How to Make Your Customer Loyalty Program Pay for Itself

Margins are reliably slim for grocery retailers, averaging around 1 percent. Due to this scarcity of capital, business owners are reluctant to take any kind of gamble when they invest in new technology. But what happens when adopting new technology becomes imperative?

The proliferation of e-commerce has made it easier than ever for consumers to take a piecemeal approach to their grocery list, only buying a few items from any given store. Recent research from Dunnhumby found that as many as 40 percent of consumers regularly shop at multiple stores, which underscores today’s competitive reality within the industry.

Grocers must find a way to encourage brand loyalty among their customers. But how can they do so without breaking the bank?

Believe it or not, today’s modern customer loyalty programs can pay for themselves. Here are four tips to consider:

1. Start with a digital-first program.

Gone are the days of reliance on physical fliers and printed coupons. Shoppers today expect their loyalty programs to live in user-friendly, engaging mobile apps — that way, their membership access is only as far away as their pocket. These apps make it easier than ever for customers to access their order history, shopping profile, personalized discounts, and more. These apps also facilitate seamless store communications, letting managers tell shoppers about special promotions, holiday store hours, or the too-good-to-miss local strawberries that just arrived.

But app-based loyalty programs aren’t just pleasing to shoppers; they also unlock a handful of cost-effective benefits for grocers.

2. Leverage advertiser funding to help recoup costs.

Mobile apps offer numerous opportunities for grocers to incorporate sponsored content that builds brand awareness and drives customers into stores.

Grocers can let popular food suppliers take their pick of retail media opportunities:

• Ad spots promote visibility and drive mobile traffic to suppliers’ websites.
• Brand stories that shed light on ingredient sourcing or the company’s founding can make shoppers feel more connected to their favorite products.
• Supplier recipes can inspire customers and encourage repeat purchases.
• Product and flavor showcases inform shoppers about new offerings.
• Gamification (e.g., Spin and Win) excites shoppers by offering discounted or even free products as prizes.

Supplier funding offers an additional benefit to grocers — not only will suppliers pay them for the ad visibility, but the promotions will also encourage customers to shop in-store.

3. Reduce operating expenditures with digital loyalty features.

Many of the loyalty features customers love can also help grocers reduce their overhead and administrative costs.

Mobile scan and pay features dramatically speed up the checkout process by letting customers scan items as they shop. This sizeable efficiency boost adds up to big cost savings over time. Opting for digital (instead of print) coupons saves retailers money by eliminating the need for printing and distribution.

By leaning into mobile promotions and capabilities, grocers can cut costs and make their stores more efficient and streamlined for shoppers.

4. Delight customers to keep them coming back for more.

Beyond the specific (and exciting) digital loyalty capabilities are the broader benefits of customer engagement.

By providing discounts and opportunities for shoppers to earn real-time bonus points, grocers encourage repeat purchases and store visits. Personalized offers signal to shoppers that grocers care about their individual experiences.

The more businesses can help customers achieve their goals and meet their needs, the stronger their customer relationships will be. Digital-first ecosystems unlock countless ways for grocery retailers to boost store loyalty — and their cost effectiveness makes them a prudent option for any business on a tight budget.

Anders Mittag is the chief commercial officer at Lobyco, a powerful, modular, scalable SaaS platform that empowers grocery retailers to deliver seamless promotion management, enhanced loyalty programs, and streamlined checkout capabilities.