Case Study: San Diego Smoothie Chain Favors Loyalty Over Acquisition

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Frustrated by people trying to defraud his paper punch-card program, Shake Smart‘s president, Kevin Gelfand, began looking for other ways to promote customer loyalty at his two San Diego locations. Gelfand ultimately chose to work with Perka, a phone app, and now awards his customers points based on the amount they spend for each transaction. Gelfand likes that he’s able to use Perka at multiple locations without having to integrate it into his point-of-sale system and says that he views the loyalty program as a “gamified way for customers to be rewarded for spending money.”

Tell me about Shake Smart.
We think of ourselves as the next-generation Jamba Juice. We do freshly blended protein shakes, and they’re all low sugar, low calorie. They’re not pre-bottled, so they’re all sold at our own stores. We have two [locations] right now, and we’re opening three more in the next couple months.

Getting a new business off the ground can be tough. What are some of the biggest issues you’ve faced in terms of marketing?
For our industry, it’s tough because [all shake shops say their products are] “healthy,” and people are not as susceptible to believing anything anymore. So getting the message across that we actually are healthy is definitely a tough thing to do. With our loyalty program, we got defrauded with our punch cards. Somebody had gotten the same puncher online and was punching cards and redeeming [them] for free shakes. We finally caught on, and that’s when we switched to Perka.

What’s most important to your business right now, customer loyalty or customer acquisition?
For us, customer loyalty is more important because in our type of business people aren’t going to drive 15 miles to come get a shake. The most beneficial part of our product is the convenience of just walking out of a gym and it’s right there. So the acquisition part isn’t really as important as just getting customers who are currently customers to continue purchasing frequently.

Can you describe a little more about the loyalty program you run now with Perka?
It’s just like a loyalty rewards program. So anytime anyone makes a purchase, every dollar is worth one point. If they spend $5, they get five points. We have certain redemption levels. If they want a free water bottle, they have to have 20 points. If they want a free shake, they have to have 60 points. It’s just a kind of gamified way for customers to be rewarded for spending money.

How do you track how much they spent? Is Perka integrated into your point-of-sale system?
When the customer comes up and they check in, you click [the name] on the Perka back end and a question comes up asking how much they spent. We just type in how much they spent at that order, and it coverts to the correct amount of points. It’s not integrated with our POS system. It’s just very easy to toggle in between the screens. Before it took a lot more time for the customer to go and say, “Oh, I have a punch card, too.” Then, they would pull it out of their wallet, and that takes time, and then we’d have to grab the puncher from under the counter and punch it and hand it back.

Have you had any specific challenges with the loyalty program you have now?
We’re dealing with a college market, and [customers there] were really quick to jump on it because they’re tech savvy. So it was simple for our customers. I was hesitant because I thought [changing] was going to mess up operations. But it was very streamlined. [Perka] sent me everything. … All I had to do was just educate our staff on it.

The only difficult part is transitioning from paper punch cards to this. We have to do a conversion of people’s punch cards and give them a certain amount of points so their paper punch cards don’t go to waste. If we were to open a new store tomorrow and start with Perka, it would be very simple.

Have you run into any issues with customers who don’t have smartphones or don’t understand the app?
We have that sometimes, but Perka has a program for non-smartphone users. There’s a specific phone number that they have to text message the words “Shake Smart” to, and when they text that number we see it on our back end just like if they had a smartphone. Their name pops up and we give them a certain amount of points. Then they get a text message back that says how many points they currently have.

Stephanie Miles is an associate editor at Street Fight. This interview has been edited for length and clarity.

Click here to read more Street Fight local merchant case studies.

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.