CHICAGO — The airline frequent flyer with platinum miles breezes through long check-in lines to instantly board flights; it’s the touchstone of solid customer loyalty that most can easily identify with.
To consumers in 2021, retailer loyalty services need to step up even more than this once-premier perk. During the pandemic, many demanded more depth to retailers’ loyalty programs: last-mile delivery, click-and-collect ease and same-day delivery. Curbside pickup across retail channels helped provide contactless engagement, and touch-free swipe-and-go technology in stores was almost expected.
The best convenience retailers capitalized via the quick-shop capability within their smaller footprints. It’s a good thing, too, as loyalty initiatives will need to continue to evolve and “wow” consumers in 2021 and beyond, say customer engagement experts.
“Convenience is really the community heartbeat,” said Kristen Small, vice president of product strategy and consumer marketing for PDI Software, Alpharetta, Ga. “You will see my Cumberland Farms store accepting me in every way I engage with them. And in that sense, c-stores get an ‘A’ [for loyalty efforts], and particularly tied to COVID-19, to meet the community where it is.”
A New Definition
Loyalty best-practices were evolving and growing at Kwik Chek Corp. prior to the pandemic. The Austin, Texas-based chain doubled down on its loyalty initiatives in early 2020 as customers demanded a new definition of loyalty.
With 48 stores and 11 car washes, Kwik Chek leaned heavily into its mobile app service, and the result was a tremendous growth of downloads for coupons and more.
“If you are a loyalty customer of ours, we have the ability to send you a text when you break a geo-fence [a virtual perimeter for a real-world geographic area], and a text offers a link to click on. This takes a customer to a redeemable coupon for a proprietary food offer.
It could be a BOGO [buy one, get one] or 50% off a sandwich,” says Kevin Smartt, president and CEO of Kwik Chek.
Kwik Chek’s food and merchandise volume increased 28% courtesy of its loyalty app from 2019. “Everything we have tracked has outpaced the national average,” Smartt says.
“Loyalty programs need to integrate with the overall consumer experience easily and seamlessly.”
“COVID-19 pushed us further and faster, and the hope is that the momentum continues. It’s a nice halo that customers can expect [when they can access] a robust digital platform.”
Artificial intelligence is making a compelling case for real-time loyalty—establishing even stronger sustained relationships via customized one-to-one engagement. “The mass offer was the mindset of retailers for a long time: a broad deal where everyone gets 10% off ,” says Heather Daw, vice president, account management at Exchange Solutions, Toronto. “Loyalty programs need to integrate with the overall consumer experience easily and seamlessly. Besides being simple to use and understand, it must be available to the consumer in all channels, always.”
As data quickly becomes a differentiator for brands, digital merchandising partners are working with c-stores to foster predictive commerce and marketing, said Matt Carinio, vice president of strategy and consulting for Hathway, a San Luis Obispo, Calif.-based digital consulting partner to the c-store industry.
AI is enabling brands to create more relevant communications to pinpoint customized relationships and, in turn, increase transaction size plus conversions through “smarter product recommendations and upsell and cross-sell suggestions,” Carinio said. “In doing so, AI is proving to be an accelerant that helps c-stores create genuine one-to-one customer relationships. ... We foresee c-stores that make a commitment to digital and AI forging long-term competitive advantages.”
San Francisco-based c-store retailer Loop Neighborhood has been working with Santa Clara, Calif.-based Algonomy, whose machine learning technology enables Loop to engage each customer in real time with contextually relevant messages based on their behavior and transaction history.
“As we continue to reimagine and innovate our business model, we’re committed to investing in new-age technology-driven customer experiences,” said Pervez Pir, chief operating officer of Loop Neighborhood.
The COVID Era
The COVID-19 era prompted many retailers to embrace a higher level of customer loyalty through the power of the mobile app and more. But late-adopter programs were relatively modest in scope. Pioneers such as Loop Neighborhood, Kwik Chek, R.L. Jordan and others perceived COVID-19 as a way to ramp up initiatives through more aggressive technology investments.
Retailers on the ground floor, meantime, were getting fluent in navigating their way through loyalty tied to a mobile app in more basic ways. Food and staples have been a core way to establish a win-win for both retailer and customer. Loyalty incentives tied to fuel discounts have had mixed success.
“I have seen other companies get in trouble when [gasoline discounts tied to loyalty] is their primary way to create loyalty,” said Dan Durbin, director of logistics at R.L. Jordan Oil Co. Inc., Spartanburg, S.C., one of the noted pioneers of technology-based loyalty in the industry.
