Reinventing Loyalty

Retailers are pulling out the digital stops to keep their loyal shoppers in the fold.

Going into the holiday season last year, Newport Avenue Market’s top 100 customers were given a great reason to remain loyal to the one-store independent grocer in Bend, Ore.: The top 25 each received $125 from the retailer, while the next 75 each got $75, to spend however they wished in the store.

The money — called “moolah” by the retailer — went into shoppers’ electronic wallet accounts, the linchpin of the store’s Foode Flash Card loyalty program. Shoppers normally earn 6 cents in their account for every $5 spent at the store. Almost 85 percent of the store volume comes through the loyalty program, which costs the store a base of $650 per month.

“We had a terrific year [in 2013] and wanted to thank our top 100 customers,” says Lauren Johnson, Newport Avenue Market’s chief executive and “head cheerleader” — a designation she recently inherited from her dad, store founder Rudy Dory. The loyalty system, managed by Bellingham, Wash.-based Accelitec, identified the best customers, deposited the rewards and e-mailed thank-you notes. “It was incredibly well received by those customers,” Johnson says. “We got stopped in the aisles, were sent handwritten thank-yous.”

Newport’s electronic wallet is one example of how food retailers are reinventing their tired, traditional approach to loyalty, which has been based on store discounts generated by swiping a plastic loyalty card at the checkout. Industry data suggests that these hidebound programs are sorely in need of rejuvenation.

According to Cincinnati-based Colloquy, which tracks loyalty marketing, even though enrollment in loyalty programs across industries grew 27 percent in 2012, activity fell 4.3 percent. Consumers are also increasingly wary of the privacy implications of loyalty schemes. Some large retail chains, like Boise, Idaho-based Albertsons, have shelved their card-based loyalty programs altogether.

But loyalty programs are being reinvigorated in the digital age with cloud-based systems such as Accelitec’s and by tie-ins with websites, social media and smartphones. Moreover, the information generated through these technologies is enabling retailers to get a much deeper understanding of their shoppers, which makes it easier to address their needs, nurture their loyalty and keep them as customers. One new vendor, Chicago-based SwiftIQ touts “Amazon-like” capacity to collect massive data sets from any number of sources and deliver insights about customers and product affinities.

In addition, providers of data analytics, like Cary, N.C.-based SAS, are enabling retailers to enhance not only the customer engagement part of their loyalty infrastructures, but also the operational and fulfillment sides. “The game has shifted to operations, including having the right level of [labor], training, displays, delivery models, digital asset management and work flows,” says Wilson Raj, global customer intelligence director for SAS, which works with such grocers as A&P, Wakefern/ShopRite and Winn-Dixie.

Raj also encourages retailers to avail themselves of free governmental data to support their loyalty programs, including information on weather, traffic, housing construction, population shifts and other demographics available on more than 90,000 websites.

Social Studies

Raley’s has advanced the reach and clout of its loyalty program through an unusually proactive use of social media. The West Sacramento, Calif.-based chain, which operates 115 stores in California and 13 in Nevada under three banners, launched its latest social rewards program, “Extra Friendzy,” last fall as a supplement to its “Something Extra” loyalty program. In addition, Raley’s partners with BzzAgent (a division of Cincinnati-based Dunnhumby USA) in offering an online advocacy platform called “Something Extra Try-It,” and delivers online discounts through the Zavers by Google and Aisle50 programs.

Powered by Revionics’ Social Commerce solution, Extra Friendzy is a feature on Raleys.com that provides loyalty customers new time-sensitive and limited-quantity offers on a weekly basis that can be redeemed at the checkout with a card swipe — but only if they agree to post the offers on their Facebook pages, thereby making them available to social media friends. Those friends, in turn, can click on the offers and post them on their pages, and so on until the promoted quantity is exhausted. The limited quantity and time of the deals prompt shoppers to “check what’s up there today,” explains Dick O’Brien, director of product marketing for Austin, Texas-based Revionics.

Extra Friendzy “leverages the powerful social media channel to keep our customers engaged, excited and motivated to shop,” notes Tom Hutchison, director of marketing, CRM and analytics for Raley’s. “In addition, this effort will help grow our social media advocates and referrals, drive more in-store traffic, and help draw members to our loyalty program.”

“The really big thing is all the analytics on the back end,” O’Brien notes, explaining that this would include “who is attracted by different offers, the time of the day and week they are shopping, which device they are using.” Raley’s is still investigating many areas, such as which items to promote and how deep the discounts should be.

O’Brien stresses that, unlike the failed Facebook store program, Extra Friendzy “starts and ends on the Raley’s website,” with Facebook serving as an intermediary location. “If someone clicks on a Facebook posting [of an offer], they go to the website and can take advantage of the offer there,” he says. “That’s a big differentiator.”

While grocers traditionally rank shoppers according to their spending, customers who have an outsized influence on Facebook and other social media take on a new significance in a program like Extra Friendzy. “The best practice is to identify those shoppers and thank them and send them separate offers,” says O’Brien.

App-driven Loyalty

With 56 percent of American adults now owning a smartphone, according to a 2013 report from Pew Research Center’s Internet & American Life Project, a branded mobile app can serve as a key component of a loyalty program.

Loblaw Cos., the giant Canadian grocer based in Brampton, Ontario, experienced a 12 percent increase in visits, a 5 percent rise in basket size and a jump of more than 11,000 members per store six months after launching its app-based “PC Plus” loyalty program in 2013, according to Peter Lewis, senior director, customer analytics and loyalty for Loblaw, during a National Retail Federation “Big Show” session in January. The app supplies shoppers with personalized dinner recommendations, recipe ingredients and offers, which produce three times the sales lift of the retailer’s paper flier.

A novel approach to loyalty, designed for independent grocers without the resources for a traditional SKU-based program, has been introduced by Atlanta-based GetOne Rewards.

Now being deployed by some grocers the company declines to name, the program consists of iPads mounted at the POS, where shoppers register, log in, enter raffles, and receive notices of points and awards based on total spending (purchases aren’t tracked by SKU) or trip frequency. Shoppers are given the option to answer questions about their preferences and demographics via iPad. The store in turn automatically sends out personalized offers to GetOne members’ cell phones or via e-mail.

Whether receiving targeted cell phone offers, endorsing offers on Facebook or piling up dollars in electronic wallets, shoppers are finding many more reasons to remain loyal these days.

“We had a terrific year [in 2013] and wanted to thank our top 100 customers.”
—Lauren Johnson, Newport Avenue Market

“[Extra Friendzy] will help grow our social media advocates and referrals, drive more in-store traffic, and help draw members to our loyalty program.”
—Tom Hutchison, Raley’s