Loyalty programs are a great way to retain customers and keep them coming back to the store time and time again. In fact, by increasing customer retention by just 5 percent, brands can increase profits by 25 to 95 percent, which is why loyalty programs are a go-to marketing source. But there is one major problem with today’s loyalty programs – there has been a 2 percent decline in overall active member rates which leads to slower growth and profits for brands.
What is causing this decline in active participation, and how can brands turn it around to fix this problem?
There are a couple of new insights that help shed a light on the cause of this decline and the tactics that can mitigate and even turn around loyalty programs so they are profitable and engaging to customers. […]
Reward programs have been around for years. Airlines, hotels, and restaurants adopted these programs decades ago. Convenience stores, on the other hand, seem to prefer club programs and simple promotions like 3 cents off per gallon or short-term, low-value programs.
At a high level, mass promotions are a great business strategy, driving more visits and spend. Most of the time they are also paid for by the CPG vendors, so the cost of running these promotions is minimal to the convenience store. Mass promotions and eblasts get brands quick wins and compel customers to make purchases with the incentive of getting an item for free.
Most mass eblast promotions are the standards “Buy 1 coffee, Get 1 coffee Free.” Let’s think about this from the customers’ point of view, a very frequent customer who comes in every day for their morning coffee before they head off to work could get a free coffee just like the customer that has maybe come in once or twice would be able to get the free coffee with their purchase. The fact is, the customer that comes in every day would have been willing to purchase that cup of coffee at full price. You are essentially rewarding the frequent customer with a free coffee for not changing their behavior or driving an incremental visit or spend and eroding the revenue you did get from driving the customer who has not come in as much and did change their behavior. […]
The convenience store industry is going through a transformation where retailers are becoming competitors in the foodservice space, but there is still a lot that c-stores can learn from restaurants when it comes to customer engagement. By learning more about their customers and leveraging the data, c-stores can build loyalty and earn increased visits and spend from their customers.
How can c-stores achieve the level of customer engagement that restaurants have been able to get? There is a shift in the way brands think about their marketing, moving from category-centric to customer-centric, meaning instead of thinking about how to sell more of a product you think about who is buying those products. A customer-centric approach still revolves around selling more products, but it also means delving into who is buying them and why.
To move to a customer-centric approach, c-store marketers need to think about three main things: […]
On average about 300 people visit a store’s gas pumps a day, but only 35 percent of those customers step foot in the store. The opportunity to compel store visits is palpable – you are not unlike other marketers who dream of solving this dilemma. We all know that margin, for the most part, lives in the store, not at the pump. Which is why converting fuel customers to frequent in-store patrons is like the brass ring of convenience store marketing.
For years, marketers have tried to solve this challenge. Some send the same ‘buy one coffee get one free’ offer to all customers and then hope it pulls them in. Others have invested in expensive pump displays, point of purchase material and more to convert that customer. There is even a group that has given up trying to convert them – leaving room for competitors to grab their customers instead. There is a better way to motivate store visits.
Use an individual’s purchase data to compel in-store sales. […]