A loyalty program for a small business: the complete guide

What a loyalty program for a small business is

A loyalty club is a list of customers who joined you by choice, plus a simple rule that rewards them for coming back. In a big chain it is a whole system. In a small business it is usually one card and one rule.

The familiar form is a punch card: every visit counts, and after a number of visits you set, a reward is waiting. But there are other forms, and sometimes they fit better. A few terms that come up in this guide:

• Stamp card: every visit counts, and at the end there is a reward.
• Prepaid package: the customer pays in advance for several units, and each visit takes one off.
• Recognition card: you count visits with no reward at the end, and show the customer how long they have been with you.
• Wallet card: a card saved in Google Wallet on Android or Apple Wallet on iPhone, next to the credit cards.

A loyalty club is also not a sale. A sale brings people once, and then it ends. A club works slowly: it gives a customer who already comes a small reason to choose you again next time, and the time after that. So you do not need a big reward. You need a reward the customer remembers is waiting for them.

Why regular customers are worth the effort

You do not need statistics to see this at the register. A customer who already knows you does not need an ad to come in. They know what they order, they know the staff, and sometimes they bring a friend.

The problem is that without records you do not really know who they are. You remember faces, not dates. When a regular stops coming, you notice months later, if at all.

A club gives you names, visits and dates. You see who is close to a reward, who disappeared, and at what hours your regulars come. This is the information that helps you decide, for example, when to add someone to a shift.

There is another reason, talked about less. A customer who stopped coming is not always an angry customer. Sometimes they moved, sometimes they changed their route to work, and sometimes they simply forgot. When you know who they are, you can ask your team if something happened, and sometimes the answer teaches you more than any survey.

Three types of club, and when each one fits

The type depends on how your customers buy: many small visits, a service that repeats, or a long and personal relationship.

With a prepaid package there is one rule not to give up: the package opens only after the customer has paid, and only you confirm it. That way no package opens by mistake, and nobody gets a service that was not paid for.

You can also combine them. A cafe can keep a punch card for coffee and a separate punch card for pastries, on the same card.

Paper, an app or a wallet card

Each way has its place. The table compares them honestly, including what the wallet card does not do.

A full comparison, with who each way fits, is in the article on paper punch card, app or wallet card.

How to choose a reward and a goal

1. Choose a reward from your own menu, not a percentage discount. A product you already sell costs you its cost price, and the customer feels the full price.
2. Set a goal a regular customer reaches within a few weeks, not within a year. A goal that is too far away is forgotten.
3. Give a head start. A visit or two free when joining, and a card that does not start from zero invites people to continue.
4. Write the rule in one sentence. If it needs explaining, it is too complicated.
5. Do not change the rule midway. A customer who was two visits from the reward should not find out the goal moved.

Example: a cafe that chooses 10 visits

For example only: "Stairs Cafe" is a fictional cafe. The owners see that their regulars come about three times a week, in the morning on the way to work.

• The goal: 10 visits. A regular customer reaches it in about three weeks.
• The reward: a latte, the drink most customers order. It costs them the cost price of one cup against ten paid cups.
• The head start: 2 free visits when joining. The first reward comes after only 8 visits.
• The rule in one sentence: "The tenth coffee is on us."

After a month they check the customer list: how many are waiting for a reward, how many are close to it, and how many joined and did not come back. If almost nobody gets near the goal, it is too far. If everyone reaches it every week, they can raise it the next time they open a new punch card.

How to get your staff to offer the club

A club nobody offers stays empty. A sign at the register helps, but what really brings people in is one sentence from the staff member, at the moment the customer pays.

• Say the sentence to every customer, including first-time visitors.
• Point to the sign with the code, and do not explain more than that. Whoever wants to will ask.
• No reception? The staff member signs the customer up from the scanner.
• Once a week, look at which staff member signed up the most people. It opens a good conversation in the team.

