Customer Loyalty Programs for Small Businesses

How to use loyalty initiatives to boost engagement, happier customers and return business.

Customer Loyalty for Small Businesses Blog Features Image
May 17, 2022
McKenna Themm
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As a small business owner, you spend a lot of time, energy, and effort toward building a successful brand, product, or service. You work hard to connect with customers and clients by giving them an enjoyable experience they’ll remember long after they’ve left your store or website. Whether you sell a product or a service, you want to make sure customers keep coming back. For this reason, customer retention is integral to the success of your business.

However, according to Invesp, 44% of businesses prioritize customer acquisition over retention. Many businesses consider new customers to be more valuable than previous buyers, but in reality, it costs five times more to attract each new customer than to keep an existing one.

Small business owners develop their own unique long-term and short-term goals so not every strategy looks exactly the same. However, one fact remains true pretty much across the board: having a loyal customer base can increase profits. Approximately 61% of small businesses report that 50% of their revenue comes from repeat customers, according to BIA Advisory Group.

At the end of the day, retention yields a better ROI than acquisition. So what can you do to build relationships with your customers and keep them from leaving your business for the competition?

One proven way to turn your one-time customers into repeat visitors is by offering a customer loyalty program.

Female small business owner handing a brown shopping bag full of items to a customer over the counter.

A customer loyalty program can help small and medium-sized businesses grow more, faster.

What Is a Customer Loyalty Program?

The most straightforward definition of a customer loyalty program is that it’s a strategy in which small businesses offer incentives to repeat customers who buy their products or services.

Through loyalty programs, a business encourages customers who have already demonstrated an interest in the brand to consistently make more purchases and continue coming back to the store or website.

Maybe you’re wondering how many small businesses have loyalty programs. For the most part, small businesses have some sort of strategy in place when it comes to customer acquisition but not when it comes to customer retention. However, Invesp shares how the “probability of selling to an existing customer is 60 – 70%, while the probability of selling to a new prospect is only 5-20%.”

Developing a loyalty program that fits within your goals and budget can be an important tactical decision. With your small business in mind, here are some important benefits of having a loyalty program:

  • Nurture existing customer relationships
  • Improve customer satisfaction
  • Lead to client retention and repeat business
  • Provide differentiation from your competitors
  • Generate an increase in sales

Since the market is full of a variety of options when it comes to customer loyalty programs, you may not know which type of platform you want to go with. We’re going to talk about a few options so you can determine which will work the best for you and your small business.

Female small business owner standing behind the cash register, talking on the phone, and reading from a notepad.

Small business owners can see big rewards from starting a mobile-first loyalty program.

What Are Some Examples of Loyalty Programs?

You started your small business for a reason. Maybe you saw a demand in the market for a certain product or service. Perhaps you always dreamed about starting a business and finally had the opportunity to do it.

Whatever the reason may be, you have a brand that’s as unique as you are. When it comes to choosing a customer loyalty program, it’s important to choose one that fits into your existing strategy but also helps you boost revenue.

Let’s take a look at some customer loyalty program examples so you can determine which one will work best for your small business.

 

1. Create a Membership Card

If you have a brick-and-mortar business — such as an ice cream shop or salon — offering physical membership cards can be an option.

Membership cards are one of the oldest and most basic loyalty program options since all you need to do is print out the cards and establish the system that works the most efficiently for your specific product. For example at an ice cream shop, you might offer a free ice cream cone for every 10 cones a customer purchases.

If your small business is more service-focused, such as a salon, you can offer a discount after a certain number of visits. For example, you might offer 50% off a haircut after the customer has purchased 10 haircuts or 50% off of a manicure after they’ve come to 10 manicure or pedicure appointments.

Hairstylist talking and looking at a client’s phone while the client is sitting down, getting ready for a haircut.

Hairstylists can drive more repeat business by offering loyalty discounts and perks.

2. Make “Member Only” Deals

One of the benefits of customer loyalty programs to the customer is that they have a special connection with you and your small business. You can set your business apart from the competition by providing an experience that makes them feel recognized and valued.

If you want to create a membership plan, you can charge customers a small annual fee that comes with a variety of benefits. For example, perhaps you own a pottery shop where customers can come and spin their own vase or paint pre-made pieces of pottery. Maybe you want to charge a one-time fee that provides customers with an annual membership plan. Then, you can offer deals to members throughout the year. Perhaps members receive 30% of pottery during the holidays or they get a discount on certain pieces of pottery during different seasons.

Image of signage at a pottery shop including a QR code.

 

By making certain deals for members, your repeat customers will feel like they’re part of an important and exclusive group. It gives them a reason to choose your business over the competition. They don’t have a special relationship with the other pottery shops in town, but they know they’ll receive a variety of benefits when they make a visit to yours.

Additionally, having a membership option encourages customers to visit your store or website regularly to make the initial investment of the membership fee worth it. Even if a customer might feel a bit hesitant about a membership fee at first, giving them opportunities to make that money back through discounts and deals can be a huge incentive.

quotation mark

It costs five times more to attract each new customer than to keep an existing one.

