Back to Blog

Effective Tips of Customer Loyalty Programs for Small Businesses

Is a Small Business Loyalty Program Worth it?

Small business owners are extremely busy, so adding a loyalty program to the list might seem like just more work. Or maybe you’ve tried a loyalty program, and it felt like you were only giving away rewards to customers who would’ve bought anyway. However, with a little set-up, you’ll find that your loyalty program will become the marketing engine for your business. And as highlighted in Software Options for Small Business Customer Loyalty Programs, POS systems that you may already have like Square, Clover and Toast have made it exceptionally easy.grown-your-small-business-picture-id1142278155

There are four main benefits to putting a loyalty program in place:

  • Identify your customers:  While you may recognize many of your best customers, do you know how much each one is spending? What about the kinds of products they buy, or the last time they visited? Many small business POS systems have the capability to capture and act on this invaluable data, but the customer needs an incentive to identify themselves. Loyalty programs provide that incentive.

  • Increase repeat business:  Retail industry stats show that anywhere from 50% - 75% of customers who try a business never come back. On the flip side, repeat customers are 5X more likely to respond than other prospects. Done well, loyalty programs will keep you top of mind to your repeat customers and give them new and interesting reasons to pay another visit.

  • Grow average ticket:  Far from giving away rewards for what customers would have already bought, a well-designed loyalty program will grow the average ticket. The new generation of loyalty systems allow small businesses to reward very specific behaviors, which means you can incent you best customers to buy in new categories or hit certain spend thresholds in a cost-effective way.

  • Bond with your very best customer:  Did you know that on average 10% of your customers generate 50% of your business? It’s what I’ve seen across 25 years of experience, and it always surprises clients. Small Businesses in particular are in a great position to do the little things That win everlasting loyalty within the local community.

Design Your Small Business Loyalty Program For Success

There are three key principles, built around the LoyaltyLevers, that can provide a roadmap to successful loyalty program design. Think about loyalty as a ladder, with your program as the tool that will keep your customers (and business) climbing towards profitability.

1.     Use Rewards to Pull Customers Up the Loyalty Ladder:

For years, small businesses have relied on the standard punch card approach, spending hundreds of dollars to print and distribute cards, only for them to be lost and thrown away. The biggest flaw with standard schemes like buy 10 get 1 free, are that they ignore where the customer is in their lifecycle. By implementing your rewards strategy based on a simple customer lifecycle view, your rewards will always be relevant and have maximum impact.

For example:

Loyalty Lifecycle Rewards Goal
New Customers If they are brand new customers, then job #1 is to beat the odds and to get them back for another visit with an incentive to immediately return.
Regular Customers Once their habit is established, then frequency programs can make sense, but different opportunities and challenges will still present themselves.
Best Customers Best customers deserve dedicated communications that recognize their importance and offer special experiences. See recognition thought starter ideas in the following section
Lapsed Customers What if your Regular or Best Customers stop visiting? It’s time to take immediate action, delivering offers that will provide a more immediate benefit and get them back into your establishment.

Well-designed loyalty programs use Behavior Drivers to pull customers up the loyalty ladder. With a little forethought and automation, yours can too!  Please see Behavior Drivers for more tips on how to design your rewards program.


2.    Use Recognition to Keep Best Customers on Top of the Loyalty Ladder

Small businesses have a certain advantage in delivering special treatment to valued customers -- large businesses struggle to replicate what the local shopkeeper has been doing for years. To be sure, it’s the small touches that matter, and simply welcoming a best customer by name and starting a conversation can mean a whole lot. Training and development of that service ethic is certainly the place to begin. In addition, today’s POS systems allow you to even more consistently recognize who your best customers and make their experience memorable. I call these kinds of benefits Sentiment Builders because they create that positive emotion and help you bond with your best customers.  Here are some thought starters that will help you keep your best customer happy and perched at the top of the ladder:

Surprise and Delight is a Proven Winner. People love a pleasant surprise, think unique appetizers compliments of the chef, an upgrade “just because” or an exclusive gift with purchase that you weren’t expecting. The great thing is it’s not a firm commitment, so you have flexibility to be creative and keep it fresh. To make it easier to execute, keep a calendar behind the scenes to plan the different themes. Your delighted customer will give rave reviews and spread the word.

Status Tiers can be very powerful with the right audience.  For example, create an "elite" tier and provide early release of new products, exclusive sales or preferred access. The best customers can be informed of their Elite Tier with a targeted communication, and provided with a special QR code to show at the point of sale. New benefits for the Elite Tier can be selected and communicated out periodically, making for a communication that Elite members will pay attention to!

Convenience is a sneaky strong sentiment builder.   Each business has ways that they can make doing business together easier and more appealing. For example, offer to hold aside limited merchandise to ensure best customers don’t miss out. Platforms like Clover enable Order Ahead and cardless capabilities. This is where you can empower your frontline staff to find novel ways to impress and demonstrate a new level of service for these best customers.

Lifestyle & Community oriented recognition works with shared interests.  These kinds of benefits pull your customers together around the common interests they share.  Whether it be fashion, gourmet food, pets, beauty or good beer/wine, it's what likely made them a best customer in the first place.   Tap into that core interest and further engage/educate your best customers with events built around new products or special speakers. Or simply bring them together to enjoy each-other’s company and the best that your establishment has to offer.

3.   Use Content and Communications to Keep them Climbing the Ladder

One of the biggest challenges small businesses face is staying top of mind among their customers, and letting them know about new reasons to come in. The new POS systems offer integrated email, SMS and even app-based communications as a way to communicate. Whatever the channel, there are three types of messaging that are imperative to a successful loyalty program, and they should align exactly with the member lifecycle stages that you choose to structure your Rewards strategy around.


Engagement Goal

Onboarding (New Customers) Focused on the New Member lifecycle, this series of communications should span 4-6 weeks and guide the member through the benefits of your loyalty program. This is your chance to provide an immediate incentive and turn a new customer into a regular customer.
Offers/Updates (Regular Customers) This simple newsletter communications should provide members with offers targeted to drive trial of your focus items, reinforce the overall loyalty scheme and give general news updates on sales and events for the coming week. By mixing news and targeted offers together, you’ll greatly improve response rates by delivering real value.
(Best Customers)
This can be a monthly piece especially for your best customers, reinforcing the special benefits that you’ve developed for them.
We Miss You
(Lapsed Customers)
Just recognizing that you’ve missed a customer and would like to get them back with a friendly message is a huge opportunity that most businesses miss. This should be a personalized message from the manager, and including a reward they could redeem immediately on their next visit will make it worth their while.


Small businesses are in a better position than ever to execute on customer loyalty programs due to the technology now at their disposal, their agility to implement special benefits and their local knowledge. While it does take some set-up, a well designed loyalty program will increase revenue and develop strong bonds with your customers. For a complimentary consultation on how to design a loyalty program for small business, please Contact LoyaltyLevers.