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Looking for loyalty: inside Metro & Moi

The catchy loyalty program with the bouncing "m" balls is helping Metro connect with customers

It’s an ordinary trip to the supermarket for Bunmi Laditan. She contentedly fills up her cart at the Metro Somerled store in Montreal’s Notre Dame de Grace borough, and in turn she will be rewarded for doing her grocery shopping here.

At the checkout, what makes this trip extraordinary is that she won’t have to pay for a portion of the items in her cart, thanks to a $20 cash rebate she just got in the mail.

That’s just one perk of being a member of Metro & Moi (Metro & Me)–Metro Inc.’s new loyalty program that gives Quebecers like Laditan a minimum four dollars off their bill every three months for every 500 points accumulated.

Bunmi is one of over one million Quebecers now with a Metro & Moi loyalty card. Just over a year-and-a-half after the program’s launch, in the fall of 2010, one in three Quebec households are members.

No one is more delighted at that speedy adoption rate than Marc Giroux, Metro’s vice-president of marketing (pictured).

Giroux, a young and energetic marketing wunderkind whose background includes time spent at telco giant Telus, started working on Metro & Moi in 2009, after the grocer’s top executives decided that Metro needed to be more customer-focused.

More specifically, they wanted to find a way to reward Metro’s best customers and curb any temptation shoppers have to dash off to the competition.

Metro & Moi does exactly that. From a shopper’s standpoint, the program is remarkably straightforward; the more they spend, the more “m” points they collect and the larger the discount on their grocery bill. As an added perk, shoppers are sent personalized offers on some of their favourite items.

For its creator, Giroux, Metro & Moi isn’t another marketing ploy, but a key cog in the grocer’s overall strategy to drive loyalty and increase sales. The reward points are tied to everything in the store, and vice versa.

“If you just launch a loyalty program to operate it on its own, you wouldn’t get the traction and value you’d get when it’s part of the overall brand,” says Giroux.

Given the state of Canada’s grocery market at the moment, that approach seems to make perfect sense. In most towns and cities, including in Quebec, there is more retail food square footage than needed.

With little volume growth happening, “the only way grocers can grow is to take share from competitors,” says Stewart Samuel, senior business analyst with IGD Services Canada, an organization that works with supermarkets and manufacturers worldwide.

A good loyalty program can help grocers such as Metro coax customers to shop more often at their stores and to spend more while there, he says.

TV spots created by ad agency Publicis are like mini movies. One ad stars a Metro grocer and a typical shopper, Mme. Bouchard; 2. the grocer takes Mme. Bouchard on a plane ride, showing her fields where Metro gets fresh produce; 3. next, a fleet of planes sends out “m” points and skywrites “thank you” to members

When Giroux and his staff sat down to create Metro & Moi, they did so partly out of necessity. In most of Ontario, Metro has the exclusive on Air Miles. But in Quebec, Air Miles’ rights are held by rival Sobeys, through its IGA banner.

To get its own loyalty program in La Belle Province, Metro had to dream up something new. The question was, what? And, how would a new program resonate with Quebecers?

To get the answer, Giroux’s team conducted customer surveys throughout the fall of 2009. They discovered three things that customers wanted most: A loyalty program had to be simple; it had to allow customers multiple opportunities to accumulate more rewards within the store; and it had to reduce their grocery bill.

The resulting program does all that. Customers who sign up collect one “m” point per dollar they spend, and they can earn up to 10 times the number of points by choosing items that are featured in special points promotions.

Once at the cash, shoppers only have to look at their receipt to see how many points they have on their balance, how many points they tallied on this trip and how many points they’ve already collected to date, plus bonus points they’ve accumulated.

Further, every quarter, Metro sends cardholders a reward in the form of a cheque that they can apply to their next grocery bill. They also receive personalized offers to earn more points or save on products that sales data shows they often buy.

The one-two punch of incentives and money off their grocery bill is why Quebecers have signed up to Metro & Moi in droves.

The No. 1 reason someone doesn’t participate in a loyalty program is they don’t see meaningful value in it, explains Rob Daniel, vice-president of research & loyalty at Maritz Canada Inc., one of the largest loyalty marketers in the world. In Metro & Moi’s case, shoppers are frequently reminded of the value they get from the program.

Metro found shoppers wanted from a loyalty program: it had to be simple, it had to provide more than one way to earn points, and it had to cut their grocery bill.

Of course, Metro isn’t pulling the levers on Metro & Moi all on its own. Nearly from day one it has had a secret weapon: Dunnhumby, one of the world’s top back-end loyalty providers, known for its expertise in customer data analysis.

Founded by veteran UK marketers Edwina Dunn and Clive Humby, in 1989, Dunnhumby counts the largest grocer in the UK (Tesco) and the second largest in the U.S. (Kroger) as clients. Tesco, which started working with Dunnhumby in the mid-1990s, now owns the firm. (Canadian Tire and Macy’s are clients, too.)

