Software for managing customer loyalty has become a critically important tool: attracting a new buyer costs 5–7 times more than retaining an existing one. We examine what functionality really works and how to build profitable models on it.
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What happened
A detailed review of seven leading solutions for building loyalty programs has appeared on the business software market. Among the key players are Loyally.ai (from $12/month), Square Loyalty, and Smile.io. The emphasis is on the fact that modern platforms offer not just savings cards, but full-fledged CRM systems with analytics, marketing automation, and integration with POS terminals. The main message: a loyal customer spends 67% more than a newcomer, and a 5% increase in retention can increase profit by 25–95%.
How this is useful for business
Loyalty programs solve a specific task: they turn one-time purchases into a stable flow of repeat sales. Digital cards on a smartphone remove the “forgot the card at home” barrier, while built-in analytics show which customers bring real revenue and which only “drip” toward a discount. Integration with cash register software automates point accrual and tracking of purchase patterns. For business, this means the ability to segment the audience and launch targeted promotions instead of mass sales that dilute margins.
How to make money from this
There are three main monetization models in this segment. The first is subscription-based: the client pays $12–78 per month for access to the platform and receives a ready-made tool. The second is consulting-based: you help companies design a loyalty program tailored to their specifics and charge a fixed rate or a percentage of the savings. The third is reseller-based: you become a partner of one of the vendors and receive a commission for referred clients. Each model requires a different level of technical expertise, but all three are scalable.
Business Ideas
1. White-label solution for niche retail. Take the Loyally.ai or Smile.io API and package a ready-made solution for coffee shops, flower shops, or barbershops. Charge $29–99/month for a branded platform with ready-made activation scenarios. Additional revenue: integration setup for a one-time $200–500.
2. Loyalty program consulting. Audit the client’s current processes and design a program from scratch. Rate: $1500–3000 per project plus $500/month for support. Target audience: chains with 10 or more locations that want to move from “just discounts” to systematic retention.
3. Agency for launching and managing programs. Provide a full cycle of services: from choosing software to writing scripts for automated mailings and training cashiers. Contract from $5000/month for managing 3–5 clients with a guarantee of repeat purchase growth.
4. Marketplace of ready-made loyalty scenarios. Create a library of templates for different types of businesses: restaurants, beauty salons, fitness centers. Sell a subscription for $19/month or individual templates for $49–99. Content can be partially generated using AI and adapted to data from reviews like this one.
5. Integration connectors. Many small businesses use outdated POS systems without native loyalty support. Develop middleware that connects Square, Clover, or custom-built cash registers with cloud loyalty platforms. Model: $99/month for connecting one terminal or a one-time payment of $499 for a boxed solution.
Risks and Limitations
The main risk is market oversaturation. If you enter with yet another template-based product, clients will go directly to vendors. The focus should be on deep niche expertise or unique integration. The second point is dependence on third-party software. If a vendor raises prices or shuts down, your business model breaks. The third risk is low staff adoption. A cashier who does not explain the loyalty program kills any tool. The solution is mandatory training and scripts with specific phrases. Finally, privacy regulation in individual jurisdictions requires caution when working with customers’ personal data.
7-Day Action Plan
Day 1–2: study the functionality of Loyally.ai, Square Loyalty, and Smile.io on free trials. Record which software solves the main pain points: integration, analytics, customer convenience. Day 3: define a niche. Analyze 10 local businesses (not from the US/EU) and understand which of them do not have a loyalty program or have one that works the old-fashioned way. Day 4: prepare a commercial proposal for one potential client, relying on data from the article: 67% growth in spending by loyal customers, 5% retention growth = +25% to profit. Day 5: launch a landing page or a simple business-card website with cases and an application form. Use ready-made builders, do not waste time developing from scratch. Day 6: hold the first meeting or call with an interested client. Collect feedback on pain points and expectations. Day 7: adjust the proposal and issue an invoice for a one-month pilot launch of the loyalty program.
Original news: Small Business Trends · See other news in the news section.