The year 2020 has been a century-defining year for the global economy. When industries such as hospitality and luxury have dropped to their lowest levels, essential services such as utilities and groceries have seen exception surge. Since the environment is going to stay skeptical, the surge is going to continue for some time now. If you are a grocery business, this is an opportunity that must be leveraged.
A good customer retention program enhances customer spending in any field of business including grocery business. Some elements of the retail loyalty program can be applied to grocery loyalty as well. However, there are a lot of challenges for groceries and food & beverage companies because the products have less shelf life.
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Customer Loyalty in the Grocery Industry
Though grocery is a competitive field, the business can stand out by just doing the basics of loyalty right. Many grocery loyalty stores are realizing the importance of consumer loyalty to the store and how it can increase the footfalls just by implementing a lucrative grocery rewards program with a store loyalty cards list. Simple optimization can make an important difference in grocery loyalty. The grocery stores with loyalty cards have improved customer retention by at least 10%, which in turn has shown promising evolution in their cash registers.
Factors That Influence Grocery Loyalty
According to a study, about 85% of shoppers have visited between five to ten different grocery chains every year to purchase their groceries. Only 1% said that they always prefer a single grocery store throughout the year.
Therefore, loyalty in grocery is not like other industries such as consumer electronics or fashion apparel which has a significant base of loyal customers. There are many factors involved in choosing the grocery store, specifically the proximity of the store and convenience of the user. Factors such as price, quality, and product selection play a secondary role in grocery loyalty.
Challenges of Grocery Rewards Programs
Having weighed all the options of grocery loyalty, there are a lot of challenges in designing grocery reward programs. Since grocers have very wafer-thin profit margins, they are always in the dilemma of giving huge rewards to customers as part of a rewards program. Spending generous amounts of rewards in loyalty can affect their already narrow margins. Most of the grocery stores offer digital coupons as part of their primary feature of loyalty. The traditional loyalty formula is applied where customers are incentivized to accumulate points on every purchase. Once the threshold is reached, they can redeem their points in various ways. CPG subsidies are also part of many grocery loyalty programs.
Though margins in the grocery industry might below, it has a great volume and frequency. People buy groceries frequently, and it was categorized as an ‘essential commodity’ during the pandemic.
Incentivizing Customers to Return to the Grocery Store
Since grocery is not an occasional purchase like jewelry or automotive, there is not much thought given when it is purchased. It is a commodity that is high utility but very low iconography. However, loyalty programs can create a sense of brand ownership among customers and prevent them from choosing other stores if they have the motivation to come back to you.
Attaching emotional investment with every grocery purchase can offer great returns. For example, a set of cutlery after making ten visits to a particular grocery store. Or simply free takeaways such as chocolates for kids or toys in exchange for reward points. A small gift goes a very long way.
Offering a Great Grocery Customer Experience
Loyalty programs have evolved beyond discounts and free gifts. It is all about how the customer feels when it interacts with the brand at any touchpoint. Experiential loyalty is a thing these days. Just like every other industry, a holistic customer experience is key to a great grocery loyalty program.
People never forget how you made them feel.
Taking into account the wisdom in the above proverb, it is the feeling of your customer that matters the most. Don’t leave a sour taste in their mouth. Literally for grocery stores when customers want to taste sweet. Streamline all touchpoints so that customers have similar experiences whether they buy from the store or online by optimizing your approach to omnichannel loyalty. Receipt scanning is also a good feature of verifying information if customers purchase from partner stores.
Design Grocery Store Rewards Programs That Works for You
As mentioned in the blog, there are many challenges that must be overcome to design a working program for grocery loyalty. There are many nuances that need to be considered taking into consideration all aspects of your business. A partner such as Annex Cloud becomes very handy to create a loyalty program by offering insights of previously designed successful loyalty programs for grocery stores. Many of the grocery stores which have been assisted by Annex Cloud have grown their business manifold. Connect to our loyalty experts now!