Most loyalty schemes in food retail offer a flat discount from 0,3% to 1% discount as part of their loyalty program.
Most of this investment is spent on mass offers about Private Label, particular categories or particular products at particular moments.
Mostly the same for everyone.
Example: 5% off on selected private label items for all card holders. 10% off “Fruits and Veggies” on Tuesdays.
Guess what? Every shopper ends-up saving less than 1% on his yearly spend. In average that gain (at a given retailer) might reach a dozen euros a year, ie 1€ a month. It’s really below the radar, nothing compared to what one can save on leaflet promotions. That’s the type of loyalty scheme that won’t stop any shopper from visiting a competitor.
From the retailer’s angle it’s a different story. 1€ a month for, let’s say 10 million customers, is a yearly budget of 120M€ with no tangible ROI. That’s obviously a big deal even for large retailers.
So most loyalty schemes don’t deliver a tangible performance because they deliver below the radar value for most shoppers. It makes possible to vanish 120M€ profits by dilution.
Loyalty schemes still help gather precious data about shoppers (at such a high price you’d better use them). Couldn’t that be the beginning of a solution?
The data reveals so much more about shoppers than what they’ve bought and how much they’ve spent here or there. With appropriate artificial intelligence (AI) it becomes the best indicator of product and brand affinity, shopping patterns, future behavior and propensity to spend.
This insight enables to find out which shoppers have the potential to use a significantly bigger share of their spend at the retailer and which specific triggers would activate that potential. Such a fine target will certainly be worth decent loyalty money.
It does sound crazy doesn’t it? Just thinking how difficult it is to get a single loyalty scheme running…
Each shopper with his/her own deal? Yes sir! The private label lover will have his/her discount on private label items but the one who cares more about vegan or organic food will have his/her own deal on his/her preferred products.
What about getting a few steps away from pure transactional rewards? What about offering some kind of personal recognition? Creating some emotional engagement?
Indeed, shoppers to whom it matters could have the chance to earn the status of “Ambassadors” of their favorite store, of “Healthy living champion”, or “Master vegan cook”. All based on their shopping behavior, affinity and social interactions.
That would make a store visit a whole different story for each and every single shopper. Isn’t that the future of physical retail?
The good news is that predictive AI, state of the art infrastructure and digital appliances now make it all possible.
It’s a central point to get a decent ROI from a loyalty scheme: don’t give away anything for nothing. Or you’ll soon stop doing it (when you realize you can’t afford it).
The deal must be clear: “you’ll get an extra exciting reward, but you’ve got to do something”.
What’s that “something”? It can range from making one more visit (than what AI would predict…), spending a few more euros on some products or leaving a few feedbacks on social networks.
Basically that’s just asking for a bit more “loyalty”.
True, but we’ve just been through the engine, now how should the car look like?
FUN! Definitely the Loyalty scheme must be fun and easy. No hassle, no long questionnaires, no coupons to scan. Make it personal, digital and real time!
Make it look like a “Clash Royale” or a “Candy Crush” where you can win real money just by being more loyal and spending more at your favorite retailer.
At UntieNots we’ve built it. It’s called Loyalty Challenge. It’s smart, fun and it’s pretty effective !