CHICAGO -- More than 50 convenience-store retailers and loyalty-program suppliers came together March 27-29 for the CSP Loyalty Forum in Chicago.
By the second day of the conference, attendees were openly sharing important, sometimes difficult lessons they had learned while trying to establish loyalty programs for their respective brands. “No matter how big or how small you are, we all have the same struggles (with loyalty),” said Terry Brown, loyalty and mobile manager for Circle K North America. “Now I feel like I’m not alone. I’ve screwed up. You guys have screwed up. We’re all in this.”
Of the retailers in attendance, 36% had a loyalty program that had been live for one to three years. Nearly 30% of attendees did not have a loyalty program and came for advice on getting started. And 14% of attendees had a four- to six-year-old loyalty program, while 21% of attendees had programs more than six years old.
Click through for seven takeaways shared at the conference …
1. Loyalty is like dating
“Loyalty itself needs to be earned, and it’s not earned by offering discounts. It’s earned through a series of many positive experiences over a long term,” said Robert Byrne, senior manager of consumer insights for dat firm Technomic, Chicago.
“It’s the same thing with any relationship,” Byrne said. “It takes time. It takes a fabrication of trust, and it comes down to this idea of consistency.”
He pointed to Technomic surveys asking c-store customers about their experiences and said the experience that most directly builds customer loyalty is service.
“Cleanliness is not becoming more important every year," Byrne said. "It was already important, whereas service is still increasing."
2. Start simple
Ernie Harker, executive director of CREATE for Salt Lake City-based Maverik Inc., lets attendees see “under the kimono,” as he put it, and spoke in detail about Maverik’s early days trying to build a loyalty program.
He described approaching Pat Lewis of loyalty provider Kickback Rewards years ago, asking if he could create an incredibly complex loyalty program Harker and his team at Maverik had dreamed up. Harker referred to the plan as his “monster.” Looking back, Harker said he should have gone to Lewis asking what Kickback Rewards was offering and gone from there.
Then, Harker described the lengthy and complicated process of trying to build his monster internally, and the added struggle of trying to explain this complicated beast of a program to consumers.
“We decided to spend six months promoting one benefit,” said Harker. “Didn’t work. You know why? The first message they understood, that’s where they pigeonholed you.” Harker and his team tried to explain the program to their customers one detail at a time, but customers would refuse to accept that the program was any more complicated than when it was first explained to them.
Today, Maverik’s loyalty program is much more streamlined and straightforward, and the lesson is clear: Start simple when launching a loyalty program. The company IT department and customers will appreciate the simplicity.
3. Loyalty = marketing
Another lesson shared from Harker: It’s much easier to market to already loyal customers than new customers.
“I spend a lot of money on billboards and radio, but I spend a fraction of that on our existing customers,” he said.
A loyalty program often comes with a database of contact information for loyalty customers, allowing marketers to more easily segment and market to the dedicated group of individuals. “Without loyalty data, there is no tool to create a market for them; they all get the same message,” Harker said.
4. We're all Bubba
As millennials and moms become more of a focus for c-store retailers, Kristen Bailey, CMO of loyalty provider ZipLine, has a different take on the stereotypical c-store customer.
“I don’t really believe in the phantom of Bubba. I’m Bubba. You’re Bubba. We’re all Bubba,” Bailey said.
Instead of thinking of Bubba as the grease-stained older male looking for Cokes and smokes, Bailey challenged attendees to widen their definition of Bubba to anyone entering their store. “Bubba is potentially a Little League coach. Coming in the morning, he’s in a different mode and needs different things than when he comes in the afternoon or on a Saturday,” she said.
5. Payment can add credibility
“When consumers do attach a form of payment, the loyalty is much higher,” Baily said. Consumers feel more attached to a loyalty program if it is attached to their checking account and used to pay for store items. “They’re engaged financially. It’s a game-changer.”
Baily offered Target’s Redcard as an example. It has 35% penetration among Target’s members.
But she offered one important caveat to anyone looking to tie a form of payment to their loyalty program: “If you’re asking for customer information, it has to feel real. It has to feel legit.”
Baily recalled a past experience trying to explain the details of a loyalty program to a consumer without revealing the payment component until it was time to collect the consumer’s financial information. She said the customer “freaked out” when asked for his checking information.
“If you’re trying to trick them into doing anything, it’s a no-go," Baily said. "You’re going to be pushing rope uphill.” She said that customers need to be told up front that personal financial information is involved, but as long as the process looks and feels trustworthy, it will inspire loyalty.
“We changed our marketing to, 'Pay with blah blah blah,' and [the customers] were like, ‘Oh, I get it!’ ”
6. Amazon rules online; c-stores rule offline
Andrew Robbins, CEO of loyalty provider Paytronix, told attendees that Amazon sales make up 44% of all online purchases. He also said that Amazon Prime membership has such a strong pull with customers that 74% of Prime members buy something if they look at it online.
“Now, I bet your customers beat that number,” Robbins said. “I bet your customers, when they walk inside, buy more than 74% of the time.” C-store customers are visiting the store for a specific purpose, and Robbins figures the likelihood that they will walk out without fulfilling that purpose is small.
7. Consumers want service and privacy
Bill Hanifin, founder and CEO of Hanifin Loyalty, said 57% of consumers want a quick checkout experience made with a payment profile. The problem, he said, is that nearly 70% of customers do not want to give the personal data required to create the payment profile.
The main problem is that customers don’t understand what they are getting in return, Hanifin said. “We’ve worn people out by collecting so much data. We haven’t brought it out to them in a usable form,” he said.
Security is also an important part of this issue. “Over half (of consumers) said they’re worried about their points getting hacked, and over 70% thought they had already been victims of fraud,” Hanifin said.
While customers have legitimate concerns about the security of their data, many decide how much or how little data to give based on emotional, not logical, factors, he said. For example, he cited the 4 million people who have sent their DNA to companies such as Ancestry.com. This is undoubtedly highly personal information that could do damage in the wrong hands, but consumers don’t seem to be as concerned about sharing this data. Why?
“You’d like to think that we as consumers are rational, but there’s this perception issue. It all depends on what we think is important,” Hanifin said.