4 Customer Loyalty Programs for Small Business Groceries (+ How To Implement)

Customer loyalty programs are increasingly common with both giant brands and small businesses — and it’s easy to see why. About 75% of customers stay loyal to brands after having a positive experience with one.

But simply having a customer loyalty program isn’t guaranteed to help your business. Luckily, we can help you make the most of yours — with decades of experience working with small, family-owned grocery stores, we’ve learned a thing or two about running customer loyalty programs that actually work.

When you understand what separates a great loyalty program from a so-so one, which types of programs are commonly used at grocery stores, and how to implement one, you have everything you need to create a memorable loyalty program that your customers will love.

Why Customer Loyalty Programs Are a Must-Have for Small Grocery Stores

Profit margins at grocery stores are notoriously small. Throw tariffs and inflation in the mix, and it’s even smaller. While many huge chains can eat these rising costs, most independent grocery stores can’t — which means it’s imperative to find ways to stand out from your bigger competitors.

Adding a creative and rewarding customer loyalty program on top of your high-quality or niche products is an excellent way to do just that!

Implementing a customer loyalty program can offer your store numerous benefits, including:

• Improved customer retention: The main goal of a loyalty program is, well, loyalty. Implementing a rewards program increases the likelihood of your existing customers choosing your store to earn more rewards or to take advantage of exclusive discounts.
• Increased revenue: Not only do repeat customers spend more than a new customer, but rewards from loyalty programs encourage customers to buy more during each shopping trip.
• Valuable insights: Once you have a customers’ contact information, you can then pull your loyalty members’ sales history into your reports to learn more about their preferences — these insights are invaluable for merchandise planning and marketing.
• Segmented marketing: Personalized marketing is more and more important for customers, and once you have a loyalty program, it’s easy to filter customers down and send them offers or announcements based on the products they actually buy.

Customers regularly need groceries — a loyalty program that’s both fun and rewarding is another tactic for ensuring customers choose your store.

Related Read: ​​4 Ways Grocery Data Analytics Help Drive Revenue

4 Customer Loyalty Program Ideas for Small Grocery Stores

Interested in starting up a loyalty program at your grocery store, but don’t know where to start? We’ve got you covered.

Here are four ideas for grocery loyalty programs that actually work.

1. Points Program

A points program is the most common style of retail loyalty program — and for good reason. In a points program, customers rack up a certain number of points for every purchase (e.g. 10 points for every $1 spent). Once customers earn enough points, they can exchange them for a freebie or discount.

Points programs can be addictive when done right — and in our opinion, the points programs at corporate supermarket chains (usually points in exchange for gas) are pretty lackluster. In other words, the rewards themselves are one area where local grocery stores can easily one-up their corporate competition.

Provide more tangible rewards like a 10% discount on a purchase of their choice, or a free item from your deli. Set tiered rewards, with smaller rewards available relatively quickly (e.g. a free coffee for every $30 spent) and bigger rewards that have to be worked towards in the long term (e.g. 15% off for every $300 spent).

You can also shake things up by having double points days or making specific products worth double points. This encourages people to make impulse buys and to come in more often. While this might sound complicated, most modern point of sale (POS) systems let you easily set these short-term promotions up on the backend so they apply automatically at checkout. 

Unfortunately, we’ve seen a lot of points programs fall flat with customers because of some common mistakes. 

Here are a few tips to get the most out of a points program:

• Make it obvious how many points a customer has at any given moment — consider printing a customer’s current point balance on the receipt (if possible) or have cashiers tell them during checkout.
• Set up alerts on your POS system when customers earn a certain number of points — this will prompt cashiers to ask customers if they’d like to redeem a reward.
• Don’t put rewards too far out of reach. If a customer feels like it’s going to take forever just to earn a tiny reward, they won’t bother signing up.
• Advertise your points program online and in store, highlighting the rewards and explaining how points work.

If you make rewards tangible and easy to earn, people will be excited to come back again and again to earn points.

2. Member-Exclusive Discounts

Another way to entice customers to sign up for your loyalty program is to give them access to exclusive discounts.

Use colorful signage with your logo that advertises member-only deals to encourage shoppers to make an impulse buy. If you rotate which items are on sale, it’ll encourage members to check in more often at your store. 

This is another type of membership that’s easy to set up with the right POS system — simply set a separate item price that automatically applies when a customer enters their phone number.

Here are some tips to maximize your member-only pricing strategy:

• Don’t just discount one type of item — have a mix of high-margin items and staples for maximum visibility and perceived value.
• Make your discount signage brightly colored to catch customers’ eyes and to encourage impulse buys.
• Make sure you differentiate your member-only discounts from discounts that are available to everyone to prevent confusion or frustration.
• Review your discounts once a week to make sure items are priced accurately in your inventory management system and your signage is accurate.
• Whenever you refresh your deals, send out emails or text messages to customers who’ve bought similar items in the past.

