Create a customer loyalty program to reward existing customers, and keep them coming back.
So, you want to create a loyalty program (or customer rewards program) for your small, local business. Good idea! Loyalty programs help you increase sales, keep customers coming back, and build brand loyalty.
In this article, I’ll talk about everything you need to know about starting (and running) a custom loyalty program that fits your business.
Jump to a spot:
- What is a loyalty pogram?
- How loyalty programs make you money.
- Types of small business loyalty programs.
- Options for running a loyalty program at your store.
- Loyalty program examples.
- A loyalty app you can use with a 14-day free trial.
What is a loyalty program?
A loyalty program, sometimes called a customer rewards program, is a program that rewards customers for shopping with you. Typically, you offer a reward to customers every x times they come and make a purchase.
How running a loyalty or rewards program makes you money.
Some local shops may be running a rewards program simply because it’s “what you do”. They’ve seen other shops in their industry offer stamp cards or rewards cards, so they do it too. But running a program has more benefits than keeping up with the Joneses.
It increases customer visits. This is the obvious one. Running a loyalty program at your local business helps ensure that people who come in, will come back. The incentive gives them a reason to come back x number of times, and they look forward to earning a reward. Once they hit that reward, the counter (usually) restarts, and they can do it all over again.
It increases brand loyalty. You can’t guarantee that a competing coffee shop or restaurant won’t open across town. What you can do is start a loyalty program now, to help you build a loyal following. For example, if someone is using your rewards program, they may be less likely to visit the new shop. Or, even if they do visit the new shop, they still have a reason to visit yours as well.
It’s a nice “thank you” to customers who support you. I’ve managed a small, local, mom & pop coffee shop before, and I know how important it is to have regulars. Those regulars make up a large % of your business, and spend hundreds (or thousands) of dollars with you every year! A loyalty program is a really nice way to say “thanks!” to them. I’ve learned from experience that customers who come back regularly will almost ask if there’s a rewards program, if you don’t promote one. It’s almost kind of expected. And as a customer at my favorite local pizza shop, I can tell you it’s really nice to walk in and realize you have a free reward waiting for you.
Combined with a referral program, it makes for some great marketing. If you take a loyalty program, and combine it with a referral program, you have some pretty powerful marketing at your store. You can encourage customers to refer friends for rewards, and then once those friends come in, your loyalty program can keep them coming back. Pollen is an app that puts both of these together really well, and lets you run both loyalty and referrals.
Types of loyalty programs.
There are 2 main types of loyalty programs you can build:
- Visits (or, transaction) based: reward customers every # times they come and make a purchase. Example: “Earn a free drink for every 10 purchases.“
- Points based: reward “points” that are based on the number of dollars spent. Example: “Earn 5 points for every dollar you spend.“
Which is right for you?
It’s really up to you! Do you want a points-based system, or to reward customers on the number of visits (or purchases) they make?
My opinion is that simple visit/transaction-based systems are easier for customers to understand and track. I built Pollen based on this, just because it’s simpler.
For example, “every time you come in and make a purchase, get a stamp on this card. 10 stamps gets you a free drink.” That’s simple. They make a purchase, they get a stamp. When they get enough stamps, they get a reward. Simple.
Another benefit with visit-based systems is that you’re probably not giving up 10% across the board.
Here’s what I mean:
If a customer comes in and buys lunch at your coffee shop, they may spend $10. But instead of 10 points, they’re getting 1 stamp. So they’re spending the full amount but just headed towards a free drink. With points systems, depending on how you structure them, you may end up giving a certain % away across all sales.
However, points-based systems have the advantage of acting like credit card points: everything is tied to dollars. So if I spend $10, I get x points. You can be more precise, and often POS systems offer features that tie points to a person’s credit card and reward them automatically.
Options for running a loyalty program.
Use a POS-based program.
Most modern POS systems will let you pay extra (I’m not sure if any come with it) for a loyalty program feature. However, I’ve seen this cost upwards of $20-30/month. The nice bit is that it ties in with your POS (obviously) and rewards points to your member’s credit cards. Again, it’s a preference thing. If you really really want a proprietary, custom points program, then a POS-based program is probably a good option.
Use a 3rd party loyalty app.
You can also use a 3rd party loyalty program app. You’ll also pay for this, but depending on the one you choose, their may be some extra benefits. For example, Pollen has these advantages:
- It includes a referral program with your loyalty program, so you can run both loyalty and referrals.
- It’s cheaper than some POS loyalty-programs.
- It lets you run a “punch” or “visit-based” program, so if you’re currently having customers stamp or punch cards, it’s the digital version of that.
- It lets customers tap to punch their card in seconds.
- And it helps drive more local customers to find you, if they’re using it for other businesses in their town.
