If you live in a world of penny profit the way grocers do, you can't afford to discount to people willing to pay full price. You also need to drive in footsteps to buy product that is literally perishable.
So where does that leave you?
Needing to promote the right products to the right customers at the right time based on what they've bought historically, what they're likely to buy now, and what are your most profitable products based on fluctuating manufacturer subsidies and discounts can be passed along to the consumer to stimulate more frequent purchases of bigger baskets.
Outcome? Happier, more loyal and profitable consumers shopping grocers with more cash, buying power, and gross margin.
Failure means the innumerable food delivery apps and web grocers continue to gain a foothold, stealing share from grocers that treat their customers like a bag of potatoes.
Grocers have a rich repository of information about their customers. However, they’re still operating loyalty programs that send mass discounts--essentially giving away products customers have already purchased or would have purchased full price. Why’s that? They don’t have a clear view of their customers’ purchasing habits and as a result, can’t suggest personalized discounts based on individual behavior in time to impact the short interval grocery shopping frequency pattern. By the time they know what to offer, the consumer might already be long gone. (There’s a reason why 71 percent of respondents in a recent Accenture report said that loyalty programs do not engender loyalty.)
As mentioned, grocers are collecting data from many sources--POS in-store, coupon codes, social media, and loyalty cards. The issue is that all of the data is put in a generalized MDM or a data warehouse to create a static, historical customer profile. As a result, there’s a latency between the time it takes to get that data to flow from the point of engagement with a customer into the central data warehouse and applied to campaigns.
Grocers are working with margins as low as 1% and an ultra saturated marketplace. It’s tough to stand out against competitors when you have the same card-based loyalty rewards program as they do and a huge percentage of your SKUs are identical. Many grocers have stuck to their old standbys of physical loyalty cards and spray and pray discounting--the marketing equivalent of insanity (doing the same thing over and over and expecting different or better results).
Now more than ever grocers must swap their all-for-one and one-for-all ways in favor of unique, personalized experiences and offers based on each customer’s previous purchase behavior and other data about their habits and preferences. For example, after a new customer’s first transaction send a push notification to thank the person for the purchase and offer the opportunity to take a brief survey about how she discovered the brand in exchange for 20% off her next purchase. Or send a longtime customer an in-app message when he trips a beacon to alert him about a sale item he frequently purchases. This personalized approach enables grocers to drive more people to their stores, more money spent, and better margins.
By taking a customer’s historical purchase data and calculating the products the consumer is most likely to purchase, grocers can then create campaigns with offers based on the calculated values. For example: Sarah typically purchases peanut butter and a loaf of bread when she shops. Send her an offer with a discount for a jar of jelly, valid for this week only.
On-demand delivery apps, shopping list apps and the like take much of the hassle out of grocery shopping. The challenge is now for grocers to leverage that consumer affinity to deliver highly sophisticated and complex customer experiences that feel simple and intuitive for customers. Grocers need to offer an engaging experience that provides value to customers in real time. And that means a unique, personalized experience for each shopper. Customers come in all shapes and sizes and their experience with a grocer should be tailored to their preferences and past behaviors. To inspire loyalty, grocers should think outside of the traditional card and coupon model by developing a program that truly benefits their most frequent customers and inspires new customers to continue to shop with them.