While it’s not a grocery store, Starbucks shares some characteristics of a food distributor. Customers can purchase items in bulk, they often make regular trips to their favorite location and they can use a loyalty program to qualify for free or discounted products.
How has the loyalty program worked out for Starbucks? The coffee giant once revealed that members of its My Starbucks Rewards program spend three times as much as non-members.
Needless to say, the company has continued to invest in its point-of-sale technology. In turn, grocery stores could learn from some of the tactics Starbucks has used to build revenues through a loyalty program. If you are a grocery store owner thinking about implementing a loyalty program, here are three items to consider:
It’s cheaper to keep a current customer than to find a new one
As we’ve noted before, it’s easier and cheaper to keep a current customer than it is to find a new one. The marketing costs are larger and the odds are not as great.
Starbucks is not the only high profile success in the loyalty program arena. Both Kohl’s and Nordstrom reported higher operating profit last year due in part to their strong loyalty programs.
On top of that, Accenture once found that loyalty program members generate 12 to 18 percent higher incremental revenue growth per year when compared to non-members.
Loyalty programs can induce goodwill in customers
Beyond the higher spend, customers in loyalty programs are more likely to refer others to their favorite business and they often use social media to express their appreciate for a brand.
Experts say that if customers receive enough opportunities to maximize their loyalty rewards points and they receive smart, targeted communications (typically via email) that offer them promotions based on their past purchases, then the customer is more likely to continue supporting the business and brand.
Why loyalty programs fail
While the average consumer has joined some 27 different loyalty programs, they actively participate in only a handful. Why? Most industry observers say that it’s because customers don’t want to carry around all those pieces of paper that seems to ubiquitous in loyalty programs a few years ago.
These days, it’s much more convenient to let guests use an app that will track their transactions automatically. Some programs that are included with a point of sale system will allow guests to scan their receipts and have the transaction go towards a rewards program.
Need help with a loyalty program for your grocery store? Contact us today to get a demo.