Should a customer loyalty program come with fine print and what basically amounts to “black out dates”? You know, the program that offers you points or discounts by coming back, but you can only get those rewards on certain days. Or sometimes the rewards aren’t eligible during other promotions. Is this fair to your loyal customers? Here’s a better question - is it smart?

Fellow blogger Ben Coy shares an interesting story about an experience he encountered with a loyalty program at his local Smoothie King small business, which makes me think small business and franchisees still need more loyalty program tips. Above and beyond the loyalty program, though, Ben first ran into trouble with a coupon he tried to use. Smoothie King wouldn’t honor a coupon during a “Happy Hour” promotion open to all customers - not just ones in their rewards program.

No big deal, right? It’s understandable (sort of) if you can’t use a coupon during a special promotion. But at least Ben’s a “loyal” customer and he had his rewards card on him where he gets a stamp each time he purchases a smoothie, ultimately resulting in a free smoothie once he has filled up his stamp card.

Again, no dice because of the Happy Hour promotion.

So Ben asks the question, is it fair to keep your loyal customers from taking advantage of a loyalty program in favor of every other paying customer? And above and beyond it being fair, is it smart?

Ben sent Smoothie King a question and an executive-level company official did in fact get back to him with an explanation and free coupons. Sure this impressed Ben - as it would I - but in our opinion the damage had already been done.

Here are some loyalty program tips. Loyalty programs should be designed to truly reward the customers that keep coming back. Small business should always go above and beyond the call of duty to keep them happy. As Ben points out, these customers no longer mean just an additional entry in the piggy bank for companies. They’re also brand advocates talking up your company experience to friends, family and the potentially thousands of acquaintances in their social networks like Facebook and Twitter.

Here’s Ben’s full story.

What’s your take? Was Smoothie King right or wrong for taking away the loyalty program during a special promotion? Please leave a comment.