Having multiple member-exclusive deals around your store is an effective advertisement to sign up and save. Just make sure that signing up is easy — some systems, like IT Retail, make it as simple as entering your name and phone number at checkout.

3. Paid Memberships

A paid membership is one where a customer pays a monthly or annual fee to get access to specific perks. These are fairly uncommon outside of wholesale clubs and food co-ops, but could work for a small grocery store if implemented correctly. 

To make life easy, find a POS system that natively supports paid memberships. This way, you can track renewal dates automatically and prompt the cashier if a membership is set to expire.

If your system doesn’t support paid memberships out of the box, you can either use a third-party service or set up a custom item in your inventory (e.g. “Gold Member”). Then, once you collect a customers’ contact information, you can put them into a custom group. 

The latter method does require cashiers to look up membership details and track renewal manually, though, so it may be easier to only go down this route if it’s a lifetime membership.

Here are a few additional tips for implementing a grocery store paid membership:

• Make a clear list with all of the benefits included in a paid membership near checkout counters and on your website. 
• Ensure that the cost of a membership is worth the perks. If a customer doesn’t feel like a paid membership is worth it, they’ll likely cancel after a month or two.
• Create a sense of exclusivity by sending a member-only newsletter that includes new item arrivals, store announcements, and exclusive discount codes. 
• Waive or reduce fees for online grocery services like curbside pickup and local delivery as both an attractive incentive to sign up and to boost online sales. 

Paid memberships aren’t a good fit for every store. They require a dedicated and regular customer base that shops with you enough to make an additional membership cost worth it. However, for stores in food deserts or that sell international goods or niche products, it may be a great option to help offset increased supplier costs.

Related Read: Minimum Order Quantity (MOQ): A Quick Guide for Grocers

4. Combine Different Ideas

Why pick just one idea when you can use multiple? Pretty much all of the above ideas can be used together to make a loyalty program even more rewarding — or you could try out novelty ideas like punch cards, member-exclusive raffles, or other fun ideas for short-term promotions and events.

That said, don’t just throw everything at the wall at once in the hope that something sticks. Too many reward types and membership benefits can be confusing for both customers and staff. Instead, find combinations that logically work together, such as:

• A free membership that includes access to member-only discounts and lets you earn points that can be spent on freebies at your deli counter
• A paid membership that includes a referral program that allows both the referring member and the referee to get a discount on their annual fees
• A free membership that allows you to earn and spend points, along with a paid membership that includes waived online grocery fees and exclusive discount codes

There are many combinations you can try out, so don’t be afraid to be creative! 

Related Read: 5 Ways Digital Customer Loyalty Programs Help Grocers Sell More

Bonus Tips For Running Successful Customer Loyalty Programs

Most small businesses have some sort of loyalty program, but not all of them resonate with customers. 

Here are a few quick tips to keep in mind when setting up your loyalty program:

• Focus on community: The primary goal of a loyalty program isn’t to increase sales, but to retain customers and build a community — so put extra effort into your marketing, whether it’s sending tailored promotions, creating a fun newsletter, or hosting community events.
• Start simple: Most loyalty programs don’t require expensive technology to run. Basic points-based programs and member-only discounts can be easily managed directly from your POS system.
• Highlight unique products: Local grocery stores are great because they carry local and niche products that customers can’t find anywhere else, so tie your rewards to these items.
• Share your expertise: In addition to discounts, one appeal of a loyalty program is your expertise! Create a newsletter for members that shares recipe ideas, talks about your local suppliers, and gives healthy snack ideas.
• Combine with EBT: Customers who shop using EBT and SNAP benefits are allowed to take advantage of store-level discounts — but it can be complicated to combine loyalty programs and EBT payments if they’re run on separate systems.
• Continually improve: Use the customer and sales data from your POS system to see which promotions and products are popular, which discount codes get used most often, and other insights that help you make improvements to your loyalty program over time.

Most importantly, don’t create a loyalty program that copies what Walmart, Target, or another corporate supermarket is doing. People go to local grocery stores for unique products and more personal customer service, so create loyalty programs that meet that expectation.

Make Customer Loyalty Programs Stress-Free With IT Retail

By implementing one (or more!) of these customer loyalty programs, you can give customers a reason to come back to your store, time and time again — building a community of loyal customers and emphasizing what makes you special.

But you won’t reap the benefits of a loyalty program if it’s complicated to manage and requires a lot of work at checkout. IT Retail includes customizable loyalty programs and flexible discounts so you can build the perfect program for your grocery store. 

Schedule a demo today to learn more about how IT Retail can help you retain and connect with customers.