Customer Loyalty Programs for Small Businesses

Lukas O'Neill

Lukas O'Neill

Letting the world know about PassKit's incredible product.
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Many companies have tried various customer loyalty programs in the past, from punch tickets to membership cards. These methods worked for a few years with customers returning for repeat purchases. 

Essentially, a loyalty program creates an organic customer cycle with customers receiving appreciation for their support. It is easy to believe in customer loyalty programs after consulting the crucial facts. 

According to market research, it costs companies five times more to gain a new customer than retain an existing one. A five-fold difference proves substantial for small businesses, often too much to ignore. There are many long-term reasons to integrate a customer loyalty program into a small business’s sales and marketing strategies. 

Benefits of Loyalty Programs

As with any business investment, it is important to consult the advantages and potential downsides of customer loyalty programs. After conducting research and a series of fact-checks, we identified a wide range of benefits associated with these programs that reward the customer. The discovery explained why 90% of all businesses have some form of loyalty program in motion.

Our findings concluded that loyalty programs had the potential to

  • Increase customer retention (engaged individuals are likely to stay in touch)
  • Improve customer lifetime value or CLV (satisfied customers stay for the long term)
  • Encourage repeated business and purchases (buyers will return with confidence in fulfilling or surpassing their expectations)
  • Improve relationships with customers (businesses can identify and cater to personalized needs, fueling a positive cycle of supply and demand)
  • Set your business apart from the competition (rather than competing at the price point level, customer relationships prove to be a more sustainable differentiator)
  • Raise revenue (every other listed benefit contributes to the overall increase in earnings)

We arrived at the favorable conclusion that customer loyalty programs could greatly benefit businesses, especially the smaller ones still building a name for themselves. The next step involves choosing the type of engagement a small business seeks to establish with each customer. 

Choose the Type of Loyalty Program

Variety is necessary for a customer loyalty program since every person has preferences according to various phases in the customer journey. For example, reward points systems may seem attractive to long-time regulars who accrue large quantities of points ready for cash-out, but it will seem unappealing to the recently subscribed. Therefore, there’s a need to optimize loyalty programs for each customer regardless of their current “loyalty tier.”

Points System 

Implementing points systems with a stamp card allow customers to accumulate and exchange points for in-store discounts and limited-time deals. Point systems provide customers with small but incremental satisfaction with each purchase, knowing that the newly gained points advance them closer to a reward. 

Notable observations

  • Redemption requirements should be realistic to keep customers engaged. They are likely to give up on your loyalty program if goals seem inaccessible or don’t benefit them.
  • Ideally, the point system should offer various rewards at various levels (i.e., one-star gift redemption, five-star lifetime membership discounts).

Membership Cards

Small businesses may introduce membership cards available in various tiers, such as bronze, silver, and gold. Customers may sign up for these cards when they hit a minimum purchase amount or follow different requirements. For example, bronze membership is free, while silver and gold require a yearly subscription fee (but they come with better perks). 

Notable observation

Customers prefer personalized membership cards, which makes them feel more valued and appreciated.

Eco-sustainable Involvement

Another popular customer reward program strategy involves proceeds to an environmental cause (i.e., a reforestation program). Essentially, by purchasing from small businesses, customers can do their collective part for the environment. The eco-affiliation drives customer loyalty through meaningful contributions alongside businesses. 

Common Issues with Loyalty Programs

While traditional loyalty programs worked smoothly for a few years, we gradually recognized the most flagrant issues that reduced their overall effectiveness for some businesses. These concerns include:

  • Customers often misplacing their physical membership cards
  • The high cost of printing and distributing coupons and membership cards started taking a toll on businesses
  • Increasing difficulty keeping track of membership records
  • Personalized loyalty programs that still seemed conceptual at best
  • Competitors had effectively transitioned to digital loyalty programs

Old-school business owners may lack the technical tools and expertise on how digital loyalty programs worked. That’s why we developed the PassKit solution. 

PassKit: The Game-changing Loyalty Program Platform 

PassKit simplifies the entire process of digital loyalty programs. As the business world becomes increasingly contactless and more customers rely on mobile wallets, PassKit makes it easy for businesses to upgrade existing loyalty programs by creating digital loyalty cards linked to a customer’s e-wallet. 

Our platform offers various tools with guided steps to take complete control of digital customer loyalty programs. With Loopy Loyalty, business owners no longer depend on physical stamp cards. Instead, a digital stamp card enabled accessible point collection and accountability. 

Plus, PassKit’s Member Manager allows users to design and create highly professional digital membership cards that will impress the most demanding customers. And the best part? PassKit helps develop and deploy the digital system required to manage membership matters while owners focus on other aspects of the business. 

At PassKit, we can help you seamlessly digitize small business rewards programs. Here are some sample pass designs created exclusively with the PassKit platform. Try a demo to keep your most loyal customers coming back for more.

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