5 Tips to Choose a Customer Loyalty Program for Small Businesses

Have you ever thought of deploying a customer loyalty program to drive more repeat business?  And what about offering gift cards for your customers to purchase?

Customers love these kinds of programs.  What’s more, done right they achieve real financial benefits.  For example, a University of Chicago study found that loyalty programs increase purchases by 20%.

A few months ago, our Small Business Trends team made a visit to the Innovation Lab at First Data headquarters in Atlanta. Our interviewer, Brent Leary, sat down with Jim Allen, First Data’s Senior Vice President Product Delivery, small business products.

The video above is a portion of our exclusive interview. (See part 1 of the interview here.)

First Data is known, of course, for its line of Clover point of sale (POS) systems.  But as Jim Allen points out in the interview, Clover is actually a platform with associated mobile apps and it is much more than a POS. Its offerings include a loyalty program for small merchants, as well as a gift card program.

Tips for How to Choose a Loyalty Program

Based on the interview and other ideas, we’ve come up with five tips for what to look for when you choose a customer loyalty program. Some of the tips apply as well to choosing a gift card program.  Look for these attributes when choosing a loyalty program and/or a gift card program:

1. Easy to Use

Time is money. So if a loyalty program takes a lot of manual time to set up and maintain, it’ll either eat up all your profits or soon be abandoned or replaced.

Look for programs that are out-of-the-box simple to get started with. Does the vendor provide materials to help display and market your programs in store or digitally, or or is that something extra you have to create?

Also, look for technology that automates and saves you time. For example, does the loyalty program integrate with your point of sale system, or will you have to hire a consultant to integrate specially?

And what if customers want to manage a gift balance or have questions — does the program have technology to help?

2. Customizable for YOUR Business

Consider what kind of loyalty program you want to offer:

  • Are you most comfortable with a punch card program, where customers earn for each cup of coffee, dry cleaning order or other purchase they make?  This type of loyalty program is simple, but doesn’t have a marketing feedback loop. So you can’t use it to collect data to shape your future marketing, like you can with a tech-oriented solution.
  • Or perhaps your customers would prefer a loyalty program that accrues points.  If your customers are tech savvy, they may appreciate a points system with a mobile app.

Similarly with a gift card program, consider how your customers may want to purchase and send them.  Plastic gift cards are well known. But more and more customers want the ability to purchase digital cards online or on a mobile device, and send them electronically to recipients.

3. Marketing Feedback Loop

Today’s best breed of loyalty programs and gift card programs give you something in return.  Look for a program that is technology based, so it can help pull out “big data” to inform you how to market better.

Also check to see how hard or easy it is to analyze and use that data.  Look for programs with built-in analytics to easily discover buying habits you may not have noticed. That way you can identify special perks and when to offer them to your most loyal customers, to encourage cross-sale opportunities or accelerate repeat sales.

4. Best Practice Ideas

One of the biggest challenges in a small business is that we often don’t have a marketing department.  A good vendor can help make up for that lack.

Look for a solution that helps you learn as well as do.  Does the vendor’s solution automatically guide you to develop best practices? Does it trigger ideas for how to make the most of a loyalty program, such as how and when to stay in touch with customers?

And when it comes to gift cards, you want materials to entice customers to buy them, such as in store signage.

5. Modest Cost to Implement

Last but certainly not least, look at the cost.

Look for programs oriented toward small business merchants.  An offering suitable for Walmart won’t necessarily be right for your business — and could be too expensive. See if the vendor’s website has a section called “small business solutions” or uses the words “small business” frequently.


Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

3 Reactions
  1. It may help to collect points for every purchase. That’s what I did in one of the ecommerce websites I manage.

  2. How about for online businesses? Is there a way to create some form of loyalty program for them?

  3. I think that loyalty programs are great for producing repeat customers because it gives them a reason to buy again.