Club Management

Members Loyalty Scheme

Member loyalty schemes

With the decline in the traditional practice of giving members club checks many clubs now provide loyalty schemes as a reward for membership.  These loyalty schemes are usually based on modern EPOS tilling systems which offer membership cards that act as: loyalty cards, account credit top-up and door entry cards.  These schemes can be an excellent tool for clubs to reward member’s loyalty, help encourage existing members to return, attract new members and increase bar takings.

Examples of some of the features that these schemes offer:

• Loyalty cards
• Dual pricing structure
• Loyalty points system
• Manage promotions and offers
• Pre-loaded cards with details of member balance and spend
• Door entry system and member database

The club’s committee should review the proposed schemes functionality to determine the features best suited for the club: –

·       Members and Guest Pricing Structure

The tilling system can set reduced pricing for members whilst non-members pay the standard price, for example, at the point of sale, the bar staff swipes the member’s card and the tills automatically change prices to a designated price level.

The impact on the club’s gross profit and cash flow should be reviewed,  these schemes usually result in an increase cost to non-members rather than reducing prices for members.  One dis-advantage of the scheme is that it is open to abuse where inexperienced bar staff may not know members and non-members.

·       Loyalty programmes – Points Schemes

Allow members to earn points by purchasing products and redeem them against future purchases.  To avoid the points building up it is advisable to set a time limit for the use of the points.  Again, the impact of profitability of the scheme needs to be assessed.

·       Promotions and offers

Automatic price levels can be set-up for happy hour, functions, etc. allowing different prices by day of the week or time of day.

·       Account top up, preloaded cards

Members can pre-load their card with money to enable them to purchase items at a later date although with the increased use of card machines this feature is becoming less popular.  It is advisable to have a policy on unused balances whether they are returned to the member or donated to club funds after a set period.

·       Door Entry Systems

The issuing of membership loyalty cards can be used to facilitate door entry.

Other considerations: –

Stocktaker – the club’s stocktaker should be informed of the scheme.  For duel pricing the majority of bar sales should be to members so normally the member’s price would be the standard price for the stock analysis, however, the stocktaker will require details of member’s discounts to make an allowance in calculating the stock surplus or deficit for the period.

Taxation

The scheme may have implications for VAT and corporation tax: –

The VAT treatment will vary according to the exact nature of the scheme:

• for a dual pricing structure the tilling system should calculate VAT on the bar price charged, so for members who receive a discount the VAT is calculated on the discounted price, for non-members VAT is calculated on the full price.
• Where a non-transferable member’s card is pre-loaded, VAT Notice 701/5 states no VAT is calculated when funds are placed on the card but at the time the credit is used to make a taxable purchase.

Corporation tax – The EPOS system should allow sales to members and non-members to be identified, only sale to members is regarded as mutual income and tax exempt, sales to non-members will be subject to corporation tax.

It is important not to over-complicate the scheme by adding too many features, inexperienced bar staff may make errors if features such as lottery ticket sales, show tickets, etc if they are included on the till. In addition, cash control becomes problematic where pre-loaded card top up is allowed, this feature combined with the acceptance of members cheques and debit or credit cards can make controls over banking difficult.  Keep the scheme simple so it is easily understood, operated and controlled by bar staff and Officers.