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Consumers love low prices. No surprise there. But in the grocery retail sector, consumers are particularly fond of price-based offers and promotions—a fact that has made loyalty cards a hit with both customers and grocery brands.
Recently, Midwest supermarket chain Jewel-Osco discontinued its loyalty card program. Seen by many as a bold move, the regional chain defended its decision by stating that the brand will now focus on offering everyday low prices to all of its customers.
But is it really a good idea to discontinue loyalty card programs? And more importantly, should other grocery brands follow Jewel-Osco’s lead and transition away from the loyalty card concept?
The Value of Loyalty Card Programs
Loyalty cards accomplish several things. In addition to rewarding customers for loyal brand behaviors and repeat visits, card programs give supermarkets a convenient mechanism for capturing customer information and distributing promotional offers or product information.
In many cases, loyalty card programs play a key role in grocery brands’ targeted marketing initiatives. Since customers use their cards to identify their store visits, groceries can leverage card programs to collect granular insights about customer preferences and shopping behaviors. This enables supermarket chains to intelligently evolve product selections and generate promotions that are customized for individual consumers.
Yet, despite the benefits, loyalty card programs can be expensive to implement and maintain. Effectively capturing customers’ behavioral loyalty does not always mean their attitudinal loyalty will follow. Some supermarkets have also found that loyalty card programs discourage shoppers from purchasing items that aren’t connected to a loyalty discount, impacting the store’s ability to sell products at full price.
Improving Loyalty in Grocery Retail
Loyalty card programs may not be the right move for all grocery retailers. But regardless of whether or not your supermarkets use loyalty cards, there are several strategies that can be used to boost loyalty and generate robust advocacy for your brand.
Customer focus. More than ever before, the customer needs to be the focus of your business model. Customer experience management programs recognize the importance of shoppers’ needs and preferences, and enable your brand to improve the consistency and impact of the customer experience.
Quality counts. Grocery retailers need to remember that it isn’t just about price. For consumers, real value is found in high-quality products offered at affordable prices. By delivering superior products and services, you can differentiate your brand from the competition and give shoppers a reason to keep coming back to your stores.
Promotions and product information. Loyalty cards provide an easy way to distribute promotions and product information to your customers. But what happens if you terminate your loyalty card program? Before you decide to transition away from loyalty cards, make sure you have an alternate method of capturing customer emails and distributing personalized promotions to shoppers.
Employee engagement. Engaged employees are satisfied employees—the kind of employees who pass loyalty sentiments on to customers. By creating an environment that promotes job training and career advancement opportunities, you can empower your workforce with the skills and attitude it takes to improve brand loyalty.
Ironically, the current controversy over the use of loyalty cards isn’t about loyalty cards at all—it’s about how grocery brands can encourage repeat visits in a competitive industry that is driven by price-conscious consumers.
Cards or no cards, by leveraging customer experience management programs and implementing a handful of essential loyalty strategies, grocery retailers can significantly improve the frequency of repeat visits and achieve bottom line business growth.
Gary Edwards is chief customer officer at Empathica, a Mindshare Technologies Co., a leading global provider of social Customer Experience Management (CEM) solutions to the world’s most respected multi-unit enterprises