It wasn’t too long ago when some supermarkets began ditching their loyalty cards altogether. Albertsons stores, for example, announced “card free savings” in 2013, notifying customers they no longer need the company’s Preferred Card to receive sale prices on items. Other grocery chains have instead adapted loyalty programs with improved mobile technology and customized rewards options.
Customers still want to save money when they buy groceries. And, they like the idea of getting special treatment for their loyalty to a company. In fact, loyalty card membership has increased by 26% in two years, from 2.6 billion total U.S. loyalty program members in 2012 to 3.3 billion in 2014, according to a COLLOQUY report, Customer Loyalty in 2015 & Beyond.
Too often, however, loyalty card memberships have become a burden rather than a perk. Most customers realize supermarkets use the loyalty programs to build a database of consumer purchase information. And, they’re willing to part with some degree of personal information to become a member, but what’s in it for them? While the number of loyalty program memberships has increased significantly, the number of “active” members has declined. “Our Census revealed a stagnant market in which more than half of members (58%) don’t even bother to participate, much less become engaged and enthusiastic members,” reported Jeff Berry, research director for COLLOQUY.
So what works? What do customers really want out of their loyalty programs, and how are supermarkets and other grocery retailers revamping their programs to make them more relevant and engaging?
No more physical cards
Loyalty programs continue to be valid, but most have made plastic cards and key fobs optional. Yes, some consumers have become accustomed to the cards, but the trend and future growth is digital through smart phone apps, websites or simply keying in a number associated with membership at check out.
Lucky Supermarkets’ Lucky You rewards program, for example, does not require a physical card unless customers request one. Members earn a point for each dollar they spend, and points can then be redeemed for various rewards, including dollars off and free products. Customers are given the flexibility to redeem the rewards most beneficial to them. The Lucky You program also allows members to create shopping lists and search a catalog of recipes through its app.
Mobile apps that excite
Loyalty programs connected to smartphone apps are becoming as ubiquitous as the physical cards once were, but some apps excite and engage customers the way successful programs should. Target’s Cartwheel app, for example, allows customers to redeem offers in-store using a single barcode on their mobile device. Members can search, browse or scan items in store to find offers and add the offers to their personalized Cartwheel barcode that they present the cashier. Customers use the Cartwheel app like it’s a game. They earn “Cartwheel achievement badges” for choosing, redeeming and sharing offers through Facebook. The badges open up more levels of savings, so the more they play, more deals they earn.
Some loyalty programs recognize specific niches within their own customer base.
United Supermarkets recently introduced its Kids Club geared toward promoting nutrition. The program, connected to United’s primary rewards membership, adds children to the account to receive special offers and treats. Children get a free piece of fruit every shopping trip, and members get information on exclusive Kids’ Club savings, family-friendly store events and contests, a monthly children’s e-newsletter and a free treat for children’s birthdays.
By going more digital, supermarkets are finding creative ways to differentiate their rewards and perks for loyalty. The one-size-fits-all approach to loyalty programs costs too much to manage and results in little reward for the retailer or the customer. Whatever the method, successful loyalty programs still need to be easy to understand and offer rewards that are relevant. Beyond that, programs that bring a little fun and excitement to the shopping experience can truly differentiate a brand.
If you enjoyed this article, join SmartBrief’s email list for more stories about the food and beverage industry. We offer 14 newsletters covering the industry from restaurants to food manufacturing.