5 Best Practices for Loyalty Success
Loyalty programs continue to change and evolve in all retail industries, and with new and more powerful technology available today, these changes are happening faster than ever before. From upgraded point-of-sale (POS) systems and mobile apps to geo-fencing and beacons, rewarding customers is becoming easier and more targeted.
“It’s about transactional engagement rather than a punch card, and technology is much more sophisticated today with point-of-sale terminals now coming with loyalty ports to allow for individual customer purchase history,” Anton Bakker, CEO and founder of Outsite Networks Inc., told Convenience Store News.
With the data and analytics available today, programs are moving away from a one-size-fits-all approach and instead targeting promotions and offers to a customer’s behavior and purchasing. While many convenience stores started a loyalty program offering cents off on gasoline, incentives are moving into the store as well, which is where profitability lies.
“Many companies are shifting loyalty from the pump to inside the store,” observed Andrew Robbins, president and co-founder of Paytronix. “They are shifting loyalty from the pump to inside because sales in-store for profitability is more important.”
Below are five best practices convenience stores can utilize when either starting a new loyalty program or looking to maximize an existing one.
1. Keep It Simple
While loyalty and rewards programs may be complex and detailed on the backend, the message to the customer should be simple. Employees should be able to easily communicate how the program works and it should be easy for consumers to understand, according to Tony Chidiac, vice president of retail at OpenStore by GasBuddy.
“I sign up and get X, or I download the app and get X, such as a free fountain drink,” Chidiac said. “Another example is digital punch cards. That is more complex on the backend in terms of what a c-store needs to do, but it’s very simple for the customer.”
This is especially true when launching a loyalty program or trying to get more members because the simpler it seems, the more likely people will want to sign up.
“A lot of programs are overly complicated, and there needs to be a simple message to the customer,” Robbins agreed. “When you start a new program, you really want to focus on enrollment with a simple message, and then you can worry about engagement.”
When it comes to simplicity, nothing is simpler and more effective than an instant price rollback at the pump, said Stephen Goodrich, CEO of ZipLine, whose ACH payment platform is the loyalty mechanism behind Cumberland Farms’ hugely successful program. “We’re an immediate gratification culture.”
2. Communication Is Key
Consumer-facing technology is playing a big role in today’s loyalty and rewards programs, including digital coupons, direct communication and mobile payment via smartphones and apps. And communication with customers is one of the most important marketing tools in loyalty, Chidiac explained.
“There is an expectation from consumers for programs to be digital and have some form of two-way communication between the customer and the store or brand,” he said. “If they don’t have this, they are missing an opportunity.”
When it comes to communicating, whether via text messaging, in-app notifications or email, c-stores are still falling behind other industries, cautioned Paytronix’s Robbins. A good communication program allows a company to keep customers active and engaged, while reminding them about promotions and more, he said.
“Messaging customers about a change of gas prices in their area, or sending a message when a customer is at the pump with a deal to drive the customer into the store are opportunities available today,” Robbins explained.
3. Personalize Offers
Like everything today, loyalty day, loyalty and rewards programs are becoming more personal. With data and analytics, as well as more sophisticated POS technology, c-stores can target promotions and offers based on customer behavior, keeping deals relevant to each individual, and even broaden the areas of the store a particular customer shops.
“If I’ve never been in the store and only buy gas, sending a message for a free coffee might get me in there,” said Robbins.
In the loyalty world, programs are moving to transactional analytics. C-stores need to know who is a coffee customer vs. a fountain beverage customer, and then target offers and rewards to their purchase history. This is especially important with millennials.
“Particularly with millennials, if you are not relevant to them, you are wasting their time,” Outsite’s Bakker noted. “They will engage with you the more relevant you are, and being transactional means you can be relevant to their behavior.”
Additionally, while many c-stores traditionally think about promotions and offers by category, this mindset needs to begin shifting to customer segments when it comes to loyalty, according to Robbins. For example, simple segments can include customers who only buy gas and never come inside the store; customers who do both; and customers who only come inside the store but never buy gas. Each segment would require a different offer or reward.
“After they segment that way, c-stores can break them down further by the things they buy, such as coffee buyers and tobacco buyers, and then overlay frequency in,” he said. “Some people come into the store 10 or 20 times per month, and a store needs to treat those people differently than people who come in one time per month.”
4. The Top-Down Approach
When launching or building a loyalty or rewards program, there needs to be internal communication from the CEO to the store level. C-store companies need to get everyone on board, and explain the goals of the program and what it will look like for customers.
“It’s imperative to have everyone on board from the top to the bottom,” OpenStore’s Chidiac stressed. “Companies need to get the store-level cashiers involved because they are the ones promoting the program.”
He recommends offering an employee incentive program tied to the loyalty program for store-level employees to give them motivation when promoting the program or app. Also, everyone should understand the program and how it works.
“You have to jump in with two feet — you can’t be halfway. I’ve seen companies do a phenomenal job giving away coupons or putting out signage, but then cashiers don’t know about the program or how to redeem a coupon,” Chidiac noted.
This is where employee training comes in, and companies need to invest the time and resources into this, especially for frontline staff, echoed Robbins, explaining that it’s not enough to just put a flyer out and expect people to sign up. C-stores need to engage and train their staff members from day one.
“Loyalty is not a light bulb. You don’t just flip a switch and there is light,” Bakker agreed. “It is not an additional item one does, it is the item one does. So, companies need to become loyalty centric in their marketing approach — and where the rubber meets the road is the cashiers in the store.”
5. Make It Mobile
With the introduction of mobile apps, c-stores can connect with loyal customers on the go, and utilize messaging and notifications to communicate relevant promotions and more. Some are even utilizing geo-fencing and beacons to target promotions to those in proximity to the store or out at the fuel pump.
Mobile apps also allow for gaming, another popular avenue for c-stores to engage customers. OpenStore created a balloon game for QuickChek Corp., which is involved in an annual balloon festival every year. The company finds more than 50 percent of users are playing the in-app games today, Chidiac explained.
“They could be a slot machine approach where people match three like prizes and win prizes from the store, like free mugs; or a bubble pop game where if they pop five and three of them are the same, they win a prize,” he said.
The next wave of mobile will be mobile wallet integration. Consumers will not have a wallet for each retailer, but they will be utilizing the big platforms, so integrating with Google Wallet and Apple Pay are important, according to Bakker.
“Programs need to be mobile. It used to be only point-of-purchase materials on the windows and the pump were how c-stores engaged, but now customers are finding out about offers through mobile engagement,” he said.
“You have to jump in with two feet — you can’t be halfway. I’ve seen companies do a phenomenal job giving away coupons or putting out signage, but then cashiers don’t know about the program or how to redeem a coupon.”
— Tony Chidiac, OpenStore by GasBuddy