- You get access to every other tool we build.
Try Pollen free. A loyalty app made just for brick & mortar shops.
Use stamp cards.
If you’re here, it’s probably because you’re already using stamp or punch cards and want to replace them with something digital. But in case you don’t have any program, it’s important to note that this is still an option for you!
Again, in the end, it’s totally up to you. There’s no right or wrong, it’s whatever your goals are, what your budget is, and so on.
Loyalty program ideas and examples.
So how about some examples? I’ll break it down by industry:
Loyalty examples for coffee shops & cafes.
Coffee shops have been running loyalty programs for years. It started with a simple “stamp” card, and for many business owners, it hasn’t changed since. Because coffee and tea are such high profit-margin items, and because customers frequently purchase these things daily or weekly, running a loyalty program at your coffee shop or cafe is perfect.
- Earn a free coffee every 10 visits.
- Earn a free $5 gift card every time you spend $50.
- Earn 5 points for every $25 you spend with us.
Loyalty examples for restaurants.
Restaurants can use loyalty programs in a number of ways:
- Earn a free slice of pizza for every $20 you spend.
- Buy 10 sandwiches and get the next sandwich free.
Loyalty examples for bakeries.
Bakeries are like coffee shops: you have the ability to give away something that doesn’t cost you much, and people are probably coming in more frequently. This makes running a loyalty program at your bakery ideal.
- Earn a free artisan loaf after you make 10 purchases.
- Get a free pastry for every 10 purchases you make.
- Get 50% off for every 5 visits.
Loyalty examples for retail shops.
When I say retail shops, I mean everything from boutiques, flower shops, and soap shops, to candles, toy stores, and everything in between. Basically, if you run a brick and mortar shop where people walk in to buy something, loyalty can keep them coming back. Here are a few examples:
- Earn a $5 gift card for every $50 you spend.
- Earn a free bar of soap for every 5 purchases you make.
- Earn a free fidget for every 10 times you come in and make a purchase.
Loyalty examples for hair salons or barbershops.
If you’re running a local hair salon or barbershop, running a loyalty program is a great way to keep your customers coming back on a regular basis. You’ll have to make sure the program works for you, given that you’re probably paying your barbers or hairdressers a certain %, but if you can find one that works, it’s a really great way to say “thank you!” and provide a nice gift to your loyal customers.
- Earn a free cut for every 10 haircuts.
- Get a free hair coloring for every 3 haircuts.
- Earn $5 off your next haircut, every 5 times you come in.
Loyalty examples for breweries, distilleries, and wineries.
This one’s a no-brainer. If you run a brewery, distillery, or winery, and you’re not running a referral program, you really should be. Here’s why:
There are so many new places popping up, it’s important to give customers a reason and reward for coming back to drink at your place. To be clear: I’m a big advocate of local people shopping locally anywhere. I don’t think your biggest competition is the other breweries or wineries in your town, I think it’s the commercial eateries or domestic brands. So this isn’t a “beat the competition” thing, it’s a “let’s reward the customers who support our business, and keep them coming back” thing.
Plus, your markup for alcohol is probably 300% or more, so it barely costs you anything to give a free drink away.
- Get a free pint for every 5 times you come in and make a purchase.
- Get a free wine tasting for every 3 bottles you buy.
- Get a free cocktail for every 3 bottles of bourbon, rum, or gin you purchase.
- Get a free 12-pack for every 10 times you come in and buy draft beer.
Ditching the “punch” or stamp cards and using a loyalty program app.
A brief word about the stamp or punch cards you’re currently using:
- Your customers forget them. They leave them in the car, at home, in their other pants, in their purse.
- Your customers lose them. They go through the wash, they get torn up, their dog eats it.
- Your customers have too many. They forgot their last one, so they’ve started another, and now they want to consolidate the two.
- Your customers don’t like them. They’d rather keep their loyalty card on their phone (but they also hate downloading a new app for every business they support, so a solution like Pollen is meant to make that simpler for them).
- Some customers like them. It’s true. Some of your customers want that tactile card. They want to get an ink stamp. They like it. So for them, my encouragement would be to keep it. Keep that card system, and let anyone who wants to, move to your other system.
A loyalty program app built specifically to help small, local, brick & mortar shops replace their stamp cards with a digital version.
I built Pollen to make replacing your current card system really simple. Basically, you can create a custom loyalty program in minutes, and then it runs itself.
It rewards customers automatically, all you need to do is share a link to let them join your program. It comes with a free app they can download, to make punching their card faster and easier.
Here are some other cool things about it…
- It’s made specifically for local brick & mortar shops
- There’s no sign-up fee (seriously)
- It’s crazy affordable
- You get access to all other features ever built