Metro’s decision in 2009 to work with Dunnhumby appears like a no-brainer now. What Dunnhumby excels at is extracting customer insight gold from the mountains of crude electronic point-of-sale data grocers spit out with every beep at the till.

analyze it using complex mathematical models to work with retailers on how to build the loyalty of our already most loyal increase their basket spend and reduce the inclination of those shoppers to shop elsewhere,” Samuel says.

In Metro’s case, this information not only drives customer loyalty strategies, it helps Metro’s suppliers better understand why shoppers are buying (or not buying) their products.

With Dunnhumby’s help, Metro & Moi has given sales at Metro and Metro Plus bannered stores in Quebec a sales lift, says Giroux (though he wouldn’t say how much of Metro’s overall sales increase can be attributed to the program).

Metro & Moi, he adds, has been a hit across the board, with all ages and income levels. Consumers have everything to gain and nothing to lose: when you get your cheque, you get coupons of your favourite products, and accumulate even more points.”

For some, collecting Metro & Moi’s “m” points is something of a contest. Giroux relays a story about a business conference in Montreal attended by major law firm executives. After Giroux dropped his keys on a table, one lawyer, seeing the Metro & Moi key tag, started telling Giroux (not aware of who he works for) how much he loves the program and how he and his friends compete to see how many “m” points they can accumulate.

“Those were business executives of big law firms. You wouldn’t expect them to be so engaged with this program,” Giroux says with a smile.

Metro’s current zeal for loyalty programs is something akin to an agnostic finding religion. In a recent analysts’ conference, Eric La Flèche, Metro’s president, admitted that the retailer had never been a big believer in loyalty schemes.

“We saw it as an expense as we were just rewarding customers.” So what changed? La Flèche says that loyalty has moved from “candy rewards” to insights “that you could do something with to leverage and improve your business and sell to your suppliers and generate revenue for your business. It’s a two-way street now.”

For Metro & Moi, all streets lead to its most loyal customers and how to target them with the right promotions. Metro and Dunnhumby now pour through aggregate transactional data to better understand how loyal customers behave, how they use flyers and what promotions get them excited.

moving from segmentation to understanding customers and really delivering on their needs,” says Giroux.

Take the all-important front page of the flyer. Metro is looking to balance the offers between price-sensitive, mid-market and upmarket because, as Metro & Moi insights show, all customers love a good deal.

By understanding which products are more effective on the flyer’s front page, Metro is able to play with product combinations and different price points to encourage broader basket shops.

For instance, “Metro and Dunnhumby can use the tools to understand that if a shopper is buying the chicken fillets on offer on the front of flyer, what else are they buying as part of that basket?” says IGD’s Samuel.

Metro also looks to create what’s called “associated basket spend.” This is the dollar amount of all products in a basket that contain a given promotion (not including the money spent on the promotion product).

Basically it’s about making promotions more efficient through minimizing cherry picking. For example, a total basket spend of $23.63 contains four items, including a 12-pack of Coke on promotion for $2.99, resulting in an associated basket spend (associated to the Coke promotion) of $20.64 (total basket minus the Coke promotion).

“It doesn’t need to be a complementary product like pasta and sauce. Instead it’s something attractive to customers who do a bigger shop with you,” says Marc Fischli, chief operating officer of Dunnhumby Canada. “M” points play a big role on associated basket spend, as well as good front-page flyer price and thirdly, more targeted promotions.

Fischli says one benefit of a targeted promotion is that it gives a customer group that is very similar in one way or another specific offers that they would be really interested in.

Sending loyal customers promos that are targeted, or as Fischli puts it, “meaningful rather than meaningless,” results in a higher probability of those coupons being used, thereby increasing the efficiency of the promotion. So whether the promotion is for more upmarket shoppers who don’t look much at prices or for those who look at every single flyer in the week, each group has a specific message that is sent out to them.

“The insights Metro gets from the Metro & Moi data can be applied in a number of different ways: marketing and promotions or ranging strategies,” says Samuel. “So instead of having a mass e-mail campaign, Metro can be very targeted with personalized campaigns across a smaller group of shoppers.”

Meanwhile, the “m” points do double-duty on the loyalty front: acting as a thank-you for shopping at Metro while at the same time luring back customers to collect even more points.

Around the same time Metro launched Metro & Moi, it also set up two programs. The first, “My Grocer’s Secrets” delivers tips and recipes online. The second, a “customer promises program,” trained its 65,000 employees on five key principles: 1) great quality fresh products; 2) customers get what they want; 3) people are great; 4) prices are good; 5) and stores are easy to shop.

Meanwhile Metro has started renovating fresh departments in Ontario and Quebec to make produce the pièce de résistance of the store. Display shelving has been placed on multi-levels for an easier shop and merchandising displays are black to highlight produce colours. Over the next two years, most Metro banners should be converted to the new produce layout.

One of the most interesting tools in the Metro/Dunnhumby arsenal is a web portal called “the Shop.” It lets suppliers (who must pay to have access) better understand a multitude of metrics around their products.

