Starting A Customer Loyalty Rewards Program, With 14 Guiding Tips For Small Businesses

March 20th, 2019

Could small businesses really benefit from starting a customer loyalty rewards program?


We know how the well know brands are quick to offer their customers one. From major retailers, restaurants, grocery stores, gas stations, to hotels, you will find plenty to join in and save.


As a small business owner, it's time to join in on the one thing that is made to create customer loyalty. It's time to move beyond offering excellent customer service. It's time for you to start your very own loyalty program.


But not any old program. One that is super affordable, easy to implement, but just as effective as the software used by major brands.


Small businesses are catching onto and using mobile loyalty as their software of choice. And for good reasons. None other more so than that people have attached themselves to their cell phones like never before.


With mobile loyalty, you are investing in a mobile marketing strategy that will propel you past your small business competitors, and allow you to tap into the customer base of larger brands.


In this post we will cover the benefits a loyalty program will have on your business, followed by 14 tips to help you start a campaign your customers will love, and you will find successful.   


Subtitle for blogpost: Starting a Customer Loyalty Rewards Program, with Guiding Tips From CTownSaver.


Benefits A Loyalty Rewards Program Will Have on Your Business


Customer Engagement

If you ever were at a party, gathering, watching a movie, T.V. show, or hearing a song for the first time and wasn't engaged, you most likely left early or found something else more entertaining. If the same opportunity presented itself again, you'll probably pass.


Customer engagement is often overlooked, but too important to keep doing so. If you want your customers to linger around longer, and increase their spending per visit, this is the key. Lowering your prices won't help here.


Customers like feeling connected, and closeness to businesses they patronize. Customer loyalty programs create this, delighting your customers whenever they part ways with their hard earned money.


 Customers with an emotional connection to a brand have a 306% higher lifetime value than those who don't.


Free Customer Acquisition

There is something about customer loyalty programs that gets people talking about the businesses that run them. Customers like bragging about items they bought well below regular price due to points they accumulated throughout the year.


This makes for easy customer acquisition because friends and family tend to trust the words from friends and family.


Now that you did not have to pay for this customer through marketing, but the customer came to you through word-of-mouth advertising, every dollar they spend increases your profits that much more.


No wonder why the biggest names in the business run loyalty reward programs!  They know that referral marketing is effective when it comes to business growth.


People gathered conversing with the caption:There is something about customer loyalty programs that gets people talking about the businesses that run them. Customers like bragging about items they bought well below regular price due to to points they accumulated throughout the year.


Cheaper To Keep Em'

You heard it before, but I'll say it again. It is cheaper to keep a customer than it is to acquire a new one. By 5-25 X more so in fact.


Customer churn is a number you need to monitor, as it will help you make informed decisions on what could be working, and what is not working, whether it's marketing, customer service, branding, or your overall offering of products and services.


Higher Customer Reviews

Online customer reviews fall in line with the same word-of-mouth marketing from friends and family that helps you acquire free customers.


Loyalty programs can be structured in a way that pushes customers to leave reviews and ratings on popular sites you choose online and on social media. 


Tips For Starting A Small Business Loyalty Rewards Program


  1. Create goals you want your loyalty program to achieve
  2. Give your program a title
  3. Identify the value the program will bring to the customer
  4. Start simple with digital punch cards
  5. Ask for relevant opt-in information
  6. Decide on how members will be identified
  7. Add tiered campaigns to your loyalty program
  8. Don't skimp on earned rewards
  9. New enrollments equal fast rewards
  10. Reward social media advocates
  11. Thinks beyond free giveaways
  12. Keep customers in the loop
  13. Promote the program
  14. Train up the employees 



1) Create Goals You Want Your Loyalty Program To Achieve

Benjamin Franklin said, "If you fail to plan, you are planning to fail." This is why starting with the end in mind is a good first step in starting a loyalty program. There are three goals we suggest as good starting focal points.


  1. Improving customer acquisition
  2. Decreasing customer churn 
  3. Increasing average order size

Consider these goals as SMART goals. Smart goals are :


  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time- Bound

For example with improving customer acquisition: You may see that on average your business is acquiring new customers at a rate of 1.7% per quarter. Your smart goal could be to improve on this with the addition of a loyalty program to acquire new customers at a rate of 3.4 % per quarter and no less than 13.6% for the year. 