Speaking in March during a “Loyalty Beat” podcast sponsored by Electrum, Durbin said the chain of Hot Spot c-stores offers fuel discounts tied to the chain’s app at a smattering of its 41 stores, depending on the circumstances. “When you look back, you don’t accomplish much other than giving profit away. It becomes like a game of Texas Hold ‘em where you [as a retailer] push your chips to the middle of the table. As the fuel discount gets bigger [cents per gallon], someone [a competitor] will play the game with you,” offering alternative discounts and pricing. “And you lose.”
Instead, Durbin said, Hot Spot drives loyalty “from the inside out, not the outside in. You need to find a way to reward customers for every interaction they have with you, to make them feel special each time they come into the store. It’s a small price to pay to reward them in a smaller but meaningful way.”
“[The program] increases the number of visits inside the store by 7% and doubles the average ticket size.”
There are different subsets of customers to take into account, from locals and their demographic makeup, travelers and even car-wash customers (see sidebar in lower right), all of whom have unique buying motivations.
One key audience that Hot Spot identified as prime loyalty customers—drivers of both the top and bottom lines—is over-the-road truckers. “As soon as truckers pull up to the lot, we offer them triple points on diesel fuel,” said Durbin. This yields a free hot dog, free drink and free chips, and a trucker mug “so they feel a connection to us. The point totals grow faster due to the large amount of fuel truckers buy per visit. We make $23 off this purchase. Truckers are the quickest way to create new profit in my stores.”
Other retailers prefer to leverage fuel as a carrot to draw in consumers. “We have clients who want to tie fuel discounts to inside purchases,” said Rebecca Burch, executive vice president, sales, at Electrum Corp., Louisville, Ky.
With fuel serving as the centerpiece of a loyalty program, customers might identify 10 to 12 high-margin, in-store items that are tied to the fuel offer. Burch said during the podcast that a customer is incentivized to buy one of these items, and the next time they purchase fuel, they’ll be eligible to receive a discount. The more they spend, the higher the discount, and flexibility is built in, as customers can earn discounts to use now or bank them for another visit.
For this type of program, Burch said it’s vital for operators to advertise at the pump due to the fact that about 40% of customers at the forecourt don’t plan to enter the store.
Supported by its technology, Electrum’s automated loyalty texts are set up so when a loyalty customer inputs his or her mobile number at the pump, they are automatically sent a personalized text message incentivizing them to come inside the store. Promotions might be based on the customer’s purchase history, a general loyalty promotion or a discount only available to pump text recipients.
“This feature has been highly advantageous for our retailers, especially during the pandemic,” said Burch. “It increases the number of visits inside the store by 7% and doubles the average ticket size.”
In-Store Factors
Speed-of-service and points accumulation are touchstones of loyalty programs: Airline loyalty with miles collected is a prime example.
But contactless retailing is now a vital layer of the broad initiative, not a luxury. Entering 2020 and pre-pandemic, Kwik Chek was on the road to a robust, cutting-edge loyalty program.
When COVID-19 arrived, the investment into loyalty became even more mission-critical. Prior to the pandemic, the chain had developed a daily “scratch and win” program for the 100 days of summer, where customers could use the app to win food, beverages, fuel, car washes and more.
The initiative “led to a spike in app downloads and usage,” Smartt said. On the face, the program was well-received. But precautions put in place because of the pandemic gave the program and the role of the mobile app even more meaning as contactless shopping became a necessity.
In Kwik Chek stores, customers can hold their cellphones up to the check stand, and a cashier captures a QR code from a few feet away, avoiding contact with customers, said Smartt. “It was an epiphany,” he said. “Many thanked us for providing it.”
On coaxing people fueling up to come inside a Kwik Chek store, the chain has found that when a text message is relayed to a fueling patron, “the market basket spend increases 32% for those people. We are moving the needle on incremental purchases. We can’t quantify how many people who redeemed [offers] were ones who did or didn’t plan to enter the store.”
Speaking about the broad proposition of loyalty, Small of PDI says that retailers have a chance to understand individual consumer needs through adoption of technology. Just like the frequent flyer who jumps to the head of the boarding line, consumers like entitlement and crave “a sense of belonging. They define themselves by the brands they buy. It gives them a sense of belonging and membership,” she said.
Retailer loyalty efforts are a gateway to fulfilling this promise, and cementing customers for life.