THE POWER OF PERSONALISED LOYALTY

Personalisation priorities

Coupons and vouchers. Members-only pricing. Tailored product recommendations. Of all the loyalty mechanics used by grocery retailers today, these are the three most common. Something else links these initiatives, though: the ability to shape them around customer needs.

“When you think how these tactics can be used to improve customer loyalty, they all become more effective when personalisation is introduced,” says Debora. “Coupons and vouchers are more powerful when applied to products people buy regularly, exclusive pricing works better when it’s for items that people really need, and product recommendations only work when they’re truly relevant to shoppers.”

While the advances in digital technology and data science referenced in the previous section have helped drive personalisation within grocery, so too has the recent surge in online shopping. As more customers have started to buy their groceries via digital channels, the opportunity to engage with them at a truly granular level has grown in kind. With that in mind, it’s unsurprising that retailers are focusing heavily on digital-centric tactics.

Looking at the specific methods and technologies used to personalise customer experience, the emphasis is clearly on offer-driven recommendations. As shown in Figure 4, leading the way are personalised offers delivered by app (86%), followed closely by personalised offers either issued by email or communicated directly through a retailer’s website (both 75%).

In comparison, only a few retailers are using tactics like in-store beacons or chatbots (both 4%), with interactive in-store kiosks being the only other approach to see any real traction (21%). Some tactics included in the “other” column include personalised offers delivered via SMS, coupon at till, and direct mail.

“These results highlight the benefits of a closed-loop approach to personalisation, which less well-adopted approaches like store beacons don’t offer to the same extent,” comments Sam. “One major advantage of delivering recommendations and offers through a website, app, or email is that you can track impact immediately; either the customer adds that item to their basket or they don’t.”

“Having this kind of absolute clarity around ROI is obviously hugely important in today’s economic climate,” she continues.

This sentiment is echoed when we look at the difference between online and offline personalisation strategies. While most retailers use the same approach in-store as on their digital channels (79%), those who differentiate between the two tend to focus specifically on digital promotions. Some key tactics employed by that smaller group include online-only promotions, deeper discounts via digital channels, and lower in-app pricing on relevant products.

“Where a retailer offers better incentives to shop online, it’s typically because they're looking to grow their audience across that channel,” notes Debora. “Despite a major upswing in online grocery shopping in the past few years, most retailers still have a huge opportunity to further expand their share of that market. From that perspective, it makes sense that they look to incentivise customers to experiment with digital.

“There is a need for caution here though,” she continues. “The customer is the customer, both online and off. Even though online-only initiatives might be valid in a scenario such as this, it’s still important to consider shoppers’ overall needs and behaviours - and ensure you’re taking a Customer First approach to your strategy. No-one should ever feel isolated or left out for shopping via a certain channel.

"More and more people are opting to shop both in person and online - and these are the shoppers that are most valuable to retailers. Indeed, our own research in the US indicated that multi-channel shoppers spend 25% more than in-store-only customers."

What methods or technologies does your client use to personalise the shopping experience for customers?

Figure 3: Relevant product recommendations with an accompanying offer see the most use by far when it comes to personalisation.

Does your client have differing strategies for loyalty and personalisation for online vs. in-store?

Figure 4: Most retailers employ the same personalisation strategy online and in-store. Those who use different techniques tend to focus on deeper discounts and online-only offers.

As more customers have started to buy their groceries via digital channels, the opportunity to engage with them at a truly granular level has grown in kind. With that in mind, it’s unsurprising that retailers are focusing heavily on digital-centric tactics."

What challenges have your clients encountered in implementing effective loyalty and personalisation strategies?

Figure 5: Data is rarely an issue for retailers when looking to deliver effective loyalty and personalisation strategies. Technical, budgetary, and resource challenges are far more commonplace.

Whether they’re sticking to the same model in-store and online or splitting them out, though, it’s clear most retailers face the same kind of implementation challenges irrespective of their overall approach to personalisation. Tapping into the knowledge of our global client leads, we sought to understand the key obstacles for those retailers trying to improve their approach to loyalty and personalisation.

Here, the view was that the primary obstacles are either technical difficulties (79%) or budgetary constraints (also 79%), with resource limitations (61%) also hampering progress. Data, meanwhile, was rarely seen as an issue. Only a quarter (25%) pointed to a lack of quality customer data being a problem, with even fewer (11%) suggesting customers were unwilling to share their information.

To realise the full potential of loyalty and personalisation, it needs to be a company-wide initiative.”

Debora Franchim

Director of Personalisation and Customer Engagement

Samantha Sergeant

Customer Engagement & Media Global Propositions Manager

On the one hand, then, most organisations seem to have little problem getting hold of data to drive better loyalty and personalisation strategies. On the other, they’re struggling with operational issues like technology and budget. So, what exactly is driving this disconnect? The answer, it seems, is a lack of wider endorsement; half of retailers struggle to get the necessary buy-in across their organisation.

“Clearly the real challenge lies not with collecting customer data but in developing a strategy using that data, and that stems from an inability to make sense of it”, says Sam. "If retailers don’t know which insights to focus on, that makes it much more difficult to organise themselves around those insights.

“As with retail media, there’s a tendency for this job to fall to the marketing or sales team,” she continues. “To have a completely customer-centric business, though, and to realise the full potential of loyalty and personalisation, it needs to be a company-wide initiative - with the right people, sufficient investment, deep technical expertise, and dedicated KPIs.”

While evidence suggests retailers might sometimes struggle to create the best framework for loyalty and personalisation programmes, Debora sees this as the exception rather than the rule. “Generally, the results we see are incredibly positive, particularly around personalisation. Retailers are making smart investments, and prioritising initiatives that truly benefit customers.

“The focus is very much on helping people save money on the items they buy most frequently,” she adds. “That’s a great example of the power of personalisation in action, particularly during a challenging economic period.”

It’s clear there are numerous tools available to retailers to help them personalise their offerings and so seek to heighten the impact of activity focused on building customer loyalty. In the next section we’ll look at how loyalty is being successfully maintained and even increased against the backdrop of highly challenging economic circumstances affecting many shoppers,