Smart Goals :  Smart goals are :  Specific Measurable Achievable Relevant Time- Bound


2) Give Your Program A Title

FuelperksREDcard, and Marriott Bonvoy. Those are how some of the most popular rewards programs are named by their company.


So, yes, as silly as it might seem, creating a name is an important first step in creating your loyalty program. But did you notice something else with those names? They make the participants feel part of a club sort to speak.


For example, you are a hairstylist named Julie. Instead of naming your program Julie's loyalty program, think of something intriguing. Julie's Reward Extensions might resonate with customers who come across the name for the first time, providing your customer's value hair extensions of course.


3) Identify The Value The Program Will Bring To The Customer

Your business needs to make money. More important, you need to make a profit. You need customers to do so.


We get all that.


But consumers in your industry could care less if you don't make money or profits if you fail to provide value for them. You could be the nicest guy or gal in town.


Won't matter.


Take the time to create a campaign that offers true value.


Why is it a good ideal for them to sign up for your program?


This answer needs to go beyond the points and rewards they earn. This should focus on long-term benefits, like savings, convenience, time or other valuable things that would keep them from going to competitors.


4) Start Simple With Digital Punch Cards

Loyalty programs, especially for small businesses or entrepreneurs, no longer have to cost an arm and a leg. Nor do they require you to need full-service tech-installation and tech-support teams added to the cost.


Mobile punch cards are effective at creating a loyalty program your customers will love. In addition, you can track data to learn more about your customers, something the old punch cards didn't have.


Our clients here at CTownSaver can offer multiple loyalty rewards at once, along with tiered programs for instance.


There are other advantages to keeping it simple when starting a loyalty program.


Having simple earning rules eases the set-up process. Simple spending rules allow the customer to understand the program better. And simple programs like mobile punch cards allow you to be up and running in hours, not weeks.


CTownSaver Mobile Loyalty Rewards Software Example

CTownSaver Offers Easy To ImplementMobile Loyalty Rewards Programs


5) Ask for Relevant Opt-In Information

When starting your loyalty program, create it so that customers have to opt-in into the program. That last sentence was not written as a suggestion. It is vital you collect basic information about your customers to run a successful loyalty program.


Besides the obvious;( name and e-mail address), you could ask for birthdays, phone numbers, and the area they live in. This transforms your normal loyalty rewards initiative into a full-scale marketing campaign.


E-mail addresses allow you to send company related information, while phone numbers allow you to start text-message marketing campaigns with the customer.


Birthdays allows you to send personalized messages or special mobile deals at a moment they cherish and sends the message you treasure them as a customer.


6) Decide On How Members Will Be Identified

Even as a small business starting a loyalty program, you will need a secure way to identify the members of the campaign and keep the program scam proof.


If you decide on mobile loyalty software for running your rewards campaigns, they will provide punch cards, mobile apps, pin code access, QR codes, and bar-code scanning capabilities to ensure your program is set up properly.


7) Add Tiered Campaigns To Your Loyalty Program

Loyalty rewards campaigns are most effective when it's participating members feel they are being noticed for their continued loyalty. This means having rewards of greater value for those who shop or visit more frequently than others.


So to satisfy these customers, you need to create a tiered loyalty rewards system. For example, you can have bronze, silver, gold, and platinum members. Members would reach higher tiers depending on their spending habits.


In addition, you could require that members uphold their status enforcing rolling time periods or risk being demoted to a lower tier.


Tiered customer loyalty rewards program example


Of course, it could be much simpler. But the basics is to give more value to those who show more loyalty to your business. 50% of customers will change their behavior to reach a higher tier within a loyalty program.


8) Don't Skimp On Earned Rewards

If you sell hundreds of products but only offer a handful that's eligible to earn points or punches toward an award, your sending a message to your customers that engagement in the program is not important.


Also, the products you offer to be eligible for earned rewards should be something the customers wants to buy. Here's that word again- Value. Who cares about products you might only buy once a year?


