Small Operators Race to Keep Up in the Customer Loyalty Game
NATIONAL REPORT — Small, independent convenience store retailers have always been at a disadvantage when trying to compete with the large regional and national c-store chains — and that's especially true when it comes to engaging customers and building loyalty.
Even though nearly half of small operators have a loyalty program, according to Convenience Store News' 2024 State of the Small Operator Study, providing value in the eyes of consumers has become more challenging than ever in today's increasingly sophisticated technology marketplace.
"Consumers demand an increasingly personalized and high-touch, omnichannel experience, while large chains and retailers combine more perks, promotions and points to try and stand out. From free, fast delivery and consistent basket discounts to endless promotions and lucrative cash-back rewards, it is a race to trade free convenience for consumers' valuable data. Small, independent retailers find it challenging to match this combination of value, frictionless experience and 'free' convenience," said Elie Y. Katz, president and CEO of Newark, N.J.-based National Retail Solutions (NRS), a supplier of point-of-sale systems, e-commerce platforms and loyalty programs designed for smaller operations.
Small operators are hindered in this race by hurdles that large operators do not face.
"Challenges for an independent operator include cost, time, and technical and marketing expertise," noted Saurabh Swarup, general manager, North America for Liquid Barcodes, a loyalty and digital marketing technology company that specializes in the convenience and foodservice industries. "These operators are time-starved and resource-strapped and need an affordable, easy-to-maintain and professional-looking digital loyalty program that can be customized to their brand and style in order to stay relevant and competitive."
New Cumberland, W.Va.-based Smith Oil Inc., operator of 12 stores in Ohio and West Virginia, has encountered these hurdles in its pursuit to engage customers and build loyalty, Michelle Fluharty, the company's secretary/treasurer, acknowledged.
The biggest challenge? "In a word, resources. Loyalty technology is costly," Fluharty said. "As a small chain, we have smaller budgets and fewer staff, which makes it difficult to implement and sustain loyalty programs. A smaller budget also means that our brand recognition is lower than larger competitors, making it harder to attract new customers."
Smith Oil recently introduced its customers to a new loyalty program, in partnership with Liquid Barcodes. The program's launch has involved a phased-in approach.
First, Smith Oil offered customers the opportunity to save 10 cents per gallon via a fuel pay mobile app, becoming "among the first in the United States to include a fuel pay mobile solution featuring a special fuel pay program that allows consumers to pay for fuel using the app," Swarup said.
"Customers simply drive in, open the app, choose the fuel pump number, link their bank account (once) which activates the pump, and fuel up and go," he explained. "Only a handful of retailers have a fuel pay program and most all of them have hundreds, if not thousands, of stores."
Then came the introduction of digital stamp cards that let shoppers earn a free item after purchasing a certain number of identical items. The retailer is continually working with consumer packaged goods companies to offer more items via the program.
"As with any new technology, it takes time for customers to adapt to using our app, but we are very pleased with the growth we've seen so far. Our loyalty customers have more than doubled in the last two months, with 73% of them being active members," Fluharty reported in early July, noting that more perks are around the corner. "We are excited to be adding gamification and push notifications to further increase activity and engagement."
Loyalty-Building Tips
To reach customers in ways that will not only engage them but also turn that engagement into long-term loyalty, Swarup and Katz offer the following tips:
Build a digital presence that customers will want to engage with. This should include a Google Business Profile and a listing on an online listing service, according to Katz of NRS. "Ninety percent of all internet searches go through Google, and 76% of consumers who search for a local business will go there the same day," he said.
Find out what your closest competition is offering. Do they have loyalty programs, mobile apps, tiered membership offers and subscription programs? If so, "download those apps, follow their social channels, and find out how to not only match those efforts but also surpass them," Swarup said.
Design an easy, empowering and engaging loyalty program. According to Swarup, this means ensuring promotions are clear, compelling and consistent. "Decide whether a program will reward using points or stamps.
Determine what makes your stores special — is it a food or drink offer, customer service, location (by a school, sports stadium)? Focus and reward that unique offer and customer segment," he said. "To determine reward categories, decide what products are most desired by frequent customers and determine which adjacent products could complement that category."
Katz added: "Keep in mind that the goal of boosting engagement is to increase customer traffic. Once there, the goal of a loyalty program is to keep them coming back with value customers can appreciate. A loyalty points program should be simple, with achievable reward levels that gamify the experience. When a customer redeems a free item or uses a loyalty benefit, it builds trust and increases sales."
Touch base often with special offers. Provide customized offers to keep customers using the app and set up push notifications to remind them of their earned rewards and special promotions. Creating a yearlong calendar of promotions is also a good plan, Swarup noted.
Engage through social media platforms. "This is a slightly more complicated but highly effective way to amplify online engagement," Katz said, noting that 75% of businesses say social media increased traffic to their stores. "Small operations should focus on their knowledge and create authentic, relevant posts that interest their local communities."
Tailor your inventory to your community. "Chain convenience stores are held to very rigid planograms and centralized buying. Independent stores have more flexibility with what is on shelf," Katz pointed out. He advocates for offering unique products that are tailored to the community's specific tastes and needs and are not available at the larger chains.