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The 4 Steps to Develop a Loyalty Program as a Small Business

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Loyalty programs make shopping fun. From miles on your credit card to points on your favorite cup of coffee, we all can relate to that addictive feeling of being good at shopping. With pre-made apps now available at low cost to small business owners, the power of loyalty is now available to everyone.

This accessibility has also made standing out in the crowd more challenging for a business. We made this article for small business owners who want to build loyalty, credibility, community, and meet their business goals with a rewards program.

1. Define the “why” of your loyalty program

Photo by Kerde Severin from Pexels

Most rewards programs are points-based, and points earn dollars off coupons, free samples, or enough of them can be redeemed for free products. Customer retention is only the beginning. Every rewards program has deeper, secondary goals. 

Why does your small business want a loyalty reports program? The answer to this question defines what customer behaviors your loyalty program rewards and reinforces. Here are some examples of goals and matching incentives:

  • Achieve higher purchase frequency and purchase volume incentivizing multiple purchases or a dollar amount on a purchase. 
  • Achieve more robust engagement and community by incentivizing product reviews on your website, and social media follows.
  • Achieve better brand awareness and reach by incentivizing mentions and tags on social media. 

2. Make rewards meaningful

Photo by Nataliya Vaitkevich from Pexels

Many small businesses believe that rewards programs are a way of buying loyalty with free stuff. Instead, small businesses must play to their strengths of community building and personality. Avoid getting trapped by the cycle of offering more and more free products by creating alternative rewards for behaviors.

The problem with offering too much free stuff 

As a small business, free stuff can get expensive fast. Companies like Starbucks, CVS, and Walmart can afford to offer lots of freebies. They have built rewards into cost structure, or their scale has driven down product costs. 

The “free stuff” centric rewards program also devalues your product by attracting customers that are not brand loyal. This damages Small Businesses that want to protect their products’ value and foster a loyal customer base. 

The secret is to create harmony between incentives for customer behaviors and the rewards for these behaviors.

Rewards that offer more than points

Most rewards programs are points-based. Points are a transparent way for customers to work towards goals and build excitement. Almost every rewards program operates on a points-per-dollar spent basis. This is a tried and true structure that many brands have found success with, and customers expect from reward programs. Points-per-dollar is also the way most B2B reward program services are structured.

When rewarding customers for specific behaviors like social media engagement, product reviews, or a high UPT it is tempting to bribe them with lots of points. We suggest taking a more tailored approach that builds loyalty and saves money.

To incentivize social media engagement, offer points for following and reward customers further by tagging them or featuring their content on your website. 

Incentivize units per transaction with a free shipping offer or an exclusive promotional gift for purchases over a set dollar amount. Exclusive promotional gifts like branded items and gift bags are excellent rewards because they do not devalue your small business’s mainline products.

As customers earn more points and prove their value, they unlock more customized and experiential rewards.

3. Tiers offer convenience and experience

Sephora hosts social events for their most loyal customers

All brands want to build a community, and all people have a sense of pride in their communities. As a small business, your size offers flexibility and the opportunity to create memorable, custom experiences that are tailored to the levels of loyalty your customers achieve

Free shipping, exclusive sales, and a birthday gift can reward beginner tier members. As customers demonstrate loyalty, reward them with exclusivity. Early access to new products, member-only branded items, or even the chance to vote on campaign themes and social media content built trust and excitement.

The top tier of your brand is for true believers, so recognize them! Exclusive monthly zoom meetings with the CEO, a brand ambassador program, more points per purchase, or even a secret Facebook page make your true believers feel appreciated. 

Retroactively Transition in True Believers

On the topic of true believers, remember to treat them with extra care. Your brand’s most loyal customers are already out there. You already know who they are, and they probably know it too. If your brand starts your top 20% at the bottom of the ladder, these customers may grow resentful.  

Find a rewards program service that allows your brand to set the reward point of top customers manually. Send these customer’s invitation emails, and let them know you have taken care of them.

Your small business will also encounter fewer dedicated customers who want to be included in higher levels of the reward program.  Make sure you have a way of tracking their previous spending if you plan on retroactively including them in middle tiers. Have a strategy for addressing their concerns, and apply it universally.

 4. Find the B2B rewards service that meets your goals

We can’t all be Starbucks or Sephora and pay someone to code a rewards program from the ground up. Luckily for us, there are tons of resources online through eCommerce platforms Shopify, Square Space, and Wix that are pre-made and ready to launch.

This is the last tip because you need a well-defined list of needs before you know what platform is the best for your business. Each B2B loyalty platform is different in the behaviors they track and how they reward customers. Make sure your brand can import data on pre-existing customers. 

Consider these variables when picking a platform:

  •  How many members you anticipate accumulating
  • The lifetime value of your customers
  • How much service your customers require
  • What behaviors you are rewarding
  • Points per dollar and points per reward

It is now easier than ever to launch a rewards program for your small business. Making a program that is worth your business’ time and money can be a challenge. If you’re interested in executing any of the ideas we highlighted above, let us know and we would be happy to talk about your digital marketing strategy.