Sales Prospects Brighten as Small Businesses Find Life in Loyalty Programs

Thus far into 2025, the year has been an eventful one — to say the least.

And the volatility of everything from tariffs (and possible supply chain turbulence) to persistent inflation to a shifting regulatory environment may have small business owners navigating stormy seas of uncertainty.

But as PYMNTS Intelligence has found, there’s reason for the optimism that had been dominant headed into the beginning of the year — especially among SMBs — to continue.

As detailed in the report “A Good Year: Why SMBs Grew More Confident In 2024,”  some of the key concerns that had been top of mind for SMB leaders, tied to their very survival or sales prospects, abated. 

A majority of the 573 SMB owners, moving into the final weeks of last year, said that they’d expected to see improving revenues this year. In fact, 15% of firms surveyed said that sales might decline, which is down from the 17% seen earlier in the year, and well off the levels seen at the beginning of last year, when the tally was 23%.

The generally positive outlook is bolstered by the National Federation of Independent Business’ latest reading on business optimism. The January reading that debuted on Feb. 11 still remains above the long-term trend. 

The logic follows that with more confidence in prospects, the existential worry of having to shutter operations subsides. In January 2024, 7.3% of SMBs were worried about their survival, and dipped down to a more recent 5% run rate.

But size matters a bit, as the more money that flows to the top line means there’s more funding to stockpile in case of a bumpy ride through the near term, in forms of high input costs or waning end market demand. We found that 1.8% of SMBs with annual revenues of more than $1 million said they were at some risk to close.

SMBs with positive growth were more likely to increase marketing and introduce loyalty programs. PYMNTS Intelligence found that about one-third of SMBs with growing revenues in the past year grew their revenue by more than 25%. Sales growth that translates into profit growth means that there is more money to reinvest back into the firm.   

More than 70% of those that grew by more than 25% said they increased their marketing and outreach to potential customers, along with boosting their loyalty program efforts. Thirty-three percent of companies with the fastest growing revenue streams had said that they would ramp up loyalty and rewards features, followed by 15% of the SMBs that saw revenues growing to as much as 25%. 

There’s a virtuous cycle at work here, where growth underpins the development of those loyalty programs, which in turn spur customers to keep spending at smaller businesses, which provides the engine for further growth. 

Our data shows that the retailers and hotels/restaurants and entertainment firms — 43% and 57% of whom, respectively, project higher sales in the year ahead — are among the most obvious candidates for those rewards programs. Repeat business, along with lower customer acquisition costs, are recipes for success. 

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