Skip to main content
Resource

How to Create a Customer Loyalty Program to Grow Your Small Business

Take the next step to creating repeat customers.

You’ve worked hard to get the customers you have—but how are you keeping them? According to a groundbreaking 2020 Retail Customer Loyalty Study, 39% of customers report that they prefer to consistently shop with the same retailer, up from 37% in 2019 and 35% in 2018.

 

There’s a lot of revenue to be made (and business growth to be had) by nurturing your existing customers. A customer loyalty program is one way to drive engagement, boost sales and turn repeat customers into advocates for your small business. If you don’t have a loyalty program in place, you aren’t alone; the SBO study also found that only 34% of small businesses offer a customer loyalty program. Fortunately, it’s not difficult or expensive to change that fact.

 

If you aren’t sure where to start, we can help. Below we’ve outlined the major steps to take and things to think about as you create a customer loyalty program.

 

Types of customer loyalty programs

Before you decide what to offer customers, you need to decide how you will reward them for their loyalty. There are three primary types of customer loyalty programs:

 

  • Point programs. This is the most popular type of loyalty program, in which customers earn points which then earn them some type of reward (e.g., a discount or freebie). If you use a point system to reward customer loyalty, make sure the relationship between points and rewards is easy to understand. Keep the conversions simple.
  • Tier programs. Another customer loyalty methodology is the tier system, in which small rewards are offered at first to encourage signup and then the value of the rewards increases as customers move up the “loyalty ladder.” Tier systems can help keep customers engaged over a longer period and are good for businesses with customers that make infrequent purchases.
  • Membership programs. You may also decide to charge a one-time or annual fee that lets customers take advantage of rewards without needing to meet specific purchase requirements first. The best example of this is Amazon Prime. According to an analysis of buyer shopping patterns, Amazon Prime members spend an average of $1,500 per year at Amazon.com, compared with $625 per year spent by non-Prime members.

 

Customer loyalty incentives and rewards

The goal of a loyalty program is to give customers something of value that will encourage them to keep coming back. There are different incentives you can offer, such as discounts, free products, or early access to exclusive deals or merchandise. According to a recent Forrester survey, 80% of adults say that instant discounts are an important element of a loyalty program. However, if you want to differentiate your program, look for opportunities to give customers less-generic rewards. Kimpton Hotels, for example, offers perks ranging from free Wi-Fi and bar credits to priority reservations and even a dedicated member-only reservation line.

 

How do you know what kind of incentives and rewards your customers want? Ask them! Don’t be afraid to let customers know you are thinking about a loyalty program; they’ll appreciate the opportunity to help design a reward program that will directly benefit them.

 

The digital customer loyalty experience

According to the BIA/Kelsey/Manta SBO study, of those SBOs who have a loyalty program (34%), less than half (46%) of those programs are digital. As you look to create your own customer loyalty program, don’t overlook the importance of going digital and the benefits such a loyalty program can have on your business. Digital loyalty programs enable you to:

 

  • Provide a seamless shopping experience for your customers by allowing them to access incentives and rewards on their smartphones, tablets and computers.
  • Track purchases to gain insights into your customers’ buying habits (what they buy, how much they spend, when they shop, etc.) and measure the direct ROI of your loyalty program.
  • Communicate with customers in real time with push messages and updates about exclusive discounts and incentives.

 

Learn more about small business customer loyalty programs

For a more in-depth look at customer loyalty programs and how to get one started, we recommend the following resources:

 

 

Total banking solutions for growing businesses

You’re looking for ways to grow your business; Cadence Bank offers tools and solutions to help you every step of the way. Find out why our business customers consider us an essential business advisor. Contact us today to speak with one of our expert small business bankers.

 

 

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.



Questions? We are here for you...

To ensure your safety, please do not include sensitive information in your submission.