Every small business owner knows it’s much less expensive to hang onto an existing customer than trying to win a new one. You know customer loyalty is vital to the success of your business… but customer loyalty is something easier spoken about than accomplished.
Your customers have dozens of options to choose from for their grocery needs. The market is crowded, and many customers don’t have a strong preference for where they get their essentials each week.
If you want to retain your customers and keep them coming back to your store week after week, you’ll need to do something to help your store stand out from the crowd. A customer loyalty program can be just the ticket you need to succeed.
This post will discuss six options for customer loyalty programs you might implement in your business. For each option, we’ll describe the program, talk about the benefits it provides, and walk through steps you can take to implement this type of program in your store.
Why Implement Customer Loyalty Programs for Small Business
If you want your customers to return to your grocery store, you need to give them a reason.
Implementing a customer loyalty program can effectively encourage your best customers to shop in your store every week.
A loyalty program rewards customers for their repeat business, encouraging them to choose your store over competitors. It's a win-win situation — your customers feel appreciated and receive incentives, and you benefit from increased customer loyalty and revenue.
So, what exactly is a customer loyalty program? Simply put, a loyalty program is any system you put in place that rewards a customer for making repeated purchases. We’ll go over several options later in this post, but regardless of which type of program you implement, the key is to make your loyalty program easy to understand and use and to provide real value to your customers.
Implementing a customer loyalty program can offer your store numerous benefits.
- Improved customer retention: The main goal of a loyalty program is, well, loyalty. Implementing such a program increases the likelihood of your existing customers choosing your store again.
- Increased revenue: When you reward customers for making purchases, you encourage them to spend more money at your store. Some loyalty programs can even help you increase the average purchase size for a customer in your store.
- Valuable insights: Loyalty programs also help you collect valuable data that can help you better understand your customers’ preferences. This data can help you improve your store’s offerings.
Related Read: 4 Ways Grocery Data Analytics Help Drive Revenue
Though any retail store can benefit from customer loyalty programs, groceries are particularly poised to win on customer loyalty. Your customers need fresh groceries on a regular basis — weekly, for most customers. Offering a loyalty program helps ensure your store will see all that customer’s grocery business, and that they’ll choose you every time.
1. Points Program
In a points program, customers earn a specific number of points for certain purchases they make at your store. They can then redeem these points later on for discounts, free products, or other benefits.
One of the main benefits of offering a points program is that this type of loyalty program can help you clear overstock. How? You can offer higher point rewards to urge customers to purchase lower-selling items, or offer discounts on those poor-performing products for customers who have earned enough points purchasing other items.
You can implement a points program by setting up a point-tracking system in your point of sale (POS) system. When a customer purchases a given product, the appropriate points are automatically assigned to their account. You may also want to set up email alerts to let customers know when they have reached enough points to earn a discount or another reward.
2. VIP/Membership Program
You can also explore a VIP loyalty program for your store. In this type of program, customers who spend a certain amount or purchase a certain number of products over a set period are eligible to be enrolled in your VIP program. This program might offer them exclusive access to discounts, certain products, and more.
A VIP program can benefit your store because it offers you the ability to charge customers who aren’t VIPs more, while earning repeat customers by offering enticing discounts and other benefits. Besides, who doesn’t love being a VIP?
Implement this program for your store by setting a spending threshold. When a customer reaches this threshold, invite them to join the program. Enroll them using their contact information or by giving them a membership card which they can supply at checkout to receive their reward.
3. Referral Program
How can you get new customers and increase retention of your existing customers? Implement a referral program!
This type of program offers customers who refer their friends or family members discounts or free products. You also may offer the new shopper a discount on their first purchase to encourage them to try your store.
Related Read: 5 Best Point of Sale Systems for Grocery Stores (Reviews & Pricing)
You can implement a referral program by promoting the offering at checkout, on social media, or through email marketing (or a combination of these!). You’ll then want to track customer behavior in your POS system, requiring a reference code or link to match the new customer with the one who referred them to ensure both receive their reward.
4. Cashback Program
Another option for a customer loyalty program is to offer customers a certain percentage of their purchase back in the form of store credit. For example, if a customer spends $100 in your grocery store, you can offer them 10 percent back in store credit on their next purchase.
The benefits here are the definition of a win-win for you and your customer. Your customer gets a deal on their next purchase, and you get to encourage them to return to your store the next time they need groceries.
Implement a cashback loyalty program by providing the customer with a token or coupon at checkout, which they can bring back to your store and spend like cash on their next purchase.
You may want to consider offering a delay on the availability of the cashback (e.g. letting them know their credit will be available beginning tomorrow), or require a minimum purchase amount on their return purchase to prevent customers from simply redeeming their cashback reward without spending additional money in your store.
5. Subscription Program
Do the same customers buy the same products in your store, week after week? If so, you can offer a subscription program. In this program, customers who sign up for your subscription service receive regular orders or deliveries of their favorite products at a discount.
You benefit from this program by encouraging customers to stick with your store because of the convenience provided by the subscription — they never have to worry about remembering certain items, they just automatically receive them when they need them!
This type of program works best for stores that offer online grocery services. You can implement this by allowing customers to select the items they’d like to purchase on a subscription. You can also partner with a delivery service to aid in shipping out subscription purchases to your customers.
6. Customized Program
Lastly, you can offer customers a loyalty program customized specifically for them and their buying patterns. In this type of program, you’ll track each customer’s purchase history and provide them with personalized discounts and offers based on their preference and past behavior.
Providing targeted discounts to customers benefits your store because it increases the likelihood of a customer returning. After all, you’re offering them a deal on something they were likely already planning to buy — why would they pay full price elsewhere?
You can implement this program by investing in a POS solution like IT Retail that offers robust customer loyalty programs. You can then track customer behavior and generate offers based on customer segments with similar purchase behavior.
Managing Customer Loyalty Programs for Small Business
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 — winning their business and increasing your revenue.
However, managing the data associated with running any one of these programs can seem overwhelming.
Thankfully, the right point of sale solution can help!
With a POS solution like IT Retail, you can track customer data and run promotions with ease. Check out a demo of IT Retail today to see how our solution can help you implement your customer loyalty program without breaking a sweat.
