In quest for loyalty, retailers dig into data
Canadians may not be polite, but they’re not an especially loyal bunch. A survey by the Royal Bank of Canada found 57% of consumers shop around for groceries more often than they used to.
They’re also fattening their wallets with rewards cards. Canadians are now active members in 7.3 loyalty programs, up from 6.4 in 2012, according to a Maritz study.
The number of loyalty programs available is growing, too.
READ: When stores and brands tussle for loyalty
This spring, two major Canadian retailers launched ventures: Loblaw debuted PC Plus, a loyalty app; and Target Canada introduced its Redcard credit and debit card. That program, available at American Targets for years, offers shoppers a flat 5% discount on just about everything in the store.
But customer loyalty isn’t necessarily the main goal of these new programs. Like most other schemes, Redcard and PC Plus generate mounds of data that can be distilled into consumer insights to boost sales.
“Either you want to be highly promotional and leverage these programs as a promotional tool, or you really want to pay attention to what shoppers are telling you,” explains Jacques Farcy, chief operating officer at Dunnhumby Canada, which works with Metro on its popular Metro & Moi program.
Retailers who use loyalty card data to learn about their customers, and identify what they like and don’t like, will be the most successful, says Farcy. Here’s how:
Know thy (best) customer: Canadians are some of the world’s most loyal users of loyalty programs. A whopping 63% participate in a grocery rewards program each week, according to Aimia, slightly below the U.K., at 75%.
The challenge for food retailers, according to Brian Ross, president of Precima, a LoyaltyOne company, is ensuring their card, not their competitor’s, is “top of wallet.” How to achieve that?
“Start by looking at your most important customers,” says Ross. “Then ask yourself, What are their needs? and look at their purchase behaviour on an aggregate basis.”
A good example is Loblaw’s PC Plus app. Each week shoppers are sent points offers on products they buy, based on previous purchase behaviour.
“If you buy Coke all the time, you’re not going to be sent an offer on Pepsi,” explains Kathy Buckworth, chief family advisor at PC Financial and PC Points. However, shoppers can get so-called “stretch offers.”
READ: Inside Metro & Moi
For instance, Buckworth was recently sent an offer to accumulate extra PC points if she bought Greek yogurt. “I don’t buy Greek yogurt now, but I do buy a lot of other yogurt,” she says.
Merchand-wise: A few years ago, U.K. grocer Sainsbury’s wanted to pull Grape-Nuts cereal from shelves. “The brand had relatively weak sales,” explains Kevin Baldwin, vice-president of Intelligent Shopper Solutions at Aimia.
But rather than delist Grape-Nuts solely on cash-register sales, Sainsbury’s and Aimia took a closer look at “consumer level data” gathered through the retailer’s loyalty program.
“It revealed that shoppers who bought Grape-Nuts were fiercely loyal to the brand and were often big spenders within the store,” says Baldwin. So Grape-Nuts stayed on shelves.
Be social: Aimia’s Manu Sarna, general manager of retail at Aeroplan, says the next generation of programs will reward members for engaging in activities outside of shopping.
A member of the Sobeys Club program might be rewarded for tweeting about a new product, posting an Instagram picture of a meal created with food purchased at Sobeys, or checking into a store with the FourSquare app.
“Programs that will succeed tomorrow will do a better job identifying who I am on Twitter
Get relevant: Though consumers may initially be attracted to a loyalty program for deals and discounts, they usually stick with a program because it anticipates their needs.
READ: Loblaw's loyalty program aims for the smartphone age
As Loblaw begins to collect purchasing data from its customers for PC Plus, the retailer will know ahead of time when shoppers need certain pantry stables, says Peter Lewis, Loblaw’s senior director of customer analytics and loyalty. So a customer who buys Tide detergent every 12 weeks could be delivered an offer on Tide 10 or 11 weeks after she bought it last.
As Loyalty One’s Ross says, “We really think relevance