier

See Also

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