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Written by: John Achedia


Your loyal customers deserve more than a cookie-cutter approach when it comes to recognizing their unconditional love. Sometimes you have to give customers a reason to keep buying from you.

According to Invesp, it costs five times as much to attract a new customer than to keep an existing one. This is why it’s so important for small businesses to turn one-time buyers into loyal, repeat customers.

Customer loyalty programs can be your secret weapon: In this Customer Advocacy Report, they found that 40% of customers are likely to buy again from brands that reward loyalty.

What is a customer loyalty program?

A customer loyalty program or rewards program is a customer retention strategy that motivates customers to continue buying from your brand instead of competitors.

To build customer loyalty, businesses offer special discounts to customers who make regular purchases. This strategy is known as a loyalty program. If executed well and with the customer at the center, loyalty programs can help your customers feel good about purchasing from you.

There are many different types of customer loyalty programs you can use to increase customer engagement. What you choose depends upon your mission, your product, and your goals for the reward program.

Why are Loyalty Programs important?

A customer loyalty program helps you build stronger relationships with your customers by rewarding them for buying your products or services. There are several important benefits of having a customer loyalty program:

  • Improves customer retention
  • Increases customer lifetime value and repeat business
  • Boosts revenue
  • Builds stronger customer relationships
  • Differentiates a brand from its competitors
  • Encourages word-of-mouth marketing
  • Shows customers appreciation
  • Drives customer satisfaction

And if that’s not enough, here are a few statistics that prove the importance of loyalty programs.

  • For a small business especially if you’re in an increasingly competitive space a customer loyalty program that rewards returning customers could be what differentiates you from your (bigger) competitors.
  • Customer loyalty programs help build a more engaging customer experience. And 75 percent of customers base purchasing decisions on their experience, according to our 2021 Customer Experience Trends Report.
  • Companies with strong loyalty marketing programs grow revenues 2.5 times faster than their competitors and generate 100-400 percent higher returns to shareholders, according to HBR.

Types of loyalty programs for small businesses.

Let’s look at five types of loyalty programs that are suitable for small businesses. And if you need some inspiration for creating a loyalty program for your business, Yamzit is a place to start.

Here are some of the most common loyalty program models:

  • Points programs
  • Tier-based programs
  • Spend-based programs
  • Free perks programs
  • Subscription programs
  • Refer a friend programs
  • Paid programs
  • Cashback programs

1. Loyalty Points Programs.

Points programs are one of the most popular types of customer loyalty programs. Customers earn points when they spend money with your company, and they can redeem the points to get a discount on their next purchase or for other special offers.

Loyalty Points Program

How loyalty points program works

2. Tier-based Program

A tiered program starts with a points program that allows customers to earn rewards with every purchase. Tier programs are like video games. Once you complete one level of spending, customers can unlock a new level that gives them access to more significant benefits and more perks.

To create an element of exclusivity, you could have a tier of “Platinum level” clients. Customers at this level could earn exclusive pricing for your most expensive products and services.

This will motivate your customers in lower tiers to make an effort to get to the next level of spending. The more exclusive the reward, the greater the customer appeal.

Tiered programs can also align with your brand marketing strategy.

3. Subscription programs

Subscription programs build customer loyalty by turning customers into repeat purchasers. A subscription program often gives customers a discount compared to one-off purchases or offers exclusive products, content, or services that aren’t available to non-subscribers.

Amazon Prime is the holy grail of subscription-based customer loyalty programs. But you don’t have to be a tech giant to implement this kind of rewards model.

4. Refer-a-friend program

Referral programs are a type of customer rewards that reward customers for referring their friends and family. They help turn loyal customers into brand advocates.

5. Paid Programs. 

A paid loyalty program requires customers to pay a fee for loyalty perks.

6. Cashback Programs

The most successful loyalty programs make customers feel like they are getting something in return. Cashback rewards give customers cashback or money to spend with the business.

This type of loyalty program is popular for financial companies. 

7. Free Perks Program

Who doesn’t love gifts? Free perks programs gift loyal customers free products and services.

8. Spend based programs

We have already discussed loyalty campaigns that offer points to customers for every purchase they make. But how do you reward those customers who are spending more money in a shorter period? How do you encourage those customers to continue spending their money with you as opposed to going elsewhere?

Spend-based customer rewards programs allow companies to recognize high-spend customers.


How to get started in creating a customer loyalty program

Here are some tips for creating a winning customer loyalty program.

  • give customers something to strive for
  • know your audience
  • genuinely provide value for your customers
  • add a personal touch
  • add an emotional element


The bottom line is, listen to your customers, and let them be your guide as you build out all the elements of your customer experience, from your loyalty program to your customer support.

To get pro help in setting up your customer loyalty program, contact 

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