The Shop is structured by business questions such as, “Who buys my brand?” Suppliers can look at what type of customer buys a one-litre versus two-litre cola brand. Then they can find out the purchasing habits of particular customer segments: Are they loyal Metro customers or loyal to that cola brand?

The data available through the Shop tool is impressive. Take assortments, for instance. Metro can find out what product is being substituted for another.

For example, if the one-litre cola bottle is out of stock, and a customer like Laditan in Montreal always buys that brand, what does she buy as a replacement–a small bottle of the other brand, a diet cola brand of the same format or a two-litre bottle?

“You can start to look at how customers make decisions on trade-offs between different products,” says Fischli.

The data also helps decipher which products should be next to each other on the shelf. Most consumer packaged goods companies prefer to have all their branded items together. But Dunnhumby has found that customers don’t always find that helpful.

Fischli says cola is one of the few categories that shoppers shop by brand, whereas milk category data shows that customers don’t care about brand; it’s more about one per cent milk, two per cent milk, or lactose free. “Other need states are more important than the brand,” he says.

Dunnhumby, the UK loyalty experts that works with Tesco and Kroger, is helping Metro turn loyalty card data into useful insights. Since this concrete data is now available for both retailer and supplier to study, insights gleaned from Metro & Moi could lead to better supplier/retailer co-operation.

“The data is the same and clear, and there’s one single version of the truth for both retailers and suppliers on what Metro customers actually do in-store,” says Fischli.

Suppliers contacted agreed that the Metro & Moi program allows for more collaboration and a better understanding of the Metro shopper. In the future, armed with more information, they say they will be able to bring more informed solutions to the table and make sure that they are catering to Metro’s most loyal consumers.

Meanwhile, Metro is able to lift sales of certain products simply by attaching “m” points to them. “When we do that we’re seeing sales lift,” Giroux says.

To boost sales further, Metro uses Metro & Moi to create in-store events. For the one-year anniversary of Metro & Moi, the retailer held a four-week contest, wherein customers were given a scratch card and could earn up to 10 times on any given points and were entered into a draw to win free groceries for a year.

“Ranging” is another area that Metro can effectively employ loyalty data to. By understanding which products loyal customers buy or don’t buy, the company can make smarter delisting decisions.

“The tools Dunnhumby has actually enable a retailer like Metro to understand how important those products they’re going to delist are to the loyal shopper,” says Samuel. “If we delist that product, we could lose the whole basket shop from our most loyal shoppers.”

That’s something Walmart in the United States found out the hard way, in 2010, when it undertook a huge SKU rationalization program, eliminating thousands of products on shelves. When sales dipped and shoppers complained, the retailer reversed course, adding back many items.

As it mines deeper into loyalty data, Metro may find even more possibilities. A look at what Dunnhumby has done with both Kroger and Tesco’s loyalty programs provides a glimpse.

Kroger, for example, is using loyalty card data to segment its stores into three groups–price-sensitive, mid-market and upmarket, and adapting pricing and assortment accordingly. “Kroger makes sure there is higher variety and selection for upmarket stores and more shelf space for price-sensitive products in pricesensitive stores,” says Fischli.

Kroger is also looking at the behaviour of its ethnic shoppers at certain stores, following in Tesco’s footsteps in the UK.

“Tesco found through its loyalty data that in many cases, the second- or third-generation of immigrant populations from South Asia and the Caribbean tend to become more British than the British; while upmarket Caucasian customers start to explore different cuisines, even cooking from scratch,” says Fischli.

Tesco found out through its data insights that the actual ethnicity of customers in the U.K. over time becomes less of a decision-making factor in purchasing decisions; rather, it’s more about the behaviour of the customer. It’s this type of data that Metro could benefit from as it reaches out to Canada’s rapidly growing ethnic population.

Samuel explains another promotional mechanism used by retailers such as Tesco and Sainsbury in the UK to capture a greater proportion of their existing shopper’s grocery spend.

As part of a promotion, they give shoppers five pounds back on their purchase if their bill rings up at the cash to at least 40 pounds. They then do a mail-out of six vouchers to customers that can be used in six subsequent weeks.

So while a shopper may only typically spend 30 pounds in the store, during a period of six to eight weeks the promotion gets that shopper to spend 40 pounds in order to get the five pounds back.

“Once the seventh, eighth and ninth week comes and there are no more vouchers, hopefully you’ve encouraged the shopper to come to your store over the one-month, two-month period and limited the spend at competitor stores,” Samuel says.

By most accounts the Metro & Moi journey to date has been successful, with Metro, suppliers and, most importantly, customers like Laditan, excited with it. One year after its launch, Giroux says surveys have found that 93 per cent of Metro & Moi members are happy with the program.

Only time will tell how Metro will use data from Metro & Moi to create loyalty and increase market share and basket size.

But one thing is certain: Metro & Moi is more than just a loyalty program. It’s a potential game-changer for the Quebec supermarket chain that is helping transform its conventional grocery banner into something unconventional.

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