6 customer loyalty programs for small businesses [2024]

If you're a small business owner and have managed to successfully acquire a client or user base, creating an effective loyalty program is not just a nice to have, but a necessity in 2024 and beyond. The reason is simple these programs are fundamental for enhancing customer retention, increasing brand loyalty, and driving growth. So by crafting a well-thought-out rewards system, small businesses can increase the likelihood of turning occasional users into regular clients/buyers. 

However, in order to develop an effective customer loyalty program, it is necessary to first have an understanding of what this marketing activity entails, what sort of program will most resonate with your brand values and customer base. Failure to do so may render any loyalty program you come up with to be ineffective. 

This article will therefore act as your comprehensive guide, and will highlight the various types of customer loyalty programs that you can use (and their benefits) to bolster your business's long-term appeal in a highly competitive market.

Let's get right into it!

What is a customer loyalty program

customer loyalty program

Put simply, a customer loyalty program is a marketing activity that is used by businesses to encourage their existing client/user base to continue purchasing their goods or services. The underlying logic here is that by rewarding customers for their loyalty, customers will feel valued and appreciated, thereby differentiating the business running the loyalty program from its competitors; increasing the likelihood of customer retention.

It is important to note that these programs often leverage a multi-channel approach, ensuring interactions are seamless whether online or offline.

In terms of how an optimal loyalty program looks like, there are many different ways of running one. However, regardless of how one looks in practice, customers must find it easy to join, and it should also provide clear and attainable benefits. Furthermore, transparency in how rewards are earned and redeemed is vital to maintaining trust and engagement in the long term.

Now we have determined what a customer loyalty program is, let's have a look at the types of benefits that you can expect to see when running this marketing activity.

What are the benefits of loyalty programs for small businesses

customer retention

Loyalty programs have an array of different benefits for small businesses, and all contribute to fostering a stronger relationship with one's customer base. 

Below are of the most common benefits that can be obtained from running a loyalty program for existing customers: 

Customer retention

The first and most obvious benefit is increasing customer retention. When customers feel valued as a result of being rewarded, they are more likely to remain loyal to the business rewarding them. This is particularly useful when a business is in a highly competitive market, as they are more at risk of losing customers to competitors. 

Revenue growth

 Another perk of enacting these programs is that they often lead to an increase in revenue. By motivating customers to return, businesses can often see a rise in repeat subscriptions or purchases, which can boost profit margins. What's more, this increase in profit can simultaneously contribute to an even more attractive loyalty program, which can bring about further profit; thus making this marketing activity symbiotic in nature. 

Personalization

More often than not, loyalty programs are carried using loyalty software that allows businesses to offer personalized experiences. So by using a loyalty program platform, for example, companies can track consumer behavior in order to tailor rewards, which further increases probability of customer satisfaction.

Insightful data

Besides tangible benefits, loyalty programs also provide invaluable data. By analyzing data relating to purchasing and subscription patterns, businesses can gain useful insights into the preferences of customers, and this information can greatly aid in the decision-making process. 

Marketing efficiency

In addition to the aforementioned benefits, these programs can also act as an incredibly effective marketing tool, and at a fraction of the cost of traditional marketing methods. The reason is simple if a loyalty program beneficiary is happy with the perks they are receiving, evidence suggests that they are more likely to share this experience with associates who are looking for a similar product/service.  

In sum, enacting a loyalty program is a super effective way of separating a small business' product or service from the masses. What's more, rewarding loyal customers for their continued support has upsides in terms of brand advocacy, so that benefits go far beyond user retention. 

The following section will delve into 6 different types of loyalty programs that can be used to obtain the benefits that were discussed above.

6 different types of loyalty programs

types of loyalty programs

Below are a list of the most common loyalty programs that businesses typically use for retention and growth purposes:

1. Points-based programs

The first and more well-known loyalty initiative are point-based programs. This is where customers are given points for each spend they make, which when accumulated, can be used to obtain enticing rewards and discounts. The psychology behind this is that these points encourage customers to repeat purchases. However, it is important to note that this type of program is more applicable to goods and product based businesses, as there needs to be multiple purchases in order to make this worthwhile. 

2. Social media engagement programs

This program type rewards customers for their engagement levels on a business' social media accounts such as Twitter, YouTube or Facebook. However, the difference here is that instead of being rewarded with points, customers can see progress through a tier-based system, where their constant engagement and participation can be recognised and accounted for publicly and online; fostering a sense of progression and achievement. Rewards can also be given in a similar public fashion, and this is to encourage others to partake in social media loyalty initiatives such as contests and giveaways. 

3. Referral programs

Although some may argue that this program is less immersive and interactive compared to the others, make no mistake, referral programs are still very effective ways of giving back to your loyal customers. What's more, they are incredibly simple to conduct, as all customers need to do in order to be eligible for rewards is to successfully refer new customers to sign up or purchase from the business conducting the referral program. This not only boosts sales, but also leverages word-of-mouth marketing.

