As more and more Aussies flock to shopping online, building loyalty has never been more important as the competitor is literally one click away.

A common misconception is that loyalty programs are for large retailers, however no matter how small your business, implementing a loyalty program can be crucial in developing an engaged customer base that encourages return sales and ultimately drives business growth.

This is particularly important as customer acquisition cost (CAC) soars and competition for new customers becomes increasingly fierce.

A returning customer will pay dividends to your business – research shows that two-time buyers are nine times more likely to make repeat purchases than one-time buyers. These staggering odds make it clear that landing a second sale can lead to years of return purchases. One of the best ways of ensuring this outcome is loyalty.

So how do we create loyalty for customers? For small businesses looking to roll out a loyalty program, here are some important things to keep in mind.

3 things to consider when starting a loyalty program

1. Make your loyalty program tailored and evolving

Loyalty programs shouldn’t be a one-size-fits-all approach for your customers or a box-ticking exercise. A loyalty program is about creating a community so that customers feel more deeply connected with your brand. This means continuously reviewing what has been well received and making adjustments based on customer needs.

Melbourne based homewares and apparel company Kip&Co began their Dream Team loyalty program to give back to its customers that had been returning to them for years. Not only has the program been a way to thank these return buyers, but it enables them to be more connected to their customers and what they’re looking for. Loyalty goes beyond a transactional program, and Kip&Co are constantly evaluating how to make their customers feel they are a part of the brand. In the first year of the program, they have already signed up over 25 per cent of their customers into the Dream Team.

2. Data is key to ensuring you’re adding value to your loyal customers

Creating a tailored program requires knowing your customers and the easiest way to do this is through your data. Thanks to customer data, you can formulate strategies to turn one-time buyers into loyal, repeat purchasers. By digging into your data, you can identify the products that first-time customers are most likely to purchase next, the time frame during which they’re likely to make their second purchase, and the best messages and channels to target them for upsells.

Take the memo, a baby product retailer for new and expecting parents. Because the baby and parenting experience is so personalised and time specific, it’s incredibly important that they’re able to serve up the right information to the right people at the right time. As Kate Casey, co-founder of the memo says, “the memo puts a big emphasis on education, because for many first time parents, the category can be incredibly overwhelming and confusing. So we use data insights to inform our communication strategy, to share helpful and targeted information with customers to guide their purchasing journey and parenting experience, when they need it most.” For the memo, it’s all about gathering insights that help their customers, not to sell to them.

It’s an approach shared by the founders of sustainable eco-friendly cleaning products, Koala Eco, who reward customers with an immediate 15 per cent discount for signing up to their newsletter, offer ‘subscribe and save’ discounts for loyal repeat customers and use their Instagram and EDMs to help provide their customers with helpful cleaning hints and tips. Data and insights from their purchasing journey also guides communication at every level.

3. Starting earlier rather than later

Ever since the pandemic, online shopping has seen massive growth. Research from Australia Post found a 23 per cent increase in online shopping in Australia for the 12 months to 31 August 2021. By 2024 online shopping accounted for $69 billion in household spending, with 9.8 million Aussies shopping online.

This reliance on online shopping provides businesses with a great opportunity to continue engaging with their customers across channels. However, it’s important to ensure businesses are providing customers with unified, personalised experiences across channels. There is no time like the present to roll out a loyalty program that will keep your customers coming back time and time again.

This post first appeared on Business Builders in December 2021 and was updated March 2025

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