3. Establish a Subscription Program

Maybe you don’t think that a membership program will work for your small business but you still want to offer a program that customers can opt into. If you offer a product or service that customers want to purchase on a regular basis, a subscription program might be the right fit.

For example, if you sell beauty or skincare products, perhaps you want to offer a monthly subscription plan for customers. Rather than taking trips to a variety of stores every few weeks for the products they need, your customers can come to your store to pick up everything they need or visit your website to place their order.

Additionally, you can add rewards at different milestones of the subscription. For example, perhaps a customer has been subscribed for six months and often adds new products to their order on top of their go-to items. You can offer a VIP subscription program for loyal customers who stick to their subscription for six months to a year.

4. Design a Website or App

Even though you may not have a large-scale business with multiple locations, it’s still important to invest in platforms where customers can find information about your products and services. If you don’t already have a website, starting out with a simple website that fits within your budget can be an incredibly important decision.

For the website, you should provide a physical address so customers can find you, as well as an email address and phone number so customers can contact you. Including information about how customers can sign up for a membership or subscription program can also be a great way to introduce a loyalty program to new or repeat customers.

If you already have a website and are looking to spice things up, maybe it’s time to design a mobile app. When creating a loyalty program app for a small business, you should use the same branding, tone, artwork, and color themes that you have on your website to maintain uniformity across all platforms.

Coffee shop rewards app.

 

Maybe you own a small bookstore with a coffee shop and have a lot of regular customers. Having an app provides a variety of benefits for your small business as well as for your customers. You can keep a list of inventory on the app so customers can know about new releases, sales, and which books are in stock, as well as coffee orders, points toward free drinks, and rewards.

You can set up the app to store the customer’s purchases so they can keep track of the books they’ve purchased. Maybe from time to time, the app will recommend specific books, based on the customer’s order history.

On top of that, customers can earn rewards through the app. Perhaps each book order or coffee purchase equals a certain amount of points so customers can earn more points every time they buy something. Then they can earn discounts on books or beverages after reaching a certain number of points.

Mobile app being used at a coffee shop.

A mobile loyalty program is easy to implement and brings your best customers back again and again.

5. Send Rewards via Email

While some companies send out physical pieces of mail to communicate with loyalty program members, a more effective and cost-efficient method is email. You can choose to collect emails passively or actively through a variety of methods.

You can ask for customers’ email addresses when they make purchases in person or when they make purchases on your website. You can also do an email capture when someone visits your website for the first time. If you want to make it more personal, you can set out a notebook in your store so customers and clients can write down their emails when they come in for a visit.

Then you can use the email list to help build a loyalty program for a consistent group of customers. You can send regular emails about discounts and deals as well as exclusive offers, such as holiday sales or birthday rewards.

6. Send Messages via Text

Most people have their phones with them at all times, whether they’re doing chores at home, working at the office, going to college classes, or running errands. And according to EZ Texting’s 2019 Mobile Usage Report, individuals read approximately 90% of text messages within three minutes of receiving them. Additionally, text messages have a 98% open rate, which means that customers are receiving and reading almost every single message you send.

These are just a couple of the reasons that a loyalty strategy focusing on text can help small business owners like you reach a wider audience. Creating a small business SMS marketing plan can help increase the success of your company. Additionally, adding SMS texting to an existing loyalty program can also help increase its impact.

Tax Text Message

How Do I Set Up a Small Business Loyalty Program?

Maybe one of these examples really resonates with you as a small business owner but you’re wondering about how to get started. A small business loyalty program can have long-term as well as immediate benefits and is relatively easy to set up.

As you prepare to launch a new customer loyalty program for your online business or brick-and-mortar small business, the first thing you’ll want to do is find a loyalty program management platform that works for you and your customers. Platforms that offer mobile marketing & SEO expertise can help you grow as you establish a loyalty program, connect with more customers, and enhance your marketing strategies.

Female small business owner standing in her coffee shop, looking at her iPad.

It's easy for small business owners to start a mobile-first loyalty program.

If you’re interested in SMS text marketing, EZ Texting might be the platform for you. We believe in putting customers first and we make it easy to capture SMS marketing opt-ins with Keywords, dedicated short codes, QR codes, and digital Sign-Up Forms.

We know how hard you work to get in front of potential and returning customers to make your business shine. We’ll help promote and maintain customer loyalty by providing your business with growth-building solutions.

Incorporating SMS texting into your loyalty program strategy can benefit your small business by getting the attention of repeat customers and encouraging them to purchase new products. On top of that, using texting as a retention tool can benefit your customers by keeping them in the loop about special promotions, appointments, sales, and orders.

At EZ Texting, we’re here to support your text marketing efforts. We want to help you reach new customers and foster relationships with existing ones. If you’re interested in learning more about how we can help your small business, sign up for your free trial today.

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