Why Small Businesses Should Be Using Customer Loyalty Schemes

Over the next few weeks we will be identifying ways small businesses can improve their marketing strategy and reach customers more efficiently for minimum prices. Our main focus will be on customer loyalty.

Author: Charlotte Cobley

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As a small business owner, what could be better than an increase in sales or more engagement with customers? Are you using customer loyalty schemes to your advantage? Customer loyalty schemes are very useful and when done correctly many businesses succeed in both increasing sales and engaging customers.

Differentiating your business from a mere pick of many, loyalty schemes can be the jump ahead of competitors that some small businesses need. If you have a limited marketing budget, a loyalty scheme is a cost effective strategy to ensure you are giving your customers the best product or service and a way your business can significantly increase sales. When deciding if a loyalty scheme is right for your small business there are a few factors to keep in mind.

Help your business stand out

Every small business at one point will likely face stiff competition and if your business is offering similar product or service to the market you have to consider what is going to make you stand out? A good loyalty scheme can be a great asset in your battle with competitors. For example the concept of ‘the seventh coffee being free’ gives customers the incentive to come back. Small business can show their generous side and remain competitive.

Stronger relationships

The use of a loyalty scheme will mean repeat customers, usually allowing you to get to know your customers and have a better relationship with them. Once this relationship is formed it gives the customer extra incentive to stay using your business. These relationships can induce customer lifetime value.


With technology constantly improving, loyalty schemes don’t have to cost a fortune. Emails can be sent out to mass audiences with offers and QR codes. The waste of punch cards can be reduced, with customers loosing bits of card and requesting new ones each week. Using digital reward programs can be much easier.

Unprofitable Customers

Small businesses may find when an offer or sale is on they have a few cherry pickers who only buy discounted products, these low spending customers can be costing you money. Loyalty schemes can be put in place to help reduce this as then only the loyal and retained customers receive the rewards.

Brand advocates

One great way customers can act upon loyalty is by becoming an advocate. Using loyalty schemes to reward retained customers can push them into becoming advocates. According to a recent study by BIA/Kelsey and Manta found that repeat customers are more likely to refer businesses to their friends or family via word of mouth, reviews and through social media.

Today’s society loves the thought of something that is free. (Ariely, 2009) More and more customers expect some types of loyalty or reward for becoming your customer. Customer loyalty schemes are a huge opportunity for small businesses to generate a valuable loyal customer base that will act as brand advocates. 

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