Why grocers need to adjust their loyalty strategies to deliver the goods: Part one

During times of inflation and economic uncertainty, customer loyalty is, perhaps, tied more directly to price than ever before. But there are factors at play beyond blanketed discounts, incentives and rewards. It’s increasingly important for grocers to understand their customers on a more granular level and engage them with personalized messaging and on the platforms of their choosing. 

We recently chatted with Joel Percy, regional director, Canada for Eagle Eye, a digital marketing tech company, about the risk of not having a robust loyalty program in place, and why grocers shouldn’t build those programs on “warm fuzzy feelings.” The interview has been edited for clarity and length.

The loyalty space in Canada has never been livelier. How can grocers remain competitive? 

A loyalty program must deliver value to customers. You can’t build it purely on warm fuzzy feelings. People are looking for dollars in their pockets or points they can use to save off their grocery bill, and I don’t think there’s a way of getting around that—value proposition must be central. But, given that everyone knows that and everyone’s aiming at that, when you talk about differentiation, it’s not only about value, it’s also about meaningful connections. The more retailers can tailor, not just the discounts and offers they’re giving, but also the messaging and the method of communication, I think that builds that emotional loyalty that makes a real difference and sticks in customers’ heads. 

READ: Grocery rewards programs most valued type of loyalty program among Canadians

Pre-pandemic, “earn and burn” or pure discount-based programs weren’t enough to remain competitive. Is it enough in today’s economic climate? 

The days where everybody gets the same thing – a certain number of points per dollar or a certain percentage – is not enough to stay competitive in today’s environment. I think that gets lost in a sea of sameness and customers turn that off quickly. They’ll swipe their card as an automatic gesture, but often if you ask them what they’re getting, they might not even be able to tell you. It’s not about moving away from value to experiences – you need to do both – but it’s about communicating that value or focusing that value in a place that matters. For example, there are going to be families for whom the biggest expense is diapers. If you can give them meaningful, dollar and cents value on the loyalty program in that category, you’re going to win their hearts because you’ve tailored that message for them. For a different household, it’s going to be a different category. The retailers that have the tools to try out those different messages and different offers and find what resonates with individual customers and adjust when things don’t resonate, are at a real advantage. 

READ: How loyalty programs can deliver the savings shoppers want

Is personalization getting better? 

I think all of us have experienced what I would call “rudimentary first steps personalization.” You bought a product, you must want to buy it again. Data science is getting better and [companies] can understand what the purchase cycles look like…You don’t run out of shampoo as quickly as you run out of eggs, for example. You need to tailor those things. Grocers are starting to look at how to personalize beyond the products they’re offering. A simple example is personalizing the timing of the communication. A lot of retailers typically send out their personalized communication on a Thursday to line up with when the flyer drops. If I’m a customer who shops every Wednesday, that’s probably not the best day to communicate my deals to me. Also, some customers respond better to frequent communication with a few deals and some prefer one communication with everything. Digital technologies let you experiment. The more you A/B test, the smarter you get as you go along.

What’s at risk for grocers who don’t have a robust loyalty program in place? 

If you don’t have a loyalty program, you’re flying blind on what your customers are doing. You don’t have the data to inform you on what’s happening if you make any changes. How do customers behave differently [as a result of these changes]? Do they visit more frequently when I do this? Are their baskets bigger or smaller? It’s depriving yourself of data that could help the business in a much better way.

This article first appeared in Canadian Grocer’s June/July 2023 issue.