Customer loyalty for small business: The ultimate guide

Marketing 21 minute read 13th October 2022

In today’s economy, it is more important than ever for small businesses to cultivate customer loyalty. This can be a challenge, but there are some time-tested methods that can help achieve this goal.

This guide will explore the importance of customer loyalty for small businesses such as restaurants or cafes. You will also find tips and strategies on how to create a loyal customer base.

The benefits of customer loyalty for a small business

With the increasing competition in the hospitality field, it’s more important than ever for small businesses to focus on creating loyal customers.

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The reasons why customer loyalty for a small business is necessary to thrive are diverse.

First, businesses that create loyal customers often see an increase in profitability and customer lifetime value.

In fact, loyal customers continue to do business with a small company over the long term, which generates repeat revenues and profits. This is especially important for small businesses, which often have limited resources and need to make every dollar count.

Second, customer loyalty also allows businesses to grow their pool of customers, as loyal customers are more likely to refer new customers to the business and write positive reviews online.

This is the best PR a restaurant can desire. It is well-proven that customers check reviews online before picking a local business.

Additionally, word-of-mouth marketing is the most effective form of advertisement as anyone would consider the suggestion of friends or family members more reliable than a review.

Other benefits of customer loyalty for small businesses include:

  • Growing in popularity
  • Getting better feedback and suggestions
  • Lasting seatbacks and hard times
  • Better social media engagement
  • Differentiation from competitors

The rest of the article will explore the best software and apps for loyalty programs, as well as examples of loyalty programs and initiatives you can apply immediately.

Are loyalty programs the best way to build customer loyalty for a small business?

Ultimately, the purpose of building customer loyalty for a small business is to create a solid base of repeat customers that will prefer your business over others and will refer your business within their social circle.

The foundation of any initiative to create customer loyalty, however, should always be providing quality products and services and creating a positive customer experience.

In other words, the essence of your business is the foundation where loyalty grows.

When these aspects are held in check, you can create a loyalty program and implement other marketing initiatives to reward customers for their continued patronage.

Although loyalty programs are not the only way to create customer loyalty for a small business, they are the most effective as they leverage the psychology of loyalty.

In fact, when loyalty programs are properly done, they create habits, reward loyalty, and make customers feel special.

However, not all loyalty programs are the same. You can typically consider three types of customer loyalty programs.

Types of customer loyalty programs

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Typically people refer to a loyalty program as any kind of initiative that encourages repeat business and fosters a better relationship between a brand and its customers.

Although they fall within the “loyalty program” label, there are three types of customer loyalty programs that differ for both purposes and simplicity.

  • Discount Programs
  • Reward Programs
  • VIP Programs

Discount programs suppose that the more your customers spend, the more discounts they get. A typical discount program would sound like this: “For every $1 spent, customers earn 1 point. For every 100 points, customers get a $20 discount”.

A Reward program is slightly different. It can involve a variety of advantages, such as freebies, unique offers, free drinks, free meals, and more. Good reward programs should provide something original that your customers genuinely value.

A VIP program is the top tier of loyalty programs. It is open only to your best customers and should provide unique advantages, such as permanent discounts, special treatments, privileges, and more.

However, you don’t need to be too precise with your program. A customized program can mix the different types of loyalty programs mentioned above.

Building customer loyalty: examples of loyalty programs initiatives

This section shows you the best examples for building customer loyalty in a small business such as a restaurant or a cafe. These are the most simple yet effective loyalty programs you can implement in your business.

  1. Referrals
  2. Points and rewards
  3. Flash deals
  4. Birthday rewards

Building customer loyalty for small businesses: Referrals

A referral loyalty program is a fantastic way to build customer loyalty for small businesses.

By offering discounts or bonuses for referrals, you can encourage customers to keep doing business with you.

Not only does this loyalty program show your appreciation for their continued business, but it also helps you build a network of satisfied customers who are more likely to recommend you to others.

A restaurant might implement such a referral program by offering discounts/free drinks/free meals. When a referral customer enrolls in the loyalty program and makes its first purchase, the referee gets the prize.

Additionally, referred customers are more likely to spend more than customers acquired in traditional ways.

Building customer loyalty for small business: Points and Rewards

Loyalty programs that involve points and rewards are the most common way to build customer loyalty for small businesses. The reason why these programs are so common is that they work and are easy to implement in virtually any business.

Offering points or rewards for purchases can encourage customers to keep coming back, and can also help attract new customers.

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There are a few different ways you can structure a loyalty program.

One option is to offer discounts or vouchers for future purchases after a certain number of points have been earned.

Another option is to offer bonus points for referrals or for spending a certain amount of money. You can also offer free gifts after a certain number of purchases have been made.

Whatever type of loyalty program you decide to implement, make sure it is easy for customers to understand and easy for them to participate in. The more complicated the program, the less likely customers will be to take advantage of it.

Building customer loyalty for small businesses: Flash deals

Offering discounts and bonuses are a great way to set up a loyalty program. But what if you could take it a step further and offer flash deals?

Flash deals are short-term, time-sensitive offers that give your customers an incentive to buy now.

