Why rewarding customer loyalty should be a priority for convenience retailers

By Steve Hoban, CEO, Suresite Group 

Customer loyalty is priceless, but its true value lies deeper than engagement with your brand. Loyalty allows retailers to gain a true understanding of their customers’ behaviours, influencing every aspect of the operational process – from your store layout, to the products that you stock, to the promotions that you run. Paired with data, it also allows a greater understanding of the frequency of customer visits, size of basket spend, and both the time of day and day of the week they visit. By building up a persona of your customer you can create a personalised shopping experience to meet their needs – and encourage increased basket spend. Loyalty is no longer just for the big players, advances in technology mean that previous barriers have been removed and the process has been simplified so even the smallest retailer can now access the benefits.

So how do you unlock these valuable insights? The answer is by rewarding your customers.

Why introduce a customer loyalty scheme?

When considering introducing a customer loyalty scheme it’s important to clearly set out your objectives. The driver needs to be the collection of data – and a way of efficiently analysing it – in order to increase revenue and improve your marketing strategy. Otherwise, you’re simply offering a loyalty discount programme to your customers for products they are likely to purchase anyway – essentially giving away your margin.

For the convenience sector, capturing data efficiently has always proved challenging. How do you motivate customers to sign up for a loyalty scheme when their visit has been driven by speed of purchase coupled with low basket spend? It’s important to introduce a quick and simple process. Often loyalty programmes are seen as an expensive investment by smaller retailers, yet technology such as QR codes has made this far more accessible.

For customers who tend to use convenience retail more infrequently, it can be more challenging to create the same level of engagement that you would have with a supermarket you regularly visit. However, this does not stop you building a rich picture of your customer base which can be used to influence their behaviour – even getting them to shop more! At Suresite, our own data shows that the convenience sector has boomed over the last year with customers choosing to frequent smaller independent stores where they have felt safer – so it’s never been a better time to understand them more.

Research shows that location is the biggest motivator for customers to visit your store. Whilst a customer loyalty scheme may not be able to compete with this, it will certainly be an influence, especially if there is a benefit for them.

So how do you motivate your customers to share their data?

From the customer point of view, there needs to be a reason for them to share their data with you. What will they get in return? This is where a loyalty reward scheme comes in. Where there are frequent, high value baskets, a points-based loyalty programme works very effectively – which is why this method is often adopted by supermarkets. Where these conditions do not apply, instant gratification such as money-off coupons or incentives that feel personalised work well too. A complimentary cup of coffee, for example, might only cost a few pence to produce, but the perceived value to the customer is high!

How to use customer data effectively

It’s important to make sure that once obtained, you have a clear plan of how to use your findings. Invest in a partner who can help you understand what insight this data brings, and how it can help you overcome challenges, open up new opportunities, and meet your customer needs.

Using the technology available today means data analysis can help retailers predict when there will be increased demand for items, when more customers will be visiting the store, and therefore allow them to be prepared to meet their customers’ needs every visit.

Ensure that communication methods such as emails obtained from your customers signing up to your loyalty scheme are used effectively, particularly via digital marketing campaigns and e-marketing. If you want to encourage more business on a Sunday, for example, email your customers with a special promotion for that day. You will influence them to choose you rather than a competitor. And from the customer point of view, this is adding value to their experience as well as rewarding them for their custom.

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