When staff forget to offer it

It will happen, mostly at busy hours. Do not look for someone to blame. Hang the sign where the staff member sees it when handing over the bill, and let them say the sentence in their own way. A sentence that sounds natural works better than one learned by heart.

What to check in the first month

You do not need complicated reports. Four questions are enough to know if the club works, or what to change:

1. How many customers joined, and which staff member signed them up. If few joined, the problem is usually at the register and not in the reward.
2. How many of those who joined came back at least once. Someone who joined and did not come back is telling you something.
3. How many customers are close to a reward. If nobody gets close, the goal is too far.
4. On which days and at what hours the regulars come. Sometimes you find a quiet hour you can fill.

Privacy and consent: what to know in Israel

The Privacy Protection Law

A loyalty club collects personal information: name, phone number, visits. Section 11 of the Privacy Protection Law says that whoever asks a person for information in order to keep it in a database must tell them a few things.

• Whether they are required to give the information or it is up to them, and what happens if they do not give it.
• For what purpose the information is requested.
• Who is responsible for the database, and how to contact them.
• To whom the information will be passed, and why.
• That they have the right to see their information and to ask to correct it.

The law was updated by Amendment No. 13. The body that supervises it is the Privacy Protection Authority. A practical rule of thumb: ask only for what the club needs, and do not collect anything "just in case".

Advertising messages: section 30A of the Communications Law

The section everyone calls "the spam law" forbids sending an advertisement by text message, email, fax or automatic dialing without the recipient's explicit prior consent, in writing.

An advertising message must say it is an advertisement: the word "פרסומת" (advertisement) at the start of the message, and in an email, in the subject line. It must include the sender's details and a simple way to ask to stop. The recipient may refuse at any time, and refusing costs them nothing.

Whoever knowingly breaks the section is exposed to a lawsuit. A court may award compensation without proof of damage, up to 1,000 new shekels for each message. The law also has a narrow exception for customers who bought from you, with conditions. Do not rely on it without advice.

The practical conclusion: joining a club is not consent to advertising. If you want to send advertising, send it only to club members who agreed to receive it, through a separate box that is not ticked in advance, and respect every request to stop.

Mistakes to avoid

• A goal that is too far. If a regular customer needs half a year to reach the reward, they will stop counting.
• A reward the customer does not want. Something small that everyone orders is better than something big that nobody asks for.
• Too many questions when joining. Every extra field is another reason to give up halfway.
• A visit recorded automatically by a scan. It is better if the scan only identifies the customer, and the staff member presses the button. That way no visits are recorded twice or by mistake.
• A benefit in exchange for a Google review. It is forbidden to give a stamp, discount or reward in exchange for a review, and Google explicitly forbids it in its policy.
• A club nobody looks at. The list is worth something only if you open it, for example once a week.
• Advertising to people who did not agree. Even if they are long-time club members.
• Two different rules for two staff members. If one gives a visit for every purchase and another only for a big purchase, customers will notice. Decide what counts as a visit, and tell everyone.

How Shortip does it

Shortip is a digital loyalty club for small businesses, a service of Joya-Tech. Gal comes to your business and sets it up with you, in Haifa and northern Israel. In short:

• The customer scans, types a phone number and gets a code. There is no app to download.
• The card is saved in the phone wallet, on Android and on iPhone.
• After every visit the wallet card updates: 2 more visits to your reward.
• Each staff member uses their own phone: scans the card and presses the button. The scan only identifies. The visit is recorded only when the staff member presses.
• A punch card with a reward, a prepaid package that counts down, or a recognition card. A package opens only when you confirm the customer has paid.
• You see who is waiting for a reward, who is close, who has not come back and whose birthday it is.
• You see on which days and at what hours club customers come, and who joined last month and came back.
• A customer with a paper punch card? You move their visits over, with your approval.
• The customer is in control: they can delete the card or ask for no advertising.
• Shortip does not send advertising SMS to your customers.

How much it costs

The price is set in one price list, and this is today's price:

Frequently asked questions