4. Event-based loyalty programs

If you are looking for a more immersive and experiential loyalty program, then conducting an event-based program is ideal. By offering rewards or perks for customers attending company-sponsored events or workshops, not only are you increasing brand visibility, but you also improve upon your relationship with customers through highly memorable experiences. This is especially useful if your business runs many events throughout the year. 

5. Creative content contributions

This loyalty program may be more effective depending upon the nature of your business. However, more often than not, there are many customers (or users) who have hidden talents which can be leveraged for creative content contributions related to your brand. Examples of contributions include blogs, artwork or videos, and having customers produce these for the chance of winning a prize not only creates a buzz amongst a wider audience, but can be useful for gaining valuable contributions that can be used for different marketing purposes. 

6. Eco-friendly incentives

This program type is very different to the other programs, but no less impactful. Given how more and more customers are becoming environmentally conscious with their purchases, businesses can reward customers for making sustainable choices, like using reusable bags, participating in recycling programs, or purchasing eco-friendly products. What this does is create a strong image of corporate social responsibility (CSR) for your brand, which has proven to be effective in bringing in new customers and users; whilst also making existing ones more likely to stay.

It is important to note that whilst the 6 loyalty programs above have been used to great effect by numerous businesses, there is a small chance that they may not be ideal for your specific business or goals. For this reason, you should take the time to evaluate whether these loyalty programs line-up with your brand before committing.

But in the event that you see the value in some of these programs, all that is left is to ensure that things go smoothly, and finding the right software platforms can greatly aid in this.

Best customer loyalty software for small businesses

For small businesses looking to conduct a customer loyalty program in a seamless and stress free manner, selecting the best software (or platform) is not just a nice-to-have, but vital for ensuring that everything goes to plan. However, given how loyalty programs are diverse in scope, it is important to be aware that certain platform's may be more suitable for certain businesses and aims.

When it comes to loyalty programs that revolve around social media engagement and referrals, few platform’s come close to Tropee in terms of capabilities and ease-of-use.

Tropee offers a variety of features that can help a businesses to fulfil their customer retention and growth objectives:

  • Customizable tasks: Choose from over 80 different tasks to your business goals, or create your own from scratch. This variety ensures that participants can help you to reach your goals in an array of different ways.

  • Unlockable rewards: Encourage immediate engagement by offering unlockable rewards for desired customer actions. The more tasks that are completed, the more points users get, and the more rewards that can be unlocked.

  • Simple link sharing: By simply using a unique URL, creators and businesses can seamlessly share their Tropee rewards program everywhere, including on their blogs, email signature or social media profiles. What’s more, businesses can also embed this link on their website or landing page. This makes it easier to gain participants from various different locations online.   

  • Built-in viral sharing: With Tropee’s built-in sharing, participants can refer their friends and associates, and earn points for every referral. This gamified perk significantly increases the likelihood of your reward program going viral, as it is in the interest of participants to generate as many referrals as possible.
  • Easy-to-use analytics: Access valuable insights such as how many tasks have been completed, which countries are driving the most visits to your program, real-time updates on how many participants have recently joined; amongst other things.

  • Automated email notifications: Members of your Tropee can be alerted via email whenever you add a new task or reward. This communication is key in building a relationship with your audience, and makes sure that previous participants do not miss out on new task and reward opportunities

  • Collaboration: If you would like to collaborate with colleagues or associates when running your loyalty rewards program, you can easily give them authorisation by simply entering their email. In doing so, they can create and manage tasks and rewards in your stead.

  • Connect Tropee to other apps: Seamlessly integrate your Tropee with tolls that you already use, including Google Docs, Zapier, Slack and Mailchimp; to name a few. This will save you a lot of time.
  • Get started for free: Last but not least, Tropee is currently free to use, and does not require a credit card to sign up. So your business can take advantage of unlimited tasks and free templates.

In the event that you think this platform is ideal for your loyalty program, you can sign up in just a few seconds!

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Conclusion

And there you have it! This guide has shown you the ins and outs of creating a customer loyalty program for your small business. From grasping the basic concept behind these programs, to exploring six different types of programs, we’ve covered all the bases to help you find the one that best suits your brand and customers.

Keep in mind, a good loyalty reward program comes from aligning it with your core values and your customers’ unique preferences. Whether you go with a points system, social media engagement or eco-friendly incentives, you have to choose something that resonates with your audience and showcases your business ethos.

But that's not all. As shown above, using the right software platform like Tropee can do wonders, and will be the final piece needed to make sure everything runs smoothly.

Sold on customer loyalty programs? If so then congrats, and best of luck when running your own future campaigns!