Groceryshop 2022: How Retailers Can Engage Shoppers Through Loyalty Programs
Customer retention is important as ever, and both retailers and brands are figuring out new ways to develop shopper loyalty.
At Groceryshop 2022, held Sept. 19-22 in Las Vegas, NV, Ken Fenyo, president of Research & Advisory at Coresight Research, detailed the state of the grocery loyalty program, and spoke about which programs are succeeding and why. Fenyo also hosted a panel on building consumer loyalty that featured Michael McGowan, SVP of insights & loyalty at 84.51°, who spoke about Kroger’s new Boost program.
“Based on our research about 15% of people say they increase their spend when they join a loyalty program, and only a much smaller percentage say they decrease it,” said Fenyo. “Paid programs are exploding in popularity. Within the grocery, food, mass and drug space, half of the top 10 programs are paid programs: Amazon Prime, Costco membership, Sam’s Club… Walmart+ and Kroger Boost are also on the list. But that’s a big change. Many of these programs didn’t exist a few years ago.”
When it comes to tactics, Fenyo pointed out a few techniques that retailers are using to attract customers through their loyalty programs. He cited retailers like Walmart, Albertsons and CVS as having programs that offer experimental benefits like streaming service benefits, personalizable free items and earning points by doing healthy activities, respectively.
Fenyo added that overcoming the ‘personalization gap’ is a key challenge for retailers with loyalty programs going forward. He cited Family Dollar as an example of a retailer using technology to better target shoppers with more relevant deals.
“About 34% [of surveyed consumers] said that retailers excelled at personalization. When we asked retailers if they excelled at personalization, pretty much all of them said ‘yeah, we’re great at this,” Fenyo said. “We think there’s a lot of room to improve personalization, and there’s a lot of things you can do. Family Dollar… the idea is not just an offer that’s relevant to you, but it also detects where you are. If I’m in the checkout ad for example, I’m going to get a Snickers ad because I’m by the Snickers. If I’m somewhere else in the store, I’m going to get a different offer. Thinking about not just the offer personalization, but the context, is important.”
When it comes to Kroger’s Boost membership program, McGowan said giving high value to customers through the program is the top priority. The annual membership provides customers unlimited free grocery delivery on orders of $35 or more, fuel discounts of up to $1 per gallon and additional savings on private label products.
“We see eight to 10 times more engagement from our loyal shoppers than we do from our non-loyal shoppers, which is an incredible stat,” he said. “It puts more emphasis on the need to be really personal and intentional about how we cultivate that relationship. Flexibility is now key. Shoppers can engage in new ways, on their own terms, on their own time. Boost is the next generation that we think offers a delivery benefit to our customers, enhances our fuel program, and also offers exclusive offers, whether that’s through our private brand businesses or national brands. We are going to continue to be flexible and offer new benefits for our customers."