Personalization Is the Key to a Successful Loyalty Program
More than 70% of c-stores offer a loyalty program, but only 42.5% of customers belong to one.
By Brian Berk, Convenience Store News
CHICAGO — Despite the costs involved with setting up a loyalty program, the payback can be immense, as it is nine to 11 times more expensive to recruit a new customer vs. maintaining an existing one.
"More than 70 percent of convenience stores offer a loyalty program, but only 42.5 percent of shoppers belong to one," Tom Byrnes, senior vice president of marketing for LedgerPay, a Quisitive company, noted during a recent Convenience Store News webinar. "If you can only see what 42 percent are doing, you have a blind spot of nearly 60 percent of your customers."
There are approximately 3.8 billion loyalty memberships in existence today. The average consumer holds 15 loyalty accounts, but only seven of them are active, Byrnes cited. The good news is that 87 percent of customers are comfortable with having their buying habits tracked if it's used to provide personalized offers.
The correct offer to the right loyalty customer is critical, added James Becker, business development manager for Quisitive. "Are you sending high-value offers to people who don't need an incentive to spend with you?" he asked. "And are you sending one-size-fits-all offers that often do not work?"
Rather than rely on generic one-size-fits-all promotions, convenience stores must deliver targeted offers to their customers in real time.
Most of all, customers want to feel appreciated. If they receive specific offers based upon their purchasing patterns, and/or if an employee knows what they like to purchase, it can go a long way, Byrnes stressed.
"You cannot buy a person's loyalty. You have to earn it," he said.
Timing is important, too. Delivering a personalized offer is most vital at "the moment of impact," when a customer is actually in the store or at the fuel pump, he advised.
The Unique Challenges of C-stores
Convenience store operators face unique challenges that other retailers do not.
Although c-stores sell 80 percent of the gasoline sold in the United States, 65 percent of customers who visit a location never enter the physical store. Technological solutions like pumptoppers have proven to be unsuccessful, according to Byrnes.
When customers do come inside a c-store, they are not spending a lot of time there. Nearly 58 percent spend only one to five minutes; just shy of 29 percent spend six to 10 minutes; and 6 percent are inside the store for 11 to 15 minutes.
Hence, Byrnes said a valuable tool for c-stores is a technological solution that can provide first-party data by capturing information for anyone who uses a credit or debit card at the location without the need for them to opt in to a loyalty program.
"C-stores are missing out on a wealth of untapped customer data," he said.
LedgerPay, which can work in cooperation with existing loyalty programs, is one company that attempts to solve this problem. "LedgerPay turns previously anonymous credit card transactions into insights and engagement opportunities," Byrnes explained. "For the first time, c-stores can engage their customers in personalized ways that drive behavior with no need for an opt-in.”
A boost of 7 percent in loyalty can increase lifetime profits by 85 percent, and an increase of 3 percent in engagement is comparable to a 10-percent operating expenditure cost reduction, according to the marketing executive.
An on-demand replay of this webinar, "Identify, Track & Engage With 100% of Your Customers Without the Need for Opt-in," is available here.