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How to Build a Successful Customer Loyalty Program

A loyalty program is a great way to increase customer retention and attract new customers, as well as an excellent opportunity for small business owners to reward their loyal customers and grow their company’s audience reach.

With the increase in ecommerce in the past 18 months, retailers need to review their engagement strategies to stay top of mind for consumers. In a recent survey by Gartner, it notes that retailers may be turning to their loyal customers to increase engagement, sales and revenue rather than trying to attract new markets with results showing that 79% of retailers are focusing on existing customers to fuel growth.

This article will provide you with what you need to consider when building a successful small business loyalty program in order to maximise success and encourage repeat business.

What is a loyalty program?

In business terms, a loyalty program is a system in which customers are actively rewarded for shopping with the same business on a repeat basis. It is an excellent way for small business owners to increase customer retention, incentivise customers with discount rewards or free products in exchange for regular visits, in turn increasing baseline revenue. It is important to note that the cost of a loyalty program can be inexpensive and it’s possible to create a simple yet effective loyalty program using the right tools and data.

At Smartpay, we offer a Zero Cost EFTPOS solution that helps SME businesses save on EFTPOS bills, keeping product and service prices low for their customers and putting those savings back into their business. One of our merchants, Sophie’s Beauty Room, is using their newfound savings from our Zero Cost EFTPOS product to do what it’s always done best: look after its loyal customers by introducing a loyalty program.

“We’re using the savings to pay for our new loyalty program, so our customers still benefit.”

– Michael, Owner of Sophie’s Beauty Room


What type of small business needs a loyalty program?

In general, small businesses have the most to gain from customer loyalty programs to reach their target audience, however in general, business owners can benefit from developing methods for regularly engaging with existing customers in order to build stronger relationships that often lead to more sales.

Businesses across a wide range of industries have been able to increase customer retention, improve their bottom line and gain a valuable competitive advantage by implementing loyalty programs that reward customers for choosing them over the competition.

What should an effective loyalty program include?

While the exact nature of any loyalty program will depend on your specific business, there are some general guidelines that can help you build the foundations of an effective loyalty program.

Provide meaningful rewards

The first and arguably most important step in creating an effective loyalty program is to offer your customers a meaningful level of reward for their patronage.

Customers have access to a huge number of potential loyalty programs offered by everyone from other SMEs to huge corporations. To make your program stand out, you need to offer them something that seems valuable enough to choose your business over other options and ensure to reward them something of significant value as a point of differentiation.

Personalise your loyalty program

Small businesses who are capturing data about their customers either through their booking system or via a loyalty program can use that information to provide a personalised shopping experience, something that customers are looking for more and more. The ‘fight’ for the customer is still somewhat around price but understanding your audience and tailoring a shopping experience or rewarding their loyalty will give you a competitive advantage.

One of the best ways to ensure repeat business is by understanding how satisfied your customers are and from that, prioritising their needs. For example, you could send a personalised eDM to your existing customer database and tailor the communication to them based on previous purchases. Or, to continually gather data and use it for personalisation, send surveys to your customers so you can collect their feedback and your business can fill any gaps that might be missing from their experience. 

Advertise your loyalty program

It’s important for customers to know that your loyalty program exists. Make sure that everyone who works for your business knows about the program and the ways they can offer it to your customers at point of sale.

You should also make it clear to customers by displaying signs, mentioning it in advertisements and running social media campaigns discussing the benefits and rewards of becoming a loyal customer.

Reward purchases of all sizes

One of the biggest mistakes you can make when creating a loyalty program is only rewarding big ticket purchases. If you are a small business owner, then your customers probably visit you every day to purchase small items that can add up over time.

By rewarding small transactions as well as large ones, many more of your loyal patrons will be rewarded for their continued support, particularly if you’re a local community business and can take the time to build solid relationships with your customers.

Don’t use it as a replacement for good service

Even the best loyalty program is no replacement for good customer service.

Customers are much more likely to stay loyal if they feel that you care about them as a customer, not just their money. It is important to create an experience that takes them on a journey from the moment they walk into the store or land on your website all the way through to taking payment, which in turn will make your business memorable.

When it comes to repeat business and customers buying from your store or website over the competition, the recipe for success is great customer service and feeling like your small business truly cares about them and in exchange for their loyalty, willing to offer some type of reward.

At Smartpay, we have implemented our own loyalty program for our active merchants who can refer a friend and be rewarded! To join our Smartpay Ambassador program or find out more, click here.

Want to know more about surcharging?

If you’re keen to learn more about how surcharging on EFTPOS works, or what you could save, find out more about SmartCharge. To talk about how surcharging could work for your business get in touch with the team at Smartpay.