They’re a great way to boost sales and create a sense of urgency. And best of all, they can be used to target specific groups of customers or products.

If you’re thinking about offering flash deals to create customer loyalty for your small business, there are a few things you should keep in mind.

First, make sure the discount is significant enough to entice customers. Second, clearly communicate the details of the deal so there’s no confusion.

Building customer loyalty for small businesses: Birthday Rewards

According to a recent study, customers are more likely to remain loyal to a business if they receive some sort of birthday reward.

Birthday rewards are an overlooked way to build customer loyalty for a small business. These types of rewards not only show the customer that you value their loyalty but also act as an incentive for them to continue doing business with you.

This strategy works so well that it is also used by Starbucks. On the occasion of birthdays, Starbucks’ customers can pick a free drink from their wide menu. Therefore, if you want to keep your customers happy and increase loyalty, consider offering some sort of birthday reward as well.

This could be in the form of a voucher, discount, bonus, or free gift. It doesn’t have to be anything expensive or extravagant - even a simple 10% discount will suffice.

Whatever you do, make sure the birthday reward is personalized and relevant to the customer’s needs and interests.

Best customer loyalty apps for small business

Apps are an easy way to manage loyalty programs for a small business such as a restaurant. In fact, they take all the hassle off your shoulders so you can focus on the important aspects of your business.

At their core, customer loyalty apps replace the physical loyalty card with a digital one. You can then customize it to suit your brand identity.

The main advantage of customer loyalty apps is that your customers won’t have another card in their pocket (which they can lose or forget). Additionally, they will get push notifications.

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The most advanced apps allow you to start a direct conversation with your customers and implement advanced rewards programs.

There are a multitude of good apps to manage loyalty programs and create customer loyalty for small businesses. They all come with different types of pricing, tiers, and advanced features. However, you don’t need to complicate your life too much, especially if you are new to loyalty programs for small businesses.

The best customer loyalty apps for small businesses listed below stand out for being simple to use, relatively cheap, and compatible with most types of smartphones.

Best customer loyalty software for small business

Loyalty software is a more advanced tool to create loyalty programs and foster repeat purchases. They typically offer more functionalities and integrate an app as well.

There are hundreds of loyalty software for small and medium-sized businesses that allow you to create from a simple loyalty program to customized rewards programs for segmented audiences.

The best software will also provide automation and other features that you can use to drive extra sales.

These are the best customer loyalty software for small businesses:

Effective marketing strategies to build customer loyalty for a small business

Along with loyalty programs, there are other marketing initiatives that an entrepreneur can use to build customer loyalty for a small business.

The most effective marketing strategies involve using tools and channels that start a direct and personal conversation with customers.

  • Email marketing
  • Social Media
  • SMS marketing
  • WiFi Marketing

Let’s briefly have a look at all of them

Customer loyalty for small business: Email Marketing

Email marketing is a great way to create customer loyalty for a small business. It involves writing regularly to your customers through email. It’s personal, it’s immediate, and its inbox placement ensures that your message will be seen.

Email marketing is an effective way to build loyalty because it allows you to establish a personal connection with your customers. They feel like they are part of a community, and this sense of belonging can lead to lifelong loyalty.

If you want to learn more, check out this guide on how to use email marketing for a restaurant.

Customer loyalty for small business: Social Media

In recent years, social media marketing has become an increasingly important tool for businesses to reach and engage their customers.

Social media provides a direct channel of communication between businesses and their customers, which can be used to build loyalty and create a strong connection between the two.

There are several reasons why social media marketing is so effective in creating customer loyalty for a small business.

First, is a personal communication channel.

Although your post are visible by anyone, you can always start a one-to-one conversation with anyone. Customers appreciate when businesses take the time to communicate with them directly, and this can be done easily through private messages.

Second, by sharing genuine authentic content about your business and what your values are, you can create a great connection with your customers.

Customers want to know that the businesses they support share their values, and by sharing stories on social media, businesses can show that they are more than just a faceless entity.

Customer loyalty for small business: SMS marketing

SMS marketing is a form of direct marketing that uses text messages to communicate with potential or current customers.

SMS stands out because they are barely used nowadays.

The advantage of SMS marketing to create customer loyalty for a small business is that it allows businesses to reach their audience with a message on their phone, in an unconventional way.

SMS marketing can be used to promote special offers, remind customers of appointments, or simply thank them for their business. You can learn everything about this strategy in this guide on SMS marketing for small businesses.

Customer loyalty for small business: WiFi marketing

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WiFi marketing is an innovative way to build customer loyalty for small businesses. The main advantage of WiFi marketing is that it targets and collects data from customers who have already chosen your business.

By using the free WiFi offered to guests in their venue, businesses can collect data about customers’ preferences and habits. This data, in turn, can be used to improve the customer experience and create loyalty programs that further encourage customers to return.

If you want to take advantage of WiFi Marketing for your venue, check out Beambox.

Beambox is an all-in-one solution for WiFi marketing that helps you connect with your customers and collect data to grow the profitability of your business.

Have a look at our solutions for small business owners and start your 30-day free trial.


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