A new study from Incisiv, FMI and Loyalty Guru reveal both erosion and opportunities in loyalty programs.
A new study has confirmed that loyalty is a more slippery proposition in the wake of a changing and widening omnichannel and simultaneous market challenges. The study by Incisiv, conducted with FMI – The Food Industry Association and in partnership with Loyal Guru, pinpointed various digital-related road bumps to traditional loyalty behaviors.
The research attributed much of the ebbs and flows of loyalty to e-commerce. Nearly three in four grocers surveyed (74%) think that digital shopping has made shoppers less loyal and 76% agree that poor website and mobile experiences hamper allegiances to retailers and brands.
[Read more: "How This Economic Climate Is Different for Grocers"]
The report, “Shopper Loyalty in the Digital Age,” also underscored tangential fulfillment issues that affect experiences and, hence, affinity. An overwhelming 88% of grocers believe that a poor third-party experience negatively impacts customer loyalty.
“Digital transformation has revolutionized the convenience of grocery shoppers, but it also poses a challenge to traditional loyalty. Grocers must recognize that poor digital experiences can lead to lost loyalty, and thus prioritize building a digital-focused loyalty program that enhances the omnichannel shopper journey,” said Gaurav Pant, chief insights officer of both Incisiv and Grocery Doppio.
Although loyalty in a broader sense has been dented in the evolving marketplace, it doesn’t mean that it has moved down the priority list for food retailers. The study shows that 71% of grocers see loyalty as a key focus area at the executive level. Loyalty programs also deliver real value besides positive perceptions: Grocers attributed 56% of sales in 2022 to loyalty programs and project that percentage will climb to 63% by 2025.
Not surprisingly in today’s inflationary times, grocers say that loyalty and discounts go hand in hand. According to this study, 82% of shoppers said they prefer price discounts and points as part of a loyalty program. Retailers, for their part, ranked the top three objectives of their loyalty programs as helping to reduce the impact of inflation on shoppers, acquiring new shoppers and improving shopper retention.
The study’s authors shared ways that current barriers to loyalty can be overcome. “In order to maintain digital shoppers and foster loyalty, seamless and personalized omnichannel experiences are necessary to succeed in today’s highly competitive landscape. These insights offer practical investment considerations for business leaders,” remarked Doug Baker, VP of industry relations at FMI.
Added Borja Sanfeliu, CEO of Loyal Guru: “As interest rates and inflation continue to rise in 2023, its clear shoppers are making more mindful decisions around their spending habits. As a result, grocers are reporting more engagement with loyalty programs that offer exclusive deals and discounts, private label growth, and a need to explore new monetization opportunities. In this regard, the hottest topics right now revolve around next-gen loyalty solutions, retail media, and building stronger customer relationships via technology.”