Customer Rewards Programs Make Some Good Points

In an increasingly competitive market, global retailers are implementing loyalty schemes to increase shopper frequency and customer retention.

According to TCC Global, a worldwide firm offering customer loyalty programs, it's vital for each retailer to differentiate itself from the competition, especially in a highly fragmented marketplace such as this one. Global retailers continue to use loyalty schemes such as points and voucher collection campaigns in an effort to increase customer traffic, build brand retention and expand their market share.

“Schemes such as voucher collection or earning points for rewards are more effective than using price alone, if only because they are addictive and ultimately deliver something of real value to consumers,” says Neil Saunders, managing director at London-based retail research agency Conlumino.

Supervalu, the U.S. market’s second-largest supermarket chain, uses reward-based programs at its Acme, Albertsons and Jewel-Osco stores. More recently, Minneapolis-based Supervalu rewarded customers with a bonus point for every $10 spent over a 20-week period. After collecting enough points, customers could redeem them for a piece of a professional cookware set. Investing in advertising, in-store signage and social media led to high levels of customer participation and, as a result, an increase in total sales.

According to U.K.-based food and grocery retailing and supply chain analyst IGD, the American grocery market grew as a whole by 4.1 percent between 2010 and 2011, and this growth is predicted to continue in 2012 with a projected 4.3 percent marginal increase. Due to the success of customer loyalty campaigns -- increasing shopper frequency, brand loyalty and spend -- these programs are on target to help support growth in the grocery sector in the coming year.