Every business aiming to climb the ladder of success must learn to attract and keep customers. The attraction is achieved through traditional advertising and brand awareness. Small businesses can do much in this aspect through search engine optimization, pay-per-click campaigns, billboard advertising, seminars, and community services.

Keeping customers is accomplished by building solid relationships with customers and offering incentives. When people become customers of a business, they begin to expect some special treatment and recognition. Providing these treats will help you win a good place in their hearts, leading to returning patronage.

A loyalty program is the most effective way to keep your customers. It offers a systematic, manageable and measurable structure for rewarding people who buy from your business. Now that you have tasted the cake’s icing, let’s fully get into it.

What is Loyalty Program?

Loyalty programs are incentive-awarding strategies businesses use to reward their customers for being loyal. It’s designed to help companies to retain their customers and encourage them to make more purchases. The incentive can be discounts, coupons, cashback, redeemable gift cards, and all sorts of rewards to compensate customers that have made repeated purchases.

How does a Loyalty program work?

It’s not difficult to understand. Businesses have been implementing discounts and coupon codes right from time. The difference with the loyalty program is that it comes with a structure. Unlike black Friday and Holiday programs that give discounts to all buyers for a limited season, Loyalty programs reward customers as long as they keep being true to a business and continue making purchases.

Examples of Loyalty Programs

  • Starbuck rewards

Starbucks will forever be one of the companies that have made the best use of this reward system. The coffee giant opened an app specifically for this program. And between October 2021 and now, over 25 million people have signed up for it.

The basis of the program remains the allocation of a star for every order made through the app. Accumulating stars will unlock new levels, and each level comes with sweet rewards like free coffee, birthday treats, and free drink upgrades.

  • Amazon Prime

When Amazon started this program, many thought it would not end well for the company and its subscribers. But today, it’s an iconic loyalty program that many ecommerce companies are trying to bring into their business. This program has helped Amazon beat its competitors, gather more sales, and build a community of returning buyers.

Amazon prime membership comes with many benefits, including free shipping and delivery, free access to all amazon streaming platforms, and discounts on unique products. The sweetest thing is that these benefits are available all the time.

  • Sephora Beauty Insider

Sephora beauty is a cosmetic brand specializing in making and selling cologne, make-up, and skincare products. This company is known worldwide for making five stars products. However, their products don’t come cheap. Therefore, Sephora beauty created a loyalty program to reward all their buyers.

Sephora beauty insider is a community of over 25 million buyers around the globe. Members of this community earn points for every purchase they make with the brand. They are free to decide how to redeem their points. They can use it to get discounts, free shipping, cash prices, and free birthday gifts.

Moreover, there are three membership stages. Promotion happens with the sum of total purchases. The rogue stage is for people who have purchased more than $1000, and the VIB stage precedes it for those with over $350 purchase records. Even people just joining the program have all the benefits of the free stage.

Why do businesses create loyalty programs?

Though it may look like a company is giving out its hard-earned money to people, the loyalty program is a win-win campaign for the business and its customers. It’s even appropriate to say that the company has more to benefit than the customers. Let’s see why you should give out some of your profits to your customers under loyal programs.

  • To increase overall purchases

People want to get to the top tier to enjoy the most benefits. This will cause them to purchase more products until they finally reach the pedestal for full rewards. Subsequently, leading to more sales for your company. Besides, loyalty programs will attract new buyers. People who have heard about your loyalty program will also want to be part of it and will be encouraged to buy from you to have a taste of those benefits your customers are enjoying.

  • To stand out in your niche

Loyalty programs make Amazon stands out among other ecommerce marketplaces and Starbucks among its beverage company peers. A well-curated loyalty forum will distinguish a business from competitors and give the business a winning edge in the niche. Users of your products will love to patronize your brand for the extra bonuses they stand to gain.

  • To improve customer retention

Customer retention is doing everything to keep customers and encourage them to make repeat purchases. No other strategy can boost your business customer retention rate like loyalty programs. One-time buyers quickly become returning buyers when there’s a reward for buying more. They will stay loyal to your brand and never look for your competitor.

  • To encourage word-of-mouth marketing

The most efficient advertising medium is your customer’s word of mouth. It convinces people more than the other marketing strategies. Loyalty programs encourages your customers to tell about your brands to their families, friends, and colleagues at work. They will openly advertise your business, products, and loyalty programs. All this because you decide you give them a birthday present.

  • To build a more robust customer relationship

You naturally become connected to people who appreciate your effort. The same strong bond forms when a business chooses to appreciate customers for patronage. It even becomes stronger when you gift them on their special days and promise to reward them for future purchases. A loyalty program is key to a solid business-customer relationship.

  • To achieve customer satisfaction

A returning buyer is, firstly, a happy customer. Only people who derive satisfaction in their first experience with your brand will come back for more. Imagine the happiness of a buyer who gets a 20% discount on their first purchase with your brand. And then, the product offers all the values they seek. The buyer is satisfied and automatically becomes a customer.

Benefits of Loyalty Programs to Small Businesses

All businesses can implement loyalty programs. Even small and local businesses can utilize this strategy to retain their customers and attract more. The following are the advantages of loyalty programs for small businesses.

  • Improved sales

This campaign will cause people to patronize your business. Besides, every member of your incentive program automatically becomes your brand ambassador and goes about convincing others to buy from you or hire your company for service.

  • Increased loyal customers

Loyalty programs will lead to an increased customer retention rate. A good percentage of your one-time buyers will convert to returning customers. And your business will have a massive community of loyal customers.

  • Rapid growth and improved status

Small businesses can quickly go global through loyal programs. The fan base multiplies, and the brand awareness goes viral within a short period.

  • Reduced cost of advertising

It takes about five times the amount needed to keep a customer to get a new one. Investing in customer retention will bring in more return on investment. Moreover, these customers will use their word of mouth to convince new buyers. And that’s how your business will keep on growing big with a little discount, coupon codes, and rewards offered through your loyalty programs.


Customers are the oxygen that businesses live on. Without them, a company will die. For this reason, treating them right and long after their happiness and satisfaction is essential. Loyalty programs have proved effective in acquiring and retaining customers. It has helped big and small businesses and will do the same for your local business. Consider it today, and start thinking of a strategy. Our next article can help build a loyalty program strategy for your business.