If the sudden demise of Plenti, the highly publicized coalition loyalty program that discontinued operations this summer, was an indication of customer sentiment toward loyalty programs, there might be some questions about their value.
If the sudden demise of Plenti, the highly publicized coalition loyalty program that discontinued operations this summer, was an indication of customer sentiment toward loyalty programs, there might be some questions about their value. But Plenti's downfall was not surprising to industry experts.
“Plenti had challenges to begin with, working as a coalition,” Mark Johnson, CEO of Loyalty360, a trade association for customer loyalty that works with brands, restaurants, hotels and grocers, told Food Dive. “It wasn’t a clearly understood program, and many retailers still ran concurrent programs.”
Johnson said that today, the goal for loyalty programs is to be relevant and timely to consumers and their preferences, and to create a dialogue between the customer and the brand.
So while grocery loyalty programs have been around for years, they may be more important than ever in today’s competitive landscape. The trick is crafting the right offering for today's consumer.
“I think there is a great need for simplicity in these programs,” Johnson said.
How loyalty benefits the grocer and the customer
The benefit of loyalty programs for grocers is clear – they provide access to customer data, shopping patterns and behavior and a direct line to the consumer, which ultimately helps the grocer drive sales among existing shoppers.
“The loyalty card allows retailers to understand who their shoppers are in a more significant way,” said Diana Sheehan, vice president of retail and shopper insights for Kantar Consulting. “It allows them to elevate how they communicate with their shoppers, it allows them to explore how to optimize their offers to meet shoppers' needs because they know their purchase behavior.”
Traditionally, Johnson said loyalty programs centered on purchase frequency and monetary spend, but now they are more focused on personalization and use of data through one-to-one relationships with customers. Additionally, highly regulated environments today make customer loyalty even more important.
“As states become more restrictive in policies around marketing, these programs will become even more important," Johnson said. "You’ll have that explicit permission to market to customers based on their participation in the program."
But what about the customer benefits? There is no limit to how many loyalty programs a person can join, no matter how frequently they shop somewhere. When shoppers can be treated as “loyal” almost anywhere, what programs actually work well and keep them coming back?
According to Colloquy’s 2017 Loyalty Census, there are 142.5 million individual loyalty memberships in the U.S. grocery industry, and customers are motivated to use programs that are easy to understand.
The key, according to Sheehan, is for a grocer to have a program that's unique and that offers benefits consumers actually value.
“Is it differentiating, or is it simply a piece of plastic that allows people to track purchases and basically give 80% of shoppers a good deal?” said Sheehan.
Best practices in customer loyalty
According to Johnson, Safeway, H-E-B, Kroger and Hannaford are among the strongest customer loyalty programs in the business.