Customer Loyalty for Small Business: The Ultimate Guide

Marketing 23 minute read 13th October 2022

Most people would be excited to find 20 free ways to support small businesses in their local community. Small businesses play a vital role, and business owners would tell you that customer retention is critical to their success. In today’s economy, rewarding customer loyalty is even more crucial than ever. This can be a challenge, but some time-tested methods can help achieve this goal.

This guide will explore the importance and benefit of customer loyalty for small businesses such as restaurants or cafes. You will also find tips and strategies for creating 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.


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. The game-changing customer retention strategy from Jon Taffer focuses on this reason, where he states that restaurants should focus on marketing three visits and not just one.

Second, customer loyalty solutions also allow 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 companies 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, building customer loyalty for a small business creates a solid base of repeat customers. Benefits of having loyal customers include word-of-mouth referrals for new customer acquisition. People love to share their favorite businesses with their social circle.

The foundation of any initiative to create client 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 you hold these aspects in check, you can create a restaurant customer loyalty program and implement other marketing initiatives to reward customers for their continued patronage. Although they are not the only way to measure brand loyalty, they are the most effective. Loyalty programs for local businesses reflect the psychology of loyalty programs and why they work. In fact, when they 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 categories 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 small businesses such as restaurants or cafes. These customer loyalty ideas are the most simple yet effective loyalty programs you can implement in your business to retain customers.

  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. These programs are so common because that they work and are easy to implement in virtually any industry.

Offering points or rewards for purchases can encourage customers to keep coming back and help attract new customers. Simply ask them to fill out a customer loyalty application to get started. Learn how to keep your customers smiling to build brand loyalty and receive positive reviews.


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 participate in. The more complicated the program, the less likely customers will take advantage of it.

Building Customer Loyalty for Small Businesses: Flash Deals

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

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

They’re a great way to boost sales and create a sense of urgency. And best of all, you can use them to target specific groups of customers or products. Marketing teams create customer profiles to identify behavioral patterns and purchase histories to inform these decisions.

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

First, make sure the discount is significant enough to entice customers. Second, clearly communicate the deal’s details, 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 Starbucks also uses it. On birthdays, Starbucks’ customers can pick a free drink from their expansive menu. Therefore, if you want to keep your customers happy and increase loyalty, consider offering some sort of birthday reward as well.

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

Whatever you do, ensure 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 small businesses, such as restaurants. Modern restaurant owners rely on powerful apps to assist them. They take all the hassle off your shoulders so you can focus on the crucial 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 customers won’t have another card in their pocket (which they can lose or forget). Additionally, they will get push notifications.


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

There are many 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 are 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.

Hundreds of loyalty software for small and medium-sized businesses 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. Gathering loyalty marketing metrics helps you to identify what is working and what needs improvement in your marketing strategy to keep your existing customers happy.

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 effectively builds 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 is visible to anyone, you can always start a one-to-one conversation with whomever you choose. Customers appreciate when businesses take the time to communicate with them directly, and you can do this quickly through private messages.

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

Customers want to know that the companies they support also share their values. By sharing stories on social media, companies can show that they are more than just faceless entities.

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 rarely used nowadays.

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

Take advantage of a small business SMS marketing guide to promote special offers, remind customers of appointments, or simply thank them for their business.

Customer Loyalty for Small Business: WiFi Marketing


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.

Businesses can collect data about customers’ preferences and habits by using the free Wi-Fi offered to guests in their venue. This data, in turn, can be used to improve the customer experience and create loyalty programs that further encourage customers to return. By using a combination method of social WiFi marketing, businesses can grow their customer base and improve overall client experience.

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 and online reputation management. It 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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