As inflation and food prices continue to rise, consumer behaviours are changing with many customers trading down, buying only essential goods and trying new products based on price considerations. But most importantly, consumers are becoming more reliant on promotions. Loyalty programmes are not only effective delivery vehicles for promotions, but they allow customers to access discounts on the products they care most about and give retailers ways to invest in promotions that target their most valuable customers, writes Tim Mason, CEO of digital promotions company Eagle Eye.

Consumers are looking to rewards platforms and programmes to help them save money and shop more efficiently. Look at Asda, who introduced its first loyalty programme in August and had more than 1 million members sign up just for a trial. The programme enables members to build a “cashpot” of rewards for purchases made or challenges performed, adding a bit of gamification.

It’s an example of even though times are tough, consumers want to engage with their retailer rewards platforms. Grocers are staring down an optimal time to enhance their loyalty programmes and meet these consumers head on. They have a consumer audience looking to engage and to activate that audience most efficiently, they need to invest in personalisation capabilities through the loyalty programme. With more effective personalised programmes, offers and communications, retailers can demonstrate that they care about their customers while simultaneously rewarding the consumer behaviour that positively impacts their financial performance.

Talk about the technology component. What’s driving the innovation in loyalty?

Loyalty has come a long way from the club card and points-per-dollar days, and there continues to be exceptional innovation in this space. First, loyalty has become real-time – programme members expect to see the points they’re earning and the savings they’re earning as they’re shopping, not when the store reconciles its transactions or on their next loyalty statement. Having a lag is no longer acceptable.

Second, data analytics capabilities have advanced significantly due to more liberal use of AI and machine learning, and they will continue to improve. This impacts retailers’ ability to personalise every customer interaction, offering individual targets and rewards based on a near-infinite variety of factors, like predicted customer behaviour or customer profitability. The ability to harness and analyse location data to facilitate contextual offer delivery is another example of technology-driven innovation.

Finally, there has been major innovation in the partnerships retailers are exploring with their loyalty programs. Forward-thinking retailers are continually seeking ways to work with or integrate new partners that add more value to their loyalty schemes and for their customers. This includes partnerships with other retailers or service providers where members can redeem points, or new ways to earn points beyond transactions. For example, a grocery customer could earn bonus points through their grocery retailer’s loyalty programme for taking part in ‘healthy’ activities as assessed by their Fitbit. None of these would be possible without significant innovation on the technology side to integrate programs and member data.

Additionally, retailers are seeking ways to access first-party data, sourced through opt-in mechanisms like loyalty programmes. This data greatly enhances their ability to deliver accurate and meaningful personalised content.

How is personalisation evolving in loyalty; where can grocers go with it?

Plenty of retailers, including many grocery chains, are already able to personalise offers and rewards to individual customers, using insights from loyalty program activity and dynamic content. The next phase of personalisation will be adding context to this mix, so that not only the message, offer or reward is personalised, but so is the manner, timing and method of sending it. By using location data, purchase data, loyalty profile information and many other inputs such as weather, seasonal activities, and knowing if a consumer is engaging over social media, for example, grocers can tailor real-time personalised content to each loyalty member at the time and day they’ve proven to most likely engage. This is a new strategy of personalisation called Marketing in the Moment.

Grocers can become true shopping partners to their most loyal shoppers, delivering content during optimal moments of engagement. A consumer can be on a train and receive a suggested recipe for dinner that evening along with an offer for a store near their train stop. Loyalty programmes are in a place to become powerful assets in a grocery shopper’s journey.

What shifts in consumer behaviour are influencing how grocers present or utilise loyalty programmes?

The biggest shift is the growth in omnichannel shopping, which is influencing how retailers provide a consistent and engaging experience however customers choose to shop. Retailers need to enhance their loyalty programmes to assist shoppers online and in-store, meet them where they’re shopping, and understand how they like to buy certain goods. If a consumer tends to buy bulk packs of bottled water for delivery, as opposed to inside a brick-and-mortar store, loyalty programmes can adjust to that consumer’s specific behaviour.

Omnichannel shopping is also driving the rapid digitisation of the physical store. Responding to how customers prefer to shop, retailers are deploying typically ‘ecom’ tactics like real time personalised promotions through scanning at the shelf, for example. We expect this trend to continue as well.

But there’s another shift in consumer behaviour driven by economic impacts, which is an increased interest in discounts and promotions. A 2022 survey of U.K. shoppers by ShopperVista found 35% of the respondents were using coupons in-store as a way to save money when shopping, up from 32% in June 2021 and 29% from January 21. Some retailers are leveraging their loyalty programmes to meet this demand by launching members-only pricing (like Tesco and Sainsbury) or pivoting their loyalty strategies more toward instant savings and incremental rewards rather than accrual of points. As price pressures persist and economic factors remain in flux, retailers will need to become efficient in meeting their shoppers online and in-store, reacting to both macroeconomic trends and omnichannel shopping behaviours.

Are there any other challenges facing loyalty programmes in the years ahead?

The biggest challenge will be meeting consumer expectations. As grocery retailers develop their programmes to meet shoppers in the moment, customers’ expectations for highly personalised service will grow. But it’s a win-win. Grocers gain so much from highly engaged consumers and those consumers will receive highly personalised experiences that make shopping easier and more enjoyable.

Shoppers are also going to be price shopping in the year ahead, so it will be a challenge for retailers to retain shoppers and loyalty members if they’re not the cheapest in town and if they’re not countering that via a highly personalised or value-added experience through their loyalty programme. Through a strong rewards programme, retailers can retain shoppers, serving up multiple promotions to individual members in the moment they need those offers most. This can create a happy shopper no matter the price.


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