Building loyalty, bit by bit

Grocers use new communication tools to grab attention and boost shopper loyalty.

By Deena M. Amato-McCoy

As more consumers click away on their smart phones, iPads and other connected devices, they are demanding that their favorite grocers keep up with their increasingly digital and mobile lifestyles. By leveraging a wide array of electronic communication tools, supermarket chains are primed to bolster shopper relationships, reinforce loyalty and drive sales.

Among the many digital marketing innovations taking hold are the ability to send targeted offers to shoppers through text messages and technology that enables consumers to download coupons directly to their shopper loyalty cards.

“When the economy fell apart, there was a strong focus on price, for both retailers and consumers,” says Jeff Weidauer, vice president of marketing for Little Rock, Ark.-based Vestcom International. “While price is still important, this year consumers are placing a stronger focus on value.”

Many consumers place a high value on information that helps them make better purchasing decisions. Experts say it is not surprising that now they are demanding that their retail brands help quench their thirst for information. On the flipside, the Internet gives consumers an instant platform for complaints as well as compliments, providing retailers with little room for error.

“Consumers are more informed today and as a result, are more cynical about what they are told,” he says. “They want support from their retailers of choice and this can be a great opportunity for retailers.”

Experts say the current economic climate provides a prime opportunity to connect with consumers. “The days of using a shotgun approach and just throwing advertising messages at the masses and hoping someone saw it is just archaic,” says Jim Bengier, global retail industry executive for Dublin, Ohio-based Sterling Commerce, a division of Armonk, N.Y.-based IBM.

While data warehousing and customer relationship management systems provide the primary support for loyalty marketing efforts, experts say many chains are learning how to use predictive analytics to understand what their shoppers are buying, how frequently they visit, and the affinity items they choose to build their market baskets. The next step is for chains to adopt customer-facing solutions that will help them bridge the gap with shoppers.

More online

The web continues to supplant newspapers as promotional vehicle. However, offering electronic versions of weekly circulars are not enough to drive loyalty.

Retailer websites are being improved and many now offer recipes, store locators, and downloadable shopping lists. Another popular feature is the addition of electronic coupons.

“Manually clipping coupons from a paper circular or newspaper ad, then hunting for promoted items in the store is an outdated model,” says Anita Newton, CMO for Kansas City, Kan.-based Zave Networks. “Consumers want to use the web not just to interact, but to transact business, so grocers need to use this medium to engage shoppers.”

Zave Networks’ software-as-a-service-based platform stream­lines electronic cou­pons for consumers, retailers and manufacturers, according to company officials. As shoppers download electronic coupons from grocers’ websites, rather than print it out to redeem at the store, they can add the incentives to their loyalty accounts.

As consumers present their loyalty card and promoted item during checkout, the discounts are applied. According to company officials, the platform also offers manufacturers a user-friendly portal to monitor redemption, in real-time, of digital impressions and the accepting retailers. Montvale, N.J.-based A&P uses the solution at  400 stores across multiple banners.

Kiosk evolution

Thanks to the expansion of web-based platforms and integration with store operations and front-end software, kiosks have become a more affordable and functional way to digitally interact with consumers.

Grocers tend to be attracted to applications that can “identify” when loyal shoppers enter or shop the store and reward them, according to industry experts. For example, Quincy, Mass.-based Stop & Shop uses the units to streamline its deli ordering process as well as deliver targeted promotions to valuable shoppers.

Individuals scan their loyalty card at a kiosk positioned in the deli department. The touch screen directs shoppers through the ordering process, which includes a history of recent orders and a price tally. Fresh food manufacturers tap shoppers’ order history to deliver targeted discounts and promotions to users. Upon completion, orders are stored in a database, and information is used to create incentives for future visits.

Green Hills Market, based in Syracuse, N.Y., is using the technology to augment its loyalty program.  Eager to recognize its regular shoppers and provide each one a “relevant shopping experience,” the chain gleans information accrued from the Green Hills Card program, and delivers individual shoppers with weekly specials based on their specific purchasing habits. Shoppers choose their discounts and electronically link these incentives to their loyalty account at an in-store kiosk, or by logging onto a dedicated page at www.greenhills.com.

“We drive these communications based on what the shopper wants, not what consumer packaged goods manufacturers think they want,” says Gary Hawkins, the company’s CEO. “This makes the shopper experience more relevant and valuable to every shopper.“

Green Hills has 12,000 customer households participating in the program, and “several thousand” shoppers, according to Hawkins, activate promotions each week. “We see a significant number of shoppers using the kiosks in the store, and these electronic incentives are impacting well north of 50% of our weekly turnover,” he says.

Getting smarter

Mobility is hitting the retail industry at full force, and consumers are learning to use their smart phones as mobile kiosks. “As shoppers become even more time-starved, many may not have time to stop at a kiosk, but they don’t want to miss the value they provide,” says Frank Riso, senior director, retail and hospitality industry lead, Motorola’s Enterprise Mobility Business division, Holtsville, N.Y. “Whether it is delivering targeted messages, allowing shoppers to research merchandise or even be the identifier in a virtual ‘cardless’ loyalty program, mobile phones will be key to marketing efforts.”

“Today’s [marketing] dialogue needs to build loyalty and by leveraging the personal aspects of smart phones, and encouraging shoppers to adopt retailer-specific ‘apps’ to stay connected with their favorite stores, retailers can deliver incentives on the fly and support shopper loyalty,” says Sterling’s Bengier.

The easiest way to achieve this goal is through SMS (short message service) text messages to deliver electronic coupons, shopping lists or even a simple “thank you” message from the store manager.

Industry executives say the next evolution is to use the smart phone as a “value-add” for in-store fulfillment operations. One example, according to experts, is to create a smart phone application to enable shoppers to order a product that may be temporarily out of stock. Rather than lose the sale when a shopper encounters an empty space on the shelf, experts say grocers can create an app that enables the shopper to order the merchandise and opt for delivery or in-store pick-up on their next visit.

Into the future

There is no shortage of ideas or creativity when it comes to new marketing initiatives, however keeping a single view of the experience across the brand will be the key to success. “Improving the customer relationship is paramount, however the real test is making sure the message is transparent and seamless across any and all channels the consumer chooses to shop in,” says John Saccomanno, director of industry marketing for Duluth, Ga.-based NCR. “Whether shoppers log on to retailers’ sites, or share their loyalty or mobile number or email address, chains must be mindful to identify the shopper the minute she starts shopping.”

Green Hills officials are tailoring the shopping experience to the individual consumer with targeted marketing messages and incentives through email and text messages, along with social media outreach on ­­­­­ and Twitter.
“We want to leverage all channels to provide real-time communications,” says Hawkins.

Experts say retailers need to step up their integration efforts to meet this goal. Developing marketing tools and applications are good first steps, but “success is dependent on both the creative and the processes,” says Sterling’s Bengier.

“Without good integration points at corporate, store-level, as well as with the consumer on their personal devices, these innovative marketing initiatives will not work,” he explains. “Too many retailers seem to excel at one or the other. If chains cannot learn how to merge actionable information with execution, it doesn’t matter how innovative the message or campaign it—it will clearly fail.”

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