Recognizing and rewarding personalized shopping styles is the new focus of loyalty programs.
By Anne Baye Ericksen, Contributing Editor
From an industry research perspective, consumer preferences traditionally indicated brand selection. Then the term started to describe where and how consumers spent their dollars, such as at brick-and-mortar stores versus online retailers.
Today, customer preferences include not just what they buy and where they make purchases, but how they pay and what rewards they expect to come from their choices.
The challenge for convenience retailers has expanded from catering to brand loyalty to how they can engage customers beyond everyday transactions.
For a growing number of convenience stores, the answer is personalized loyalty rewards programs.
“Shifts in shopping and consumption habits mean most retailers have accepted that total loyalty to one store or brand is unrealistic,” said Simon Johnstone, director of retail insights for Kantar Consulting. “Successful loyalty initiatives will be those that increase total share of shopper wallet by either rewarding, personalizing or incentivizing the digital shopper. As a result, many retailers will continue to bring traditional loyalty card schemes to the digital age.”
Customer loyalty programs certainly are not a new concept. They’ve been around for decades, beginning with the straightforward promotion of buy-10-get-one-free punch cards. While those cards have been replaced with smartphone apps, most consumers still respond to reward offers. According to the “C-Store Shopper Profile 2018” by Excentus, a PDI Company, 43% of shoppers visit convenience stores because they belong to the retailer’s loyalty program. Plus, 51% of c-store shoppers admit to frequenting retailers more often if they belong to a loyalty program.
However, motivations have changed. Whereas point accumulation once may have been enough to drive action, that alone is insufficient in today’s environment. According to an Oracle study reported by Retail Dive, nearly three-quarters of shoppers prefer to receive immediate benefits from loyalty programs rather than accumulating points for future redeeming. All Business also reports that the No. 1 reason people abandon loyalty programs is that it takes too long to earn enough rewards to make membership worthwhile.
Businesses now are exploring technology that allows members to redeem points as soon as they’re earned. For example, Shell-branded fuel retailers, in partnership with Excentus and FIS, a financial services technology organization, have developed a program that will institute real-time redemption savings.
KEEPING IT PERSONAL
But customers demand more than just instant rewards. Numerous studies indicate consumers’ desire loyalty programs that cater to their individual shopping habits. In fact, Oracle research revealed that 87% of shoppers are comfortable with having their buying habits tracked and monitored if that information is used to personalize a loyalty program.
“Many chains have ‘loyalty programs’ that are not loyalty, but rather frequency rewards. A true loyalty program recognizes individual purchase patterns and behaviors, and targets opportunities to improve value to the customer,” said John Schaninger, founder and owner of c-store consultancy The Schaninger Group as well as a partner of b2b Solutions LLC, based in Lake Forest, Ill.
“This allows the retailer to have insights into purchase behaviors, and thereby, the ability to target items and offers that complement the needs and desires of both the customer and retailer,” added Schaninger. “This additional [information] provides insights into what type of customer each individual person is, from ‘cherry picker’ to a ‘strong loyalist.’”
Thanks to technological advances, more and more convenience stores are seeking ways to engage customers through multiple platforms for that more personalized connection. La Crosse, Wis.-based Kwik Trip launched Kwik Rewards one year ago and reached 1 million members within a few months.
In addition to traditional offerings, such as earning rewards for in-store and fuel purchases, members have a digital punch card and receive exclusive coupons through a proprietary app that can be used at the company’s more than 650 Kwik Trip/Kwik Star locations.
“During the initial investigation of the Kwik Rewards project, we realized there were a lot of different elements and features that would be important for different users. Capturing all of these elements and implementing them within the rewards program was one of the areas we felt some programs struggled with,” said David Jackson, digital marketing and loyalty manager for Kwik Trip.
“We believe the Kwik Rewards program has excelled in implementing many of these important elements seamlessly and creating value for every user in different ways based on what’s important to them,” he continued. “Whether it’s visit rewards where a user can select their own reward or exclusive coupons and fuel discounts these members have access to, each member will find unique value with Kwik Rewards for different reasons.”
Loyalty personalization shouldn’t be limited just to affirming existing habits. It could be a mechanism to introduce new products and promote items members may not normally reach for on a routine visit.
“This form of personalization was one of our key goals with Kwik Rewards as it generates some excellent results at a very effective cost compared to one-size-fits-all offers,” said Jackson.“Challenging them to do something different to earn a reward encourages a habit we’d like [members] to adopt.”
VISIBLE & CURRENT
Marketing experts insist complacency is one of the deadly sins for loyalty programs.
Regular and meaningful promotion is critical to keeping members engaged for a high return on investment. In an All Business post describing the biggest loyalty program mistakes, Adela Belin asserted it can be five to 25 times more expensive to attract new members than to retain existing loyalty customers.
“Now it’s not as much about a business program, but how you communicate about it. You have to give them the content customers want and through a relevant channel, whether that’s push notification or social media,” said Art Sebastian, vice president, digital customer experiences for Casey’s General Stores Inc. The c-store chain, based in Ankeny, Iowa, operates more than 2,100 locations throughout 16 states. Currently, Sebastian is leading efforts to design a new mobile app and loyalty program, set to debut later this year.
Multi-channel connections have proven to be highly effective in keeping customers invested. Sebastian confirms Casey’s initiative will include messaging through the store’s website, social media channels, text messaging notifications and more direct communications such as emails to serve as prompts of special deals or reminders of membership benefits.
Buying online and pick up in store is already an accepted practice at department and big box stores, but could be a service c-stores adopt in the future and use to enhance or add bonus rewards.
“I would not limit the conversation to order online, but rather mobile ordering and online. Mobile ordering is the future and if one can develop an easy-to-use foodservice ordering system, as example, it allows for larger baskets for the retailer and speed of service for the customer, especially if able to pay through the app,” said Schaninger.