The 3 Most Common Mistakes in C-Store Loyalty Programs

And 8 ways retailers can avoid them

OAKBROOK TERRACE, Ill. -- "A lot of convenience-store loyalty programs are stuck," Andrew Robbins, co-founder and president of guest engagement platform provider Paytronix, said during "The Evolution of C-Store Loyalty: Past, Present & Future," a webinar sponsored by CSP magazine.

loyalty cards on keyring

Loyalty programs are powerful marketing tools for convenience-store retailers, and in 2016, these programs are proliferating rapidly. The webinar explored best practices for implementing forward-looking programs.

Robbins and Stephen Stone, Newton, Mass.-based Paytronix’s marketing and webinar series manager, detailed the history of loyalty programs from S&H Green Stamps, popular in the 1930s through 1970s; to airline deregulation in 1978, which led to American Airlines’ launch of that industry’s first program; to the hotel industry’s loyalty programs with Marriott in the 1980s; to Starbucks and Panera getting on board with loyalty in 2001 and 2008, respectively, with programs they have since tweaked.

"Starbucks is the gold standard for loyalty," Stone said. Starbucks’ evolving program started with paper punch cards, then introduced tiers, then moved from a visit-based program to a spend-based program.

Panera is using My Panera strategically, with specific day-parts and specific products. “If the time is low in a certain market, they can promote rewards that encourage visits and behavior in that day-part. They are changing what people buy."

Airlines are moving to more features on mobile apps, including in-flight entertainment such as movies and books. Hotels are piloting letting guests open their door with their mobile phones.

Robbin said, "There is a common evolution" from paper to automating paper to thinking more broadly about "spend," customer tiers, data and how "to integrate it into your digital platform and create an unfair competitive weapon and create emotional engagement.”

Robbins cited Thorntons, Wawa, Sheetz and Maverik as a few of the c-store chains that do loyalty well.

But his general view of convenience-store loyalty is that “a lot of the programs are just '3 cents off.' There's no 'earn' component, there's no request of the guest. It's just kind of a 'gimmie.’ Is it a reward? Is it driving behavior, or is it just an entitlement?", Robbins said.

Along with the “gimmies,” what are the most common mistakes in c-store loyalty?

  1. Overcommunication. Sending too many emails. For a twice-a-year customer, “don’t email them twice a week,” said Robbins.
  2. Lack of segmentation. Sending the same message to everyone.
  3. Overcomplexity. Making these programs too complex and too confusing. “Keep it simple, stupid,” he said. “The KISS principle is a good way to start and then make it hard with data. The great thing about segmentation is the guests never see it. All that hard stuff is hidden, and they don’t need to witness the complexity."

What should convenience-store retailers do to move their loyalty programs forward?

  1. Catch up. A retailer can make changes to a program. Starbucks and Southwest made changes to their programs over time.
  2. Restructuring a program to reward the whole guest. “You could move toward a more holistic view of your customers” and “treat different customers differently.”
  3. Use personalized communications. “Millennials especially expect that you communicate in the right tone to them, a person and not an age group.”
  4. Consider multitier programs. “You could add tiers and levels so that you didn’t treat someone who comes in the sixth time and got a free gallon of milk [as] … the person who came in for their 60th time for a gallon of milk.”
  5. Use data to segment, micro-target and engage the customer one to one. “Become experts in customer data. Find the golden nuggets.”
  6. Think more about the customer and less about the category. “Rethink CPG (consumer packaged goods) coupons,” said Robbins. “Do I want to shift the person from buying one type of energy drink to the other, or do I want to try to motivate low-frequency customers to come in more frequently and get that incremental visit and hopefully making it a regular behavioral change? … Convenience stores are fantastic at category management. But what about the customer?”
  7. Take a lesson from restaurants. “There are six or seven times as many restaurants [on Yelp] as there are convenience stores near me,” said Robbins. “And the restaurants are competing like mad for my business. They are all different. … Restaurants are good at this, at trying to bring forward some unique differentiation about themselves. And they’ve used Yelp effectively to do that.”
  8. The future is coming fast. “There’s lots of technology that can help. There are more and more computers in cars,” he said. “How are convenience stores going to tie into those computers?”

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