Loyalty is earned, not given. Small business loyalty programs are a great way to gain customers’ trust and keep them returning. The best part is, they work! 70% of companies say that their loyalty programs have improved consumer engagement.
There are many programs and ways to implement them. Sephora’s Beauty Insider program earns customer loyalty with a tiered system that rewards shoppers based on how much they spend. Participants unlock bonuses like exclusive products, early access to promotions, and personalized recommendations.
Chuck E. Cheese conducted a 13-store test, which showed a high demand for a loyalty program to keep families returning. The company introduced fun tiered memberships (ranging from $7.99 to $29.99/month) that offer free play points, birthday perks, and discounts.
The trick is to figure out what your customers want and implement a program that works for you.
How can small businesses build a good customer loyalty program?
Keep it simple – think punch cards, points, or meaningful perks your customers actually want, and can save up to choose when to use. Sprinkle in some personality, some digital point systems or tool accessibility, and shout it from the rooftops (or at least your social media)! Point systems can encourage customers to return and choose your business over a competitor’s.
The Importance of Loyalty Programs
Customer loyalty programs are structured marketing strategies designed to encourage customers to continue shopping at or using the services of businesses associated with each program.
The programs can offer:
- Rewards
- Discounts
- Memberships
- Freebies
- Free shipping
- Special incentives
- Birthday gifts
- Early access to sales
- Referral bonuses
- Exclusive events
- Points for purchases
- Personalized offers
- VIP-only product drops
- Gamified experiences
- Donation matching for purchases
Understand your customers’ needs and select rewards that increase customer retention and lifetime value. In fact, loyalty programs can significantly impact a business’s bottom line by increasing customer retention rates and boosting profits.
Seven Steps to Create an Effective Simple Business Loyalty Program
64% of participants in loyalty programs spend extra money to get the most out of their benefits. Now that we understand small business loyalty programs, it’s time to dive into the best part – how to create one effectively.
1. Define Clear Objectives
Determine what you aim to achieve. Is it increasing repeat purchases, boosting average order value, or gathering customer data? Clear goals will guide the program’s structure and integration.
2. Choose the Right Type of Program
Loyalty programs aren’t one-size-fits-all. Many types can fit your business and your customers. Here are some to consider:
- Points-Based Programs → give points for each purchase, and can be redeemed by customers for rewards.
- Tiered Programs → unlock escalating benefits based on spending levels.
- Paid (Premium) Programs → pay a membership fee for exclusive perks.
- Value-Based Programs → a portion of each sale supports a charitable or social cause.
- Cashback Programs → receive a percentage of their purchase amount back in cash or store credit.
- Referral Programs → rewards are given when referring friends or family to join.
- Punch Card Programs → after a set number of purchases, customers receive a free item or discount (e.g., “Buy 10, get one free”).
- Subscription-Based Programs → pay regularly (monthly/yearly) for recurring benefits like discounts, samples, or early access.
- Gamified Programs → perks are tied to completing challenges or missions for badges, points, or rewards.
- Partnered/Coalition Programs → redeem rewards across a network of participating businesses.
3. Simplify the Enrollment Process
Make it easy for customers to join. Offer multiple sign-up options and keep the required information minimal to encourage participation. The best options include:
- online registration
- in-store enrollment
- mobile app
If you have a physical location, options that don’t require giving out personal information, like punch cards, tend to work very well.
4. Offer Valuable and Relevant Rewards
Make your rewards something customers actually want – no one’s getting excited over a dusty keychain. Think discounts, free goodies, early access to hot new stuff, or surprise personalized offers that feel like they were made just for them. Take your perks from “eh” to YES!
5. Incorporate Technology, Where Possible
Let tech do the heavy lifting. Using apps for your checkout process, like Square and Clover, makes tracking purchases and distributing points easy. Tech is a digital sidekick that remembers every coffee, cupcake, or cart full of goodies your customers buy and automatically rewards them for it.
6. Promote Your Program
If nobody knows about your program, they won’t use it. Promote the loyalty program through different channels, such as social media, email newsletters, direct mail, and in-store signage. Be sure to point out the specific benefits to attract more participants.
7. Monitor and Adjust
Don’t just set it and forget it! Test, tweak, and perfect it over time. Ask your customers what they love (or don’t), always check the data, and keep fine-tuning to make sure it meets your goals and customer expectations.
Common Problems
- Customers may lose interest or avoid participating altogether if the rules are too complex or confusing.
- Failure to communicate regularly or provide updates can cause customers to forget about the program or lose motivation to stay involved.
- Not analyzing the data collected means missing valuable opportunities to personalize rewards and improve the overall experience.
Key Takeaways:
- Easy-to-understand loyalty programs (like punch cards or point systems) drive better engagement.
- Rewards and perks must be relevant to your audience’s values – discounts, freebies, or exclusive access.
- Pick the right program model that fits your business goals and customer habits.
- A loyalty program only works if customers know about it – use in-store signage, mail, email, and social media to spread the word.
- A loyalty program works only if customers know about it – use in-store signage, mail, email, and social media to spread the word.
- Always check performance, gather feedback, and use customer data to improve your program.
Increase Customer Loyalty with Safeguard
Rolling out small business loyalty programs isn’t just smart—it’s the secret to keeping customers hooked. Done right, it’s a win-win for everyone, including your bottom line. Remember to set clear goals, pick the right program, make it super easy to join, pack it with rewards people want, and let tech handle the heavy lifting.
Don’t forget to promote your program and shout about it everywhere (primarily social media, not rooftops), and keep an eye on what’s working (or not). Get the expertise and marketing solutions to help your organization access all the support you need – whether in print or strategy. Partner with Safeguard and keep your business growing. We offer perks, too – seriously, check them here.