2020 forced supermarkets and grocery retailers into reinvention mode. From the way consumers buy groceries to how they’re rewarded for their loyalty, the impact of shopping for essentials in a pandemic has permanently changed the grocery market. To win and retain customers in the future, smart grocery retailers respond to increasing customer expectations around convenience, flexibility, and value.
Leading supermarkets and grocery stores are leveraging their loyalty programs to incentivize repeat purchases and compete in a booming market. Here are some tips for grocery retailers planning to launch or revamp their loyalty programs this year.
Digitize your program
Many supermarkets use physical loyalty cards to identify loyalty members at the point-of-sale, but members must remember to carry and present their cards at check out. Digitizing your loyalty program is a great way to differentiate from most programs in the market. By providing members with a mobile pass accessible via their smartphone devices, members can collect and redeem rewards in real time at the register.
Go a step further and launch a digital rewards experience for program members. Allow them to check their points balance and review available rewards on the program’s personalized dashboard. Connect your loyalty program to your online store to capture your shoppers’ purchase information.
Food Lion upgraded their MVP rewards program in 2020 to enable customers to redeem digital coupons when ordering online for store pick-up or home delivery. By providing this option, Food Lion guarantees their customers are rewarded for their purchases no matter how or where they’re made.
Offer personalized discounts and cash back
Grocery retailers and supermarkets operate on thin margins, making it difficult to offer high-value rewards. This limitation means that most elect to offer discounts and cash back rewards instead. Grocery retailers can differentiate their program from others in the market by leveraging customer transactional data to offer members cash back and discounts on their favorite items.
Supermarket chain Safeway’s loyalty program app, Just for U, collects customer shopping habit data and uses it to create personalized deals for program members. Members can also view weekly specials within the app and access automated personalized shopping lists based on the savings they’ve clicked on. These tactics keep the store top of mind for customers and keep them engaged in the program.
Consider a tier-based program structure
If you’re launching a brand new loyalty program, consider using a tier-based approach. Tiered programs provide customers with different perks and rewards depending on where they rank. The value of these benefits increases as the customer progresses through the tiers.
Tier-based loyalty programs have many advantages. The ranking system is a motivator for customers to spend and engage more with the brand. And brands are able to segment their customers and identify brand advocates more easily. These programs are a great way to give special treatment to your most loyal customers.
Tier-based loyalty programs are uncommon in the grocery market. In fact, when Giant Eagle launched their new myPerks loyalty program last year, it was the first multi-tier loyalty program introduced by a major U.S. supermarket. MyPerks provides a $1 reward for every 50 perks earned at Giant Eagle and Market District supermarkets and GetGo convenience stores. Customers who earn 2,500 qualifying perks within a six-month earning period unlock the myPerks “Pro” tier, enabling them to earn 50% more perks on groceries, retailer gift cards, gasoline, prescriptions, and more.
Consider charging a fee for membership
Fee-based or premium loyalty programs are another great way to stand out from the competition. Members of premium loyalty programs receive high-value perks and benefits up front for a fee; therefore, the benefits must be desirable in order to attract sign-ups.
PC Optimum, the loyalty program for Canada food and pharmacy leader Loblaw Companies, offers loyalty members the ability to become an “insider” and upgrade their grocery shopping for $119. PC insiders enjoy perks such as free and priority pick-up, free shipping, 10% back on certain purchases, and exclusive access to lifestyle content and sneak peeks.
Premium or subscription-based loyalty programs, when executed effectively, deliver a new profitable source of revenue. They also increase retention and brand affinity because subscribed customers are less likely to purchase from competitors.
Provide ways for members to give back
Loyalty programs are not only a valuable source of customer data; they also provide brands with a channel to communicate brand purpose and corporate responsibility. This is more important than ever, given that a recent Deloitte study found that (as of April 2021) 39% of U.S. consumers are becoming more mindful of where they spend their money, and 45% of consumers say they’ll purchase more in the future from brands that responded well to the COVID-19 crisis. Supermarkets and grocery retailers can do more to promote their values and mission in their loyalty programs by offering charitable donations as a redemption option.
Supermarket Kroger gives its members the ability to give back with their free Community Rewards program. Members can choose a nonprofit of their choice to receive funds from the grocery chain every time they shop. By providing customers the ability to donate to a cause they support, brands can expect deeper, emotional connections to form over time.
Winning customers through differentiation
According to U.S. online grocery shopping statistics, pre-pandemic total grocery sales were expected to reach $59.5 billion by 2023. In an unprecedented year for online grocery shopping, ecommerce sales alone grew 54% in 2020 to reach $95.82 billion. That propelled it to a 12% share of total U.S. ecommerce sales and 7.4% of all grocery sales.
In a market where loyalty programs don’t differ much from brand to brand, grocery retailers have an opportunity to win market share and secure their slice of the profits. By seizing the latest consumer trends, grocery retailers and supermarkets can upgrade their loyalty offerings by innovating their incentives, digitizing the program, personalizing the experience, and creating a sense of exclusivity.