Across all retail segments, including convenience stores, loyalty programs are big business, and it’s no wonder. They’re proven to boost growth, they are not expensive for the retailer to implement, and they enhance your relationship with your customers.
U.S. consumers have 3.8 billion memberships in consumer loyalty programs, according to Hubspot’s 2020 Loyalty Marketing Trends for Convenience Stores. Today, loyalty programs are all about the customer experience, creating personalized, choice-driven programs that will meet and exceed consumers’ ever-heightening expectations. Whether it’s a point system, discounts, cash back or members-only coupons, retailers need to balance the financial costs to them, versus increased customer loyalty and increased purchases as a result.
In addition, today there is greater access to more (and more personalized) customer preference data than ever before as a result of technology-based loyalty programs. It allows retailers to offer personalized, customized rewards, offers and experiences to customers, which enhances their engagement. Like Netflix and Amazon, it gives the customer the feeling that retailers know them, are interested in their preferences, offering what they want and need even before they know what that is. It’s a gold mine of data for retailers, but that data is sitting on a slippery slope. It’s the “too much of a good thing” syndrome.
As consumers get more and more savvy about data privacy, and high-profile data breaches across all industries make people wary about giving personal information, retailers must walk a fine line about the type of data they’re collecting and using. The perception out there is: Shopping preferences = good. Email addresses or other personal information = bad.
In the end, Hub Spot said, it all boils down to value, customer engagement, increased purchases and an improved customer experience.
When it comes to loyalty programs, 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.
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” 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.
A Personal Focus
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.
The trap for c-stores is that 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. 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. This additional information provides insights into what type of customer each individual person is, such as a loyal repeat customer or someone just passing through.
Keep Current and Engaged
Thanks to technological advances, more and more convenience stores are seeking ways to engage customers through multiple platforms for that more personalized connection. 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. Experts believe 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. Retailers must consumers the content they want and through a relevant channel, whether that’s push notification or social media. Multi-channel connections have proven to be highly effective in keeping customers invested.
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. This strategy has started to take hold at convenience stores during the pandemic and is an effective way to grow sales using a loyalty program.