Table of Contents
Overview
Loyalty Programs for Small Businesses have relied on punch cards and other manual solutions to loyalty program design for many years. The positive is certainly in the simplicity – easy to create and handle for the merchant, and straight-forward for the customer to understand that one purchase of any type equates to one punch. Another positive is low cost, however printing upwards of 20K cards per year can cost $500 or more.
As a loyalty system for small business, Punchcard programs have some drawbacks as well. Consumers expectations are higher these days, set by the more sophisticated loyalty program designs from larger brands. The one size fits all approach severely limits the ability to reward certain kinds of purchases. There is the expense of printing paper cards and procuring special punches to help avoid fraud, as well as hassles with lost cards and the need to combine cards. Perhaps the biggest challenge in recent years has been declining consumer demand – most store operators report a decline in the willingness to take a punch card. Another drawback is the complete lack of data identifying customers and their purchase patterns.
Loyalty Program Design in the post punch card era
As consumers, we all see the escalation of loyalty programs, from hyper-targeted offers at the grocery store to VIP treatment for frequent fliers and cash back from credit card providers. Customized apps generating mountains of data used to personalize communications is certainly effective, but also intimidating and expensive. As a loyalty program for local businesses, it all mmight seems a bit much!
Stepping back, there are some fundamental reasons that a loyalty rewardsemigi might program for small business can be beneficial:
- Know your customers: Start by simply identifying who they are and gaining permission to communicate with them. Identify the patterns of their visits and purchases.
- Deliver targeted incentives: Keeping your business top of mind and motivate return trips
- Grow the average ticket: Deliver offers to try new products
- Recognize Best Customers: Deliver special recognition/benefits to best customer
Historically, there have been precious few options for small businesses to achieve these kinds of objectives at a reasonable price. Luckily for small business owners, that’s changed over the last few years, and it’s very likely you have loyalty program options closer than you might think.
Convergence of Loyalty and POS Solutions
Over the last few years, leading POS systems for small businesses have begun to integrate loyalty solutions into the products, and these can simply be activated for as little as $50 a month. Additional communications capabilities to send text and email messages are also available. There are still some fundamental challenges to implementing these, foremost being a lack of loyalty and marketing skills for most small business owners, but first let’s take a look at what’s available.
Toast is one of the top Point of Sale (POS) software solutions for restaurants, touting 57,000 locations with rapid growth and a reasonable price tag starting at $50 per month. Square serves the full range of merchants vs just restaurants, and has a whopping 2 million active sellers. A significant emphasis is on Small Business, with 61% selling less than $150,000 per year. Both offer loyalty modules with full capabilities.
| Toast | Square | |
| Customer profile | ü | ü |
| CRM Database | ü | |
| Points Engine | ü | ü |
| Customizable Rewards | ü | ü |
| Recognition Tiers | ü | ü |
| SMS/Email Integration | ü | ü |
| Integrated App/Wallet | ü | |
| Reporting/Analytics | ü | ü |
Loyalty Systems for Small Businesses
The basic means of tracking is quite similar between Toast and Square, utilizing linked credit cards. The guest is offered the choice to enroll in loyalty at check-out. The Square experience features a tablet that can be flipped to face the guest where they can enter their personal information. Toast, which is used more in sit down restaurants, has a slick integration with the mobile payment terminal which the server hands to the guest to insert credit card, select the tip and provide loyalty information.
Square has a few advantages, including a built-in CRM database and more robust communications capabilities. Members receive an SMS message immediately following the transaction to confirm the enrollment, notify of the points total, and offer the chance to opt-in for email which provides additional capabilities. Square also offers the ability to set point levels as the SKU or category basis (including exclusions) and also offers more rewards customization opportunities with up to 15 unique rewards. Both programs offer the ability to set how rich the rewards payback is, which is key to driving repeat business. Visit the Loyaltylevers website for more information on how to best structure Behavior Drivers
One challenge for small business loyalty programs is staying top of mind, since according to recent industry statistics the average consumer has 15 loyalty cards and is active in less than half. Square integrates seamlessly with their Cash app, that provides a single stop view of all the customer’s loyalty activity along with a lot of other functionality. By removing the need for remembering individual account access details, Square makes it much easier to keep each program top of mind and overcomes a significant barrier.
Small Businesses Can Excel with Recognition Programs
Local businesses have long had a simple advantage in recognizing the customers they see every day, and intuitively giving special perks to their most loyal patrons. In fact, small businesses are in a much better position to execute on this than their larger brand counterparts. Recognition can take the form of “surprise and delight”, empowering the front liners to choose from a range of approved upgrades or perks. The key here is, don’t give them a discount on what they were already going to buy, instead give them a big value on making an addition to their order, or give a unique gift with purchase. Even welcoming them back and simply recognizing them for being a best customer means a lot!
I call these kinds of benefits “Sentiment Builders”, because they go a long way towards building the kind of emotional loyalty that lasts. There are several different kinds of Sentiment Builders in addition to Surprise and Delight. Here are some thought starters for customer loyalty programs for small businesses.
- Status can be very powerful, for example, providing early access to new products, exclusive sales or a unique merchandise item that denotes their special status. The best customers can be informed of their special status with a targeted communication, and provided with a special QR code to show at the point of sale. New Status benefits can be selected and communicated out periodically, and this a communication that members will definitely open!
- Convenience is another powerful sentiment builder. Each business has ways that they can make doing business together easier and more appealing. For example, offer to hold aside limited merchandise to ensure best customers don’t miss out.
- Lifestyle & Community oriented recognition can provide the kind of special experiences that form lasting bonds with members. For example, member only events after hours or with notable guests are of interest to best customers and enhance the reasons they visit your store so frequently in the first place.
Summary
Small businesses are in a better position than ever to execute on customer loyalty programs due to the technology now at their disposal, and their agility in offering the kind of Sentiment Builders that will build true loyalty. For a customized playbook on how to design a loyalty program for small business.