Grocery loyalty programs enjoy widespread popularity. Our recent survey and report, Grocery’s Great Loyalty Opportunity, found that 70 percent of North Americans belong to at least one. And amid rising food costs, they’ve become more popular as consumers seek value (73 percent) and discounts (62 percent) from brands. Shoppers also have firm preferences about how to unlock that value: they want more personalized offers (46 percent), discounts on a wider range of products (65 percent), and for it to be easier to find discounts and specials (56 percent).
As high-frequency, high-SKU businesses, grocers enjoy certain advantages compared to other retailers that don’t collect a comparable volume of data from their customers, making them well-positioned to deliver customers’ desired value through their loyalty programs.
Next-Level Personalization
One of those advantages is the ability to personalize the loyalty and shopping experience.
Many grocery loyalty programs can personalize offers thanks to the wealth of information they have about a loyalty member’s past purchase history. And consumers are very open to these types of promotions; our survey found that 82 percent of consumers said they believe personalized offers could help them save money, and 58 percent think it’s important to receive customized offers.
However, loyalty managers must think beyond past purchase history to leverage the power of personalization that drives more business and responds to consumer demand for value. Knowing when customers typically shop and how frequently they prefer to receive promotions can amplify the conversion rates of personalized offers. Understanding a customer’s typical basket size and identifying the right incentive level to drive the next purchase can enable many customized combinations of different offer types and discount levels that are likely to resonate.
Similarly, a more detailed, real-time view of the buying journey (e.g., is the customer in-store, looking at the app, or building their virtual cart?) can yield a more engaging loyalty experience and boost offer redemptions. Consider these numbers: 65 percent of North American consumers would contemplate buying a product or find it helpful to receive a text or notification in the loyalty app with an offer while shopping, and 43 percent think retailers should send them relevant offers when shopping. This puts the offer front and center rather than making it something customers need to be searching for.
The challenge for grocery retailers is building the infrastructure needed to execute this type of personalization. Many grocers look at their data weekly or monthly, but always-on data management and real-time, customized offer permutations can’t be handled in-house. Our findings suggest that while personalization is on loyalty managers’ radars, only 35 percent had planned to invest in this capability in the short term, pointing to a big disconnect between clear consumer demand and the industry’s focus.
Winning the Grocery Loyalty Game
Of course, there are more ways to create value for customers other than targeted and contextual discounts. Gamification, for example, is an excellent way to increase engagement and deliver savings to customers through points or rewards. Nearly 65 percent of shoppers we polled said they would or already do play games offered by their loyalty program, so while not all customers might choose to participate, a significant subset will. These experiences are also an excellent way to collect customer data points and drive new revenue streams by including supplier promotions within their games.
Savings and points-based value have always been at the heart of the grocery loyalty experience. Now is the time for retailers to re-examine what that means to their customers and upgrade their technology and strategies to stay competitive and deliver the value and experiences their customers expect.
Joel Percy is the regional director of Canada at Eagle Eye, where he helps clients grow loyalty and drive sales by building digital connections with their customers.
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