Creating a Loyalty or Points Program: Good Idea?

Richard F.

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Grocery store points cards are a marketing ploy to encourage customers to call again. Individual rewards are relatively low, compared with the rewards available by other loyalty schemes, such as in the travel and gasoline industries. Perhaps this is a reflection of the markedly lower profit margins that grocery stores make. Despite the lack of high value rewards, consumers in general do respond to loyalty programs, especially if it translates into price discounts or store credits that will ultimately drive the cost of shopping at a particular store lower. 



By comparison, these cards help grocery store owners in a variety of different ways, from attracting new clientele to keeping current customers loyal to the brand. The only downside could be unclaimed credits stacking up to a point where they begin to impact equity. Enforcing award expiry dates is a sensible measure to take to ensure that stores can better predict when consumers will redeem their points.



Bigger Share of Customer Wallets


All consumers enjoy receiving rewards for their purchases. Points cards hit the nail securely on the head with the illusion that everything is cheaper, although it frequently is not. Lack of a loyalty scheme may be all that is necessary for a customer to move to where one is. If you are a grocery store owner, make sure that your percentage offered competes favorably with your competition. The market does compare and respond to the rewards that stores give.



Beady Eye on Customer Preferences


Reward cards are a significant advantage in terms of customer relationship management. They tell us more about individual and family purchasing patterns than any other method. Right now, a number of stores know what time and day you shop, what you splurge on over Thanksgiving, and equally importantly, the brands and products you ignore.



After they tap into your buying personality they know which specials to offer and what your tipping point is. Without putting too fine a point on it, grocery stores get a pile of benefits from offering small cash backs. 



Costing Value to The Store


The real challenge is figuring out how much money you are really making with the loyalty program. There’s no point in going to the trouble if the rewarded customer does not come back for more. One way to verify a points program's effectiveness could be to check whether your gross on your reward customers is growing faster than your overall. I agree that is a fuzzy performance metric. I am keen to know if there are better ones.



Priming the Pump for Action


To get the system off the ground, you must convince your customers to participate. The best way to oil the pump is to issue a card with some value already attached. When your target discovers they have more money than when they entered you have turned the heat on high and could be cooking with gas.



All in all, grocery store points cards can benefit both customers and stores, if they are executed correctly. Loyal customers benefit from customized deals and discounts while stores have a deeper knowledge of consumer spending habits and can better maintain a loyal customer base.



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