We live in the world of customer experience and retention. Retailers such as Checkers and Pick n Pay have taken this to the next level with their Xtra Savings Card (Checkers) and the Smart Shopper card (Pick ‘n Pay). However, these loyalty programs are not features exclusive to big businesses, they can also be rolled out by smaller businesses.
A loyalty programme is designed to encourage shoppers to return to retailers by offering incentives such as discounts, sales or free goods/services. Loyalty programmes are considered a marketing strategy which can be tailored to each customer or made generic for your whole customer base.
For small businesses, loyalty programmes can provide a lot of good insights into your customers, their preferences and overall buying behaviour.
In this article, we take you through what makes up a loyalty programme and how you can create your own.
Benefits of a Loyalty Programme
The main reason for loyalty programmes is to get customers to make repeat purchases. And while that’s great, it’s not the only benefit of having a loyalty programme. Some of the other benefits are:
Increased Customer Retention
According to a report by Merkle, a good loyalty programme has an 84% impact on a customer’s decision to keep buying from a business. Furthermore, the report states that these offerings are still in high demand.
Customer loyalty programmes are vital to keeping your customers engaged beyond the point of purchase. Having a robust programme can make your customers happy and increase the chances of them making repeat purchases.
Customer Referrals
A good loyalty programme will increase the chances of your business getting more referrals from your existing customers. This word-of-mouth marketing brings in new customers at no acquisition costs and increases your revenue.
More User-generated Content and Reviews
Online reviews are the best thing that can happen to your business. Not only do they draw in new customers but also increase your search engine ranking. Loyalty programmes that incentivise reviews on websites and social media will also result in a lot of user-generated content.
This type of content (reviews and user-generated content) increases trust between your brand and customers and also solidifies any purchasing ideas potential customers might have had.
Competitive Advantage
It’s so easy for shoppers to go online and compare prices on products/services they want. If consumers only think about your products and not your brand or store, you will find yourself in a pricing race with your competitors.
A benefit of having a loyalty programme is that you don’t compete on a pricing level with your competition. Loyalty programmes connect with customers’ emotions which means your store and brand will stand out amongst others and offer customers a more enhanced customer experience.
Increased Customer Lifetime Value
Loyalty programmes have the potential to increase your customer lifetime value (CLV). Customer lifetime value is the net profit attributed to the overall relationship you maintain with your customer.
Your programme will improve CLV by increasing the average order value and purchasing frequency of your customers. This means they will spend more money, more frequently and stay with you for longer.
How to Develop a Customer Rewards Programme
Now that you know the benefits of a customer loyalty programme, it’s time to develop your own. Below is a list of tips you can leverage to create your own loyalty programme.
Tip 1: Find a Great Name
The first step to a successful loyalty programme is finding a great name. When you think of existing examples, they have catchy names for example Smart Shopper, Xtra Savings, Spar MyRewards and Google’s Google Play Points programme.
A good name distinguishes your brand from other competitors, and it should give your customers a small idea of what the programme does.
Tip 2: Create a Deeper Meaning for the Programme
Customers can be very wary of loyalty programmes and sometimes consider them as ploys to get them to spend more money. If you create your own, ensure that it is as compelling as possible.
The loyalty programme’s “why” must explain everything from benefits to how this programme aligns with your brand’s values and goals.
Tip 3: Reward Various Customer Actions
To further demonstrate the benefits of your loyalty programme, reward non-purchasing customer actions. You can reward your customers for product reviews, watching videos, engaging on social media and your app or subscribing to your newsletter.
Within this, you must also offer a variety of rewards to fit the various actions your customers perform. This makes subscribing to your programme worthwhile for customers and provides them with tangible takeaways.
Tip 4: Make it Fun
Everyone loves to have fun even if it means spending money. Make joining your loyalty programme a game or competition to entice customers to join. You can take it a step further by rewarding entry points or discounts to those who sign up, play and subscribe for more marketing content.
Tip 5: Try various Programme Forms
Just because the popular thing is to do loyalty cards, does not mean you have to do the same. Look into various forms like punch cards, free trials, opt-in emails referral programmes or partner programmes, loyalty discounts or points system.
Choose the programme that fits best with your brand and your customer retention strategy. Leverage customer relationship management platforms to take your loyalty programme to the next level.
To explore more marketing strategies for small businesses, take a look at one of our articles about marketing. And, come join us at the 2025 SME SA Funding Summit! Get your tickets on the SME South Africa Event page.