For example, a small grocery retail store would be better offering points for paper towels, vs table cloths. Nothing wrong with offering table clothes, but you see the difference. One is more widely used and valued than the other. By offering the table clothes, and not the paper towels, customers will see your program as a way to just get them to spend more money.


Well, in all fairness, your program should be set up and structured in a way to get them to spend more money. But because of the value, it adds and not the devilish schemes you come up with.


9) New Enrollments Equals Fast Rewards

Slow and steady wins the race. Unless it's customers racing towards an award.


When a customer first decides to join into your loyalty program, consider making the first reward redeemable within the first month or less. Just fast enough for them to taste what will come if they continue to remain loyal.


Having your program structured this way for those newly enrolled will lessen the chances they forget about your program altogether. Also, you are encouraging them to increase their visit frequency, which leads to increased revenue.


10) Reward Social Media Advocates

Customers show they are engaged with your brand when they support in furthering your message on social media. So why not go beyond re-tweeting that post they mentioned you in?


That's right, set up an awards system that shows them it's not all about your ego boost. By rewarding your customers that share your message on social media, you could be harvesting a broader reach in a cost-effective manner.


One customer could have hundreds, if not thousands of followers you can connect with, for as little a 5% off a future purchase if need be. On top of that, 42% of American buyers are loyal to a brand that friends or family do business with


Social rewards are small businesses best secrete, but a powerful weapon for creating social media advocates.


customer loyalty stat


11) Think Beyond Free Giveaways

Not every reward has to be something you give away for free. Like the tiered example, I used above, taking a percentage off the final total is effective.


Some rewards could include workshop access, charity donations, or special after-hours shopping. Maybe there are events only your business can provide and not your competition.


Allow your rewards to be a reflection of what you stand for in the community. Think of your business, and what your customers value and care about the most when choosing incentives.


12) Keep Customers In the Loop

Having your e-mail or text message marketing campaigns set up offers a way for you to communicate with your customers. This is important, as your customer live busy lives, and may not know about expiring rewards, or dearly needed deep discount days you plan.


By ensuring your customers stay abreast of their status with your loyalty rewards program, you raise the chances of customers staying with the campaign and reducing customer participation churn.   


13) Promote The Program

If you build it, they will come. Sorry, not with loyalty programs. You will need to spread the word about the programs value, benefits, enrollment options and qualifications at every opportunity.


Have flyers for bag mailers when customers visit and make a purchase. Ask customers at the checkout registers if they are already enrolled.


Promote it on social media, and use social rewards to have your social media advocates spread the word as well. Continue to market and promote the program daily, to keep it growing, and replace those who leave the program for certain reasons.


Baseball diamond -Customer loyalty rewards program promotion tip with the caption: If you build it, they will come. Sorry, not with loyalty programs. You will need to spread the word about the programs value, benefits, enrollment options and qualifications at every opportunity.


14) Train Up The Employees

Another critical step in promoting the program is ensuring your employees has the proper knowledge of how the program works. Questions will arise.


They will need to know how rewards are earned, redeemed, and details about the products or services that the customers are buying to earn in the first place. Lack of product knowledge can cause loyalty programs to derail, which would not look good for your ROI. 



These 14 tips will help in starting a customer loyalty rewards program that will succeed in your small business. In return, you will receive better customer engagement, free customer acquisition, a lower overall customer acquisition cost, and higher customer reviews.


Before even naming your program, (and you definitely should) start with the end in mind and start smart goals for with what you want the program to accomplish.


Provide value to your customers through the program, and consider starting with something simple but effective, like with what mobile loyalty software can provide.


The data you collect through the "opt-in" registration will be valuable, for the overall business.


Consider tiered-awards, and select plenty of valuable products or services for customers to buy and earn points towards the rewards.


Ensure new enrollments will get excited for not having a long wait time or hoops to jump through for winning their first reward.


Keep in mind that social rewards is a great way to encourage social media advocacy, and text message marketing keeps communication fluid.


Lastly, promote the program and train the employees properly on how it works, the story behind the program and the benefits it provides the customer.


Any tips I missed?  Please leave them in the comments :)


Written by: Kevin Johnson


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