Loyalty Programs Are Prime to Grow in 2023

Tech advances and consumers eager to save money make grocery loyalty programs an essential strategy for the year ahead
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Grocery loyalty programs are on the cusp of breaking out in 2023.

As a new year dawns, food retailers and grocers are in a prime position to elevate their loyalty programs like never before.

Even though the retail landscape seems tumultuous, with grocers wrestling with inflation, bracing for an impending recession and continually adjusting to omnichannel shopping behaviors, these factors can all help fuel customer engagement and drive loyalty in grocery. 

Consumers are eager to save money, so they’ll look to a rewards program to help them find more value. They’re also hungry for a more engaged and connected relationship with their retailer of choice. According to The Forrester Wave report on loyalty for Q3 2021, 86% of U.S. online adults belong to at least one loyalty program.

The growth can be seen in retailers such as The Fresh Market, which debuted a loyalty program in March 2022 and has already amassed more than 1 million users. U.K.-based Asda also passed that threshold months into its first-ever loyalty program in the fall.

Add in new technological advances and the ability to do more faster with shopper data, and grocery loyalty programs are on the cusp of breaking out in 2023. Here’s how.

More Than a Coupon

A recent report from Deloitte reviewed 115 separate consumer loyalty programs and found that 54% offer “nontransactional benefits” to members, meaning that a loyalty program can offer a customer a new experience or some level of value beyond savings.

For example, perhaps the program delivers the loyalty member insights about the producer where that customer likes to buy its coffee or suggests relevant recipes for dinner during the week.

To be successful, loyalty programs in the year ahead must provide members with more than a way to save money – they should become true partners to the customer, offering utility at every stage of their shopping journey. This is all possible by leveraging data, moving beyond just trying to increase spend or frequency, and focusing on how a retailer can add more value to the customer’s life by understanding their historical behavior. This could manifest itself in content such as recipes that fit their lifestyle, touting seasonal activities coming to a nearby location or presenting information on how to connect with the retailer’s dietitians for help — all to provide added value that’s nontransactional yet relationship-building.

Personalized Moments

In that same Deloitte study, nearly a third of U.S. loyalty program members said that they would share their personal information in exchange for more personalized experiences and rewards.

Similar to adding value beyond promotions, grocers are now in a position to act on data in real time to deliver more personalized shoppable “moments” to loyalty program members.

Grocers can combine purchase history along with location data and other contextual information to execute unique content to individual members based on where they are (down aisle five or on a train) and how they’re shopping (buying online at home or viewing mobile in transit), and factor in other elements like weather, a loyalty point threshold, a seasonal activity and so many other factors. The result is the ability to deliver content to program members and customers that assists them "in the moment."

This approach is a huge step forward versus executing targeted offers by grouping a set of similarly profiled loyalty members and picking one day and time to send out a promotion to that group. Here, using “marketing in the moment,” each individual shopper receives a genuinely unique offer, delivered how they want it, and on a day and time that’s most optimal to that user. 

Curating a Deeper Connection

With these new lines of data merging with purchase history and a strategy that goes beyond savings, food retailers are positioned to present a loyalty experience that curates a deeper retailer-shopper bond. This is the new frontier of loyalty, and retailers see it coming.

In Woolworths’ recent Q1 earnings report, the Australian retailer discussed its Everyday Rewards program, which currently reaches nearly 14 million shoppers (almost half of the country’s adult population). The promise of the program that the grocery retailer is testing is leveraging the program as real-time loyalty for its members, activating and crediting points instantaneously while looking at future possibilities of curating content for members and reaching shoppers in the moment.

Using a rewards program as their customer engine, the grocers that can seamlessly curate products, experiences and offers that directly line up with a loyalty program member’s shopping history and behavior can stand out from the other programs, and indeed lead a new frontier of loyalty in grocery.

About the Author

Tim Mason

Tim Mason joined as chairman of U.K. company Eagle Eye in January 2016, moving to the role of CEO in September 2016. Mason has more than 30 years of experience in the grocery and retail industries and a strong background in strategic marketing and customer loyalty. Previously, Mason was a managing director at Sun Capital Partners and is currently a nonexecutive director at Gousto. Before Sun Capital Partners, he was deputy CEO at Tesco from January 2010 to December 2012.
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