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Are You Really Ready For Loyalty?

I've said it once, twice, three times, and again, if you're not seriously planning to implement a loyalty program in the near future you'd best get on the bus. Loyalty has become a household name in the convenience retail and petroleum space. It took a bit longer than many of us thought, but it is indeed here and here to stay.

New suppliers for loyalty programs are emerging from the woodwork. It seems like just yesterday there were only a handful serving our space, which is proof that adoption has exploded and soon will be prevalent in the majority of convenience retail -- or at least the majority of retailers that are serious about staying in this business.

Many retailers are looking for a quick and dirty solution to address the fact they don't offer a "loyalty" program of some nature, but might not be taking the time to think long-term strategy. What is best for my customer base, not just for now, but for the future? Will the program I'm considering offer the flexibility I need when fuel discounts, for example, aren't in the center of the bull's-eye? Will this program really allow me to connect with my consumers? Can I really implement and support this program?

Don't get trapped by short-sighted tactical plans. Think through it to ensure the loyalty solution you are about to implement will take you into the future. If it doesn't, you may not only be faced with starting over at some point, but it just might cost you the loyal consumer base you did gain in the short term. And loyalty programs are hard to take back.

The Long Haul
Define your goals and identify them in terms of implementation timelines. Make sure the program will be able to support those goals in terms of features and functionality.

1. What does loyalty mean to your organization? Define it and capture it. Your definition of loyalty will help drive the types of offerings you might consider.

2. What's your adoption strategy and which consumer segments are you targeting? Can the program offer something for each of those segments? For example, if you want to target teens and younger consumers, a loyalty program that only offers fuel won't help you here.

3. Is the strategy quantity- or quality-centric in terms of the number of loyalty program consumers and what they spend? If your strategy is to increase consumer spend per visit and the program doesn't actually incent the consumer to spend more, you've missed the mark.

4. If you are pursuing a follow strategy, do you have the confidence the loyalty program you are considering will allow you to follow the competition when they do the next best thing? Lead, don’t follow. Develop a program that is better than the other guy.

Think beyond the tactical problem or short-term goals to ensure the program is sustainable over time. Can the program support the following:

1. Foodservice -- If you are going to stay in this business, it's a given you'll be doing something foodservice related in the future.

2. Alternative payment methods -- Credit card fees aren't getting any better, and the industry is rapidly adopting alternative forms of payment.

3. Multi-use -- Pump start, ACH payments, check card, stored value cards ... all considered as driving consumer loyalty. Does the program you are considering support these aspects as well, and perhaps on a single form of identification?

Consumer Connection
What type of connection with your customers will the program facilitate? Will the customer really feel compelled to be part of the program?

1. Can you develop programs that will allow you to build incremental benefits for the customers that visit your stores more often than others, or spend more money than others?

2. Consider emerging technologies and trends -- what does the program offer, or have plans to offer in the social networking or mobile space?

3. Is the program built in a way that cashiers and other store personnel can sell it? It might not sell itself, so programs that drive the consumer to be in front of store personnel give you an additional advantage.

Can you really implement it, and how will it impact daily operations?

1. How will in integrate with your POS and/or dispensers? If it doesn't, does it really make sense?

2. Will the program require additional hardware, and if so will you be able to support it? It's the same as a fuel dispenser, if a consumer expects to receive loyalty benefits and the loyalty system doesn't work, they're going to walk out the door and just might not return.

3. Are there any potential PCI implications? If it touches your network, hardware or software, assume it’s in scope until you know for sure.

Sure, as a supplier it's easy to say you should think strategically about your loyalty program as you are doing everything you can to keep from being cleaned out by a competitor that's just implemented a wiz-bang program destroying your fuel volumes. But the fact that you are now so interested in a loyalty program presents an even more compelling reason to make sure that when you implement one, you will be able to compete, be innovative, lead instead of follow, and not forget it's going to be really difficult to take your loyalty program back from consumers without losing some of them.

Drew Mize is the vice president of product management and marketing at The Pinnacle Corp. ( He can be reached at [email protected].

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