Dive Brief:
- U.S. consumers hold 3.8 billion memberships in customer loyalty programs, according to the 2017 Colloquy Loyalty Census cited by Progressive Grocer. Membership growth has slowed to 15% from the 26% growth rate attained in 2015, due in part to the maturation of the U.S. loyalty market.
- Grocery program memberships dropped from 188 million in 2015 to 142 million this year, representing a 24% decline. This is partly due to mergers and acquisitions across the sector, according to Colloquy. It also suggests that grocers must offer more enticing reasons for customers to join, including more meaningful and personalized incentives, according to Progressive Grocer.
- Not wanting to share their personal data with grocers is a big reason why consumers are reluctant to join loyalty card programs.
Dive Insight:
While shoppers love discounts and deals, they want personalization without having to part with too much data. A consumer survey conducted by Retail Dive earlier this year found that less than half of consumers — just 43% —are willing to exchange personal data for discounts and other benefits. This presents a clear conundrum for retailers in their quest for personalization.
Whether shoppers want retailers to have their personal data or not, grocers still can learn a lot about shoppers through the application of advanced analytics and sophisticated algorithms. Besides data gathered from loyalty cards, grocers should keep a close eye on information such as past purchase behavior, search history, coupon downloads and social media interactions in order to segment consumers and develop personalized deals and promotions that resonate.
Loyalty programs remain an important tool for retaining customers and generating repeat patronage. With more grocery options available to consumers than ever — including online vendors, meal kits, and discounters like Aldi and Lidl — retailers have a battle on their hands in not only attracting shoppers, but retaining them as well. Research firm Magid found that half of American grocery shoppers visit three or more stores to buy food and household supplies.
So instead of offering price cuts across the board to all cardholders, like some programs do, retailers should consider revamping loyalty programs to give shoppers personalized offers through mobile apps, direct mail and other channels. Programs should be easy to participate in with benefits clearly and consistently communicated. Seamless integration across physical and digital platforms also will be an expectation. Perhaps most importantly, though, grocers must make it simple to redeem rewards and ensure that rewards resonate with shoppers.
“Shoppers love digital offers and deals, either in the form of discounts on products they buy, or in terms of rewards like points, if a retailer has such a program,” president and CEO of digital promotions provider Quotient Mir Aamir told Progressive Grocer. "The key is to make all such incentives relevant and easy to use. If a deal or offer is personalized, shoppers love it. In fact, shoppers have come to expect personalization.”