Small businesses are in competition with big-box stores, online retailers, and other small businesses. It’s a dog-eat-dog market where small business owners need every edge they can get.
Good products and an excellent guest experience will get you far, but a rewards program will incentivize more people to choose your store. Learn how rewards programs can boost loyalty as well as five steps you can take to set up a rewards program for a small business.
Rewards programs, which are also often called loyalty programs, reward shoppers and diners for making repeat purchases. Loyalty programs are particularly valuable for small businesses because they give you an easy edge over other shops in your area by rewarding repeat customers. Plus, they’re easy to set up, so even new brands can start a rewards program for a small business.
A rewards program can help small businesses:
Find new customers: Eighty-one percent of consumers trust recommendations from their friends and family more than they do recommendations from businesses. If you create a referral rewards program with valuable perks, you can turn happy customers into a ready-made salesforce, which can easily expand your customer base.
Build customer loyalty: Rewards programs gamify the shopping experience, which can encourage shoppers to buy more from your small business. Not only do these programs help with customer retention, but they can increase customer lifetime value, too.
Design better marketing campaigns: Rewards programs for small businesses allow you to track customer data and purchasing habits over time. This means you can learn more about the people who buy from you the most. Use customer data and engagement metrics to see what they enjoy and tweak your approach accordingly. It can even help you improve your email marketing, SMS, and other marketing efforts.
Rewards programs aren’t just for small businesses. Major retailers have used loyalty programs for years. Check out these popular rewards programs for inspiration.
This paid membership option offers two-day shipping, access to Prime Video, and other exclusive perks.
Sephora’s Beauty Insider program offers insider perks to customers based on how much they buy. With a $1,000 minimum annual spend, Rouge is the highest membership level and offers perks like free shipping, events, rewards points, and exclusive discounts.
CVS’ rewards program offers 2% cash back on every purchase. Members can spend their ExtraBucks like cash at CVS, but they also get other perks, such as birthday freebies.
Starbucks’ rewards program allows customers to earn points on every purchase, which they can later redeem for drinks, merchandise, or food.
JCPenney offers rewards where you can earn one point for every $1 spent. Members receive a $10 reward for every 200 points earned, although you can earn more points (and better perks) if you shop with a JCPenney credit card.
Through Kohl’s Rewards, shoppers can earn up to 5% cash back in the form of Kohl’s Cash, which they can spend in-store or online like cash. Members who shop with their Kohl’s credit card can earn up to 7.5% cash back.
Nordstrom’s Nordy Club gives members exclusive access to sales and events. They can also earn up to three points for every $1 spent, which they can redeem for future purchases.
Target Circle is a free rewards program where shoppers can earn 1% cash back online or in-store. However, if they use their Target RedCard, they can earn up to 5% cashback.
As a small business owner, you work hard to bring in shoppers or diners. It’s simple to set up rewards programs for small businesses, so what do you have to lose? Follow these five steps to start your customer loyalty program.
First, decide how you want your reward program to work. Every business is different, but these are the most common types of programs:
Bonus points: Allow shoppers to earn points with every purchase or visit. Some brands equate one point to $1, but you can customize the rewards rate to your liking.
Referrals: Current customers can earn free products, BOGO deals, or steep discounts when they refer a friend to your business. Offer perks to both the current and new customer so you incentivize purchases on both sides.
Punch cards: This loyalty option isn’t very high-tech, but it’s an affordable option for small businesses. You can punch the customer’s card every time they visit or give punches based on the quantity of products they order.
Mobile app: If you have the means, create your own mobile app. This digital option makes it a cinch to track omnichannel customer data. So, if you offer both in-store and online shopping, a mobile app is a great idea. Just make sure it’s available on both iOS and Android so you don’t leave anyone out.
Loyalty cards: With this option, you print physical loyalty cards with barcodes. Shoppers scan their cards in-store or type in their card numbers for e-commerce orders.
Phone number with your POS: This is the easiest way to implement a rewards program for small businesses. With a point-of-sale solution like Square Loyalty, you can track customer purchases by phone number. You don’t need to buy cards or build an app, so this is a much simpler option.
After you choose the structure of your rewards program, you’ll need to determine the types of rewards shoppers can earn. Incentives will differ based on your products, customers, and business, but these rewards are popular with shoppers:
Cash back, which they can use for a next-purchase discount
Early access to sales
Exclusive events
Free upgrades
Gift cards
Birthday gifts
If you’re worried about giving away too much with your rewards program, consider tiering the membership options. Offer different membership levels based on how much customers spend or how many points they earn. This way, you can offer better perks to elite members and incentivize lower-tier shoppers to spend more.
Self-service kiosks give shoppers and diners the convenience of checking out without flagging down a cashier. This efficient option is a great time-saver for customers and employees, but it also has another fun perk: It makes loyalty points a breeze.
KioskBuddy now integrates with Square Loyalty, which means brands that use Square as their point-of-sale system can automatically add a rewards program to their checkout flow. This makes it easy for customers to earn and redeem rewards through your kiosks — all they need to do is enter their phone number.
If you want to offer even more perks to shoppers and diners, consider joining forces with non-competing small businesses in your area. It’s not unusual for several brands in one area to offer reciprocal rewards for each other’s loyalty members.
For example, if you’re a shoe store, you can offer a 15% discount to people who join the loyalty program for the hair salon next door.
This is a great way to encourage customers to stop by your physical storefront, and it also supports other small businesses in your area. As long as the other businesses hold up their end of the bargain by promoting your business, this is a great way to encourage more local shoppers and diners to take advantage of your loyalty program.
But you can’t rely on other businesses alone to promote your rewards program. If you want customers to take advantage of your loyalty program, they need to know about it. Market your rewards program via social media, store signage, and email marketing to spread the word.
Make it as difficult as possible to ignore your loyalty program. For example, if you use a kiosk, you can add a loyalty option to the checkout flow automatically, so every shopper has the option to sign up.
Loyalty rewards programs give small businesses an edge in a competitive environment. They allow you to thank customers for shopping or dining with you and to make more money in the long run. Follow these steps to set up your first loyalty program:
Choose a loyalty solution
Determine the types of rewards
Link customer loyalty to your kiosks
Co-brand your loyalty program
Market your rewards program
It’s simple to create a rewards program for your small business. All you need is Square Loyalty, a Square payment hardware, and KioskBuddy. With kiosks in your storefront or restaurant, you can start offering customer rewards in just a few minutes. Download KioskBuddy now to get started.