Customer loyalty (or rather, the lack thereof) is one of the biggest threats facing supermarkets today. With price comparison sites and the simple array of choice giving customers more options and power than ever, we live in a time of promiscuous shopping, where it’s incredibly difficult for supermarkets to build a long-lasting relationship with their customers. However, there are actions that are available for these brands to take, and one of them is personalisation. In this post, mporium explores how supermarket brands can use personalisation to their advantage.
The Loyalty Lag
A lack of loyalty among supermarket consumers is nothing new. Supermarkets have tried for years to put in place tactics that will inspire customers to shop with them and keep coming back. Loyalty cards are the most prominent example, but they’re somewhat stuck in the past, with a lack of digital integration leading to consumers forgetting their cards and therefore not being able to use them in store. Offers and in-store events have also been used to varying degrees to build that all-important loyal relationship.
Despite these efforts, supermarket loyalty is frustratingly low. A study by EY recently found that only 5% of retailers believe their customers are loyal, with 87% believing that a strong loyalty strategy is key to their success. Further concerning research, this time conducted by retail marketing agency TCC Global, found that 16% of shoppers have switched their main supermarket in the past year. Worse, 39% said it wouldn’t be a problem if their usual supermarket closed down. Such is the amount of choice, customers believe they’d be able to find a like for like alternative without too many problems.
EY’s Helen Merriott underlined the need for retailers to change the way they approach loyalty. “The relationship with the consumer has become increasingly transactional. With consumer expectations changing at a rapid pace, retailers need to create loyalty that sticks,” she said. “Few retailers are fully embedding loyalty across core operations and customer touch points. Companies need to meet customer expectations at every turn to see increased business success as a result of increased customer loyalty.”
The Personalisation Proposition
The most obvious way to appeal to consumers and gain their loyalty is personalisation. A study by ICLP found that customers believe they get the best personalisation from department stores, with 49% of people saying they felt valued on an individual level. Supermarkets lagged behind with a score of just 33%. The key, the report found, is smart use of data. 53% of those surveyed said that department stores used their information to improve the shopping experience and to benefit the customer.
“Retailers need to recognise the huge potential of the vast quantities of data that they already have, and ensure they are using it to deliver true relevant personalisation,” said ICLP’s general manager Jason De Winne. “Even a small amount of personalisation can give retailers the edge against their competitors. Everyone now has the potential to offer more personalisation. From supermarkets to fashion, retailers need to segment their customers and deliver them the news, offers, and rewards that they want and listen to them through all relevant channels.”
Among supermarkets, Waitrose has arguably found the most joy through personalisation – and that’s because they’re doing exactly as De Winne suggests. They’re getting smart. Taking a digital perspective, the company found that if a customer shops online five times, it’s likely that customer will be retained in the long-run. This led to a campaign in which customers were sent unique discount codes every time they placed an order; which amounted to an £80 discount across five shops. The scheme led to a 24% increase in orders.
Another key tactic was that Waitrose used its data at a critical time of year for supermarkets: Christmas. Looking back at the shopping habits of loyalty card owners, Waitrose worked out which customers had bought turkeys the previous year and sent out a 20% discount to anyone who hadn’t yet done it in the current year. It was a simple idea that was executed perfectly and delivered incredible results. Purchases of turkeys went up 20%.
The Empowerment Equation
Why did these ideas work so well? Simple: they empowered the customer. By using customer data to deliver not just offers and discounts, but offers and discounts at the right time and in the right way, Waitrose found a way to build loyalty. A 50p off a tin of beans voucher is great, but maybe the customer didn’t need a tin of beans at that moment. Maybe a voucher for a 2 for 1 offer on some chips would be equally as unnecessary at the time it’s delivered. Great personalisation isn’t just about the offer, it’s about the context that offer is delivered in.
That’s why the turkey concept worked so well. There were multiple points of data converging here: the time of year, whether the customer had bought a turkey last year and whether they had bought one so far this year. By doing this, Waitrose understood the needs of its customers and delivered something genuinely useful. In other words, it empowered its customers and therefore built more than just a relationship – it built trust, and therefore loyalty.
Supermarket brands that are looking to do the same should follow a similar path. Loyalty and empowerment are inseparable. By empowering customers, brands are showing they care about them and therefore building loyalty. Just as with real-life relationships, it’s a two-way transaction based on positivity and mutuality
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